Contributor: Daniel Dewitt, Garrett Berntsen
APR 1, 2014
The IOR is one of the most complex regions in the world in human terms. It includes a wide variety of different races, cultures and religions. The level of political stability, the quality of governance, demographic pressures, ethnic and sectarian tensions, and the pace of economic growth create a different mix of opportunity and risk in each state. This can affect mid and long-term development, and sometimes creates near term problems in stability that can trigger internal or civil conflict.
The Contents of the Net Assessment
The revised study provides an updated and expanded comprehensive overview of the subregions and countries in the region, drawing heavily on a new Country Risk Assessment Model developed by Dr. Abdullah Toukan, a Senior Associate with the Burke Chair at CSIS. It provides detailed graphs, tables, and maps covering the IOR as a whole, each major subregion, and each of the 32 countries in the region as well as the impact of US and Chinese military forces.
Chapter One provides an overview of risks in terms of governance, economics, ease of doing business, security, and progress in human development using the Country Risk Assessment model and ratings by the UN, World Bank, and IMF. It provides summary risk assessments in each key category.
Chapter Two examines demographic trends and risks for the period from 1950 to 2050. It highlights the importance of population pressure, the “youth bulge” caused by the very young population in a number of countries, and the shock caused by rapid urbanization and the breakdown of previous patterns of social and political stability. It also examines the level of gender inequality. A critical factor slowing economic growth and development in a number of IOR states.
Chapter Three expands the economic analysis but focuses on Gulf energy exports as a key factor shaping the IOR’s strategic importance to the world.It examines trends in production and exports, the growing importance of Chinese and Asian imports, and the strategic impact of the growth in US domestic energy production.
Chapter Four focuses on the Gulf states: It examines the military and internal security risks in the Subregion. It summarizes the relative stability of the Southern Gulf states, and examines the overall military balance and threat posed by Iran, and the stability of Iraq, Bahrain, and Jordan.
Chapter Five focuses on the Horn, Red Sea sates, and Egypt: It discusses the strategic threat posed by piracy in the region, and examines the level of instability in each Red Sea state and the growing instability in Egypt.
Chapter Six focuses on East Africa and South Africa: There is no clear strategic threat in this sub-region as such. The chapter focuses on the level of instability in each East African state and its possible implication for the subregion and the IOR as a whole.
Chapter Seven forces on South Asia: It examines the risk of another India-Pakistan conflict, India’s focus on China’s build up and the risks by country in India, Pakistan, Bangladesh, and Sri Lanka.
Chapter Eight analyzes risks in Southeast Asia: This chapter analyzes the threat of piracy in the Strait of Malacca, stability and instability in each state, and the impact of the Chinese military build-up on national forces in the subregion.
Chapter Nine analyzes the impact of US and Chinese forces: It examines the changing military balance between the US and a rising China and the effects of this relationship on the present and future stability of the IOR.
The Strategic Impact of the IOR
The analysis shows that three critical strategic issues cut across the IOR and have a global impact:
- The stability and security of Gulf petroleum exports.
- The special risks create by the possibility of a future conflict involving India, which may be emerging as a major global power, and the risk if a nuclear conflict involving India and Pakistan.
- The overall security of maritime traffic and commerce through the entire region.
- In the Western part of the IOR, the Arab Gulf states and Iran shape much of the world’s petroleum exports and play a critical role in the global economy. While many other areas in the Indian Ocean have strategic importance – and a fuller list is provided in the introduction to this study – petroleum exports through the India Ocean to Asia, through the Red Sea and Suez Canal, and around the Horn are the area where the IOR has the greatest single impact on the global economy and the world.
This is also the area of highest near-term risk in terms of serious military conflict. The negotiations between the P5+1 may have reduced the nuclear aspect of this conflict – although this may take several years to fully verify and determine. It has not yet affected the broad regional competition for influence between Iran and Arabs states, the risk of asymmetric war in the Gulf, a major conventional arms race, and Iran’s build-up of major ballistic missile forces.
