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Geopolitics and Maritime Security in the Straits of


Malacca: Implications of Chinas Maritime Silk Road and
Indonesias Global Maritime Fulcrum
Carlyle A. Thayer

Presentation to the
th
8 MIMA International Conference on the Straits of Malacca
Resolving Regional Issues and Their Impact on the Straits of Malacca
Session 1, Paper 1,
Malaysian Institute for Maritime Affairs
Istana Hotel, Kuala Lumpur
April 25, 2016
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Geopolitics and Maritime Security in the Straits of Malacca:

Implications of Chinas Maritime Silk Road and

Indonesias Global Maritime Fulcrum


Carlyle A. Thayer

Introduction
This presentation compares and contrasts two major initiatives that will impact on the
security of the maritime domain in the approaches to the Straits of Malacca in coming years:
President Xi Jinpings 21st Century Maritime Silk Road and President Joko Widodos Global
Maritime Fulcrum. This presentation begins by summarising the key elements of each
initiative. Both have a strong domestic economic focus. The presentation then considers four
questions: (1) what are the motivating factors behind each initiative? (2) what is the scope of
each initiative? (3) what are the security benefits of each initiative? and (4) what are the
potential security risks and pitfalls of each initiative? This presentation concludes by offering
a broad net assessment of these initiatives on the geo-politics of the maritime region
centred on the Straits of Malacca. If successful, both China and Indonesia will enhance their
political and strategic influence; but Indonesia and other Southeast Asian maritime states
will resist the superimposition of Chinas grand strategy on their autonomy. 1

1. Overview
According to the Asian Development Bank (ADB), Asias demand for new investments in
infrastructure estimated at $8 trillion for the period 2010-2020 (or $800 billion per year) -
far exceeds the capacity of existing multilateral lending agencies. The ADB itself can provide
only about $10 billion in loans per year for infrastructure. In 2014, the ADB provided nearly
$14 billion on new projects in Southeast Asia. The ASEAN Infrastructure Fund, a joint
arrangement between the ADB and ASEAN, only had $485 million to invest. 2
During the 2010-2020 time frame Indonesia is estimated to require $230 billion for
infrastructure development, while the countries comprising the Greater Mekong Sub-region
(Thailand, Laos, Cambodia and Vietnam) are estimated to need $50 billion. In the period
from 2015 to 2030 countries in Southeast Asia plan to spend an estimated $7 trillion to
upgrade infrastructure.3

1 C.P.F. Luhulima, Superimposition of Chinas silk road and Indonesias maritime fulcrum, Jakarta Post, 13
December 2014 and Scott Bentley, Indonesia: An Emerging Maritime Power, in Asia-Pacific Regional Security
Assessment (London: Institute for Strategic and International Studies, 2015), 10 and Iis Gindarsah and Adhi
Priamarizki. Indonesias Maritime Doctrine and Security Concerns, Policy Report, Singapore: S. Rajaratnam
School of International Studies, 2014, 2.

2 Gerald Chan, Chinas New Silk Road: A New Global Financial Order in the Making?, Paper presented to the
Inaugural International Conference on China-US Relations in Global Perspective sponsored by the New Zealand
Contemporary China Research Centre, Victoria University of Wellington, Wellington, New Zealand, 8-9 October
2015.
3 Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
3

Where are the investment funds going to come from?


Maritime Silk Road. The Maritime Silk Road initiative is part of Chinas broader strategic
thrust. In September-October 2013, President Xi Jinping proposed two initiatives on his visits
to Kazakhstan and Indonesia a Silk Road Economic Belt and a 21 st Century Maritime Silk
Road. These two initiatives have been grouped under the expression One Belt, One Road
(OBOR). A major aim of the OBOR initiative is to fund a broad range of infrastructure in order
to promote greater connectivity by air, land and sea between China, Eurasia, Europe, South
Asia, Southeast Asia and the South Pacific.
President Xi formally announced Chinas OBOR initiative at the Boao Forum for Asia annual
conference on Hainan Island on 28 March 2015. At the same time, Chinas National
Development and Reform Commission released a comprehensive overview in a document
entitled Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century
Maritime Silk Road.4
After President Xis visit to Indonesia in October 2013, Premier Li Keqiang addressed the
China-ASEAN Expo and tabled the proposal to build a Maritime Silk Road orientated towards
the Association of South East Asian Nations (ASEAN) to be jointly funded by China and the
individual members of ASEAN. In March 2016, Premier Li offered five Southeast Asian
countries $10 billion in credits and $1.54 billion in preferential loans for infrastructure
development along the Mekong River.5
According to the HSBC, Chinas proposed New Silk Road Initiative is estimated to cost $232
billion. China has identified the Asian Infrastructure Investment Bank (AIIB), the New
Development Bank (formerly BRICs Bank), and the Silk Road Fund as the prime lending
agencies.6 The AIIB has now been established with fifty-seven founding members (not
including Japan and the United States). China will provide the lions share of the $100 billion
proposed initial capital. The China also has agreed to cooperate with the ADB.
The Silk Road Fund is a limited liability company set up in China with a registered capital of
$10 billion. Its shareholders include the China Investment Corporation (sovereign wealth
fund under the Ministry of Finance), China Development Bank, Export Import Bank of China
and the State Administration of Foreign Exchange. The Silk Road Fund, under the control of
the Peoples Bank of China, is expected to attain $40 billion in investment capital. 7 Its first
project was a $4 billion investment to upgrade Pakistans railway network.8

