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The Indian Ocean Region: a Strategic Net Assessment

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The Indian Ocean Region: a Strategic Net Assessment The Indian Ocean Region: A Strategic Net Assessment Assessment Net A Strategic The Indian Ocean Region: AUTHORS Anthony H. Cordesman Abdullah Toukan With the assistance of Daniel Dewit Garrett Berntsen A Report of the CSIS Burke Chair in Strategy AUGUST 2014 1616 Rhode Island Avenue NW | Washington, DC 20036 t. 202.887.0200 | f. 202.775.3199 | www.csis.org CORDESMAN AND TOUKAN CORDESMAN ROWMAN & LITTLEFIELD Lanham • Boulder • New York • Toronto • Plymouth, UK 4501 Forbes Boulevard, Lanham, MD 20706 t. 800.462.6420 | f. 301.429.5749 | www.rowman.com Cover photo: Shutterstock.com. The Indian ISBN 978-1-4422-4020-9 ROWMAN & LITTLEFIELD Ë|xHSLEOCy240209z v*:+:!:+:! Ocean Region A Strategic Net Assessment Blank The Indian Ocean Region A Strategic Net Assessment Authors Anthony H. Cordesman Abdullah Toukan With the assistance of Daniel Dewit Garrett Berntsen A Report of the CSIS Burke Chair in Strategy August 2014 ROWMAN & LITTLEFIELD Lanham • Boulder • New York • Toronto • Plymouth, UK About CSIS For over 50 years, the Center for Strategic and International Studies (CSIS) has worked to develop solutions to the world’s greatest policy challenges. Today, CSIS scholars are providing strategic insights and bipartisan policy solutions to help decisionmakers chart a course toward a better world. CSIS is a nonprofit organization headquartered in Washington, D.C. The Center’s 220 full-time staff and large network of affiliated scholars conduct research and analysis and develop policy initiatives that look into the future and anticipate change. Founded at the height of the Cold War by David M. Abshire and Admiral Arleigh Burke, CSIS was dedicated to finding ways to sustain American prominence and prosperity as a force for good in the world. Since 1962, CSIS has become one of the world’s preeminent international institutions focused on defense and security; regional stability; and transnational challenges ranging from energy and climate to global health and economic integration. Former U.S. senator Sam Nunn has chaired the CSIS Board of Trustees since 1999. Former deputy secretary of defense John J. Hamre became the Center’s president and chief executive officer in 2000. CSIS does not take specific policy positions; accordingly, all views expressed herein should be understood to be solely those of the author(s). © 2014 by the Center for Strategic and International Studies. All rights reserved. ISBN: 978-1-4422-4020-9 (pb); 978-1-4422-4021-6 (eBook) Center for Strategic & International Studies Rowman & Littlefield 1616 Rhode Island Avenue, NW 4501 Forbes Boulevard Washington, DC 20036 Lanham, MD 20706 202-887-0200 | www.csis.org 301-459-3366 | www.rowman.com Table of Contents EXECUTIVE SUMMARY. ..................................................................................................................... IX I. INTRODUCTION .............................................................................................................................. XVI DEFINING THE REGION ............................................................................................................................. 1 Subregion by Subregion and Country by Country ............................................................................... 2 STRATEGIC INTERESTS AND RISKS ........................................................................................................... 4 Regional Contested Spaces .................................................................................................................. 5 Major Strategic Issues and Risks ......................................................................................................... 6 THE COUNTRY RISK ASSESSMENT MODEL .............................................................................................. 7 Methodology Overview of the Country Risk Assessment Model .......................................................... 7 QUALITY OF GOVERNANCE ...................................................................................................................... 8 MACROECONOMIC ENVIRONMENT ......................................................................................................... 20 Comparing Ease of Doing Business, Global Competitiveness, and Macroeconomic Stability Rankings ............................................................................................................................................. 24 Comparing Ease of Doing Business and Governance Rankings ........................................................ 28 THE QUALITY OF HUMAN LIFE: THE UNDP GENDER INEQUALITY INDEX AND THE HUMAN DEVELOPMENT INDEX 2012 ................................................................................................................... 31 The Human Development Index ......................................................................................................... 31 Gender Inequality Index ..................................................................................................................... 33 USING THE COUNTRY RISK ASSESSMENT MODEL ................................................................................. 36 THE NEED FOR BETTER ECONOMIC DATA AND PLANNING .................................................................... 36 II. DEMOGRAPHIC TRENDS IN THE IOR REGION ...................................................................... 38 Key Population Trends ....................................................................................................................... 38 THE NEED FOR BETTER DATA AND PLANNING ...................................................................................... 43 III. GLOBAL ECONOMIC GROWTH AND ENERGY TRENDS AFFECTING THE IOR REGION .................................................................................................................................................... 55 IEA ESTIMATES ...................................................................................................................................... 55 THE EIA ESTIMATES ............................................................................................................................... 57 OECD (Developed) Economies ...................................................................................................................................... 57 Non-OECD Developing Economies: Asia ...................................................................................................................... 58 Non-OECD Developing Economies: Africa and Middle East ........................................................................................ 59 ESTIMATING THE IMPACT OF GLOBAL ENERGY TRENDS ....................................................................... 64 THE IMPACT OF IOR ENERGY TRENDS ................................................................................................... 68 THE IMPACT OF GULF PETROLEUM PRODUCTION AND EXPORTS .......................................................... 70 SCENARIOS FOR ESTIMATING GULF PRODUCTION AND ITS IMPACT ON THE IOR .................................. 73 IRANIAN OIL PRODUCTION AND EXPORTS, SANCTIONS, AND THE P5+1 ................................................ 75 THE PETROLEUM “PIVOT TO ASIA” AND ITS IMPACT ON IOR SECURITY ............................................... 76 THE IMPACT OF INCREASES IN ASIA DEMAND FOR IOR PETROLEUM AND OTHER LIQUIDS ................. 79 SMALLER, BUT SIGNIFICANT INCREASES IN ASIA DEMAND FOR IOR RISING ASIAN GAS PRODUCTION ................................................................................................................................................................ 83 AMERICAN STRATEGY IN THE IOR AND US “ENERGY INDEPENDENCE” ............................................... 91 The Impact of Increased American Production of Petroleum and Other Liquids.............................. 93 The Impact of Increase US Gas Production ....................................................................................... 95 US OFFICIAL ESTIMATES OF ENERGY DEPENDENCE ON IMPORTS, THE IOR. MENA OIL, AND THE GULF ....................................................................................................................................................... 98 THE BROADER NATURE OF US STRATEGIC DEPENDENCE ON OIL IMPORTS ........................................ 103 IF THE US FALTERS OR WITHDRAWS ................................................................................................... 104 iv | Anthony H. Cordesman and Abdullah Toukan MARITIME TRAFFIC AND PETROLEUM .................................................................................................. 106 Strait of Hormuz and Pipeline Options ............................................................................................ 110 Westward Flow Through the Sumed Pipeline and Suez Canal ........................................................ 110 Eastern Flow Through the Strait of Malacca ................................................................................... 111 Other Trade Flows in the IOR .......................................................................................................... 111 IV. THE GULF SUBREGION ............................................................................................................... 112 IRAN, AND THE US AND ARAB GULF STATES ....................................................................................... 116 The US and the Southern Gulf States ..............................................................................................
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