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D A T A
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Indonesia:
positive trends and the implications for the United States strategic interests
Eric G. John, Deputy Assistant Secretary, East Asian and Pacific Affairs
Statement before the Senate Foreign Relations Committee, Subcommittee on East Asian and Pacific Affairs
Washington, DC
September 15, 2005
I. Strategic Overview
Although it is no surprise to members of the committee, Indonesia is clearly, by virtue of its size, location,
and status as a democracy, one of the most important countries to the United States in Asia. Consider the following
facts:
* Since the fall of Suharto in 1998, Indonesia has become the world's third-largest democracy.
* Indonesia has more people of Muslim faith than Iran, Iraq, Egypt and Saudi Arabia combined.
*The strategic sea lanes that pass through and along Indonesian territory carry one-third of the world's sea-borne
trade.
* Half the world's oil passes through the Malacca Strait.
Finally, and perhaps most importantly, Indonesia is a key player in the dominant ideological struggle of our time:
the competition between democratic modernization and the rise of extremist Islam. Indonesia is aggressively combating
the tiny minority of terrorists. It is also working to promote religious tolerance among the population at large,
while demonstrating to the world that Islam and democracy are fully compatible.
II. Opportunity
The success of Indonesia's 2004 national elections, and the joint Indonesian and United States response to the
tragic earthquake and tsunami of December 26, 2004 have opened a window of opportunity for U.S. and Indonesian
relations. The positive trends in Indonesia today with regard to democracy, countering terrorism and extremism,
economic reform, security service reform, and peaceful resolution of conflicts, strengthen this opportunity. We
have the chance to achieve a breakthrough in our relations with the world's largest Muslim-majority nation and
third-largest democracy. If we succeed, it will have far-reaching effects on our common interests with Indonesia
and throughout the world.
Indonesia's national elections proceeded in an exceedingly peaceful and democratic manner, and gave Indonesians
for the first time the right to directly elect their president. President Yudhoyono emerged from the elections
with a mandate from the Indonesian people, receiving over 60 percent of the votes in the presidential run-off in
September of 2004. With Indonesian voters demanding change, President Yudhoyono is pursuing a bold reformist agenda.
Furthermore, as a U.S. university and military college graduate, he has first-hand knowledge of the U.S. and its
people. President Yudhoyono is keenly aware of Indonesia's status as a role model to the Islamic world and seeks
a greater international profile that accords with this status. The example he sets is a positive one.
President Yudhoyono demonstrated his statesmanship in the aftermath of the tsunami, and he opened up the previously
closed Aceh province to international assistance, particularly from the United States. Our joint efforts in relief
and reconstruction for the victims of the tsunami saved the lives and lessened the suffering for tens of thousands
of victims, helping to bridge the distance between our countries. The USS Lincoln off the coast of Aceh made a
strong positive impression on the people and government of Indonesia no other country was able to match our response.
Scenes of U.S. relief workers and soldiers working side-by-side with their Indonesian counterparts showed Indonesians
that the United States is a friend. Public opinion toward the United States has since improved.
With Indonesia we have the opportunity now to forge close, long-term ties with a developing democracy that is home
to 4 percent of the Islamic world. Indonesia has a history that includes serious human rights abuses, separatist
conflict, ethnic and inter-religious strife, and other problems and challenges that have affected our relations.
Many of these problems and challenges remain today. However, it is essential that we address these issues not in
isolation but in the context of a mature relationship that keeps in focus the broad, positive trends in today's
Indonesia. In the context of a mature and robust relationship with a fellow democracy, we have an opportunity to
resolve, not ignore our differences with Indonesia, while strengthening our partnership with this tremendously
important and dynamic country. The dominant trends in Indonesia today are positive ones for U.S. strategic interests.
Secretary of State Rice noted to President Yudhoyono during their last meeting that the United States has pulled
back at times in its relationship with Indonesia. But she added that this is not the way it will be in the future.
We must be both a good and reliable friend to Indonesia, and we must act now to make this a reality. We must do
everything we can to develop our relationship to its full potential, and help Indonesia succeed as a modern, democratic
power, one that acts as a positive force on the global stage and ensures prosperity for its people at home.