4 Peoples Republic of China, Ministry of Foreign Affairs and Ministry of Commerce, National Development and
Reform Commission, Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime
Silk Road (Beijing: Foreign Languages Press, March 2015).
5 Reuters, China offers $11.5 billion in loans, credit to Southeast Asia, Bangkok Post, 23 March 2016.
6 Dipankar Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, ISEAS Perspective, No. 14,
31 March 2016, 3; Christopher K. Johnson, President Xi Jinpings Belt and Road Initiative: A Practical
Assessment of the Chinese Communist Partys Roadmap for Chinas Global Resurgence. Report of the CSIS
Freeman Chair in China Studies. Washington, D.C.: Center for Strategic and International Studies, March 2016,
17-18 and Luhulima, Superimposition of Chinas silk road and Indonesias maritime fulcrum.

7 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 19-20 and
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.

8 Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
4

Global Maritime Fulcrum. Indonesias Joko Widodos (Jokowi) raised the theme of the
salience of Indonesias archipelagic maritime domain during national elections and in his
inaugural speech as President to Parliament on 20 October 2014. 9 President Jokowi later
announced his Global Maritime Fulcrum (poros maritime dunia) strategy at the East Asia
Summit in Myanmar on 13 November 2014. 10 Like Chinas OBOR, it too is aimed developing
Indonesias maritime infrastructure with a priority on upgrading and developing Indonesias
ports maritime transport, shipbuilding industry, domestic tourism, and maritime forces, both
civil and military.11
According to two Indonesian academic specialists, President Jokowis overarching concept of
a Global Maritime Fulcrum is the centrepiece of his administration. In their view:
It fundamentally represents a national vision and development agenda to rebuild the countrys maritime
culture and expand its economy. The concept also signifies a new strategic doctrine that projects
Indonesia to become a maritime power with considerable diplomatic influence. Specifically, the Jokowi
administration seeks to play a central role in two vast maritime regions the Indian and Pacific oceans. 12

2. What are the motivating factors behind each initiative?


Maritime Silk Road. Chinas OBOR initiative is the centrepiece of the economic, political and
strategic policy framework adopted by Chinas Fifth Generation Leadership under the
Chinese Communist Party (CCP) General Secretary Xi Jinping. 13 It is the culmination of Chinas
earlier going out policy and it is part and parcel of Xis great rejuvenation of the Chinese
nation and his China Dream.14 According to Christopher Johnson, The purpose of (Chinas)
foreign relations remains first and foremost to secure good external conditions for Chinas
reform, development and stability15 He also observed that
In many ways, OBOR serves as the embodiment and executive agent of recent changes President Xi has
made to the ways China envisions itself interacting with the world. In particular, and as is the case in so
many other policy areas, Xis unique contribution appears to seek absolute alignment between Chinas

9 For early accounts of Jokowis foreign policy see: Aaron L. Connelly, Indonesian foreign policy under
President Jokowi, Lowy Institute Analysis, Lowy Institute for International Policy, October 2014; Emizra Adi
Syailendra, Consensual Leadership in ASEAN: Will It Endure Under Jokowi?, RSIS Commentary No. 5, 7 January
2015; Phuong Nguyen, Indonesias Foreign Policy under Jokowi: A Giant Comes Knocking, cogitASIA
(Washington, D.C.: Center for Strategic and International Studies), 13 January 2015; Marvyn Piesse, Indonesian
Foreign Policy and the Regional impact of its Maritime Doctrine, Strategic Analysis Paper, Perth: Future
Directions International, 29 January 2015; Donald Weatherbee, The Incredible Shrinking Indonesia, PacNet
No. 64, 23 September 2015; and Natasha Hamilton-Hart and Dave McRae, Indonesia: Balancing the United
States and China, Aiming for Independence, Emerging US Security Partnerships in South-East Asia, Sydney: The
United States Studies Centre, The University of Sydney, November 2015, 20-24.

