In recent weeks, the Indo-Pacific maritime domain has come into focus due to four developments with one common strand: China.
The most visible of them all has been the tense military stand-off between India and China along the contested Line of Actual Control, the 4,000-kilometre loose demarcation line that separates territories controlled by the two countries. An often articulated view is that, while naval power will not have a bearing on what is happening in the high Himalayas between the two Asian giants, it is a leverage that Delhi could consider using in order to manage an assertive Beijing.
The other three events pertain to reports recently released by the US Department of Defence and the German foreign ministry, as well as a China-Russia joint communique.
Assessed together, these documents point to the emergence of the Indo-Pacific as a domain for competition and a degree of contestation among the major interlocutors: China, Russia and US. This exigency would also hold a strategic and security relevance for India and other littoral nations of the Indian Ocean.
The world is in a state of uncertainty and flux due to the Covid-19 pandemic, and the geopolitics, in all likelihood, will be played out in the maritime continuum of the Indian and Pacific oceans.
The US DoD report and its naval/maritime focus on China is stark. The summary is that the People's Liberation Army Navy currently has more ships and submarines than the US Navy – 350 versus 293 – and that Beijing is determined to expand its footprint across the Indian Ocean. It notes that, in addition to the base in Djibouti, the Chinese military is seeking additional facilities in Myanmar, Thailand, Singapore, Indonesia, Pakistan, Sri Lanka, Kenya, Seychelles, Tanzania, Angola, and Tajikistan. Clearly, the geographical spread is expansive.
China’s determination to consolidate its position in the Indian Ocean Region (IOR) has its own strategic considerations, and this is subsumed in what Beijing refers to as the "Malacca Dilemma" – the fact that China is dependent on the sea lines of communication for its trade and energy requirements. Beijing is also cognisant of a centuries-old tenet that, for a major power to be truly credible, it must be able to maintain effective military presence in two of the world’s navigable oceans at will.
It is evident that the US, which enjoys its position as the No 1 military power, is determined not to allow China to displace it in a routine uncontested manner.
This framework illuminates the relevance of India in the geopolitics of the IOR, for it is in a favourable orientation due to geography and naval pedigree. While India’s naval/maritime capabilities are more modest than those of the US and China, the two bigger powers are aware that their respective geopolitical aspirations and anxieties specific to the IOR can be significantly impacted by the posture that India adopts.
Currently three major non-littoral powers that have a visible military presence in the IOR are the US (in Diego Garcia), France (in Reunion) and China (in Djibouti). It is also instructive that Germany has now identified the Indo-Pacific as a domain where it plans to take greater interest than it has in the past.
The geopolitics of the post-Covid-19 world will be played out in the maritime continuum of the Indian and Pacific oceans
Speaking at the release of his government's report, German Foreign Minister Heiko Maas said: “We are sending a clear message today – the Indo-Pacific region is a priority of German foreign policy. Our aim is to strengthen our relations with this important region and to expand our co-operation in the areas of multilateralism, climate change mitigation, human rights, rules-based free trade, connectivity, the digital transformation and, in particular, security policy."
Mr Maas further added that Germany wants to help shape the order in the Indo-Pacific so that it is “based on rules and international co-operation, not on the law of the strong". The allusion to China is unstated but evident.
Japan is also a stakeholder in the IOR. Shinzo Abe, who recently stepped down as prime minister, is seen as the prescient leader who first envisioned the confluence of the Indian and Pacific oceans as one strategic space. His country is a part of the "Quad" grouping that also includes Australia, India and the US – a cluster often referred to as a concert of maritime democracies committed to a free and open Indo-Pacific space that would be rule-based.
There is, however, an alternate formulation and a strongly held viewpoint that was articulated in Moscow at a meeting last week between the foreign ministers of China and Russia.
Their joint communique said: “We noted the destructive character of Washington’s actions that undermine global strategic stability. They are fuelling tensions in various parts of the world, including along the Russian and Chinese borders. Of course, we are worried about this and object to these attempts to escalate artificial tensions. In this context, we stated that the so-called ‘Indo-Pacific strategy’, as it was planned by the initiators, only leads to the separation of the region’s states, and is therefore fraught with serious consequences for peace, security and stability in the Asia-Pacific Region.”
For India, this is an anomalous development. It is because Delhi is a part of different groupings that place it under the same umbrella with Beijing and Moscow – the Russia-India-China trilateral grouping, Brics and the Shanghai Co-operation Organisation. Curiously, India was at the Moscow meeting where the China-Russia bilateral statement was issued.
In other words, squaring this nettlesome Indo-Pacific circle – even as it strives to retain its strategic autonomy along the troubled LAC in the Himalayas – will require India exerting a great deal of skill and diplomacy.
C Uday Bhaskar is director of the New Delhi-based think tank Society for Policy Studies
UK’s AI plan
- AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
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Power: Combined output 920hp
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Four tips to secure IoT networks
Mohammed Abukhater, vice president at FireEye in the Middle East, said:
- Keep device software up-to-date. Most come with basic operating system, so users should ensure that they always have the latest version
- Besides a strong password, use two-step authentication. There should be a second log-in step like adding a code sent to your mobile number
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PROFILE
Name: Enhance Fitness
Year started: 2018
Based: UAE
Employees: 200
Amount raised: $3m
Investors: Global Ventures and angel investors
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The bio
Job: Coder, website designer and chief executive, Trinet solutions
School: Year 8 pupil at Elite English School in Abu Hail, Deira
Role Models: Mark Zuckerberg and Elon Musk
Dream City: San Francisco
Hometown: Dubai
City of birth: Thiruvilla, Kerala
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The specs
Engine: 3.0-litre six-cylinder MHEV
Power: 360bhp
Torque: 500Nm
Transmission: eight-speed automatic
Price: from Dh282,870
On sale: now