III. Positive Trends
* Democracy
Indonesia is a front-line state in a trend we see all over the world: people want to rule themselves, and they
want their governments to be accountable. It has been only seven years since the fall of Suharto and the end of
three-decades of authoritarian rule. In this short span, Indonesia has emerged as the world's third-largest democracy
and a leading global example of a democratic, Muslim-majority nation.
The successful series of national democratic elections in Indonesia last year produced a sea change in the country's
domestic politics. More than 75 percent of eligible voters cast their ballots in last year's presidential election.
To put those numbers in context, just as many Indonesians voted in their presidential election as did Americans
last fall, 2004, about 118 million in each case. This year Indonesia is conducting eight gubernatorial and 157
local elections; reports so far have been similarly positive.
The direct presidential election itself was a product of sweeping constitutional reforms aimed at strengthening
democratic institutions, accountability and transparency, and separation of powers. A free press and an increasingly
active civil society have become important agents of change. People are debating the abuses and excesses of the
Suharto years and are demanding real accountability for what happened. Citizens are demanding justice from the
judicial sector. Finally, the country is going through one of the most ambitious decentralization efforts ever.
That process is empowering Indonesia's far-flung 33 provinces and introducing unprecedented levels of transparency
and accountability into local governance.
Looking forward, we envision an Indonesia that is democratic in the full sense of that term, with an educated
electorate, a government that is transparent and accountable to its people, respects the rule of law, and protects
the human rights of its citizens. Indonesia has many difficult obstacles, both past and present, which it must
strive to overcome. As our 2004 Human Rights Report indicates, Indonesia's human rights record has been poor, and
there is much to be done, particularity in the area of accountability for abuses committed by members of the security
services. But we cannot overlook the flourishing of democracy in Indonesia. We will continue to encourage and assist
the positive democratic trend in Indonesia, while working with the country to achieve needed progress on education,
accountability, the rule of law, transparency, and respect for human rights, to realize the vision of a modern,
fully democratic Indonesia.
* Countering Terrorism and Extremism
Indonesia is a key player in the dominant ideological struggle of our time: the competition between democratic
modernization and extremist Islam. As the world's largest Muslim-majority nation, Indonesia is buffeted by the
same radical strains of Islamic thought and hate-preaching firebrands that afflict much of the Islamic world. Related
to this, we face a challenge in convincing countries like Indonesia of the truth that the Global War in Terror
is not anti-Islamic.
Indonesia is in the midst of this ideological struggle, but the overall trend is positive. Indonesia stands as
a democratic example to the Islamic world. Islam in Indonesia has always been and remains predominantly tolerant
and open to combining Islamic beliefs with modernization and free speech. Indonesia has maintained its pluralistic
constitution and proven that Islam and democracy are compatible and complementary. The ability of such a diverse
nation to pursue a democratic, just agenda respectful of other faiths serves as a powerful reminder of what a successful,
tolerant society can look like.
Indonesians know better than most the devastating effects of terrorist attacks that are the product of extremist
Islam, such as those that have occurred in Bali and Jakarta over the last three years. The Indonesian government
has done an admirable job of pursuing, arresting, and prosecuting terrorists. Since the Bali bombings in October
2002, Indonesia's police and prosecutors have arrested and convicted more than 0 terrorists. Indonesia has established
an effective counterterrorism police force that is working hard to bring terrorists to justice. Despite progress,
the threat of future attacks remains grave. Our two countries thus share an interest in addressing the causes of
terrorism and protecting our people from further terrorist violence. President Yudhoyono is committed to this cause.
* Economic Reform
President Yudhoyono places priority on economic growth and poverty reduction, recognizing that Indonesia has
just recovered from the 1997-1998 financial and economic crisis. The government of Indonesia has announced an ambitious
reform program, boosted investor confidence, attacked corruption and made a push for infrastructure development.
President Yudhoyono remains committed to this program. Real gross domestic product (GDP) growth increased to 5.1
percent in 2004, and the Indonesian economy has been resilient in spite of the tsunami, avian influenza, polio,
and high world oil prices. American investors continue to show interest in Indonesia. More than 300 U.S. companies
have investments in Indonesia valued at a total of more than $10 billion, and an estimated 3,500 U.S. business
people work in Indonesia. The combination of high-level commitment, pressing economic issues, and American investor
interest poses a special opportunity for us to make progress with Indonesia on economic reforms.