10 This concept is also translated as global maritime nexus or global maritime axis.
11 Bentley, Indonesia: An Emerging Maritime Power, 9-20; Marvyn Piesse, The Indonesian Maritime
Doctrine: Realising the Potential of the Ocean, Strategic Analysis Paper, Perth: Future Directions International,
22 January 2015 and Michael R. Calistro, Indonesias maritime strategy: Jokowis gamble, PacNet Newsletter
No. 66A, Honolulu: Pacific Forum CSIS, 5 October 2015.
12 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 2.
13 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 2.
14 Johnson, President Xi Jinpings Belt and Road Initiative, 11.
15 Johnson, President Xi Jinpings Belt and Road Initiative, 11.
5

foreign economic diplomacy and the CCP-driven policy framework emerging as a hallmark of his
tenure.16

According to Johnson, there are three CCP foreign policy tenets and concepts that underpin
Xis OBOR initiative:
The period of strategic opportunity up to 2020 during which the external security
environment will be conducive for China to concentrate on internal development.
The concept of peaceful development that Chinas rise can only be achieved by
peaceful means and win-win outcomes for China and its neighbours and partners.
The stress on two important anniversaries: the hundredth anniversary of the founding of
the CCP (2021) and the centenary of the Peoples Republic of China (2049). 17
Global Maritime Fulcrum. President Jokowi is seeking to revive Indonesias maritime past.
His initiative may be seen as an extension of Indonesias archipelagic concept (wawasan
nusantara) in which the sea was the medium that unified a sprawling archipelago. For
example, in his inaugural speech to parliament on 20 October 2014 he said:
We have for far too long turned out back on the seas, the oceans, the straits, and the bays. [The time
has come to] restore Indonesia as a maritime country. 18

3. What is the scope of each initiative?


Maritime Silk Road. Chinas Vision and Actions on Jointly Building Silk Road Economic Belt
and 21st-Century Maritime Silk Road sets out the overall framework of Xis OBOR initiative
under seven heading: background, principles, framework, cooperation priorities,
cooperation mechanisms, Chinas regions in pursuing opening up, and China in Action. 19 Xis
OBOR is breath-taking in its scope:
The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents
and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and
Road, set up all dimensional, multi-tiered and composite connectivity networks, and realize diversified,
independent, balanced and sustainable development in these countries. The connectivity projects of the
Initiative will help align and coordinate the development strategies of the countries along the Belt and
Road, tap market potential in this region, promote investment and consumption, create demands and
job opportunities, enhance people-to-people and cultural exchanges, and mutual learning among the
peoples of the relevant countries, and enable them to understand, trust and respect each other and live
in harmony, peace and prosperity.20

With reference to the Maritime Silk Road, Xis initiative envisages two sea routes, one from
Chinas east coast to Europe via the South China Sea and the other from Chinas east coast to

16 Johnson, President Xi Jinpings Belt and Road Initiative, 11.


17 Johnson, President Xi Jinpings Belt and Road Initiative, 3 and 13. The CCP has set the goal of being a
moderately well-off society by 2020 and by 2049 China will have built a modern socialist country that is
strong, prosperous, democratic, culturally advanced, and harmonious.

18 Quoted in Bentley, Indonesia: An Emerging Maritime Power, 10.


19 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road (Beijing:
Foreign Languages Press, March 2015), 2; see also Banerjee, Chinas One Belt One Road Initiative An Indian
Perspective, 2-3.

