Economics and Geopolitics in the Indian Ocean

Translated by Alessandra Fumagalli 

The third biggest sea space on the planet, the Indian Ocean, plays a fundamental role in the global sea trade. On the most trafficking routes there are the so-called choke points, that represent fundamental and critic points for the transit of goods. In the West part, Bob al-Mandab Strait is a necessary step towards the Suez Canal and the link with the mediterranean route, being a crucial issue for the International trade. In the East part,  the Strait of Malacca, Singapore Strait and Sunda Strait are important intersection that joins the Indian Ocean with the East Asian trade routes. In the South part, Mozambique Channel gives access to the Atlantic areas, easing the link with Cape of Good Hope. 

For a long time, due to the great variety of the coast countries that are on three different continents, the IOR (Indian Ocean Rim) caught the international attention about some issues linked with the sea communication, known as SLOCS, the sea safety, the safeguard of the environment and the management of the choke points. Since the last century, the Indian Ocean was indeed scene of fighting and military operations, like the 70s’ Indo-Pakistani War and the nowadays efforts to resist to the ongoing threat of piracy. A last tension factor is the presence of program for uranium enrichment and the possibility to develop nuclear arms. Pakistan, India, Iran, the Saudi Arabia and South Africa are interested in this area behind the technical ability to create a nuclear arsenal. Due to the rivalry relationships and the historical conflicts among the countries, the hypothetical presence of nuclear arms can cause an arms race and increasing tension in the area. 

The Indian Ocean key players

As previously mentioned, different actors play a paramount role in the Indian Ocean area. Among the others, India is the prevalent regional power, having the biggest navy in the region. With its growing economy, India needs to control the sea transits in order to guarantee a regular stream of its imports and exports. On the other hand, its historical rival, Pakistan, with the nuclear bomb, has deep bonds with China, making an alliance called the CPEC (China Pakistan Economic Corridor), an ambitious trade plan whose aim is to connect the Indian Ocean with the Western China, strengthening its role in the region. The Chinese giant is an emerging actor in the area, increasing the rivalry with India, in order to distance it from the United States and its strategical policies. 

Australia plays another important role, with an advanced economy and a strong dependence on the sea routes. The control of these lines is crucial to the country, that exports a great variety of natural resources, among which coal, bauxite, diamonds, uranium and gold. 

Iran and the Saudi Arabia are both great exporters of hydrocarbons and, due to their historical tensions, they are often the direct or indirect reasons why there are some crisis in the region. 

To conclude, in the south-west part of the region, South Africa is an important political actor. Beyond representing the most influent country of the Sub-Saharan Africa, South Africa is more advanced than the other countries in the region, with great underground resources and its role will grow in the Indian Ocean. 

The blue economy and the impacts on climate

The aims of the blue economy are human wealth, social equity and sustainability for the coast countries, highlighting the development of an economy based on the ocean and its resources. These are fishery, sailing, maritime transport, coastal tourism, sea energy and sea derived products. According to a WWF report, entitled "Reviving The Western Indian Ocean Economy", the western Indian Ocean has a yearly gross sea product of around 20,8 billion dollars, whose beach and coastal tourism is 70%. In 2020, according to FAO, the maritime fishery in the Indian Ocean contributed to 15% of the global fishing, with India, Bangladesh, Myanmar, Indonesia, Tanzania, Egypt, Iran, Kenya and Mozambique among the main global fish producers. The fishery industry in the Indian Ocean has indeed a significative impact on the economic activity, as it happens for Indonesia, where fishery and aquaculture provide jobs to around 6 million people, getting over the textile and clothing industry. 

IOR is subjected to the United Nations Convention on the Law of the Sea (UNCLOS), which allows the dispute between the coastal states on the division of the exclusive economic zones (EEZ) in the Indian Ocean to be regulated. The EEZs stretch for 200 miles from the coast, given exclusive rights on the exportation and exploitation of the natural resources and making it easy to manage the naval transport in the maritime routes. These are fundamental for the economy of the region, since they have an influence on the national agendas of the country and their economic growth. Mining in deep water is one of the priority of the blue economic, since the Indian Ocean has hydrothermal sources, which are rich in minerals, like copper, cobalt, nickel, zinc, gold and rare earths. In 2022, the UN agencies IORA and the International Seabed Authority (ISA) signed a Memorandum of Agreement to collaborate to the sustainable development of mining in the sea bottoms in the region. In 2021, India was the first country to explore the sea bottoms through the Deep Ocean Mission, entering into contracts for mining with Change, Germany and South Corea. 

However, climate change threatens the stability of the whole IOR region, jeopardizing human health and the blue economy in the Indian Ocean. Due to tropical storms, flooding, droughts and heat waves happened in the last years, there will be an increase in the ocean temperature, causing a decrease in fishery and consequently damaging the economy of some nations who live thanks to this activity, like India, Indonesia, Madagascar, Mozambique, Pakistan, Sri Lanka, Tanzania and Thailand. Moreover, climate change threatens the population health, due to natural disasters, long drought and extreme hot temperatures. 

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