15 April 2015 | Vol. 6, № 13. From the Editor’s Desk Dear FDI supporters, Welcome to this week’s edition of the not produce the results the electorate Strategic Weekly Analysis. demands. We begin this week in Pakistan, where we Moving to South Africa, we note that review the decision of the Pakistani Helen Zille, the leader of the main Parliament to launch a consultative opposition party, the Democratic Alliance, initiative with Turkey to find a diplomatic has announced her retirement, thus settlement to the violence in Yemen. This opening the door to a younger approach could, however, strain generation. Islamabad’s relationship with Saudi We conclude our coverage this week with Arabia. analysis of the joint statement by China, Moving across the border to India, we South Korea and Japan to strengthen co- examine the situation in which New Delhi operation on water-related matters could soon find itself – side-lined in Iran during the 7th World Water Forum held in by China, which has used the likely lifting South Korea this week. of international sanctions against Tehran to begin negotiations for Iran’s energy I trust that you will enjoy this edition of resources. the Strategic Weekly Analysis. We turn next to Indonesia and examine Major General John Hartley AO (Retd) Institute Director and CEO the demand that President Widodo Future Directions International reconfigure his Cabinet and replace some of its under-performing Ministers. Upon closer examination, however, it becomes apparent that reshuffling the Cabinet will ***** Pakistan Hesitates to Join Saudi-led Coalition Pakistan and Turkey have launched a consultative process to find a diplomatic solution to the Yemeni conflict. While it will likely join the Saudi Arabian-led coalition in a supporting role, Pakistan’s hesitation could potentially strain its strategic relationship with Saudi Arabia. Background Together with Turkey, Pakistan has launched a diplomatic initiative to find a solution to the conflict in Yemen. The meeting between Pakistani Prime Minister Nawaz Sharif and his Turkish counterpart, Ahmet Davutoglu, is the start of an intense consultation process that will include separate negotiations between Saudi, Turkish, Pakistani, and Iranian leaders in Ankara, Islamabad and Tehran. Despite having pledged ‘all support for the defence of Saudi Arabia’s sovereignty and territorial integrity’, Pakistan is yet to join the Saudi-led coalition of predominantly Sunni- majority Arab states in the fight against the Iranian-backed Shiite Houthi rebels, regardless of Saudi calls for its military support. Comment A Sunni-majority state, Pakistan shares close defence and strategic relations with the Sunni Kingdom of Saudi Arabia. Riyadh provides Islamabad with substantial aid donations to help support Pakistan’s fragile fiscal position. Saudi Arabia also hosts 2 million Pakistani workers who remit US$4.75 billion into the Pakistani economy annually. Aside from Sharif’s personal ties to Saudi royalty, Pakistan which has a significant military capability, is an important provider of military training and arms to Saudi Arabia and has provided Riyadh with military support in the past. Pakistan is, furthermore, the only Muslim state with a nuclear capability and is critical to Saudi Arabia as it seeks to check Iran’s growing regional influence. The current negotiations between Tehran and the P5+1 and European Union that are aimed at arriving at a nuclear agreement only add to Riyadh’s apprehensions. Given their relationship, it is not surprising that the Saudi leadership has asked and would welcome Pakistani support in Yemen. While not intending to strain relations with Saudi Arabia, Pakistan’s hesitation stems from a combination of issues. With a large Shia minority, Pakistan has an on-going problem with sectarian violence that could be aggravated if Pakistani policymakers are viewed as being Page 2 of 11 involved in a proxy war for regional influence between Saudi Arabia and Iran. Additionally, Pakistani forces are currently stretched between a conflict with extremist insurgency near the Afghan border and the defence of its border with India. Pakistan could also be apprehensive about having to place troops on its border with Iran, a country that has recently received a lot of positive interest from China, which is also Pakistan’s “all-weather friend”. Islamabad may, therefore, be torn between its ties with Riyadh and Beijing. The suggestion of some Pakistani parliamentarians to ask China to promote a ceasefire in Yemen at the United Nations further supports the idea that Pakistan could be gravitating towards China’s orbit. In this light, Pakistan’s hesitation to join the Saudi-led coalition is understandable. Despite this, it is likely that Pakistan’s relationship with Saudi Arabia and the broad regional support for the initiative will lead to its involvement in Yemen. Likely to be supportive in nature, Islamabad will postpone any involvement for as long as