20 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 5.
6

the South Pacific via the South China Sea.21 China would give priority to jointly building
smooth, secure and efficient transport routes connecting major sea ports along the Belt and
Road such as the China-Pakistan Economic Corridor, and the Bangladesh-China-India-
Myanmar Economic corridor.22 In addition, China has identified priority areas to promote
cooperation: policy coordination, facilities connectivity, unimpeded trade, financial
integration and people-to-people bond.23
Chinas vision of financial arrangements is expansive and includes pan-Asian systems for
currency stability, investment and finance, and credit information and expanded bilateral
currency swap and settlement arrangements. China also envisages multilateral cooperation
to provide syndicated loans and bank credit including permitting companies and financial
institutions along the OBOR with good credit standing to issue Renminbi denominated bonds
in China. Chinese financial institutions and companies with good credit ratings would be
permitted to issue bonds in Renminbi and foreign currencies outside China. Further, China
would like to expand practical cooperation through the China-ASEAN Interbank
Association.24
China also has identified four cooperation mechanisms: existing bilateral arrangements (joint
committee, mixed committee, coordinating committee, steering committee and
management committee), Memoranda of Understanding or plans, bilateral cooperation
projects and bilateral joint working mechanisms. China also singled out existing multilateral
institutions and fora, including ASEAN Plus China (ASEAN Plus 1), Asia Pacific Economic
Cooperation, Asia-Europe Meeting, Asia Cooperation Dialogue, Conference on Interaction
and Confidence-Building Measures in Asia, the Greater Mekong Subregion, the Boao Forum
for Asia, and the China-ASEAN Expo. To cap this off, China proposed to set up an
international summit forum on the One Belt and One Road Initiative. 25
Chinas OBOR master plan includes a major stress on the role of involving Chinas provinces
and regions. For example, the Guangxi Zhuang Autonomous Region in the southwest would
interact with ASEAN countries. The Beibu (Tonkin) Gulf Economic Zone and the Pearl River-
Xijang Economic Zone would link up to form an international corridor opening to the ASEAN
region.26 In addition, Chinas plans include:

21 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road (Beijing:
Foreign Languages Press, March 2015), 10. There are reports that China excluded the Philippines from its
Maritime Silk Road initiative; see: Andrew Browne, China Bypasses Philippines in Its Proposed Maritime Silk
Road, The Wall Street Journal, November 10, 2014. http://www.wsj.com/articles/china-bypasses-philippines-
in-its-proposed-maritime-silk-road-1415636066.

22 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 10 and
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?. China financed two pipelines
across Myanmar that bring Middle East oil and gas to cities in southwestern China. The pipelines across
Myanmar run for 771 km and continue for another 1,631 km in China to reach Kunming, Chengdu and
Chongqing. The total cost of this project was $2.5 billion.

23 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 12-23;
see the discussion in Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 5-6.

24 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 19-20.
25 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 15-26.
26 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 29.
7

[making] good use of the geographic advantage of Yunnan Province, advance the construction of an
international transport corridor connecting China with neighboring countries, develop a new highlight of
economic cooperation in the Greater Mekong Sub-region and make the region a pivot of Chinas
opening-up to South and Southeast Asia.27

In November 2014, President Xi announced at the APEC Summit in Beijing that China would
establish a $40 billion fund to finance infrastructure construction as part of the OBOR
initiative while the Bank of China announced plans to extend $20 billion in credit to OBOR-
related projects in 2015 and $100 billion over the next three years. After the APEC meeting
Xi delivered a major policy speech to the Chinese Communist Partys Foreign Affairs Work
Conference. Xi stated, We should prepare timetables and road maps for the coming years
for the OBOR project and will focus on some significant projects and let the construction of
OBOR commence as soon as possible. 28
Chinas One Belt One Road Initiative embraces up to sixty-five countries with a combined
population of 4.4 billion or sixty-three per cent of the worlds population and twenty-nine
per cent of the worlds Gross Domestic Product (GDP) or $21 trillion. The Maritime Silk Road
envisages linking China with eleven countries in Southeast Asia and seven countries in South
Asia for a total of eighteen.29
Global Maritime Fulcrum. The scope of President Jokowis Global Maritime Fulcrum ranges
across the entire Indonesian archipelago with the aim of improving maritime connectivity
and infrastructure internally as well as linking the Indonesian archipelago to the Pacific and
Indian Oceans. It is focused on both internal passageways and international passageways.
The external dimension of the Global Maritime Fulcrum is focused on ending illegal
unreported and unregulated fishing (IUUF) in Indonesias Exclusive Economic Zone (EEZ) as
well as smuggling and piracy, and developing maritime defence forces capable of deterring
external states.30
According to President Jokowi five pillars support his concept of the Global Maritime
Fulcrum: maritime culture, marine resources, archipelagic connectivity, maritime diplomacy,
and naval modernisation.31
According to Gindarsah and Priamarizki the Global Maritime Fulcrum
Would improve maritime connectivity and infrastructure such as building sea highways, constructing
deep seaports and logistical networks as well as developing indigenous maritime tourism, fishing and
shipping industries. It also seeks to maintain and manage marine resources to ensure the countrys
food sovereignty.32

27 Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 30.
28 Quoted in Johnson, President Xi Jinpings Belt and Road Initiative, 1.
29 Chan, Chinas New Silk Road: A New Global Financial Order in the Making? and Johnson, President Xi
Jinpings Belt and Road Initiative, 1.

