Speech by Mr Peter Varghese AO, Chancellor of The University of Queensland, to the Indian Ocean Conference, Symbiosis University, Pune, 18 December 2016

Acknowledgements

I want today to give you an Australian perspective on Indian Ocean issues. Not an official Australian view, because I am no longer an official, but a personal view shaped by the way we in Australia see the Indian Ocean and in particular the concept of the Indo Pacific.

I also want to address how this India Pacific concept shapes the way Australia views India in geo-political terms, including the growing strategic congruence between our two countries.

It is not often that a country changes the geographic definition of its primary strategic environment. But that is precisely what Australia has done in recent years by replacing the Asia Pacific with the Indo Pacific.

The Asia Pacific, with north east Asia at its centre, has been the conceptual foundation of Australian strategic thinking for most of the post war period. It was seen as a coherent strategic system bringing in the major powers and also reflecting a long period of trade and investment integration.

Australia saw this economic integration as giving the Asia Pacific added coherence. The Asia Pacific construct provided a framework for thinking about the management of major power relationships anchored in US strategic primacy. It was also our frame of reference for charting the strategic impact of shifting economic weight, especially the rise of the Chinese economy.

In more recent years, however, we have moved from Asia Pacific to Indo Pacific to describe the boundaries of our strategic environment. And a large part of that shift is driven by how we see India.

I should concede at the outset that the concept of the Indo Pacific as a single strategic system is a work in progress. It is both an act of imagination and a recognition of an emerging structural shift in our strategic environment.

At its heart the Indo Pacific reflects two propositions.

First, that the maritime environment is likely to be the primary focus of strategic planning and strategic competition over the next several decades.

Secondly, that India’s strategic focus will over this period shift well beyond India’s immediate neighbourhood and embed India in the strategic dynamics of the Asia Pacific in a way it has not in the post war period.

These two propositions do not, in themselves, create a coherent Indo Pacific strategic system. But it does suggest that the idea of the Asia Pacific needs to adapt to accommodate these two propositions.

In this sense, the idea of the Indo Pacific is best understood as an evolution of Australia’s Asia Pacific bearings, not a rejection of it.

It is also important to understand what the Indo Pacific is NOT.

It does not, for example, treat the Indian and Pacific oceans as a single strategic system. Not does it seek to bring all of South Asia into the old Asia Pacific strategic system. 

For now the Indo side of the Indo Pacific is really just India and it is more about bringing India to the Asia Pacific than stretching the footprint of Australia’s primary strategic focus all the way to the western reaches of the Indian Ocean.

Over time, more structure and integration may evolve in the Indian Ocean such that it might become a coherent strategic system akin to its counterpart in the western Pacific. But that is a long way off, so for the foreseeable future when we think about the Indo Pacific we are thinking of an Asia Pacific which finds room to accommodate India as a strategic player, and an India whose strategic and economic interests will increasingly draw her into being such a player.

The geo economic dynamics at play here are important, because shifts in economic weight inevitably have implications for strategic weight.

We see this clearly with China which is reaching not just for more strategic influence to match its economic weight but, in the longer term, for strategic predominance in the Asia Pacific.

The biggest question about China is what will be its political and strategic settling point. How will the Chinese leadership hold on to its monopoly of political power ­– which it is determined to do – while also putting in place the far reaching economic reforms it has itself identified as essential if the Chinese economy is to continue to grow? How do you give the market a greater role in the allocation of resources while maintaining a tight grip on political control?

It is here, at the intersection of politics and economics, that the hardest challenges for China’s leaders will lie. 

I had always thought that the tensions between an economy which was opening up and a polity which was tightly controlled could be managed in the Chinese context for a very long time. That may still prove to be the case but it seems to me that it is becoming harder to achieve. We must all hope that the Chinese leadership can nevertheless manage it because no one gains if China fails.

Much has been said of the challenges Australia will face as it manages its relationship with China and the US respectively. I do not subscribe to the view that Australia will have to make a binary choice between the US and China. But as strategic competition between the US and China sharpens, and if China continues to be dismissive of its international legal obligations in the South China Sea, it will inevitably become harder for Australia simultaneously to pursue our large economic interests with China and our core strategic interests with the US and in a rules based international system.