We have moved to take advantage of this special opportunity to help Indonesia address economic reforms. We have
already had two rounds of Trade and Investment Framework Agreement (TIFA) talks this year and have started a dialogue
with Indonesia on conducting a full review of all trade-related policies. We have restarted our Energy Policy Dialogue
after an eight-year gap, and are working closely with the government on strategies for boosting Indonesia's crude
oil production. We are also supporting the Yudhoyono government's crucial effort to change the culture of corruption
in Indonesia, in part through his launch of several corruption cases against high-level officials. To support this
important effort, we are putting in place a major U.S. Agency for International Development (USAID) project to
help the government of Indonesia set up an anti-corruption court and reform the commercial courts. We want to see
an Indonesia that is open for investment and trade, and open to American investors playing a prominent role in
the country's economic development. American investors continue to push for investment climate and legal system
reform and fair resolution of investment disputes, signaling their long-term commitment to Indonesia's economic
growth.
Complete article
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Southeas
Asia in the Sino-U.S. Strategic Balance.
by Shannon Tow; Contemporary Southeast Asia, Vol. 26, 2004
Introduction
Throughout much of the post-Gold War period, the dynamics of the Sino-U.S. relationship have
been a critical factor in Southeast Asian states' foreign policies. Southeast Asia has traditionally been a site
of great power competition for regional dominance, due to its strategic location as a bridge between continental
and maritime East Asia.
To manage this competition and to enhance their own subregional autonomy, the member states of the Association
of Southeast Asian Nations (ASEAN) engaged in a number of regional institution building initiatives during the
early 1990s. This "institutionalist" agenda led to speculation that ASEAN could become the hub of a nascent
regional security community. (1)
Following the 1997 Asian financial crisis, however, the prospect that ASEAN could act as an autonomous entity to
mitigate Sino-U.S. geopolitical pressures seemed increasingly tenuous. Weakened by political and economic instability,
intra-regional disputes and a simultaneous expansion of its membership, ASEAN has come to question its own identity.
This has only further undermined ASEAN-led regional security initiatives such as the ASEAN Regional Forum (ARF).
More frequently, Southeast Asian states have favoured bilateralism and have looked to external powers to realize
their security interests. (2)
These changing subregional dynamics have, in turn, prompted renewed efforts by China and the United States to cultivate
influence within Southeast Asia. China's attempts to gain support for its "new security concept" and
US efforts to secure additional access and infrastructure agreements along the "East Asian littoral"
are illustrative. To some extent, Sino-U.S. geopolitical competition has been modified by strategic cooperation
resulting from the "war on terror". Yet China still remains wary of U.S. attempts to engage Southeast
Asia in countering global terrorism. (3)
These trends have, in turn, compelled analysts to reconceptualize the Southeast Asian security landscape in a balance
of power context. Principal among these exponents is Robert Ross. In his article "The Geography of Peace",
Ross argues that as the two most geopolitically dominant regional actors, China and the United States preside over
their own separate but complementary spheres of regional influence. He asserts that continental Southeast Asian
states have aligned with China and maritime Southeast Asian states have aligned with the United States. (4)
The geographic position of China and the United States, and the evolution of their interests and military capabilities
accordingly, make it unlikely that either country would seek to project power into the other's respective sphere.
Ross therefore postulates that the emerging bipolar structure is likely to be a stable and enduring one. This portrayal
of Sino-U.S. relations has been acknowledged by recent literature on Asia-Pacific security. (5)
However, Ross' depiction of how Southeast Asian states respond to this relationship has been subject much less
to theoretical analysis.
One contending school that has emerged argues that ASEAN states have adjusted to great power geopolitical competition
by pursuing a "hedging strategy" rather than by aligning with either China or the United States. Gaye
Christofferson specifically seeks to refute Ross' argument by asserting that the Southeast Asian states maintain
a position of equidistance between the great powers.
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A strategic move
P.S. SURYANARAYANA
in Singapore
The U.S. decision to help Indonesia "modernise" its military establishment is a strategic move that may
acquire unforeseen importance in 2006.
