Session 2 History, geography and security: evolving dialogue in the Indo-pacific

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Session 2

History, geography and security: evolving dialogue in the Indo-pacific

Session Chair: Ms Elena Douglas, The University of Western Australia

Robert Kaplan’s influential 2008 foreign affairs article described the Indian Ocean as the great theatre of the 21st Century. To Kaplan the Indian Ocean exposes the contours of power of this century. Looking at global trade in this region, 70 per cent of the world’s petroleum products cross the Indian Ocean. 50 per cent of all of the world’s container traffic crosses the Indian Ocean. And 40 per cent of global container traffic goes through the straits of Malacca. From an Australian and Western Australian view, nearly a third of this country’s export wealth is generated in a sparsely populated area on the Indian Ocean with very little naval resource at all, aside from limited coast guard.

Kaplan’s analysis has had an impact around the globe and certainly in the US. But also in Australia where it resulted in some last minute but important changes to the defence planning documents of this country, which included greater consideration of the Indian Ocean. And in another sign of this ocean being the ‘new black’ the Australian American leadership dialogue will be held in Perth for the first time in August. Prime Minister Gillard, however, in her meetings with Obama and her speech to the Joint House of Congress yesterday, still spoke of the Asia Pacific and made no mention of the Indian Ocean. But watch this space because it is only a matter of time before she too adopts the term which better captures Australia’s genuine strategic and geo-political reality, the Indo-Pacific. And also watch In The Zone and the Lowy Institute claim credit for bringing this term to prominence.

In this session we will explore the security dynamics in the region, we will be looking at also the important questions of what we can do as citizens, thinkers and business leaders of Perth, what we can do to play our role in creating the people to people connections, the second track diplomacy initiatives, the business associations and alliances appropriate to a city that literally finds itself in the box seat of history.

Now let me introduce our fantastic panel. We are very privileged today to have three such seasoned strategists on global security join us for this discussion. Today we are going to hear from Rory Medcalf, Director of the International Security Program at the Lowy Institute. Some of you would have seen Rory’s excellent opinion editorial piece in The Australian on Monday, which argued for the need to look much more deeply at Australian defence arrangements in the Asia Indo-Pacific.

Rory is going to speak about the US, China, India triumvirate for competition and resources and influence in the region. He is also going to discuss the contentious question, which each member of our panel has a different view about, as to whether there is an Indo-Pacific security system or if there is an Indian security system and a Pacific one, and some reflections about the capacity of our current architecture to cope with the dynamics and change that are on the way.

Then we will hear from our learned friend Pramit Pal Chaudhuri who is the Foreign Affairs Editor of the Hindustan Times and is also on the national security advisory board in India. He is a very well-known commentator across the world on India, its economy, its security and its rise in the world, and we are thrilled to have Pramit back for the second time to In The Zone.

Pramit will share his view of the world from New Delhi and look at India’s evolving foreign policy strategy, as well as the consequences that he sees flowing through the region and particularly with impacts on the US and China from recent events in the Middle East.

Then we will hear from Ric Smith. Ric is presently Australia’s Special Envoy to Afghanistan and Pakistan. He was ambassador to China at a fascinating time in 1996 to 2000, and amongst a varied career was Australian Secretary of Defence. We are very proud that he and his wife Jan are graduates of the University, and Ric holds an honorary doctorate from this fine institution.

Ric will present what it means for Australia with all of these changing dynamics and the security and policy implications for Australian policy makers. So he will be doing the Australian point of view on this, and I am sure he will take the opportunity to challenge the views of his fellow panel members as well. So I would like you to welcome Rory Medcalf to the stage.

Mr Rory Medcalf, The Lowy Institute for International Policy

Thanks very much Elena and it’s wonderful to be here. I guess I’m in my own zone today in a manner of speaking. I want to introduce a concept or I guess support a concept that I am going to call Indo-Pacific Maritime Asia. Now that is a bit of a mouthful but I would argue not as much a mouthful as something like Asia Pacific Economic Cooperation. It’s got a noun in it for a start.

