Driving Indo-Pacific in an Uncertain World
By Dr Prabir De
Indo-Pacific is in the limelight for quite some time now. It is a multipolar region, contributing more than half of the world’s GDP and population. Indo-Pacific is the lifeline of the entire world; world’s one-third flow of trade and energy passes through this region. The motivation for a larger bloc always comes from the sheer size, resources it owns, and the scope and size of the economies of scale that it can generate. Indo-Pacific has everything, but can it culminate into a formal bloc or a region that goes on building a better world?
Indo-Pacific got a new life when ASEAN in June 2019 and India in November 2019 came out with their respective Indo-Pacific visions. Earlier this week, the EU’s current Chair Germany presented the country’s Indo-Pacific strategy, and it is almost certain that the EU will come out with its Indo-Pacific vision soon. Some more countries such as Canada, Sri Lanka and South Africa are expected to launch their Indo-Pacific visions. Figure 1 illustrates countries within and outside the region that introduced Indo-Pacific visions with ASEAN being encouraged to take centre stage due to ASEAN’s most-ready regional architectures like ASEAN Regional Forum (ARF) and East Asia Summit (EAS). Today, countries and regions one after another are pledging to join the league. The immediate question that comes in our mind is how far are we from an Indo-Pacific order?
Richard Baldwin’s 1993 NBER working paper entitled “A Domino Theory of Regionalism”, offers an explanation. The domino effect is simple. When multilateral bodies fail to meet the countries’ expectations, regional integration sweeps the world like a wildfire or tsunami. Why are countries eager to join Indo-Pacific? The proximate answer is that the world is fully aware of the costs of the rise of only one country or a fixed set of countries and that risk must be avoided. A rules-based global order is what the world needs, which is another reason for the rise of Indo-Pacific. This is also caused by two idiosyncratic events multiplied by a domino effect. The triggering events are the US-China trade war and the global pandemic, which has an origin in China.
Richard Baldwin’s paper tenders an interesting analogy. He said, which I quote: “It is all about political equilibria”, which balance anti- and pro-membership forces, determine the country’s stances on the regional programme like Indo-Pacific. Now add economics in it. Business communities (e.g. traders and investors) are always a powerful pro-membership constituency. An event like Indo-Pacific that triggers closer integration within one or multiple existing blocs harms the profits of nonmember exporters, therefore stimulating them to boost their pro-membership (pro-Indo-Pacific) political activity. The extra activity alters the political equilibrium, leading some countries to join. This enlargement further harms nonmember traders and investors since they now face a disadvantage in a greater number of markets. This second wave brings forth more pro-membership political activity and further enlargement of the Indo-Pacific bloc. The new political equilibrium is marked by larger regional trading blocs. In the meantime, regionalism appears to spread like a wildfire. This might replicate in the case of Indo-Pacific.
India’s performance in Indo-Pacific has come out impressive. In India, Indo-Pacific is a benign and transparent initiative. India’s vision Security And Growth for All in the Region (SAGAR) has been introduced. PM Modi’s speech at Shangri La Dialogue in 2018 “Free, Open Prosperous and Inclusive Indo–Pacific” has further provided political direction. Besides economic relations, India’s security partnerships with countries in Indo-Pacific such as the US, Japan, Australia and several ASEAN countries, have expanded significantly in recent years. Both Indian External Affairs Minister and Foreign Secretary have kept the Indo-Pacific active, which is concurrently shaping the posture of international affairs. There have been regular meetings, particularly virtual meetings even in this Covid-19 period.
In 2019, ASEAN SKYCHURP on Indo-Pacific (AOIP) was introduced by ASEAN, and India has introduced the Indo-Pacific Oceans Initiative (IPOI). These two versions have added further fillip to the emerging Indo-Pacific construct. India-Japan Vision Statement dated 29 October 2018 has also provided crucial political support to Indo-Pacific. While highlighting the criticality of finding common solutions by working together, Prime Minister Modi proposed at the 14th East Asia Summit an IPOI for addressing challenges and ensuring a safe, secure and stable maritime domain.
