Strategic Hedging:

*This article has been featured in the State of the World publication, Issue No. 01, April 2023

With the current Russia-Ukraine War capturing international headlines over the past six months, it is easy to forget that other parts of the world have their ongoing dimensions of strategic rivalry in far-off and easily forgotten places.

One of those places always smoldering in the background is the micro-states of the Indo-Pacific. But before we begin looking at this in more detail, let us try to understand what the region of the Indo-Pacific is.

What is the Indo-Pacific?

During the Cold War (1947-91), the early part of this epoch saw nascent independence movements coalesce into waves of decolonization taking place during the 1960s-80s (1). On the whole, most of these independence movements were relatively peaceful, with metropolitan powers (the United Kingdom, the United States and Australia) recognizing the natural end of the institution of colonialism. But the Cold War also saw this region, because of its small, fragmented population, weak governance, and distance from heavily populated centers, being used by the West as a testing range for its nuclear weapons. These atomic weapons tests caused untold social damage by uprooting people from their traditional homes and resettling them elsewhere, not to mention the ecological damage caused by nuclear testing. France still maintains active colonies in this part of the world, with Paris simply turning its colonies into extensions of France itself by granting French citizenship to its Indian Ocean and Pacific territories.(2) New Caledonia poses some unique challenges to this French model, with an active independence movement living alongside a significant French population. The United States, on the other hand, managed to integrate its North Pacific territories (the Marshall Islands, Wake Atoll, Midway Atoll, Palau, the Federated States of Micronesia, the Mariana Islands and American Samoa) as ‘U.S. Territories’ without the benefit of belonging to the actual U.S. body politic. (3)

The modern term ‘Indo-Pacific’ was first coined by the late former Japanese Prime Minister Shinzo Abe when he addressed the Indian Parliament in 2007 on the ‘confluence of seas’. Abe believed that "peace, stability, and freedom of navigation in the Pacific Ocean are inseparable from peace, stability, and freedom of navigation in the Indian Ocean".(4) This idea matured into the Japanese and U.S. policy of a Free and Open Indo-Pacific (FOIP).

Japan, a resource-poor industrial powerhouse, depends on long sea lines of communication (SLOC) to access trading partners and resource-rich areas. For Japan to prosper, it requires a peaceful international maritime domain free from conflict. But when looking at the Small Island States (S.I.S.) that inhabit both the Indian and Pacific maritime spheres, it is perhaps not so apparent that combining these two oceans into one global strategic domain makes sense for understanding the local dynamics of the S.I.S. Indeed, a quick survey will determine that there are genuine differences between the Indian and Pacific Oceans.

The S.I.S. of the Indian Ocean Region is populated by Indian, Arab, and African people, with some Polynesian, Malay, and European minorities. Among the S.I.S. of the Indian Ocean Region, cultural/religious sentiments are largely split between Christian Madagascar (23 million) and Buddhist Sri Lanka, (5) with significant Muslim and Hindu minorities scattered among this region’s S.I.S. The combined population of these S.I.S. is approximately 50,144,505, with the two largest island-states, Madagascar, and Sri Lanka, commanding the region’s largest populations. (6)

On the Pacific side of the ledger, we have many of the S.I.S. populated by Polynesian, Melanesian, and Micronesian people with East Asian, Indian, and European minorities. The largest population centers in the Pacific are the country of Papua New Guinea, with over 6 million and the U.S. state of Hawaii, with over 1.4 million. Cultural/religious sentiment among the Pacific’s S.I.S. is almost exclusively Christian, with a combined regional population of approximately 11,607,066. New Zealand, an advanced economy and regional power, was not included in this tally. On the other hand, Hawaii is geographically a small island even though it is a state of the United States and therefore was included in this count. (7)

Commonalities between the Indian and the Pacific Ocean Small Island States

But despite these demographic differences, the S.I.S. of the Indian and Pacific Oceans share several characteristics that increase their vulnerabilities to great power competition:

1. The small land size is often very isolated from other regional S.I.S. and actual or potential great power security guarantors.