We do not know how all this is going to play out. Australia has next to no capacity to influence the direction of Chinese politics. We must continue to pursue policies designed to avoid invidious choices. But we also need to have a clear eyed understanding of our core interests, both economic and strategic. 

We want to see China succeed in its economic reforms and to play a constructive role in the region and the world. But we also want to see a strategic system in the Indo Pacific which is anchored in the rule of law and which recognises the stability which US strategic engagement brings to the region.

We will not know for some time whether these objectives can be achieved and it would be foolhardy to conclude now that they cannot.

Nor does it help to cast China as the enemy. But what is happening in our region does challenge a strategic system – and a strategic culture – with which Australia is comfortable, both as a US ally and as a beneficiary of a rules based system reflective of the norms of a liberal international order. It means that the level of strategic congruence between Australia’s strategic interests and China’s strategic ambitions is fairly limited. 

India is a different proposition. What will be the strategic posture of India over the next several decades assuming it continues to deliver relatively high economic growth placing it as the world’s third largest economy?

My sense is that Indian strategic thinking will be shaped by six key factors.

First, a firm attachment to strategic autonomy and to preserving maximum freedom of action.

Second, deep strategic competition with China, not just as a neighbouring state but also in relation to China’s regional influence. Japan is in a similar position.

Third, India is showing a growing level of comfort in increasing strategic cooperation with the US and its allies in the region such as Japan and Australia.

Fourth, India is likely to continue to support a liberal international order, although that will not extend to support for US exceptionalism. 

Fifth, India is committed to increase significantly its defence capability to buttress its strategic autonomy.

And sixth, India is likely to be cautious about pressing a human rights agenda in its bilateral relations and nor is it much interested in an international policy of promoting democracy. Moreover it will hold to this caution while also holding firm to its own domestic commitment to human rights and democracy.

All of this, I would suggest, creates space for Australia and India to cooperate on a shared strategic agenda. And none of the likely drivers of India’s strategic trajectory creates a serious problem or obstacle to such a shared agenda. 

In suggesting that the maritime domain will become the key focus of strategic planning in the Indo Pacific I am also saying that freedom of navigation will be a front-of-mind issue.

China’s behaviour in the South China Sea is sometimes presented as a threat to freedom of navigation but that seems to me to miss the point. 

China has no interest in curtailing freedom of navigation, at least not commercial navigation: military freedom of navigation is another thing. 

Indeed, if anything, part of what drives China’s approach to the SCS is to try and ensure that it can better deal with threats to its commercial supply lines which depend on freedom of navigation.

The other driver is China’s wish to exert strategic control over the SCS which it sees as important to its capacity to blunt US maritime superiority.

These freedom of navigation issues will inevitably find an echo in the Indian Ocean, not least because it also is an important waterway for international trade.

This will increase China’s interest in the Indian Ocean and that may worry both the US and India.

So some of the major power dynamics which we see playing out in the Asia Pacific may well spill over into the Indian Ocean, adding a further layer of complexity to the concept of the Indo Pacific.

Conclusion

The re-emergence of China and India as major economies and major powers is the defining feature of our region. Their paths will be different but the consequences of their rise will be profound.

Neither will follow a linear trajectory. China’s future is perhaps more uncertain because it has yet to find its settling point as a strategic power and a political system. India’s challenge will be to translate potential into achievement.

The Indian Ocean provides a meeting point for Australian and Indian interests in a way the Australia-China relationship cannot. It extends the scope of our growing strategic congruence. India has always seen itself as an Indian Ocean power whereas Australia has traditionally placed a greater emphasis on the Pacific as the ultimate arbiter of our strategic stability. Now we have an opportunity to better align these perspectives and to build a partnership which bridges both oceans. It is a neat symmetry for an Australian continent which faces both the Pacific and Indian oceans and an India which has always been strategically anchored in its namesake ocean.

 

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