The points I want to make really come in three segments. Firstly I want to set the scene a little bit by talking about the power shifts in our region which I will call Indo-Pacific Maritime, I guess is optional or a statement of the obvious. I will talk a little bit about what Australia is doing to adjust to these changes, and as we have just heard Julia Gillard’s speech to the US Congress overnight gives a taste of some of those actions, but there is a lot more to be done. And thirdly I will talk a bit about what is missing, what is to be done, what can and should we do to ensure Australia’s security and prosperity in this Indo-Pacific era, if you like.

Well to set the scene, there is no question that our world is changing and that there are power shifts underway and I would argue these are predominantly due to the rise of China and India not only as economic actors but as we see their wealth translate into strategic weight as security actors and diplomatic players as well.

The future of Indo-Pacific Asia is not of course just a Sino-Indian story. There will be I guess a multi polar system evolving and we shouldn’t write off Japan just yet, or indeed the weight of other players such as Indonesia. But I think the United States is certainly the other or the third key actor in this system. We look at Asia’s rise and we talk about America’s decline, but it’s really a relative decline and I think by so many measures that America is going to continue to be a crucial player. Indeed just as America’s economic standing is beginning to diminish, we are seeing the US becoming more welcome, not less, as a security actor in Asia and we are seeing I think very clear statements of not only political will but manifested in action by the United States in this regard, the entry to the east Asian summit, the regions predominant diplomatic forum. The essentially reassuring for many allies and partners’ actions of the US in the past twelve months with its military presence in the wider region.

So power shifts, the rise of China and India, translating into strategic weight, the role of the United States. China and India will matter a lot more to Australia not only in terms of markets and as investors and even with sagas like the flight of the Oswal’s notwithstanding, the role of Indian entrepreneurs in Australia I am confident will continue to grow. And there are plenty of good new stories on that front.

Human capital, and again we have seen down sides with the for example the Indian student crisis in the recent years, but I think in the long term the role of Indian and Chinese human capital will continue to grow, and the security actors in the region.

Now this differs substantially in terms of the roles of China and India. There is uncertainty about China’s role and what it means for Australia’s security . That is not the same picture, I think, with the role or image of Indian power, but both China and India will share in common an interest in I guess being a kind of security provider in some of the less contentious issues. Such as piracy, we are seeing anti-piracy, we are seeing unprecedented activity by China and India as security providers in response to the situation in Libya, rescuing at least their own people and showing an ability to project power right across the Indian Ocean, and of course diplomatic influence in the region.

Now this power shift is not, I would argue, confirming the centrality of the Indian Ocean itself. I wouldn’t argue, I wouldn’t join Kaplan's argument that the Indian Ocean is somehow becoming the stage for global security in the 21st century. Let’s get real about some of the countries around the rim of the Indian Ocean, their levels of development, their capacity to act and to coordinate their diplomacy. Instead I would argue that the power shift we are talking about is in terms of an Indo Pacific strategic system. And what I mean by that is China looking to its west and to its south west, India looking and acting to its east, and I think economic interests will increasingly drive these two of the world’s three great military powers in decades to come to look at a much wider strategic space than what we are used to. And that is why again I come back to this notion of the Pacific Maritime Asia.

Now in all of this I would say, and let’s look perhaps 25 years into the future, I would say that relations between China and India are going to be crucial for Australia’s own security and prosperity. This is a relationship which I would define as one of competitive coexistence at this stage. They are not great friends, they are not great security friends. There is a history of mistrust and in fact this is currently coming to the fore again in the last 2 or 3 years we have seen a worsening in the relationship between these two countries which we can maybe go into in the discussion. But China is India’s number one trading partner. And this incidentally is going to make it difficult for us to mount the argument that somehow a stronger economic relationship with India will quarantine us if the China story ends unhappily. But of course a stronger economic relationship with India is very good in its own right.

Now in this Indo-Pacific strategic system I would see Western Australia’s geography as central. I commend I guess the spirit of the In The Zone’s second conference in this series for emphasising that centrality, but I think it is a strategic centrality as well as an economic centrality.