2. S.I.S. populations are not well linked internally due to poor infrastructure that is highly vulnerable to storm activity, tidal surges and other environmental conditions brought about by climate change, such as rising seas.

3. Distance to international markets often hampers local authorities from getting national resources to consumers in developed economies without external assistance.

4. Non-existent or tiny local paramilitary forces due to sparse local populations.

5. Tribal politics often leaves local societies vulnerable to the manipulation or exploitation by great power strategic or commercial interests and transnational criminal groups. (8)

What makes the Small Island States of the Indian and Pacific Oceans so crucial to the functioning of the developed and developing economies are the valuable marine resources in the waters surrounding these islands. In a word, fish. The Indian and Pacific Oceans are home to some of the world’s largest and most significant fish stocks. However, the Indo-Pacific’s fragmented, poor, and weak governments cannot protect their often vast sovereign maritime surrounds without the assistance of larger ‘outside powers’ such as Australia, New Zealand, France, India, the United States and Chile. Complicating matters is that these larger maritime powers are often involved in disputes outside of the Indo-Pacific domain and can only devote a tiny percentage of their available military power to assist in the protection of sovereign Small Island State territory and the enforcement of sustainable fishing practices.

Sino-American Competition

Then, layered upon this is the increasing great power competition between the United States and the People’s Republic of China (PRC). 

These two international powers represent two very different forms of capitalism and society. One in which political power is disaggregated and commercial power is separated from the state – the U.S. versus another where political power is highly centralized, society continually surveilled, and the line between private enterprise and state-owned enterprise is blurred – the PRC. 

Since 2019 competition between the U.S. and the PRC has intensified. Many international relations scholars and commentators are now openly speculating about the prospect of war between these countries, especially over the island-state of Taiwan or in the South China Sea. Among the Small Island States of the Indian and Pacific Oceans, this strategic competition is seeing a build-up of Chinese commercial ties in countries such as Sri Lanka and the Maldives in the Indian Ocean and, in the Pacific, the Solomon Islands. Currently, the Chinese have only one overseas base in the tiny east African country of Djibouti, where this base is close to bases from Saudi Arabia, Japan, the United States, and several European countries. The Chinese base in Djibouti is to assist in the international monitoring and interception of pirates operating in the Arabian Sea and along the Indian Ocean littoral, especially along the coast of Somalia. In addition, many Western commentators have long speculated that China wishes to create a network of naval bases stretching from the South China Sea to Africa – the so-called String of Pearls.(9) Some suggest that such naval bases are currently being built in Pakistan, the Maldives and Cambodia. However, Chinese internal economic troubles such as the current property market and banking crisis may see any such external developments, if they indeed exist, to be temporarily suspended with the Chinese Communist Party’s (CCP’s) focus on regime survival, not on strategic expansion. 

The Solomon Islands

In the Pacific, a Chinese diplomatic push into the Solomon Islands to develop a security agreement with Honiara has alarmed both the United States and Australia. To the government of the Solomon Islands led by Manasseh Sogavare, Honiara’s engagement with the People’s Republic is a sovereign matter designed to assist in bolstering local security forces with small arms and training. Western countries, especially Australia, is concerned that any such agreement is considered interference in the sovereign decision-making of the Solomon Islands. To Canberra and Washington, the Sogavare position paves the way for China establishing a strategic foothold on the island-state with the prospect of developing maritime bases that could threaten the West’s SLOC between the United States and Australia. There is little direct evidence of China wanting to alter the strategic balance of power in the South Pacific. However, Beijing has motives to extend its commercial reach into this region to secure exclusive fishing and other resource deals to exclude its East Asian economic competitors. There is also a motive to reduce the diplomatic significance of ‘rogue province’, Taiwan. Currently, 15 countries in the world recognize Taiwan as a sovereign country. Until 2019, the 16th country that had done so, the Solomon Islands, dropped its recognition of Taiwan in favor of China. This change was unpopular for many Solomon Islanders who had been comfortable with their recognition of Taiwan. Sogavare’s move publicly declared his pro-Chinese bias, a point underscored by his 2019 decision to join China’s Belt and Road Initiative (BRI). Australia’s position not only in the Solomon Islands but also in the Pacific was generally dealt a blow. As the region’s largest aid donor and strategic guarantor, Australia saw China’s increasing presence in the Solomon Islands as a challenge to its prestige and status. Together with the Chinese origin of COVID-19 and Australian calls for an independent international enquiry into the origins of the disease, meaning an intervention into the Chinese city of Wuhan, Australian-Chinese relations nose-dived. 

