In the latter half of the twentieth century, in a world dependent on energy, the Indian Ocean, with a significant amount of the world's natural resources and its unique geography, has rightfully assumed centre stage. Home to critical energy transportation routes, the Indian Ocean Region (IOR), has seen extra regional powers fight two energy wars in the last couple of decades. Security concerns including piracy, rising fundamentalism and various forms of illicit trafficking have led to continued military presence of extra regional powers in the region on the pretext of protection of trade and energy routes.
The IOR is home to over two billion people living in over 30 littoral nation states with diverse levels of economic development. Jutting out into the Indian Ocean, India is one of the ascending powers of this region. On account of its increasing economic clout and geographical position, India considers the IOR as an immediate area of interest and seeks to influence events therein. A booming economy and increasing energy demands mean that the IOR is also an area of immediate interest to the world's second largest economy - China.
National policies of both countries exhibit distinct efforts to exert their influence in this region. These concurrent national interests have led most analysts to declare the IOR as a source of conflict between India and China, with only the means and timeframes being in question. However, a closer examination of other factors leads to a non-intuitive answer that the IOR is more likely to be the theatre of a conflict than a cause of it.
aim
This paper advocates that simplistic models of only cooperation or only conflict between India and China in the IOR are not borne out by the intricacies of engagement. The future will in most likelihood be an amalgam of military peace and intense politico-economic competition. In any case, it would be an outcome of interplay between various factors that will determine cooperation or conflict.
new found interests in the indian ocean region
It is important at the outset to briefly examine history to put into perspective the new found interests of India and China in the IOR.
Chinese Interest in the IOR
The Chinese Heartland. China is an old and ancient civilization with over 4000 years of continuous recorded history [1] . The regions surrounding the Chinese heartland, especially those in the north, were the main source of threats to the stability and power of Chinese empires. Through ancient times, successive Chinese empires have therefore anchored themselves in the Chinese heartland and sought control of the surrounding regions, in order to create a peripheral buffer zone [2] . Consequently, for most of China's history right up until the 20th century, China was never a significant maritime power seeking to dominate the seas around it. Her main maritime concerns were limited to the protection of its fertile and prosperous eastern coast from pirate attacks, by making use of shore-based defences on river approaches, major harbours and large offshore islands [3] .
Chinese Naval History. One aberration to this largely land-dominated outlook was a brief period in the early 15th century when China developed a credible navy under Ming Emperor Yong Mingle. It was during this time, that seven long sea voyages were undertaken by Chinese ships under Admiral Zheng He between 1405 and 1503. Zheng He led over 300 Chinese ships from the East Coast of China right up to East Africa, South East Asia, Sri Lanka and India in order to carry out trade and extend the empire's trade routes. Notable amongst all his voyages is his second, when he successfully fought a land war in Ceylon against the kingdom of Kotte.
Even in the nineteenth and twentieth centuries, China was largely preoccupied by continental concerns. China's aspirations in the Indian Ocean Region are thus fairly new-found and are logical outcomes of late 20th century concerns - an uninterrupted availability of energy to its economy.
Indian Interest in the IOR
Indian Context. India is also an ancient civilisation with a recorded history as old as China. With a coastline over 7500 km [4] , peninsular India has been an important destination for east-bound trade routes originating in Arabia, Rome and Greece. However, successive invasions from the North West lent a continental outlook to pan-India empires like the Mughal Empire. The lack of any dominant maritime power in the immediate neighbourhood also contributed to a passive view towards maritime dominance in medieval India.
Right through modern Indian history, a handful of visionaries in Indian history recognised the importance of the sea and made efforts to address them. However, these efforts proved too weak or were not significant enough to prevent the eventual domination of India by European powers. Arriving by sea, European powers, especially Britain, soon used the sea to establish control and effectively rule the Indian subcontinent right into the middle of the twentieth century. Post-colonial India, was largely preoccupied in reconstruction of the nation state and though there were efforts to augment the nation's maritime power, they did not seek a comprehensive ability to project power. It is only with economic development and consequent demands on energy along with a need for strategic assertion in the neighbourhood that India has begun to concern itself with developments in the IOR and its littoral states.
Apart from the new found interest in the IOR, China and India also share a common disputed border, growing economic ties that trace their origins to way back in time religious links and a conflict. An examination of Sino Indian relations in the present day is important to be able to place their future in perspective.
Current State of Sino Indian Relations
Border Disputes. Unresolved border disputes have sparked a conflict between both nations in 1962 and still create sore moments in relations between both nations. India and China contest the sovereignty of the territories of Aksai chin and Arunachal Pradesh.