Finally the last feature of the power shifts and the importance of the Indo- Pacific security system to my mind relates to transnational challenges. We have seen a classic example of this in the anti-piracy cooperation off the coast of Somalia that has bought in lots of external players, some cooperating, some working in parallel to one another. That we have got now an unprecedented situation of Chinese, Japanese, Indian, Russian, European, United States, Australia, South East Asian forces all engaged against essentially a common transnational challenge. We will see this region become more important in terms of disaster relief, dealing with the impacts of climate change, dealing with domestic unrests and the spill overs of that in the strategic space, dealing with the exploitation of resources, fisheries and so forth. So it means I guess that there will be an essential role for external players in the Indian Ocean as part of this evolution of the Indo-Pacific strategic system. It is not realistic to consider countries that do not border on this ocean as not having an interest in its security and stability.

I have already said that we certainly should not write off the role of the United States at all. It is becoming more active and I think more relevant in the Indo-Pacific, not less. The US still has the will to act, it still has military power projection that still lacks in China, and will lack for decades. And it has a willingness, with a few exceptions, to work within international rules to uphold a rules based international order. And, as I said, strong support from many in the region. I think that the India/US relationship really has been quite a historical event in marking the welcome of the US as a key strategic actor in the Indian Ocean and the Indo-Pacific Region.

And finally, the diplomatic architecture that’s evolving around all of this, the US role in the East Asia summit I think confirms that the US is here for a long time yet.

Now how is Australia responding to all of this. As I said Julia Gillard’s address to the US congress was quite illuminating and I think had some very welcome elements to it. She is clearly popular somewhere at the moment anyway. The reaffirmation of the indispensability of the Australia / US alliance was critical. She emphasised the need to reorient the alliance for a new era. She may have used archaic Asia Pacific terminology but I think the idea was right. The hint I would say of an increased role and an increased presence for US forces closer to Australia perhaps with increased visits, perhaps with facilities or logistics in Australia. The hints both in her speech and in the presentation of her trip to the United States I think is again illuminating and again I think a part of the right response to the power shift in the region.

The emphasis on Australia and some other US allies notably Japan and South Korea as to use the Prime Minister’s words ‘anchors of stability’. Now that was, I think, a worthwhile thing to say as well, but it is interesting the relatively low prominence that India was given in that speech. I would go back to a document going back I think 10 years or so ago that I was involved in drafting when we were trying to build the Australian/Indian relationship that identified Australia and India as nations with stability in a shared region, and I am disappointed that there wasn’t more made of that in the speech by the Prime Minister.

And finally a positive, the Prime Minister’s recognition of the need for regional diplomatic architecture to manage change, to manage competition, including to imbed China in the management of the regional order. I think all of these were sensible things and the welcome shift from APEC to the East Asia Summit as the primary vehicle for this was absolutely right.

So what’s missing and what else can be done? Firstly, a more full recognition within Australia of the long term Indo-Pacific nature of our strategic system. I think there is still to my mind too much Asia Pacific retric, and I think that it is time that Australia maybe got on the front foot and changed its rhetoric.

Secondly I still think that Australia’s analysis of the future of this Indo-Pacific strategic system is a little bit too light on the role of India. India got some worthwhile mentions in the Prime Minister’s speech but more in terms of its democratic nature than its own economic achievements and indeed the strategic implications of a powerful endearment to the future. As a US congressman told me recently, you Australians may be our closest ally, but India is going to be our most important partner in Asia in the decades to come. It is interesting that he didn’t say Japan.

Next, the need for Australia to do more to build an Indo-Pacific diplomatic architecture I think we have done the right thing in supporting the evolution of the East Asia Summit to include the US and Russia. I would differ with those who suggest that this is a grand achievement of Kevin Rudd. I think the region was moving in this direction anyway. Certainly Rudd’s business on this front may have helped push it along, but I think there’s been a much wider effort leading to this point in this case, but it is the right point.