For the United States, the Solomon Islands conundrum presents a different order of problems. As part of a global struggle for influence between American and Chinese interests, any move by the Chinese to extend their strategic footprint at the expense of Washington or its allies (Australia) is generally seen in zero-sum terms. China’s establishment of a minor security agreement with the Solomon Islands opens the possibility for further expansion of this agreement by, for instance, arranging a military basing agreement between Beijing and Honiara. This could see the People’s Liberation Army Navy (PLAN) warships traverse to and patrol the waters of this critical S.I.S. Why is this a problem? Because American strategy has, up to now, been about preventing PLAN warships from exiting China’s self-declared Nine-Dash Line, limiting Chinese maritime power to the East and South China Seas. If the Solomon Islands were to invite Chinese forces to set up an extensive naval base on its territory, PLAN warships and aircraft might be able to interdict US Navy or merchant ships on route to Australia and conduct deep surveillance in the waters off the eastern Australian coast where most of Australia’s significant population and commercial centers are located.

The new Albanese government has changed tack in attempting a quieter form of diplomacy to tempt the Sogavare government back to better terms with Australia. Whether he can be persuaded to drop the Chinese is still unclear, considering that Sogavare seems determined to carve out an independent foreign policy position straddling the wants and desires of Beijing and Canberra. If Sogavare succeeds, it may set up a precedent for other Pacific island-states to diversify their ties away from traditional security guarantors, commercial benefactors, and aid donors. One of the attractive things about accepting Chinese aid is that there are usually no political strings attached. Western aid is always based on meeting good governance benchmarks to curtail corrupt practices – tied aid. According to Western observers, untied aid is considered a challenge to the sovereign dispensation of aid through the tribal system, a system steeped in corrupt behavior. However, at the commercial level, the Chinese are known for the practice of debt-trap diplomacy. This term is relatively controversial since some scholars doubt the Chinese are doing this. Nonetheless, it is the practice of a creditor nation tempting poorer countries into unsustainable loans so when the poor recipient state experiences financial difficulty, the lender can seize national assets for its exclusive use.

Sri Lanka

China is Sri Lanka’s largest creditor nation. But the opaque lending practices of China tend to surround such economic agreements in mystery, especially how debts are likely to be paid off and what the terms of particular loans are. The current Sri Lankan economic crisis has been partly blamed on Chinese lending to a completely mismanaged Sri Lankan financial sector and treasury. For strategic observers, Sri Lanka’s Hambantota port is a case in point. From the Christian Science Monitor, Ann Scott Tyson says: "China loaned Sri Lanka $1.26 billion to finance the Hambantota port from 2007 to 2014. As Sri Lanka’s debts mounted, China’s state-run firm China Merchants Port Holdings took over management of the port under a 99-year lease for $1.12 billion, which Sri Lanka used to strengthen its foreign reserves".(10) And if one doubted China using such economic facility for strategic gain, the visit by the PLAN’s missile tracking ship, the Yuan Wang 5, to Hambantota on August 16, 2022,(11) demonstrated rather clearly that this ship’s visit to a Sri Lankan port under Chinese management symbolized an extension of Chinese power into the Indian Ocean. The Yuan Wang 5 is part of China’s Strategic Support Force and tracks Chinese civilian rockets, satellites, and ballistic missiles. As a dual-use ship, it is difficult for China’s strategic competitors to prevent the deployment of these vessels in international waters when they might be supporting China’s civilian space program. Though the Yuan Wang 5’s visit sparked diplomatic protests from Indian and American officials, the most significant concern is the potential of severe maritime competition between India and China. India, the regional hegemon of the Indian Ocean, sees its uncontested naval power as a guarantee of its strategic influence and long-term security. A view shared by its Quad partners, the U.S., Japan, and Australia. Indeed, any Chinese move to consolidate its military capacities in the Indian Ocean through debt trap diplomacy is considered an existential threat to Indian and Western interests.