Aksai Chin. India has claimed that Aksai Chin is a part of Jammu and Kashmir based on the controversial Johnson Line proposed in 1865. The Chinese claim, on the other hand, rested on the McCartney - Macdonald Line, which was conventionally agreed to, but never formally ratified. In the 1950s China built an all-weather road through the region in order to connect Tibet with Xinjiang. Indian claims of sovereignty over the region were responded to by similar Chinese claims that proclaimed Chinese sovereignty over the region. The uninhabited region of Aksai Chin forms an area of strategic importance for China whilst it remains an issue linked to national prestige for India. The present Line of Actual Control roughly mirrors the MacCartney-McDonald line. One of the major concerns, is that pending military interest in the area has led to a conjoining of Pakistani and Chinese controls. China retains an active military interest in the area, since 1950, and it has resorted to repaving the road linking Xinjiang to Tibet for the first time in 50 years [5] .
Arunachal Pradesh. The dispute over Arunachal Pradesh has its roots in the McMahon Line demarcated at the Shimla Convention in 1914, which effectively gave the British control over the erstwhile North East Frontier Tract (NEFT) (present-day Arunachal Pradesh). The Chinese contention is that the demarcation of the line was a unilateral decision and neither the Republic of China (ROC) nor the Communist Party of China (CPC) accepted the line. Following the Tibetan rebellion in 1959, Chinese troops invaded the NEFT and unilaterally withdrew in a month's time. Since then China has tacitly endorsed Indian control over the region, whilst continuing to put forth the Chinese claim. The importance of Arunachal Pradesh to China stems from the Chinese efforts to bring all elements of Tibetan culture under its control so as to maintain stability in the Tibetan Autonomous Region (TAR). India, on the other hand views Arunachal Pradesh as strategically important for its defence [6] . India has made concerted efforts in the recent past to strengthen its defences in the region by sanctioning over 1,934 Crores for building over 800 km of roads, expansion of troop deployment, positioning of two Sukhoi squadrons and fielding of Brahmos supersonic missiles in the region [7] . China had earlier augmented its armed deployments, pushing the region into a vicious circle of militarisation.
Trade. Indo-China trade had begun in the 1960s, but full-fledged bilateral trade relations developed only in 1992. In spite of according each other a 'Most Favoured Nation' status in 1984, it was the signing of a Double Taxation Agreement in 1994 that provided a major fillip to Indo China Trade [8] . Bilateral trade was further aided by signing of the Bangkok agreement in 2007 and bilateral trade in 2011 touched a record USD 73.9 billion. China is today, India's second largest trading partner with an annual trade turnover of USD 58.96 billion in 2010-11 [9] . Indian exports to China mainly consist of primary products such as iron ore, slag, ash, copper, chemicals, machinery and cotton. However, India is only China's 16th largest source of imports, and Indian exports form only 3.8% of China's overall trade [10] . This huge trade deficit of over USD 27 billion is a cause of concern for India.
Brahmaputra Waters. The Brahmaputra or Sang Po also forms the basis of recurring disagreements between India and China. The Brahmaputra originates in south west Tibet, and flows down through the Himalayan passes into Arunachal Pradesh and thereon to Assam and Bangladesh. Both India and China look upon the river as a source of hydroelectric power and irrigation, and Chinese intentions of building of dams on the river have always evoked strong Indian protests. China in the meanwhile has already begun the construction of the Zangmu dam in the TAR with a total hydroelectric generation capacity of 510 MW [11] . Chinese hints of northward diversion of Brahmaputra waters has drawn strong Indian protests and implied hints of a water war.
Energy Concerns. While remaining militarily sensitive to each other, both India and China, over the past few decades, have followed a policy of attempting to gain economic strength, and then use it to leverage ascendancy in the region. Thus, the major concern of both nations is safeguarding the factor that has the most significant impact on their economies - Energy. Price and bidding wars based on economic considerations are a natural part and parcel of economic competition but the overwhelming resources at the disposal of Chinese companies and the strategic backing of the Chinese state, provide China with an upper hand [12] .
Whilst Indian state owned concerns invest far and wide in pursuit of energy sources, domestic compulsions inherent in a democracy also render India vulnerable to energy price fluctuations. A military and aggressive tinge to the pursuit of these energy concerns by the Chinese Government is viewed as cause of concern by Indian analysts and polity, especially when such pursuits involve funding and creation of infrastructure in littorals of the IOR.
Trust Deficit. The nagging issues confronting India and China also carry with them a trust deficit that overshadows actions of each nation, and has a major impact on and how these actions are perceived by each nation's populace and polity. While Chinese public will remains largely subservient to the powers that rule Beijing, any Indian government has to contend with a popular distrust of China. Attempts to bridge differences must therefore grapple with both national mistrust as well as populist pressures in India.