30 Sean Quirk and John Bradford. Maritime Fulcrum: A New U.S. Opportunity to Engage Indonesia, Issues &
Insights, Honolulu: Pacific Forum CSIS, October 2015, 2; Piesse, Indonesian Foreign Policy and the Regional
impact of its Maritime Doctrine; 4-6 and Gindarsah and Priamarizki, Indonesias Maritime Doctrine and
Security Concerns, 2.
31 Bentley, Indonesia: An Emerging Maritime Power, 10; and Gindarsah and Priamarizki. Indonesias Maritime
Doctrine and Security Concerns, 2-3.

32 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 2-3.
8

Scott Bentley concludes:


While Indonesias president has made clear that he intends to work with China as an economic partner,
including seeking its investment in building maritime connectivity, he has also emphasised that he will
not allow such cooperation to compromise Indonesias sovereignty or jurisdiction. 33

4. What are the security benefits of each initiative?


Maritime Silk Road. The OBOR initiative aims to link Chinas western regions over land with
Eurasia, ensure safe navigation by sea and improved relations with countries that lie along
both land and sea routes. As the OBOR initiative matures China would strengthened its
presence in Central Asia/Eurasia and, at the same time, would have reduced the Malacca
Dilemma.34
Chinas OBOR initiative is primarily aimed at domestic economic development by enlisting
the provinces on Chinas borders as well as underperforming regions (Xinjiang, Ningxia,
Qinghai and Yunnan) and rust belt provinces in the northeast and integrating them in an
externally orientated development program.35 OBOR might mitigate security challenges on
Chinas periphery such as instability in Afghanistan.
The OBOR initiative would absorb Chinas industrial iron, construction materials such as
steel, cement and heavy machinery.36
OBOR would be a proverbial lifeline to state-owned enterprises (SOEs) that are over
burdened with debt and non-performing loans by injecting new capital from state banks that
would not be available otherwise. New capital would also enable Chinas larger SOEs to
transform themselves into internationally competitive global companies. 37
Chinas OBOR initiative would benefit the countries that participated in it by addressing their
massive demand for investment in developing infrastructure. Both China and the
participating countries would benefit from secure market access, efficient customs
clearances, secure banking, interstate money exchange facilities, comprehensive
infrastructure development, and security along sea lines of communication (SLOCs). In sum,
OBOR would provide mutual benefits to all the parties and economic growth would spill over
and positively impact on internal security.
Finally, China would emerge with a greater role in the global economy and greater influence
over the global financial infrastructure.
Global Maritime Fulcrum. Jokowis Global Maritime Fulcrum is primarily aimed at developing
Indonesias domestic economy. Indonesia wants to develop and modernize its internal
infrastructure and maritime connectivity, develop its fishing and shipping industries. The
Global Maritime Fulcrum also has explicit security and defence objectives including

33 Bentley, Indonesia: An Emerging Maritime Power, 17.


34 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 7 and 9.
35 Johnson, President Xi Jinpings Belt and Road Initiative, 20.
36 Johnson, President Xi Jinpings Belt and Road Initiative, v, 18 and 20 and Geoffrey Till, Dominion, Trade
and the Maritime Silk Road: A Review of the Issues, Soundings No. 9, Canberra Sea Power Centre Australia,
2016, 4.

37 Johnson, President Xi Jinpings Belt and Road Initiative, v.


9

modernization of Indonesias maritime forces including the navy and coast guard and
stepping up defence diplomacy.38
President Widodos emphasis on maritime diplomacy will result in greater diplomatic efforts
to negotiate unresolved territorial and maritime jurisdictions with neighbouring states. 39
Indonesia also seeks to develop its capacity for maritime law enforcement and modernize its
navy to deter foreign intrusions into Indonesian waters. Indonesias capacity to meet these
objectives will be closely tied to maintaining relatively high growth rates that will enable
Indonesia to increase the per cent of GDP spent on defence from one to 1.5 per cent. 40
If Indonesias increased its capacity for maritime law enforcement, it would be able to
reduce illegal unreported and unregulated fishing in its EEZ that cost Indonesia an estimated
$20-24 billion each year.41
Indonesias Global Maritime Fulcrum could see renewed efforts by the newly created
Maritime Security Agency (Bakamla) to deal with piracy at its root source in Indonesia.
In order to achieve the objectives of the Global Maritime Fulcrum Indonesia must attract
overseas investment. This provides an opportunity to align Chinas Maritime Silk Road
funding for Indonesian maritime infrastructure priorities. 42 This could have the effect of
spurring competing investment from Japan, the United States, South Korea, Australia and
Europe.43 This competitive dynamic also applies to expanding bilateral cooperation in
modernizing Indonesias defence.44

38 Bentley, Indonesia: An Emerging Maritime Power, 15-16 and Piesse, The Indonesian Maritime Doctrine:
Realising the Potential of the Ocean, 5-8; Iis Gindarsah, Indonesias Defence Diplomacy: Harnessing the
Hedging Strategy Against Regional Uncertainties, RSIS Working Paper No. 293, Singapore: A. Rajaratnam School
of International Studies, 9 June 2015; and Gindarsah and Priamarizki, Indonesias Maritime Doctrine and
Security Concerns, 3-13.