Great Power Rivalry

The Indo-Pacific will remain a place of intensifying great power rivalry, especially between U.S. and Chinese interests but also between China and established Indian and Pacific Ocean powers such as India, Australia, and France. 

What makes this so compelling as a great power cockpit of the 21st Century is that the S.I.S. of the Indo-Pacific has lower population density, weak governance, distance from significant population and industrial centers and proximity to resource-rich marine areas. In some cases, especially in the Pacific theatre, there are pre-existing domestic political schisms that external powers can exploit. The S.I.S. of the Indo-Pacific usually lies close to critical SLOCs making it a relatively low-cost, high-impact area for intervention, whether commercially or strategically.

This article shows that the PRC has made some strides in the Solomon Islands and Sri Lanka. However, whether it can consolidate there and move beyond will depend on the CCP’s abilities to get on top of domestic economic issues, which for the moment, might well focus the minds of the Chinese leadership before it can resume external strategic expansion.

References:

(1) See: (ed.) Shand RT, The island states of the Pacific and Indian Oceans: anatomy of development, Development Studies Centre Monograph No. 23, The Australian National University, Canberra, 1980

(2) Overseas France. (2022, August 29). In Wikipedia. https://en.wikipedia.org/wiki/Overseas_France

(3) Under Compacts of Free Association. For more information see: Smith A., U.S. Compacts of Free Association Are Key to Deterring a Taiwan Contingency, The Diplomat, August 9 2022, https://thediplomat.com/2022/08/us-compacts-of-free-association-are-key-to-deterring-a-taiwan-contingency/ (date accessed: 20/09/2022)

(4) Abe S., Act now to safeguard freedom of the seas, Financial Review, republished from, Project Syndicate, 2012, www.project-syndicate.org, 20/12/2012 (date accessed: 20/12/2022)

(5) 70 per cent or 15 million out of the island’s total population of 22 million

(6) Ibid., pp.140-142.

(7) Bruni J., "Small Island-States (SIS) of the Indo-Pacific, The African & Latin American Littorals & The Poles", Bruni J., Olney DJ, Jain PC, Ludwig JZ & Tyrrell PJ, The strategic implications of changing dynamics & regional partnerships on major power competition in the Indo-Pacific, A Report Funded by the Australian Department of Defence through its Strategic Policy Grant Program (SPGP), Ovato Press, Melbourne Victoria, 02/11/20, pp. 131-132.

(8) Ibid., pp.140-142.

(9) Ashraf J. "String of Pearls and China’s Emerging Strategic Culture." Strategic Studies, vol. 37, no. 4, 2017, pp. 166–81. JSTOR, https://www.jstor.org/stable/48537578. Accessed 19 Sep. 2022.

(10) Tyson AS., Port politics: How China fits into Sri Lanka’s economic crisis, Christian Science Monitor, August 19, 2022, https://www.csmonitor.com/World/Asia-Pacific/2022/0819/Port-politics-How-China-fits-into-Sri-Lanka-s-economic-crisis (date accessed: 20/09/2022)

(11) Ibid.