it doesn’t risk damaging its relationship with Riyadh. While Pakistan’s reluctance could strain relations with Saudi Arabia, this is likely to be limited given the importance of the relationship to both parties. Joash Pleiter Research Assistant Indian Ocean Research Programme ***** Post-Sanctions Iran: India in Danger of Being Marginalised A lack of geostrategic foresight has placed New Delhi in danger of being marginalised by China in Iran, no matter its on-going project in Chabahar Port. Background It is becoming increasingly apparent that in the wake of the negotiations on Iran’s nuclear programme between the P5+1 and Tehran and assuming the US Senate Foreign Relations Committee okays the agreement, the sanctions imposed on Iran will be lifted, most likely in stages from June. China, ever uber-realistic, has already positioned itself to take advantage of Iran’s energy resources. Beijing’s plan to bring Islamabad into the picture by promoting a pipeline between Iran and Pakistan will, moreover, not only side-line New Delhi in Iran but will also rub salt into the open wound this will cause India. Comment Speaking in Beijing recently, Iran’s Oil Minister, Bijan Namdar Zanganeh, thanked Beijing for standing with Tehran during the sanctions regime imposed by the West led by the US. Anticipating the phasing out of sanctions from June, China and Iran have moved quickly towards an even closer buyer-seller relationship than before. Beijing purchased an Page 3 of 11 estimated 550 thousand barrels of oil every day from Iran last year, despite the sanctions, enlarging its Iranian purchases by 28 per cent over 2013. It played a vital role in holding the Iranian economy together, a fact Mr Zanganeh noted. While Iran and China will undoubtedly enlarge and further develop their energy partnership, it is probable that Beijing will want to take advantage of this relationship to extend its influence into Iran and, thus, into the Middle East. China currently has a very strong relationship with Turkmenistan, purchasing a good deal of that Central Asian country’s gas. By developing its relationship with Iran, Beijing will only further its reach and influence in the region. China will, moreover, be keen to make Tehran an extension of the Beijing-Islamabad Economic Corridor. The validity of these ideas appears to be borne out by geopolitical events in the region and slightly further afield. Beijing has, according to media reports, initiated a project to pipe Iranian gas into Pakistan via the “Peace Pipeline”; a final agreement will be signed during President Xi’s forthcoming visit to Islamabad. This project, if true, will have several outcomes. It will alleviate Pakistan’s chronic energy shortage immediately. This will have the immediate effect of taking a lot of pressure off Nawaz Sharif. It will also give Sharif even more reason to be grateful to China; Pakistan has received nuclear technology and military equipment, including fighter aircraft, from Beijing. The pipeline will, furthermore, eventually be extended through the Karakoram Mountains into China, giving Beijing yet another source of energy, more regional influence and clout, and the perception of being a peace-maker by bringing Tehran and Islamabad, never the best of neighbours, closer together through trade. The pipeline will also herald a Pakistani shift from a Saudi Arabian to a Chinese orbit. This could explain Islamabad’s reluctance to comply with Riyadh’s request for troops and other military assistance as part of a Saudi-led coalition against the Houthi insurgency in Yemen. Whereas Islamabad has always been quick to comply with every Saudi request previously, this is a complete about-turn in its Saudi policy. A case in point, the reason the project to construct a gas pipeline between Iran and Pakistan did not go through earlier, even though an agreement had been signed by Tehran and Islamabad, was because Riyadh asked Islamabad not to uphold its end of the agreement. Islamabad complied with that request and Riyadh paid to Pakistan the US$1.5 billion it accrued as a fine for not going ahead with the project. That Islamabad now not only had agreed in principle to construct the pipeline at Beijing’s behest but has agreed to extend it to China demonstrates the strength of Chinese influence in Pakistan. There is yet another outcome of this pipeline and Pakistan’s and Iran’s turn towards China. First, Pakistan’s strengthened relationship with China puts it in a stronger position vis-à-vis India. This places New Delhi under more pressure just prior to Prime Minister Modi’s visit to China in May. It also gives Beijing more of a bargaining tool against New Delhi, especially at a time when Modi is showing signs of moving closer towards Washington, Tokyo and Hanoi. It gives the perception that Beijing has once again outfoxed New Delhi on the world stage. India’s own attitude towards Iran during the sanctions regime is as much to blame as China’s pro-active approach.