MARITIME security is being cited by the United States as a "joint objective" that deserves to be pursued
in association with Indonesia, among a few others, in East Asia. In fact, "maritime security" has been
bracketed with "counter-terrorism" and "disaster relief" in a new catalogue of reasons for
strategic cooperation between Washington and Jakarta.
To be sure, the U.S. has not formally identified Indonesia as a strategic ally or partner in East Asia. However,
the U.S. decision on November 22, 2005, to help Indonesia "modernise" its military establishment (TNI
in local parlance) was a strategic move which, in the reckoning of regional diplomats and analysts, may acquire
unforeseen importance in 2006. However, if no definitive diplomatic bets are being placed yet on such a possibility,
the reasons have much to do with Indonesia's slow-paced resurgence as a democracy that could also stay stable over
the longer term.
Another factor of uncertainty has to do with the durability of America's attention span in regard to Indonesia
in this context. Relevant to this aspect is Washington's growing strategic dependence on China to resolve the issues
relating to the nuclear-weapons programme of the Democratic People's Republic of Korea (DPRK) in the East Asian
theatre itself.
What is reasonably clear, despite such ifs and buts, is the U.S. move to try and coopt Indonesia for a policy of
creating a second line of China containment. With the U.S. having updated and reinforced its long established military
alliance with Japan in October 2005 (Frontline, August 12, 2005), the main strategic battle-lines were indeed firmed
up for Washington's bid to prevent China from emerging as a peer-competitor in the Asia-Pacific region.
The U.S. is obviously scouting for more friends and allies for a potential global-scale containment of China
over a longer term. India does figure in such a U.S. calculus, but that is a different story.
From the U.S perspective, the control of key sea lanes in the Asia-Pacific zone is essential, for two sets of reasons.
There is the more obvious objective of "counter-terrorism" and anti-piracy operations in the current
global milieu of political priorities. But, there is also the discernible U.S. objective of keeping an eye on China,
itself a growing maritime power.
Now, the strategic importance of Indonesia, the world's largest archipelago-state that straddles important sea
lanes, has not been missed by the U.S., long schooled in the `thoughts' of Alfred Thayer Mahan, a `guru' who advocated
maritime supremacy as a defining aspect of American power. Indonesia, surely, has a long way to go before its potential
as a major maritime power can be realised. However, when the U.S. decided to help it "modernise" the
TNI, the naval angle was kept in prime focus, "maritime security" being projected as a "joint objective".
There is an often downplayed, or even ignored, reason why Indonesia is particularly important for a global maritime
player like the U.S. The Straits of Malacca in South-East Asia is arguably the busiest sea lane for global trade
and it covers, at once, the interests of major economic powerhouses like the U.S., Japan, and China. It and the
adjoining Straits of Singapore have been increasingly identified as potential terrorist targets in view of their
enormous economic importance to the U.S. and its friends and allies.
n this context, the maritime passageways that crisscross the Indonesian archipelago can, if suitably developed,
serve as an alternative to the Straits of Malacca. The economic viability of such a project may not have been worked
out by the governments concerned. However, the political attractiveness of an alternative global trade route across
South-East Asia remains a compelling proposition.
A counter-point, obviously, is whether Indonesia, which is increasingly seen as a fertile territory for Al Qaeda
and its "regional affiliate", the Jemaah Islamiyah (J.I.), can indeed provide a safe alternative route
for global trade.
It is in this subtext that the U.S. reasoning for helping Indonesia "modernise" the TNI makes interesting
reading. The ongoing democratisation of the Indonesian polity and its current emergence as "a voice of moderation
in the Islamic world", under President Susilo Bambang Yudhoyono, have been outlined in justification of the
U.S. move to befriend the TNI and help Jakarta beef up its military muscle.
As for U.S. appreciation of Indonesia's undeniable democratisation at this stage, the political irony is that Washington's
hands are not clean insofar as the political evolution of this South-East Asian country is concerned. It is widely
chronicled that the U.S. had aided the process of toppling a democratically elected government in Indonesia in
the 1950s. This does not, however, cast a slur on Indonesia's current efforts to energise itself as a resurgent
democracy.
Full article
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U.S.-Indonesia Military
Ties Moving Toward Full Normalization
But U.S. presses for accountability on past human rights abuses
The United States is taking steady steps toward full normalization of military relations with Indonesia, according
to a State Department release.