But there needs to be an Indo-Pacific set of mechanisms that support the East Asia Summit, the ASEAN regional forum and so forth. And I don’t see this as some glorified version of the Indian Ocean Rim association for regional cooperation, which you may or may not know of, but a rather fitful effort to build an inclusive regional structure that has been stopping and starting for the past 15 years or so.

However, there is scope for some creative thinking about essentially concepts of powers within the Indian Ocean region. Perhaps centred on India because it is the great power of the Indian Ocean, but including external players such as the United States, such as China, such as Japan, such as Europe, in accordance with their legitimate interests in this region. And I should add this could and should be supported by even smaller more flexible mini lateral arrangements, for example coordination between Australia, India and perhaps Indonesia on maritime security, because we share on obviously crucial strategic maritime zone between these three powers. And there would be some very good triangulation to be done there of some good bilateral relationships.

Finally, the missing link in all of this, I think, is to fix Australia/ Indian relations. That is, the bilateral relationship in this mix that is weaker than it should be, weaker than it could be, we have had a rocky time in the last few years. I don’t need to remind you about students and uranium. I might also remind you about mutual misperception about the rise of China. My impression is that some in India only began to realise that Kevin Rudd really didn’t trust the Chinese when Wikileaks told them so. So there is much more that needs to be done on that relationship and some obvious places to start, one would be to change the policy on uranium exports. This is not to say that India is an easy partner to deal with in this region. It’s got its own internal challenges, its own frustrations, but it will be an indispensible player in this region, in the, I guess, the Indian Ocean side of the Indo-Pacific and I think ultimately in the Indo-Pacific as a whole along with China and the United States.

Mr Pramit Pal Chaudhuri, The Hindustan Times

One of the things that has always been striking about India and the Indian Ocean is that for much of our independent history, we didn’t seem to have and Indian Ocean strategy. Which is a little strange you would think, if someone names an ocean after yourself you would be at least a little proprietorial about this. But we are now I think I wouldn’t say I’d call it a strategy as the government are still a little allergic to the idea of using that term, but we are starting to see the elements of a very clear Indian attempt to position itself as not just as a question of geography as being the essential nation in the Indian Ocean, but being a nation in many ways at all of the countries of the littoral Indian Ocean will look first to or at least keep in mind when they do anything that is of strategic consequence.

I will outline what I am seeing developing within the Indian security establishment and what exactly is happening on the ground. And I would argue there are three key geographical elements to what India is doing in the Indian Ocean.

On the western side which is basically the African littoral, I will keep the Persian Gulf on a separate discussion later, we are seeing the countries all the way down to Mozambique, India has launched a relatively extensive over the past two or three years, specifically being wrapped up at the highest level right now, a very large engagement that both combines economics, politics and military understandings with alot of these countries. For example a nation like Mozambique, which is now you may be surprised to know is now a member of the British Commonwealth although it doesn’t like cricket and it doesn’t speak English, is now for example a crucial country as far as Indian foreign policy is concerned. The Indian foreign ministry has been phoning me up on a weekly basis saying “why don’t you drop by Mozambique because we’d really like to start seeing Indian newspapers cover this”. Last year we extended a $500 million line of credit to Mozambique. It’s going to be one of our big naval partnerships over the coming years. Indian companies, though to a large degree on their own, have been moving in and investing in gas, and coal and so on in Mozambique.

So we are seeing a lot of this activity. And what we are also finding in Africa, is that a lot of these African countries are coming to us and saying they would like you to become more involved with us. Just before I came here I met with the South African Foreign Minister. She said “you know the west and the Chinese are all coming in and demanding things, or I want to buy this, to want to buy that, and walking through South Africa and saying who owns this field, I want to buy it, who owns that mountain, we want to take it. We want your Country of all of these to be the one to come in because you’re the country that we feel really the most comfortable with both for historical reasons, because we have a large Indian Diaspora, and ultimately because you are seen and perceived to be a less threatening nation than almost any of these others.