39 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 3-4 and Piesse, The
Indonesian Maritime Doctrine: Realising the Potential of the Ocean, 4.

40 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 3-5 and 11-12.
41 Hongzhou, Indonesias War on Illegal Fishing: Impact on China, RSIS Commentary No. 192, September
2015, 1 and Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 4.

42 Luhulima, Superimposition of Chinas silk road and Indonesias maritime fulcrum and Piesse, The
Indonesian Maritime Doctrine: Realising the Potential of the Ocean, 3. For a brief overview of Indonesias
relations with China see: Hamilton-Hart and McRae, Indonesia Balancing the United States and China, Aiming
for Independence, 8-11.
43 For concerns about China see: Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 2-3
and 5-6; Lucio Blanco Pitlo, Balancing the U.S. Rebalance, China-US Focus, 19 April 2016; Quirk and Bradford.
Maritime Fulcrum: A New U.S. Opportunity to Engage Indonesia, 3-5; Piesse, The Indonesian Maritime
Doctrine: Realising the Potential of the Ocean, 8; and Hamilton-Hart and McRae, Indonesia Balancing the
United States and China, Aiming for Independence, 16-19.
44 Quirk and Bradford. Maritime Fulcrum: A New U.S. Opportunity to Engage Indonesia, 5-10; Kyodo, Japan
courts Indonesia with defence equipment as it seek to counter Chinas influence in Asia, South China Morning
Post, 17 December 2015; Reuters, Japan, Indonesia to Solidify Security Ties, Voice of America News, 17
December 2015; Reiji Yoshida, Japan, Indonesia hold first two-plus-two talks, agree to work toward transfer of
defence weapons, Japan Times, 17 December 2015; Agence France Presse, Japan, Indonesia agree on defence
technology transfer talks, Yahoo News, 18 December 2015 and Reuters, China offers $11.5 billion in loans,
credit to Southeast Asia, Bangkok Post, 23 March 2016. For a brief overview of Indonesias relations with the
10

President Jokowis stress on a two-ocean outlook has already resulted in Indonesias raised
participation in Indian Ocean affairs as exemplified by its chairmanship of Indian Ocean Rim
Association in 2015.45

5. What are the potential security risks and pitfalls of each initiative?
Maritime Silk Road. Chinas OBOR initiative is historically unprecedented. It is several times
greater than the scope of the Marshal Plan.46 The major risk is the continuing slowdown in
the Chinese economy fuelled by scepticism about Chinas official GDP growth rate figures. 47
A slowdown in Chinese growth would reduce to a certain extent Chinas role in regional
trade and investment.
Critics have questioned whether China has the requisite experience, human capital and
technological knowhow and expertise to manage such a gargantuan project involving so
many central government ministries and agencies as well as provincial governments. 48 There
is a risk that some provinces may seek funds primarily to assist debt-ridden state-owned
enterprises or that OBOR projects could encourage adventurism by Chinese SOEs looking to
expand overseas. Another risk is that some projects may turn out to be economically
unviable.
OBOR is more of a sweeping vision with a multitude of objectives than an operational
blueprint. Critics charge that OBOR is too hasty, too broad, too ambitious, and without
sufficient preparation that could result in financial wastage. One of the potential major
pitfalls is how China will deal with unexpected contingencies such as: economic difficulties
such as credit risks, environmental issues (for example, the Mitsore dam in Myanmar 49),
political instability and insecurity arising from ethnic and religious complexities., especially
where land routes are linked to seaports along the Maritime Silk Road.
Chinas OBOR initiative is supposed to provide mutual benefits for the parties involved.
Many of the mooted OBOR projects are high-profile ones involving China and the host
governments. Set backs and failures could have domestic repercussions. There are multiple
risks that OBOR will be viewed a self-serving by host governments and companies thus
generating concerns over competition as new markets open up and over dependence on
economic networks centred on China.50

United States see: Hamilton-Hart and McRae, Indonesia Balancing the United States and China, Aiming for
Independence, 12-15.

45 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 3 and Piesse, The
Indonesian Maritime Doctrine: Realising the Potential of the Ocean, 4.