In the center of the IOR, India is such a large state that its emerging role in the global economy has great strategic importance, but so does the risk of another conflict between India and Pakistan – both now nuclear-armed states. This risk is assessed as low to moderate. Both nations have established a relatively high level of mutual deterrence and have little to gain from any form of future conflict. At the same time, both states still confront each other, keep increasing their inventories of nuclear weapons and now deploy them at the tactical level, terrorism is a serious threat, and the history of war is not the history of carefully calculated actions and risk assessments.
Finally, the overall stability of the flow of shipping and maritime traffic throughout the IOR impacts on importers and exporter on global basis, affects the flow of petroleum exports. The main risk to this stability is currently piracy and maritime crime. In the west, it is concentrated around Somalia and to the east around the Strait of Malacca and Indonesia. Piracy is presently a low but continuing risk, and one of major importance to shippers. It does, however, have a particularly critical impact on key East Asian trading states like China, Japan, and South Korea.
A more serious strategic risk may be emerging. At present, US sea and air power, and partnerships with a variety of regional states, play a major role in securing Gulf oil exports and the security of maritime traffic throughout the region. The US is now committed to a strategy that gives the Middle East and Asia high priority, but some question whether it will remain committed in the future as US energy import needs diminish. This risk currently seems limited, but cannot be dismissed.
The other risk is a potential shift in air-sea power as China acquires a major blue water navy and the potential ability to project air and missile power throughout the IOR. Asia has already replaced the West as the key energy importer and source of maritime trade across the IOR, and China will steadily increase its volume of imports and import dependence over time.
Given the tensions between China and the US and other states in the Pacific, this raises the question of whether China and the US will compete or cooperate in the IOR, and particularly how their actions could interact with the role of the states in the IOR, affect a key chokepoint like the strait of Malacca, and tie the IOR to regional tensions over the South China sea and the much broader areas involved China’s claims to maritime and air rights in the entire Pacific. This is not currently more than a possible area of future risk, but its strategic importance is too great to ignore.
The Gulf and Energy Exports
The extent to which Iran and the Arab Gulf states can produce and move oil, gas, and product by sea or pipeline has a massive impact on the economy of virtually every developed and trading state and increasingly on the developed and more advanced economies in Asia – whose exports, in turn affect the security and stability of the economy of virtually every other developed state.
This analysis shows that several of the states in the Gulf – or states that affect the flow of petroleum within the Gulf and Middle East Subregion -- suffer from serious internal instability and face the risk of civil conflict. Egypt is a key case in point because of its role in establishing the security of the Suez Canal and SUMED pipeline, but Bahrain, Iraq, Syria, and Yemen – and to a lesser degree Iran – all present significant national risks.
More broadly, the struggle between the Arab Gulf states and Iran, and the role the US plays in ensuring the security and stability of the Gulf, presents major ongoing risks that will not be resolved by the current negotiations between Iran and the P5+1 even if these negotiations are fully successful.
At present the arms race in the Gulf; Iran’s broader struggle for influence over Iraq, Syria, and Lebanon; and the growing tensions and conflicts between Sunnis and Shi’ites/Alawites seem containable and the level of deterrence of any serious conflict seems relatively high. This is, however, by far the most serious strategic risk and flashpoint in the IOR.
India and the Prospects for an India-Pakistan Conflict
The strategic impact of South Asia on the IOR is dominated by the potential emergence of India as major economic power, by the risk of another India-Pakistan conflict, and by the degree of competition between India and China. Its overall impact on the security and stability of the IOR is confined largely to the immediate sub-region region. There is no immediate threat to world maritime traffic or the flow of petroleum.
The extent to which India does or does not emerge as a growing and developing economy has a vast human impact, but also affects the balance of power in all of Asia, the relative role of China as a world power, and the extent to which South Asia emerges as a major trading bloc.
This study concludes that the internal pressures in India still sharply limit the probability it will emerge as a major part of the global economy and major military power at anything like the rate and level of China. This is a possibility, but not a probability. India imposes too many limits on its own development.
At the same time, the tensions between India and Pakistan have led to several major conflicts and now involve substantial inventories of nuclear-armed missiles and aircraft. A major nuclear conflict between the two is unlikely, and its strategic impact on states outside of South Asia would be relatively limited, but it would be a human disaster of exceptional proportions and set a precedent for future nuclear arms races and conflicts.