So Africa in fact has been declared unofficially when we’ve spoken to senior members of the Indian system as to being one of the three big foreign policy goals of the next priorities of the next few years. So on Africa we have this growing development of attempting to not merely have a good relationship which we already have with a lot of these African countries, but making it a much deeper engagement on almost every potential index we can find.

Now in the middle of this Indian Ocean I would argue is the second strand. We are looking at the island states, Mauritius, Maldives, Seychelles. And in those India is effectively moving into a much deeper policy of effective security co-option. What we have done with countries like Mauritius is offer them an enormous carrot. Mauritius officially is India’s largest source of foreign direct investment. Needless to say it’s very little of that is Mauritian money. There may be a bit of it but it is as much likely it is Mauritius capital as the Dodo is still walking around the island.

And in effect it has now become an off shore banking centre for India and India has said that is fine. But in return we want to understand that your security and foreign policy needs to be so tightly melded in with India that we have to know everything that goes on in there. And the Mauritians have agreed. It is worth it to them, they want Indian security, it helps that the island is 50 per cent of the people of Indian origin. But overall there has been a consensus within the Mauritian system on this. And this model is now being slowly replicated.

The Maldives just last year have just signed over almost their entire maritime security system was effectively handed over to the Indian Navy. Their foreign minister and their President, Mohamed Masheed, a fellow I know quite well, came and gave a speech where they said that our policy is India first on everything. Maldives now effectively sees India as a country that is essential to almost every aspect of its governmental policy.

We also have very deep naval and maritime understanding with the Seychelles. It is effectively now an Anglo French Indian consortium that controls this. The French, if anything, have been pushing very hard for us to take up more activity in Seychelles so they can sort of walk out and do a lot less there.

And the third arm of this which is on the eastern littoral, is look at countries like Malaysia, and Indonesia, and particular countries which we’ve never had a close relationship with as opposed to let’s say Singapore and Australia. And basically saying let’s be equal partners in our relationships both on a security and an economic relationship. The Prime Minister of India and I accompanied him on this trip last year, visited Malaysia, a country we’ve traditionally had a very difficult time with. I think in Australia you may have had a similar experience. It was the first time an Indian Prime Minister had gone in a dozen years. And effectively the Prime Minister of Malaysia said lets change this relationship. And I want to change this because of economics. The Asian Tiger model is not working. I want India to start helping me to produce a new one. And I am looking at the Indian economic model which is based far more on a domestic entrepreneur class, far more than a diversity of services and technology and I want that transplanted to Malaysia. And in return we change the relationship between these two countries.

Indonesia’s President was our State guest for a Republic Day this year in January, and in effect it was an invitation partly because the Indonesian and Indian relationship is also on a verge of, I think, a major transformation. We have already been deepening our military relationship. A couple of years ago Indonesia was actually our number one naval exercise partner in the world. Partly because of the Indonesian military’s desire to make India a much more active player in their region of the world.

So on these three strands we can see India effectively engaging the Indian Ocean littoral nations on a scale that it has never done before. Partly because it now has the resources to do so, partly because its interests are much stronger. And I will basically go through very quickly why I think India is much more interested in this. The obvious argument is that while our economy is now completely dependent on traffic coming in and out of the Indian Ocean, for us it is not a percentage figure as to how much what trade goes through the Indian Ocean, it is now 100 per cent except for whatever little Buddhist traffic is going on up in the Himalayas.

But on top of this there is and everybody talks about this so-called Indo-China / Sino-Indian rivalry in the Indian Ocean, and I think there is a fraction of concern about what China is doing. But it is very important not to exaggerate this and as our National Security Advisor has said in public. He said “the string of pearls policy, this idea of Chinese 45 ports all across the Indian Ocean, he said if you’ve ever played the game Clue, then you’ll know that a string of pearls is a very poor murder weapon”. And he pointed out that if China builds ports, there’s absolutely nobody who should be worried about this, even if they operate some ports we are not going to be overly concerned. We would be more worried if they actually owned the ports. But our impression is very clear, nobody, no country in the world really allows another country to own the port on their sovereign soil, especially a strategic one. Even Pakistan which is in many ways China’s strongest and longest strategic ally in this region, would not allow China to own a port on their soil.