Factors Precipitating Conflict or Cooperation
The complex dynamics of international relations cannot be assumed to conform to simplistic models of compete or cooperate. The relations between nation states can be considered to be a result of interactions between various factors that eventually determine the end state. It would thus be pertinent to examine a selection of such factors, as are likely to drive competition or cooperation between India and China. Having seen the holistic areas of engagement, it is now possible to assess what could lead to a major drive towards co-operation or conflict.
Short Term Perspectives
In the short term, factors like violation of territorial integrity, immediate perceived threats to maritime trade or energy shipments, external security threats and the internal security situation may push India - China relations towards conflict. Some of these factors are examined in succeeding paragraphs.
Territorial Integrity. The concept of 'territoriality' is one of the two characteristics of a Westphalian nation state and refers to a specific area of land over which a ruling share has the ultimate power to rule without yielding to any external agency [13] . Conversely it also means that a nation state's authority is limited to its national boundaries giving rise to the concept of 'territorial integrity'. Any violation of territorial integrity is thus considered as a direct attack on the sovereignty of the nation and will in all probability draw a very strong and even disproportionate response. In the absence of a settled international border, actions by both India and China along the LAC and the perceived intentions of these actions, especially amongst popular media, can generate insecurities that may fuel strong adverse reactions from either country. These can quickly cascade to develop into a conflict or crisis situation. An area of concern is that given the hypersensitivity, ill-advised actions by local commanders can also quickly turn into hardened positions of no return. More than strategic attacks, this scenario remains a more likely source of conflict.
Energy Security. The economic growth engines of both India and China require colossal amounts of assured and uninterrupted energy, a large share of which is imported by both countries over significant geographic distances. Actions that signal competition and direct threats to these energy resources or their transportation, are also bound to elicit a strong, direct and disproportionate responses. Indian exploration in Vietnam, for example, drew a sharp Chinese accusation of violation of territorial integrity. Subsequently, India pulled out of the area, though it stated that commercial viability was the cause [14] .
State Owned Oil and Competition between SOEs. Considering the strategic nature of oil and energy, both India and China exert State control over these sectors and have resorted to the use of State Owned Enterprises (SOEs) to actively pursue and obtain energy assets abroad. Energy acquired by SOEs abroad, especially oil, can thus be termed as 'State Owned Oil' though it may not be located within the geographical boundaries of the State. China has, through its SOEs namely Petro China and the Chinese National Petroleum Corporation (CNPC), actively engaged in acquisition of energy assets across the Middle East, South East Asia, Australia, Canada, Latin America and Africa [15] . In fact Chinese SOEs are conspicuous by their absence in the US and Europe. India has also used SOEs such as ONGC Videsh to acquire stakes in countries around the world. The pursuit of acquisition of energy assets around the globe has often put Chinese and Indian SOEs and implicitly the two countries, in direct competition with each other. Close state support backed by larger monetary reserves of Chinese SOEs has ensured that they have more than often upstaged Indian enterprises when in direct competition [16] . As energy demands of both countries increase, the quest for acquiring 'State Owned Oil' is bound to give rise to increased competition between the SOEs and implicitly the two states.
It would, however, be unwise to predicate conflict in this regard based on the above summary. A fresh impetus to cooperation in this regard is shown by the renewal of a joint exploration agreement between the CNPC and the ONGC in Jun 2012 that seems to indicate a willingness to look for mutual benefit [17] .
Proxy Wars. Whilst not engaging in direct conflict, both countries may be tempted to use proxy wars to create indirect pressure on each other. It is more difficult for India to exercise this option than it is for China, which can use the easy option of shoring up the military potential of Pakistan. A slightly more difficult option, albeit one once exercised in the past, is to feed insurgent movements. For India, this is also not an easy option. It could consider providing limited support to US forces in the IOR as a soft counter to Chinese policies. Indian support, for what China views as Tibetan insurgency, has also been limited to increasingly muted political support. The presence of these 'indirect' options provides a paradoxical effect. On one hand, they provide a permanent temptation to resort to covert hostility. On the other hand, their presence significantly reduces the need to engage in active conflict.