Piracy and the Security of IOR Sea Lanes and Chokepoints
The overall security of maritime traffic throughout the region is another key strategic priority to the nations outside the IOR, and to the major trading nations and exporters within it. The most immediate near-term threat to the secure flow of shipping is piracy; a threat currently concentrated in the actions of Somali pirates in the west, and broader range of pirates and maritime criminals in the Strait of Malacca and Indonesia. This threat currently seems to be contained in both areas, although maritime crime in Indonesia presents serious problems and Somali piracy has not been ended.
The key question is whether broader threats will emerge because of the competition between Asian powers over maritime rights in the Pacific, and for strategic influence over the Strait of Malacca. Other threats include tensions between the US and China, the possible expansion of piracy or threats to maritime traffic because of instability in Yemen and other Red Sea states, and internal tensions within Egypt that could lead to attacks on shipping in the Suez Canal area.
The near term probability of such threats becoming major problems seems limited, but they may emerge as far more serious issues in the mid-to-long term.
Forces Outside the IOR: The US and China
The air-sea balances that affect the overall flow of trade and petroleum are a critical factor shaping the overall strategic impact of the IOR on the global economy. These balances are now dominated by the level of US power projection from outside the IOR.
The US is now the dominant outside power in the Gulf and Middle East backed by limited support from Britain and France. The US is also the dominant power in projecting air-sea forces into the Indian Ocean from the East. It is China and the Asian powers, however, which now are most dependent on Gulf oil exports and supplies from the IOR, and this dependence is projected to increase massively over the next few decades.
China is gradually becoming a modern blue water navy, and is playing a growing role in the Indian Ocean. It may become a competitor to the US and India. Japan and South Korea are even more dependent than China, but currently have limited power projection capability even near or beyond the Strait of Malacca.
Much depends on whether the United States will continue to use its forces to maintain stability in the IOR, and whether it sees its growing domestic energy output as reducing its need for strategic involvement in the Gulf and IOR. This analysis shows that the US remains committed to the defense of the Gulf and maintaining a major presence in the Indian Ocean region. There has been considerable confusion over the level of US commitment because of speeches referring to a “pivot to Asia,” US and P5+1 negotiation with Iran, claims of US energy independence, and the impact of sequestration and US defense budget cuts.
The new US strategic guidance issued in January 2012, however, gave the same priority to the Middle East as to the “rebalancing to Asia” – the phrase used in all US strategic documents and budget requests and one that refers to a 5-10% shift in US forces away from NATO Europe and to the US west coast and Pacific. This has been regularly reaffirmed in US budget guidance through FY2014, by USCENTCOM commanders, and by Secretary of Defense Hagel in his speech to the Manama Dialog in Bahrain during a trip to the Gulf in December 2013.
Secretary Hagel made it clear that the US negotiations with Iran were part of long standing P5+1 effort to halt Iran’s nuclear weapons programs. He said the US was involved in 6 month process to see if it could work through its differences with Iran and that it was it was his opinion that this represented a wise opportunity to probe in great detail the possibilities to see if Iran was serious about following through on its commitments in the nuclear area.
The US increased its forces in the Gulf in 2013, rather than cut them. It also is transferring over $70 billion worth of arms to Arab Gulf and neighboring Arab states. Currently, the US can rapidly deploy massive amounts of air and cruise missile power, base B-2 stealth bombers forward in areas like Diego Garcia, is upgrading much of its tactical airpower to F-35 stealth strike fighters, is introducing the Littoral Combat Ship to deal with threats like Iran, has offered THAAD anti-missile defenses to states like Qatar and the UAE, and Secretary Clinton had offered the same “extended deterrence” guarantees to the Gulf states that the US had once offered to Europe during the Cold War – an offer that remains on the table.
Secretary Hagel and other US officials noted that the US had stepped up its partnering and exercise activity with the Gulf States, and that moving US aircraft and ships to the West Coast and Pacific meant they could be used in the IOR and Gulf as well as the Pacific and reduced US dependence on the Suez Canal. They also noted that France and the UK had strengthened their exercise and partnership activities as well.