So what exactly are we really concerned about strategically? And I think what we are looking at is of overall sense that one, we are, and this is something the Americans are now repeatedly warning us and it’s something I presume will be of a concern to anybody in the Indian Ocean or in the Asia pacific, the Americans keep telling us that we have a 300 ship navy today. In six years it is going to be 150 ships. The US navy is shrinking at a dramatic rate. We are going to have to start pulling ships out and one of the areas which we will probably pull a lot of ships out is the southern Indian ocean. And we would like you to step up to the plate. More than any other country you are the natural fit as to what is going on here. And I think India is still in many ways still digesting this but part of what we are doing for recognition is do a security vacuum in the Indian Ocean. There are not too many threats that are necessarily visible in this area. Though the Somalia pirates have suddenly come out of the blue in this region and we are now looking at them and thinking that maybe this is a sign of what could be happening in the future if there is not going to be somebody around to play that game.

But what India is very clear, is that we are not strong enough, and the Indian government has said this very publicly, we are not big enough, strong enough and we don’t really think that it’s a good idea that we sort of be the hegemon of the Indian Ocean. We want a security structure in which we bring as many possible players, the biggest players in the Indian Ocean together, and right now the structures that exist are too weak, they are almost too unknown. Rory mentioned the IORARC which I know in Australia is pronounce IORARC and at one point this caused confusion in diplomatic circles as some of them thought it was a reference to Iraq when the Australians kept talking about it. But what we have is a situation where the structures in the Indian Ocean, and we’ve actually compared this with what exists in the Atlantic.

The Atlantic actually isn’t a particularly big security area, but it is an area in which the connectivity between all these countries are on the Atlantic literal is very tightly knit, very well institutionalised. That type of structure virtually does not exist in the Indian Ocean. And that is the type of thing we will be looking to trying to create. And I think clearly Australia is a natural partner for a large portion of this and I think that is one of the reasons why India is engaging so many other countries in the literal area in an attempt to slowly build up to put together this net for the future.

And finally I will mention, because it is a topic of right now, and because the Persian Gulf in many ways is such a crucial portion of the trade and the strategic consequence of the Indian Ocean. To a large extent India has basically said this is an American lake. And the Persian Gulf is such a nightmare for anybody to go in and try to work out who is against who and why everybody seems to hate everybody there that we prefer almost to stay away. We have a very strong relationship with Oman which has many ways been our closest friend in the Gulf region. We have just signed defence agreements with Qatar, Saudi Arabia and Iran and Kuwait, and the United Arab Emirates are countries that we have a very strong relationship. UAE incidentally is our second largest trading partner if you dismember the European Union.

But what we are starting to see there is not only again America urging us perhaps you need to be getting involved, but also the countries in the gulf asking us perhaps we would like to consider a stronger presence within the gulf area.

But what has been happening with the Jaspan revolution in the Levante in particular and Egypt. We are starting to see another potential element in the foreign policy which we didn’t have before which is democracy facilitation, as it has been the Egyptians and it has been the Muslim brotherhood for example which is not an organisation that India has had a particularly strong relationship with, who has come to us and said why don’t you help us hold the elections in Egypt.

You have the capacity, you hold elections on an enormous scale in conditions that are very similar to what Egypt has today. And it is one of the things now, and I remember in some of my meetings with senior Indian officials, well this is something that we hadn’t fully expected and now we have to ask ourselves whether we really want to get in this game. But it is something now which I think we didn’t recognise as being something that the Arab world in particular, looked upon us as being a potential beacon for. And I think now this should become an element of our thinking on the Indian Ocean literal area and perhaps a little further beyond.

So I’ll just mention finally that India is a country whose strategic capacity is severely stretched. We have consistently underestimated our own economic growth rates, we have consistently underestimated the demands that the rest of the world would like to put on us, and have consistently underestimated the pace at which we are becoming integrated with the international system. So when we as for example as I was discussing with some of the panellists, our foreign ministry is half the size of Australia’s. Our naval structure, our military systems are not designed for military cooperation and have only recently begun to ramp up that capability and the world goes on. We are an isolationist power in tradition that is being forced out of its shell extremely rapidly so one of the reasons why we are looking for partners and countries that we have a high degree of comfort, which I will include Australia, is because we recognise that there are going to be limits especially in the short and medium term as to what we as a nation can do.

