SOURCE: LIGNET
Indian Prime Minister Manmohan Singh (center, wearing turban) stands with ASEAN heads of state for a group photo at a special ASEAN summit in New Delhi on December 20. (RAVEENDRAN/AFP/Getty Images)
Summary
An historic agreement reached by India and ASEAN countries on economic and maritime security cooperation is a reaction to growing fears about China’s increasingly aggressive efforts to claim almost the entire South China Sea as Chinese territory. While this agreement may lower tensions in the region in the short term, China is certain to deeply resent India’s move and it could eventually lead to a military incident.
On December 20, India expanded its free trade agreement with the Association of Southeast Asian Nations (ASEAN) to include services and investment. India has no territorial claims in the South China Sea but it has repeatedly emphasized the importance of freedom of navigation in the region. One of India’s major commercial ties to the sea area is with Vietnam, with which it has cooperated on joint oil and gas exploration projects in waters also claimed by China.
Background
For several decades, India has largely followed an economic growth model focused on boosting exports to the United States and the European Union. While India did adopt a “Look East Policy” (sometimes called “Turn East”) in the early 1990s, the catch phrase became little more than a rhetorical device and little real change took place in Indian foreign or economic policies.
Following the global economic crisis in 2008, India made the economic and strategic decision to flesh out its Look East policy. In 2009, India and the 10-member countries of the Association of Southeast Asian Nations, of which China is not a member, signed a free trade agreement (FTA) on goods. The effect of the agreement was significant: trade between India and ASEAN now stands at $79 billion compared to $32 billion before the agreement. An Indian trade official said after the signing of the new trade agreement that he expects India-ASEAN trade to reach $100 billion by 2015.
Given the vibrancy of Asia-Pacific economies and the boost of trade in goods, India led the way to expand the FTA to include services and investment. The agreement, which takes effect in August 2013, will impact key sectors such as healthcare, tourism, transportation, tourism, pharmaceuticals and biotechnology. Indian Prime Minister Manmohan Singh called the agreement “transformational” and said relations were at “an exciting stage.” He also said the agreement “will help unleash the vast economic potential of our region, accelerate development and deepen our strategic partnership.” While not singling out China by name, Singh indirectly referenced growing tensions in the region, saying that India and ASEAN “should intensify our political and security consultations.”
After the signing of the new agreement, several ASEAN leaders were much blunter about the need for enhanced maritime security cooperation. The leaders of the Philippines and Vietnam, the ASEAN members which have had the most territorial disputes with China in recent years, directly referenced rising concerns about maritime issues and the need to maintain a high level of maritime security. Similarly, Indonesian President Susilo Bambang Yudhoyono emphasized that “closer maritime cooperation with India was needed because 70 percent of the world’s traffic in petroleum products passes through the Indian Ocean from the Middle East to East Asia.”
Of particular concern to India and ASEAN was the announcement by China in early December that it was prepared to board foreign vessels in the South China Sea for infringing on Chinese territory. This announcement met with a sharp rebuke from ASEAN, which said that such moves could spark naval clashes. It also prompted India to say it was ready to deploy naval vessels to the South China Sea to protect energy exploration. This follows an incident last year when an Indian navy ship was challenged for entering ‘Chinese waters’ off the coast of Vietnam.
China said little about the new India-ASEAN agreement. Its response was muted, with China’s Foreign Ministry saying in a statement, “Both India and ASEAN are important partners of China. We hope improvement of their relations will contribute to the regional peace stability of development.”
Analysis
The agreement to expand trade between India and ASEAN is significant, but the decision to elevate relations to “strategic partnership” will resonate more loudly and is a direct challenge to China. While Beijing’s formal response at first glance may seem tepid and muted, the new agreement between ASEAN and India – a longtime adversary of China – will be a major concern to China’s new leadership.
In the past, China has successfully kept ASEAN divided and has been able to sideline its discussion of security issues. The fact that ASEAN and India used the signing of an FTA on services and investment, a purely economic issue, to fold in maritime security cooperation could be a sign that India may help unify ASEAN on security issues.
From the perspective of the United States, closer cooperation between India and ASEAN will be a welcome development. It complements the U.S. Asia “Pivot” (now called “rebalancing”) announced in November 2011 by President Obama in Jakarta. Just as ASEAN countries welcomed the decision by the U.S. to increase its engagement in the region, they will also welcome a greater role for India.
LIGNET continues to assess that the likelihood of a regional conflict remains low, but there is still a risk of skirmishes or clashes due to China’s increasingly aggressive naval activities. The decision by India to become more involved in the region, particularly its willingness to send naval vessels, will give pause to China. While China would have little reticence about engaging the Philippines or Vietnam in a one-on-one naval skirmish, it will be more reluctant to confront India. Given India’s cooperation with Vietnam on a number of resource exploration projects, the likelihood of China engaging Vietnam may go down. Consequently, LIGNET sees the move by India as lowering tensions, at least in the short term, in the contentious South China Sea.
Given the longtime hostility between the two countries and territorial disputes, India’s actions could lead to a naval conflict over the longer term. China will view an India naval presence in the South China Sea as a deeply provocative act, especially after India tested long-range missiles this year capable of hitting Beijing. As LIGNET reported last July, China already sees the Indian navy as a threat and reportedly launched a cyber-attack against it earlier this year. A downturn in China-India relations coupled with a new Chinese campaign to reinforce its claims to the South China Sea could precipitate a China-India naval incident to convince New Delhi to keep its navy out of what Beijing claims is Chinese territory.
Conclusion
China’s increasingly aggressive behavior in the South China Sea has prompted a backlash not only in the region, but in Washington and New Delhi. First the U.S. and now India have announced they will play a much more prominent role in the region, not only economically but militarily as well. India’s decision to send naval vessels to the South China Sea could lower tensions in the short term but will be viewed as a provocative act by China that could lead to a naval confrontation down the road.
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