Other Key Trends Affecting the IOR
There is no easy way to summarize the overall mix of trends in the IOR. Chapter I does, however, provide an overview of the risks in governance and economics using a new Country Risk Assessment Model developed by Dr. Abdullah Toukan, a coauthor of this study. One of the key conclusions of this model, however, is the need to assess all of the key internal risks by country. While given subregions do share many common values, it is all too clear that neighboring states can present radically different levels of risk in radically different areas. In fact, a second key conclusion is the need to explore the full range of risk in depth and accept the complexity of doing so.
A third conclusion, however, can be drawn from the population data in Chapter II and the discussion of the individual countries in each Subregion that follows. Demographic pressures from massive population growth is putting a high degree of stress on the governance and economies of most regional states. The region is filled with countries with very young populations, and with the exception of a few Gulf and Southeast Asia states, these present major challenges in terms of education, job creation, and infrastructure.
Few countries report unemployment by age group and none report disguised unemployment – jobs which have no productive output or where more than one individual is doing a job that one person could perform. Measurements of poverty levels also do not reflect age, and are set so low that people well above the poverty level can be deeply dissatisfied with their lives. In many countries – even including some of the “wealthy” Gulf oil states -- this presents a serious problem in terms of being able to marry or acquire housing.
Other factors affect many countries. A larger population of older citizens presents different problems in terms of employment and income, and further increases the high dependency ratio caused by large numbers of children. Urbanization has reached far higher levels than the data on most countries reflect, with large numbers of rural poor living in the equivalent of slums. It has also deeply disturbed the previous social structure and traditional safety net, and has often pushed different religious, sectarian, and ethnic groups into new mixes – sometimes exposing serious fault lines.
Governance is weak and sometimes at the crisis point in many critical areas and states across the IOR. This not only compounds the problems caused by young populations and the resulting “youth bulge,” but the problems in adjusting to rapid social change and urbanization. It is often a key problem causing the alienation of young men in male-dominated societies, and most of the political structures in the region suppress opposition and dissent, make compromise and change more difficult, and to this alienation.
As Chapter I and the following chapters on each Subregion show, the interaction between weak governance and poor economic policies creates additional problems. Most governments in the region create serious barriers in terms of doing business and economic growth. State sectors are generally mismanaged, and many countries are deeply corrupt and pursue a form of crony capitalism that leads to poor distribution of wealth and often serious pressure on the middle class. The failure to fully integrate women into the political structure and economy adds to these problems, not simply as a human rights problem, but because it sharply restricts the productivity gain within the labor force and economy as a whole.
There are – as this study shows – notable exceptions. There are many countries that show progress in a number of areas, and some that are breaking out of the problems and traps of the past. The fact remains, however, that in many other countries, a combination of these problems, deep internal tensions and conflicts, interstate tensions and the risk of war with neighboring states, combine to create serious cumulative risks. Risks of this kind have already helped lead to explosive political upheavals and civil conflict in some IOR states.
The period up to March 1971 saw a rapidly increasing tempo. Commands would be grilled over their daily situation reports which he saw first thing every morning, directors and principal staff officers at Army Headquarters got to see his phenomenal memory when he would quote assurances given and not yet fulfilled, if he did not understand some subject or was dissatisfied with a draft, he would pick up the file and march at this customary 140 paces to the minute to the officer concerned who would get a shock seeing the Chief entering his office and sitting down opposite him to question and advise. The bureaucracy was cautioned that a case under the Chief's signature would bear notings by the Defence Secretary only. Concurrently, re-organisation and re-equipment of the Army was taken up. A massive construction programme was launched to overcome the huge deficiencies of accommodation. Orders were issued that allotted funds must be expended in full and in time, cautioning that the time honoured practice of saving allotted funds and then expecting a pat on the back would, instead, get a rap on the knuckles. A widely welcome change in the retirement age of personnel was that it would be by age replacing the existing ad-hoc tenure system wherein no one knew when the retirement axe would fall.