46 Johnson, President Xi Jinpings Belt and Road Initiative, 21.


47 Ye Xie and Phil Kuntz, China GDP suspicions arise anew, The Australian Financial Review, 14 April 2016 and
Johnson, President Xi Jinpings Belt and Road Initiative, 2.

48 This paragraph and the following two paragraphs draw heavily on Johnson, President Xi Jinpings Belt and
Road Initiative, vi , 10 and 21-23; see also Till, Dominion, Trade and the Maritime Silk Road: A Review of the
Issues, 5-8.

49 Reuters, China offers $11.5 billion in loans, credit to Southeast Asia, Bangkok Post, 23 March 2016.
50 Johnson, President Xi Jinpings Belt and Road Initiative, vi.
11

Chinas development of ports in Myanmar, Sri Lanka and Pakistan (Gwadar) are likely to raise
alarm bells in India about Chinas intrusion into the Indian Ocean if not Chinese encirclement
and isolation of India.51
Global Maritime Fulcrum. As Scott Bentley has pointed out, there is an inherent tension
between the domestic development focus of Indonesias third pillar of its Global Maritime
Fulcrum with the fourth and fifth pillars that focus on national security and defence. 52 In
addition, there is also the risk of the Armys reaction to a decrease in funding and/or role in
favour of the navy.
President Jokowis prime focus on protecting and defending Indonesian sovereignty
especially in reducing if not eliminating IUUF has already produced tensions in its relations
with China.53 As Indonesias capacity for maritime law enforcement develops there is a risk
of further clashes at sea between the coast guard agencies of both countries.
President Jokowis nationalism will reinforce Indonesias past reluctance to become involved
in multilateral efforts to tackle the regional piracy.
6. Net Assessment: Geo-political Impact
Geoffrey Till provides a suitable framework for a net assessment of the geo-political impact
on Chinas Maritime Silk Road and Indonesias Global Maritime Fulcrum on regional security
centred on the Straits of Malacca.54 Both of these initiatives promote trade and raise issues
about the relationship between trade and what Till calls dominion (domination or control).
Till presents four schools of thought:
The Manchester School that argues trade and the threat or use of force (war) are
antithetical because private companies primarily compete for private gains. This school
seems least relevant to the concerns of this paper because much of the focus on Chinas
trade is related to state-owned enterprises.
The second school argues that trade is not conducted in a strategic vacuum and the state
has to intervene at some point in time. This could lead to state versus state conflict.
The third school argues that trade generates economic power and this in turn increases
the resources available for the military in general and the navy in particular. According to
this school of thought a state should pursue an advantage in trade to enhance the
capacity for strategic dominion.
The fourth school argues that success in sea-based trade can usurp the role of military
power at sea by shaping the way states behave. In other words, states can use their
economic power as a lever of influence over another states.55

51 Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 6.
52 Bentley, Indonesia: An Emerging Maritime Power, 17.
53 Scott Bentley, Indonesias global maritime nexus: looming challenges at sea for Jokowis administration,
The Strategist, Canberra: Australian Strategic Policy Institute, 26 May 2014 and Zhang, Indonesias War on
Illegal Fishing: Impact on China.
54 Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1-4.
55 Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1.
12

Till notes in his summary that the latter three schools on the role of trade and dominion are
mutually supporting and in their broadest sense may be used to identify five major Chinese
geo-political objectives behind it OBOR initiative (1) a general desire to reshape the world
with a greater role for China; (2) winning friends and influencing people; (3) advantageous
access to resources; (4) energy security (diversity sources and routes); and (5) reducing
strategic vulnerability through Malacca Straits.56
Forty per cent of Chinas trade passes through the Straits of Malacca. China views the straits
as a point of vulnerability in times of crisis and is thus developing alternate routes for its
energy needs. For example, normal shipping from Saudi Arabia to Shanghai via the Malacca
Strait takes up to two weeks. The Bangladesh-China-India-Myanmar Economic corridor has
slashed transport times substantially. This has implications for the global oil market as well
as the strategic importance of the Straits of Malacca and hence the geo-strategic
calculations of Southeast Asian and other stakeholders.
India has a crucial role to play in the overall success of the One Belt One Road initiative. The
ancient southwest Silk Road by land linked India to Chengdu and Kunming. Kolkata and
Kalinga on the coast of Orissa provided maritime access the outside world. Indias non-
participation could result in isolation.57
India is in need of massive investment for its infrastructure and that was no doubt a
motivating factor in Indias decision to join the AIIB. 58 As yet neither India nor China has
indicated any clear commitment to jointly developing infrastructure in India that would
support the Maritime Silk Road.
The Maritime Silk Road will allow China to reduce risks of the Malacca Dilemma through
access to maritime facilities in the Indian Ocean, such as ports in Myanmar and Sri Lanka not
to mention Pakistan.59 The China-Pakistan Economic Corridor gives China enhanced strategic
security and greater bargaining power and negotiation flexibility in resources market and
transportation market.60 In sum, China diversification of energy supplies and related
transportation routes therefore serves its geo-political interests. 61
If Asias future demands for quality infrastructure are met that will result in increased global
trade by land and by sea, this will not reduce the importance of the Straits of Malacca as a
vital transit corridor. Indeed, regional specialists forecast a rise in shipping passing through
the Straits of Malacca in coming years.
If the OBOR initiative succeeds it will support Chinas continuing economic growth. A larger
Chinese economy will have more resources to advance Chinas interests along the Maritime
Silk Road and also will result in increased funding for the Chinese military and the Peoples

