Towards a more stable security environment in the Indian Ocean region Policy Recommendations by the Quadripartite Commission on Indian Ocean Regional Security Policy Recommendations by the Quadripartite Commission on the Indian Ocean Regional Security Towards a more stable security environment in the Indian Ocean region Appendix Appendix Policy Recommendations by the Quadripartite Commission on the Indian Ocean Regional Security Towards a more stable security environment in the Indian Ocean region Appendix The Sasakawa Peace Foundation in cooperation with Australian National University Vivekananda International Foundation Sasakawa Peace Foundation USA Copyright©2017 by The Sasakawa Peace Foundation All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission of the publisher, except for the purpose of review written for inclusion in a magazine, newspaper, broadcast, or online service. International Peace and Security Department The Sasakawa Peace Foundation The Sasakawa Peace Foundation Bldg. 7F 1-15-16 Toranomon Minato-ku, Tokyo, JAPAN Phone: +81-3-5157-5209 URL: https://www.spf.org/ Printed at Urban Connections Co., Ltd. Contents FY2016 Chapter 1 India’s Role in South Asian Economic Dynamism ......................................................................... 7 Makoto Kojima Chapter 2 Energy Security in the Indian Ocean ............................................................................................. 39 Jun Arima Chapter 3 Commercial Shipping in the Indian Ocean: Safety, Security and Structures .................................................................................................... 91 Vijay Sakhuja Madhumita Kothari Chapter 4 Infrastructure Development in the Indian Ocean Region: Geo-strategic Challenges and Opportunities for Cooperation ..................................................... 109 Meena Singh Roy Rajorshi Roy Chapter 5 Traditional and Non-Traditional Security Issues in the Indian Ocean ........................................ 179 Nilanthi Samaranayake Chapter 6 China’s One Belt One Road Initiative: Its Strategic Impact on South Asia and the Indian Ocean Region ...................................................... 197 David Brewster FY2017 Chapter 7 Chinese Capabilities in the Indian Ocean: “Seeing an Acorn, and Imagining an Oak Tree.” ........................................................................ 213 Michael McDevitt Chapter 8 Understanding China’s Naval Strategy in the Indian Ocean ....................................................... 233 David Brewster Chapter 9 Enhancing Maritime Connectivity in the Indo-Pacific Region —Peacetime Military Engagement from the Sea— .................................................................... 249 Takuya Shimodaira Chapter 10 Cooperation Framework in the Indian Ocean for Regional Powers to Meet the Challenges of Non-Traditional Threats .......................................................................................................... 263 Vijay Sakhuja Chapter 1 India’s Role in South Asian Economic Dynamism Chapter 1 India’s Role in South Asian Economic Dynamism Makoto Kojima Professor Emeritus, Takushoku University Introduction Currently, South Asian countries are attracting world attention because of their favorable economic performance. Since 1990, the Indian economy has shown an average growth rate of 6.5 percent, propelling India to become the third-largest economy in 2008, measured on a PPP basis. India has already shown faster growth than China. Recently, India and other South Asian countries have reported higher GDP growth rates than other emerging regions. Given that South Asia is the most populous region in the world, and that their population is expected to increase into the future, the future of the region depends on whether and how economic dynamism can be cultivated in the region. India is expected to play a decisive role in uplifting the South Asian region as a world growth center. India has enjoyed services-led growth since the early 1990s, which differs from the path of economic development followed by many other countries. Currently, manufacturing is promoted under the “Make in India” initiative, with its economic growth becoming more resilient under prudent macroeconomic management. Many oppor- tunities and challenges exist in the area of infrastructural development, where collaboration with Japan might be particularly productive. Considering the current remarkable performance of the Indian economy under a huge domestic market, there is reason to believe that India can assume a path of high economic growth that is firmly based. Given that South Asia’s integration with the remainder of the world is weak and that its interdepen- dence within the region is quite low compared with that found in other regions, another important issue is how to enhance regional connectivity to bring about spillover effects throughout the region. This study was undertaken to assess the possibilities of Indian development into a driver of global growth in the near future and to elucidate prospects of infrastructure development for enhancing regional connectivity in and around South Asia. I．Emerging South Asian Economy 1. Background of Favorable Economic Performance Recently, the emerging South Asian economy has received the attention of the world. Reflecting the vigorous expansion of the Indian economy, GDP growth rates in South Asia are at the highest levels among all economically developing regions. Its GDP growth rates, which were 7.0 percent in 2015 and 6.6 percent in 2016, are forecast to rise to 7.3 percent in 2017 (Table 1.1). In addition to India, both Pakistan and Bangladesh have posted strong growth figures recently. Total foreign direct investment (FDI) inflows to South Asia increased by 22 percent to $50 billion in 2015, of which US$44 billion were allocated to India. Since the early 1990s, the Indian economy has emerged as a leading economic power, attracting world attention. 7 Following their high growth, poverty reduction has also been pursued in South Asia since the 1990s. Although almost half of South Asians were living below the poverty line in 1990, that figure was reduced to less than 15 percent in 2015. The absolute number of poor people declined steeply from 568 million in 1999 to 231 million in 2015 (Figure 1.1). In Bangladesh, for example, food self-sufficiency was ultimately achieved around 2000. The labor-intensive garments industry made way for that nation’s high economic growth and improvement of the social and economic status of women. International trade, migration, investment, and technology transfer are all important and interconnected facets of globalization. Above all, migration has been an important aspect of life throughout South Asia. The movement of people across national boundaries facilitates movement of goods, ideas, and capital by lowering costs, informational asymmetries, and legal barriers. Migrants not only provide a large and reliable source of external finance for the homeland. They are also a source of technical and managerial expertise that is usually scarce in the homeland. According to World Bank data, as of 2013, the global stock of migrants amounted to 247.2 million people (World Bank, 2016b). South Asia has 37.1 million emigrants. India ranks as the top 8 Chapter 1 India’s Role in South Asian Economic Dynamism emigrant provider in the world, with 13.9 million emigrants, followed by Bangladesh with 7.6 million, and Pakistan with 6 million. Remittance inflows to South Asia amounted to US$115.5 billion in 2014, accounting for 19.5 percent of the world’s total remittance flows. India is also the world’s top remittance receiving country, accepting US$ 72.2 billion in 2015, whereas Pakistan and Bangladesh respectively received US$ 20.1 billion and US 15.8 billion. The main destination countries of South Asian emigrants include the United Arab Emirates (UAE), Saudi Arabia, North America, and the United Kingdom. South Asian migrants include not only low-skilled laborers but also numerous highly skilled professionals. Figure1.2 Top10 Remittance-receiving Countries, 2015 India has a large network of overseas Indians. Currently, overseas Indians including Non-Resident Indians and Persons of Indian Origin are nearly 27 million people (Table 1.2). They are spread widely throughout the world in economically developed and emerging countries. The United States is the major host country, where as many as 4.46 million overseas Indians reside. These overseas Indians have a rising economic and social profile in regions throughout the world, contributing to the economic development of the host countries through activities in intellectual and innovative spheres. They play the role of a bridge that is important for providing knowledge, skills, and capital, and a market to the mother country. Given the cultural diversity of the country, Indians easily acquire their skills through management of cross-cultural operations, which gives them an edge in managing operations across diverse locations (Kumar, 2008). The global network of overseas Indians is itself a benefit that contributes greatly to Indian economic development. 9 Since Independence, India has established a parliamentary democracy. To date, 16 general elections have been held successfully at the central level. Elections are also held at state, municipal, and panchayat levels. The rule that government can be replaced only through election has been firmly established.