Internal Security Situation. The economic march of the last couple of decades has not been an undiluted success in both countries. In China, it has been a ruthless pursuit of objectives whilst accepting unpleasant fallouts as acceptable collateral. The Indian economic story too, has not been an easy path. Corruption, a large section of uneducated population and a deepening divide between 'haves' and 'have-nots' is a dichotomy common to most Indian states. These factors are contributors to social discontent, especially, when coupled to slowing economic growth and can form a potent mixture to generate populist pressures. The most obvious and intuitive way to deal with social discontent is to suppress it by using force. Suppression, however, cannot continue indefinitely and brings to fore a less palatable, but unfortunately effective alternative, of creating artificial external existential threats to the security of a country. Such threats serve to direct national attention away from existing dilemmas - a ploy that is being used with remarkable success by our western adversary. Resorting to the latter option without addressing the root cause of the concern, however, will require increasing escalation, eventually leading to conflict. It is to India's credit that successive governments on either side of the political divide have resisted the temptation to lead the nation to misadventure in an attempt to shore up popular support.
In the context of China, a number of additional factors and events also come to fore that may drive China to seek a conflict rather than face internal instability and the prospect of large scale upheaval. Some of these factors are as indicated below:-
Political and Military Succession. Transition from the fourth generation of Chinese leaders to the fifth is expected to occur in 2012 [18] . The new set of leaders is likely to face an increasingly untenable economic situation and may not be willing to make drastic reforms within a short span of time whilst endeavouring to maintain internal stability in the country. The internal pressures that accompany such change are evident in the unprecedented level of public protest and aberrations like the swift fall from grace of a rising leader like Bo Xilai. China will also see sweeping changes in the military leadership in 2012 and the military's vision of its role will also influence Chinese activities in the IOR. While China is unlikely to fall into the trap of attempting a military boost to ruling powers, the pressures of political and military upheavals cannot be underestimated.
Export Oriented Economy. On the basis of a large population and cheap labour, China has grown into an export oriented economy, which depends on the willingness of other countries to buy Chinese imports. However, these exports, so far fuelled by cost differential, have run against unwilling, but steady measures by the Chinese to raise the value of the Yuan, as well as a groundswell of opposing public opinion [19] . Notably, financial downturns in the United States and Europe have impacted Chinese exports and also created strong public opinions against outsourcing. In a market economy, reduced demand should automatically lead suppliers to cut production. However, the social ramifications of lost jobs and resultant social unrest have serious implications for a Chinese government, whose priority is maintaining internal stability. An undeveloped domestic market adds to the woes and further increases Chinese reliance on exports. While not directly impacting the IOR, China could be pressurized into indirect actions (like funding Pakistan) to ensure that India does not remain unaffected.
Unequal Economic Progress. Chinese coastal regions have prospered on account of China's growing economy but this growth has not spread in equal measure to the interior regions of China. Economic divides between the coastal and the interior regions has been the cause of instability in China since the days of the Chinese Empire [20] . Over the years, the Chinese government has tried to balance this increasing divide and reduce tensions. How well China can balance growth and unrest in its various regions will become one of the factors to decide how well it can prevent instability in the country. Demographic pressures may well lead China to seek additional territory.
Geopolitical Pressure. The IOR is plagued by overt military presence from foreign navies. Though the perceived threat perceptions from them may vary on Chinese and Indian sides, the implied geopolitical pressures that they exert also influence Indian and Chinese national priorities. Territorial threats perceived by each country also contribute to their sense of security and warrant examination.
Territorial Threats to China.
United States. China now perceives that the largest external threat to it arises in the East and is maritime in nature. Chinese insecurity stemming from the knowledge of its inability to counter US maritime power has occupied Chinese strategic thinkers after the third Taiwan crisis in 1996. It has led to a significant focus on the growth and development of the PLA(N), development of asymmetric capabilities and the Anti-Access / Area Denial (A2/AD) strategy. These developments point towards an effort to counter / blunt US naval power in China's peripheral seas [21] . US naval supremacy in the IOR is also an area of concern that ultimately shapes Chinese attempts to bilaterally settle border disputes with immediate neighbours.
India. Geographical features, numerical superiority and a strong infrastructure contribute to the fact that India is not perceived as an immediate threat to China, especially over land. The same, however, is not true in the maritime context. Increased naval prowess and capability building by the Indian Navy lead China to perceive India as a direct threat to its SLOCs and energy lifelines. In an eventuality, the Indian ability to interdict Chinese shipping in the IOR may allow it to offset its disadvantageous position over land. This perception has led China to invest considerably in developing a number of port facilities in the IOR littorals (also referred to as a String of Pearls [22] ) and gradually deploying ships in the IOR, albeit for anti-piracy patrols.