Thank you.

Dr Richard Smith, Australia’s Special Envoy to Afghanistan and Pakistan

Thankyou Pramit, and thank you Elena and Michael Chaney for having us here.

Look I like the term Indo-Pacific. We could do something with it, but the problem I have is that it’s a term that leaves out Asia, and Asia to me is still everything.

That said, what I want to talk about firstly is the Indian Ocean. You know I am old enough to be conscious of the history of the discussion of the Indian Ocean. Here in Perth in 1969 the then Minister for External Affairs, Gordon Freeth, lost his seat of Forrest of South West of Western Australia when he was the target of by the League of Rights, remember them, over a speech he made suggesting, as I recall it, “that we needn’t be too concerned about Soviet ships in the Indian Ocean”. We were supposed to be concerned.

Then in the 1980’s another son of these shores, Kim Beazley, another graduate here, made much as Defence Minister of the potential importance of the Indian Ocean to the defence of Australia, and more recently Stephen Smith, another graduate from here, as Foreign Minister, was very articulate about the importance of the Indian Ocean to our foreign and trade policy interests.

I am also old enough to remember that President Sukarno who proposed that the Indian Ocean be renamed the Indonesian Ocean. And I was present when an Indian Admiral asked the then Defence Indonesian Minister a couple of years ago whatever happened to that idea. And his answer was “look, we can’t think about a blue water navy, we can’t even police our internal waters”.

Look, rather than in the 10 minutes I have in reprising all the sorts of arguments that Kim Beazley and Stephen Smith had in mind, or to respond directly to my colleagues here, I just want to make a couple of points.

And the first is this, the Indian Ocean is bordered by many countries with many, many different issues and challenges and is characterised in the north by some very important sea lanes and I will come to that. But let us not imagine for a moment that it is a coherent region or a single strategic entity system. Do not imagine that one exists when it does not.

Each of its many sub-parts of course impact on Australia, and Western Australia in particular, but that does not mean that some of the parts is any easier to understand or to deal with. Almost the only thing that these many parts have in common is that the Indian Ocean washes their shores.

My second point follows from that. I think that frankly the Indian Ocean itself is much overrated as an entity of strategic importance. There are going to be for sure some countries bordering the Indian Ocean which carry great strategic weight and can influence regional affairs and in the future may well influence world affairs. India stands out of course, and Indonesia too may yet have its day. There are also a number of countries bordering the Indian Ocean which are very unstable, none more so than Somalia, and some others which have great potential for instability, Pakistan.

And of course there are some critically important in the national sea lanes, including the straits of Malacca, of Hormuz, of Bab el Mandeb, and not to mention the sea lanes northwards that are so important to Australia, the Sunda Straits, the Lombok Passage and so on, are all critically important yes to Australia, yes to East Asia, but to the extent that they are the lanes which provide the onward sales, the fuel that fuels the growth of East Asia critical to the world economy as well.

But almost all of this relates to the northern reaches of the Indian Ocean, putting them all together tossing in the many and varied issues facing the countries of the littoral, all of these parts don’t together make the Indian Ocean itself a single strategic entity for our liberal purposes. And here’s the point, it is certainly hard to see how naval or other strategic planners or policy makers in government could gain by seeing the Indian Ocean as a whole. In my view it remains far more useful and practical in economic and foreign policy terms, and from the point of view of any military planning that anyone may want to do to view it in the component parts I’ve referred to.