With the announcement of the AOIP and IPOI in 2019, Indo-Pacific has started receiving attention globally. As an open global initiative, the IPOI draws on existing regional cooperation architecture and mechanisms to focus on seven central pillars conceived around Maritime Security; Maritime Ecology; Maritime Resources; Capacity Building and Resource Sharing; Disaster Risk Reduction and Management; Science, Technology and Academic Cooperation; and Trade Connectivity and Maritime Transport. AOIP and IPOI show commonalities and also the scope of cooperation, particularly in view of unfolding global order in the backdrop of ongoing Coronavirus pandemic. The National Maritime Foundation (NMF) of India came out with the first ever Indo-Pacific Report in 2019. A good set of literature on Indo-Pacific is needed to strengthen its intellectual base.
The success of the regional initiative also depends on bilateral as well as subregional relations. In July 2019, India joined ACMECS (Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy) as a Development Partner along with Australia, China, Japan, South Korea and the US.
Indo-Pacific has all ingredients to facilitate trade and investments. However, the region is highly heterogeneous in terms of economic size and level of development, with significant differences in security establishments and resources. It also faces complex challenges in terms of economy, security and the environment. The maintenance of peace, stability and security in seas; unimpeded lawful commerce; freedom of navigation and overflight and other internationally lawful uses of the oceanic and air space; and the protection and preservation of marine resources, as well as a sustainable and responsible fishery–framework, are all critical towards building a regional consensus on maritime security and cooperation in Indo-Pacific.
In a recent paper published in Journal of Economic Structures, this author along with Mohammad Masudur Rahman and Chanwahn Kim (“Indo-Pacific cooperation: What do trade simulations indicate?”, Journal of Economic Structures, Vol. 9, No. 45, 2020) has investigated the potential economic effect of ‘Indo-Pacific’ regional economic cooperation and compares with the extended CPTPP. The Computable General Equilibrium (CGE) results show that the quadrilateral alliance between the US, Japan, Australia, and India shows although a substantial economic gain whilst South and East Asia join with the Indo-Pacific cooperation, the economic benefit would be enormous. The findings also indicate that South and East Asian improved trade facilitation could bring huge gain as a large part of Indo-Pacific trade has remained unrealised. The trade transaction cost is one of the major trading barriers prohibiting the growth of Indo-Pacific intra-regional trade. This paper reinforces that improvement in infrastructure and connectivity that leads to less trade transportation costs should be a necessary step to realise Indo-Pacific trade potential.
The recent special issue of the Journal of Asian Economic Integration (JAEI), entitled “Indo-Pacific: A New Paradigm”, presents six freshly written research articles by eminent scholars on Indo-Pacific. These six papers review critical aspects of Indo-Pacific, from concept to sectoral dynamics to country and regional narratives. This is the first publication of a special issue on Indo-Pacific by any frontline publisher. For example, Takenori Horimoto in his paper entitled “Indo-Pacific Order and Japan-India Relations in the Midst of Covid-19” has called for stronger cooperation between Japan and India to maintain peace and stability in Indo-Pacific regional order. He has suggested the creation of a free, open, inclusive, and democratic Indo-Pacific. There should be some mechanisms based on principles of multilateralism, e.g. Quad-Plus, not only involving the four countries: like-minded countries should also be included. In this way, we can find a silver lining beyond Covid-19.
With countries from ASEAN, SAARC, BIMSTEC, EAS, EU and NAFTA joining the group, this free, open and inclusive Indo-Pacific is likely to scale up the regional development in post-Covid, provided countries do not repeat their mistakes in existing regional cooperation initiatives and devote quality time to build a better world for all. Security is not the only vehicle for the diffusion of integration, rather the most important mechanism is geographical and cultural proximity. Besides, it is the economy that would drive the Indo-Pacific in coming days.
Indo-Pacific countries have ample scope for further deepening the integration process in this Covid-19 period. Strengthening the economic integration requires a shared strategic vision, political will and strong commitment, which are the keys for the success of Indo-Pacific. Without doubt, ASEAN centrality would be a major driving force for speeding up cooperation within Indo-Pacific. Multi-dimensional regional cooperation within Indo-Pacific would not only foster economic relations but would, in addition, strengthen regional capacity and enhance regional capability while dealing with the region’s complex security challenges. To drive the initiative in this era of disruptions, Indo-Pacific countries, who have introduced their respective visions, may call a Ministerial meeting and a Summit thereafter. A JWG may be formed to design the Indo-Pacific blueprint and a POA suitably.
(Author is Professor and Head, ASEAN-India Centre (AIC) at Research and Information System for Developing Countries (RIS), New Delhi, and also Honorary Adjunct Fellow, National Maritime Foundation (NMF), New Delhi. Views are the author’s own.)
DISCLAIMER : Views expressed above are the author’s own.