Territorial Threats to India. Unlike China, India faces a real tangible threat from its western adversary in the form of covert support to insurgency, terrorist attacks and secessionist tendencies amongst Indian populace. There also exists the distinct possibility of having to deal with a religious fundamentalist nuclear state on the brink of failure. A historical trust deficit and recurrent Chinese actions also crystallise into a believable threat on India's north east borders. Lack of infrastructure, geographic obstacles and numerical inferiority mean that India assumes a largely defensive posture on these borders. India's maritime capability and the Chinese interdependence on energy is thus an effective counter to the Chinese threat on its North Eastern border.
Long Term Perspectives
Whilst the critique above classifies the above factors as 'short term', a more accurate classification would be 'predictable factors'. A long term view presents a different set of factors that may prove to be game changers, being unpredictable but decisive. Some of these factors are appended at succeeding paragraphs.
Demographic Dividend. The demographic dividend is the benefit that country stands to derive from having a large working population, typically between the age of 16 to 64. The dividend accrues from an increase in the availability of workers and an accelerated increase in capital accumulation due to decreased spending on dependents [23] . A 2010 IMF report indicates that demographic dividend can add up to two per cent to a country's growth rate if combined with the right policy mix [24] . The benefits of the demographic dividend, however, can only be exploited over a small time window of opportunity. The following paragraphs examine the expected advantages that both India and China may expect to accrue on account of a demographic dividend.
India. India's working population is set to increase till 2029 before it starts to gradually reduce. In 2030 there are expected to be 1.03 billion Indians capable of working; providing India with an opportunity to push its growth rate. However, unequal distribution of prosperity, concentration of population growth in under developed areas, a small manufacturing sector compared to the services sector and lack of education may not allow India to capitalise on the increased workforce. It will take concerted efforts in building infrastructure, ensuring better health care and an increase in the component of women in the labour force to exploit this small window of opportunity [25] .
China. China on the other hand has already benefitted from a large working population and faces a tougher task ahead. Its working population is set to decline post 2015 [26] and China will face the drain of having to invest money in catering for an increasing ageing population, thereby reducing the available disposable income. Such a negative spiral has induced the USA to actively seek wars as the ultimate government spending stimulus to boost economy. Whether the Chinese will be able to arrest their spiral in time by alternate means is the million dollar question.
Cooperation over conflict
The focus on economic growth in both nations makes direct war an undesirable option unless brought on by other compulsions. Thus cooperation seems the obvious alternative.
Increasing bilateral trade may shape and dictate the contours of the relationship but it would be naïve to assume that there did not exist inherent risks in such an approach. If trade barriers are not carefully regulated, India, for example, carries the inherent risk of being swamped by low cost products from a production powerhouse like China. This will have extremely adverse effects on the domestic manufacturing sector and in extreme circumstances can lead to social unrest. The Chinese services sector on the other hand will also face a direct threat from an extremely developed Indian services sector. Opening trade barriers in China also carries the inherent risk of increasing exposure of the population to ideas of political liberalisation.
Faced with an uncertain future and inherent risks to complete cooperation, it is natural that both countries take a guarded approach to cooperation and direct conflict, preferring to engage and unsettle each other through indirect means.
Keeping India preoccupied by low scale investments in Pakistan and using a policy of envelopment by investments in littoral states of the IOR, signify a guarded approach to cooperation. Establishment of intelligence gathering and monitoring stations by China is indicative of efforts to gauge Indian capabilities and attitudes and to calibrate her own response.
India uses Tibet and the Dalai Lama for similar reasons. Improving relations with the US, increasing its naval prowess and making efforts to constructively engage littoral states of the IOR are Indian initiatives that serve as checks and deterrents to reciprocal Chinese policies.
conclusion
The sheer number and nature of tangible and intangible variables, factors and their interactions preclude simplistic assumptions of only cooperation or conflict between India and China. The current economic focus of both countries will compel them to choose an overtly cooperative approach over conflict. However, internal compulsions may compel both countries, especially China, to create an artificial security situation that may turn the IOR into a theatre of conflict.
A realistic view of the situation in the near term, however, is indicative that neither conflict nor cooperation appear pre-ordained and both India and China will pursue multi-pronged strategies and options to prepare for either eventuality.
Indian Way Ahead. India has a stated policy of non-aggression and non-expansionism that should not prevent it from actively engaging its neighbours to form friendly alliances and bolster its security assurance as well as provide it avenues of economic growth. It is unlikely for India that the future will throw up a clear military advantage over China, and it may also not make economic sense to pursue that aim. However, India must seek an unambiguously credible deterrence to ensure that Chinese military superiority does not overwhelm it.
In summary, India's best option is to seek balanced trade and cooperation with China whilst continuing to build credible military and economic deterrence.
Wellington (DY Gokhale)
16 Aug 12 Cdr
4345 words