It follows that I think, like Rory, that the thesis being ascribed to Robert Kaplan about the Indian Ocean as the great theatre of the 21st century is overdone. Perhaps it would be too much to describe the Indian Ocean as a chunk of geography in search of a strategic role or even just of recognition, or perhaps it’s a matter of strategic commentators having done China to death looking for some other lucrative field. But as I’ve said I don’t think there is much to be gained by treating the Indian Ocean as a single strategic industry, and nor as it turns out does Robert Kaplan. In his book Monsoon, a terrific read incidentally, on the subject of the Indian Ocean, of the 330 pages he makes only 10 references to Australia and his references to Africa are principally in the form of a travelogue.

Which brings me to my third point. Let’s look at the map, as Dora The Explorer would say. In the Zone we have gone for 33 years with scarcely a shot fired in anger. A bit of stuff has gone on, and the North Koreans have sunk a ship recently. But for a generation this area has prospered and has been conflict free.

Let’s look to its shoulder. West of Mumbai. West of Mumbai is the nightmare region. The book ends of Bombay, Mumbai and Beirut. Both cities whose names that are evocative of violence, sadly. Book ends if you like could be called Kashmir and Palestine. And that says so much about the region. In the middle of the book shelf are Iran whose rift with the United States now goes back 30 years, is the most significant division in global affairs in that time. Either side of Iran, Iraq on one side and Afghanistan and Pakistan on the other. This is to use a word that Pramit used, a nightmare. It is a region which embraces the great nuclear issues of our time. There are two nuclear states in Israel and Pakistan, there are three or four nuclear states bordering it, Russia, India, China and there’s one major nuclear aspirant, Iran. As well it has been the home, the crucible of the great battle of ideas of our time, Huntington’s clash of civilisations and of course it is the world’s spring of the various forms of terrorism which have plagued us for a couple of decades and more recently the Al-Qaida form.

What is the difference between what has happened in this region and what has happened in this shoulder is this. That in the region for 30 years economic decision-making has predominated. Issues of sovereignty, politics, conflict, have been subordinated on the whole in the region to good clear decision-making, which have prioritised economic growth and prosperity. Sadly to the west - the nightmare region - that has not happened.

Think of this, the great policy goal to persuade India and Pakistan to subordinate political and sovereignty and historical issues in favour of economic decision-making. Think of the goal one great South Asian economy with all the benefits then of the one great East Asian economy we have. That’s the goal and then the Indian Ocean region will be transformed.

Finally let me return to the Indian Ocean and my scepticism about the re-found interest in its strategic importance. This discussion of course is in the hands of professional strategic commentators who have been brought up on the study of the history of military conflict. Now far be it for me to again say that, history is my own preferred discipline for which thanks to the University of Western Australia and we all know the old sore, those who forget history are destined to relive it. Equally however, those who see the world only through the lens of history and the conflicts that have defined it, risk being hostage to ways of thinking that may be different from reality or ignore new dynamics. Thus we regale often with the argument that as China rises it will inevitably come into conflict with America just as Germany came into conflict with great Britain 100 years ago, and as India rises it in turn will come head to head with China. The Economist in the last year has devoted two volumes to that.

In fact there is nothing ordained or inevitable about either of those prospects. If these discussions were led by economists they would highlight I am sure not the prospects for conflict but rather the benefits, the enormously and overwhelming benefits, of avoiding conflict and the imperative importance of governments to do so. They would question whether it would ever be in the interests of any power to interrupt or to put at risk the great sea lanes of the north Indian Ocean and would urge policy makers to concentrate on ensuring that these remain as they have been through history global common or thoroughfares.

I have never been known as a Pollyanna on these matters and as a former secretary of defence, I understand as well as anyone the need to plan for the worst while hoping for the best. And yes we much get the Indian Ocean into our strategic framework. But I would enjoin the business leaders and economists here not to succumb to a frightened view of the Indian Ocean but rather to try to ensure that the prophecies of the strategic tension and conflict school do not become self-fulfilling, to get behind a welcome and different constructive analysis of the Indian Ocean and what is happening in its environments.

Certainly there are plenty of counterparts in China, India and elsewhere in the wider region who are looking at it in that way and a lot of investment is going to that view. And optimism I think is at the very much the spirit of this series of In The Zone conferences.

Thank you.

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