56 Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1 and 4-5.
57 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 1, 3-4 and 7-8.
58 Shao Yuqun, Two Roads, But One Destination?, Paper presented to the Inaugural International Conference
on China-US Relations in Global Perspective sponsored by the New Zealand Contemporary China Research
Centre, Victoria University of Wellington, Wellington, New Zealand, 8-9 October 2015.
59 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 1 and 3-4.
60 Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
61 Johnson, President Xi Jinpings Belt and Road Initiative, v.
13

Liberation Army Navy (PLAN) in particular. The PLANs role in the South China Sea and
western Pacific and Indian oceans will expand as part of the new normal far seas
activities.62
Chinas OBOR initiative is likely to achieve some success and improve connectivity along the
Maritime Silk Road. This raises the salience of security for Chinas SLOCs via the South China
Sea to the Indian Ocean.
China will continue to give high priority to provide the funds to enhance ASEAN connectivity
modern highways, railways, ports, power lines, telecommunications, and pipelines.
Mainland Southeast Asia will be drawn closer to China economically. According to one
analyst, At worst, it could turn ASEANs countries into southern Chinese provinces. 63 And
China will have more influence and leverage in Southeast Asia to promote a more China-
centred economic (if not security) architecture.
According to Johnson, OBOR is comprehensive, focused and personal to President Xi. 64
Chinas priority is internal development and modernization and promotion of stable external
environment, including stable relations with the United States. China is not overtly seeking
to be a disruptive power either regionally or globally (however Chinas assertiveness in the
South China Sea partly undercuts this argument because it raises regional tensions).
Chinas OBOR initiative and increased economic and political leverage will induce the United
States, Japan, India and other countries to respond with aid and investment inducements of
their own to preserve their interests in Southeast Asia and to balance China. 65 Major power
rivalry will continue to have both a bilateral and multilateral focus.
The emergence of the AIIB and other China-initiated multilateral banks will challenge the
dominance of the global financial architecture established after the Second World War
World Bank, International Monetary Fund and later the ADB. Nevertheless, both sets of
institutions will have a continuing role because the demand for investment in infrastructure
will exceed the funding available from all sources.
There will also be competition about regional trade arrangements if the United States
Senate ever approves the Trans Pacific Partnership. Chinas will continue championing the
Regional Comprehensive Economic Partnership (RCEP) and push to upgrade the China-
ASEAN Free Trade Agreement. 66
Chinas Maritime Silk Road will result in linking ports and maritime facilities from Chinas east
coast through the South China Sea to the western Indian Ocean. China will acquire access to
and control over harbour facilities, marine logistics, security of transportation at sea, access
to marine resources and the type of naval support and facilities that it lacks today. 67 There is

62 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 2.


63 Stewart Taggart, Chinas Southeast Asia Infrastructure Drive, China-US Focus, 8 April 2016.
64 Johnson, President Xi Jinpings Belt and Road Initiative, v.
65 Gindarsah and Priamarizki, Indonesias Maritime Doctrine and Security Concerns, 6-9.
66 Shao, Two Roads, But One Destination?; Peter Drysdale, Beijings RCEP is a far bigger deal than
Washingtons treaty, The Australian Financial Review, 27 April 2016; and Banerjee, Chinas One Belt One Road
Initiative An Indian Perspective, 9.

67 Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 9.


14

little evidence of a push back by Southeast Asian states to Chinas OBOR initiative. 68 They
appear to welcome Chinese investment and this will result greater economic linkages to
China as long as China can sustain its economic growth rate. A downturn in the Chinese
economy would dent the Maritime Silk Road initiative. At the same time, Southeast Asian
states will continue to rely on the United States for strategic balance.69

68 Johnson, President Xi Jinpings Belt and Road Initiative, 24.


69 Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
15

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