Responding to a question taken at the January 3 press briefing, the State Department's Office of the Spokesman
said the United States is resuming "selected areas" of military assistance for Indonesia, noting President
Bush's declaration that "normal military relations would be in the interest of both countries."
The Bush administration, the State Department says, "considers the relationship between
the United States and Indonesia, the world's third largest democracy, to be of the utmost importance…. As the world's
most populous majority-Muslim nation, Indonesia is a voice of moderation in the Islamic world." The State
Department also noted Indonesia's "key role in guaranteeing security in the strategic sea lanes" and
the progress it has made "in advancing its democratic institutions and practices in a relatively short time."
At the same time, the United States "remains committed to pressing for accountability for past human rights
abuses, and U.S. assistance will continue to be guided by Indonesia's progress on human rights, democratic reform
and accountability," the State Department said.
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Straits, Passages and
Chokepoints
A Maritime Geostrategy of Petroleum Distribution
Jean-Paul Rodrigue
Hofstra University, Hempstead (N.Y.)
Jean-Paul.Rodrigue@Hofstra.edu
Abstract
The transportation of petroleum represents one of the most strategically important circulations of resources in
the global economy. Its role cannot be overstated. Yet, petroleum has become a “strategically invisible” commodity
as its flow has
been continuous with limited, but eye-opening, disruptions such as the First Energy Crisis is 1973.
Petroleum supplies are virtually taken for granted. Since approximately two-thirds of the world’s petroleum
production is
shipped by sea, there are inherent distribution constraints, which require navigating through straits and passages;
hokepoints of maritime circulation. This paper presents an overview of the geography of oil supply and demand,
and the
strategic issues that are linked to its maritime circulation. Chokepoints are perceived as resources, the value
of which
varies according to degree of use. As the era of petroleum domination draws to a close, the importance and vulnerability
of strategic passages will increase. Their ability to handle additional traffic appears to be limited, implying
that future
energy crises or oil shortages are more likely to be attributable to the challenges of distribution.
OIL SUPPLY STRATEGIES
To ensure a constant and uninterrupted oil supply, the strategies of industrialized nations have been articulated
by the use
of military force (primarily by the United States), economic incentives and uneasy alliances with oil producers,
namely in
the Persian Gulf. Access to this strategic location, especially Saudi Arabia, is likely to be the most important
factor in contemporary energy geopolitics (Klare, 2001).
The growing dependency among developed nations on external sources of oil reinforces these conventional strategic
considerations, when a few key maritime passages chokepoints of the global economy are considered valuable resources
with a rather fixed supply (Nincic, 2002). Moreover, increased Asian oil demand, especially within China, has caused
a new
shift in petroleum circulation and has stepped up competition over existing known oil resources, including the
chokepoints themselves.
The new geography of petroleum circulation is thus challenging conventional distribution networks, their security
and their reliability. Control of oil supply is becoming increasingly strained with limited alternatives other
than to pursue policies and strategies implemented decades ago. For this reason, the Carter Doctrine, drafted to
address the security of the Persian Gulf,
grows more relevant after over 50 years of US military presence in the region.
An attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the
vital interests
of the United States of America, and such an assault will be repelled by any means necessary, including military
force.
(President Jimmy Carter, State of the Union Address, January 23, 1980).
Full Article
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STRATEGIC PASSAGES:
CHOKEPOINTS OF THE GLOBAL ECONOMY
Maritime transportation, as the dominant purveyor of international freight distribution, operates over a global
maritime space.
This space has its own constraints, however, such as the profile of continental masses. International shipping
lanes
are forced to go through specific locations such as passages, capes and straits. There are approximately 200 of
these locations, but only a handful are of strategic importance.
By definition chokepoints tend to be shallow and narrow, impairing navigation and their capacity is being challenged
by
growing maritime circulation and larger ships (Feller, 2004). Many chokepoints are in close proximity to politically
unstable nations, which increases navigation risks and compromises access and use. In recent years, the threat
of terrorism has
raised additional concerns over maritime circulation (Richardson, 2004). Strategic passages can be mined, blocked
by sinking ships, or interdicted by naval forces, artillery or missile systems.
Chokepoints truly are the geographical Achilles heels of the global economy.
The geostrategy of maritime petroleum circulation involves six major chokepoints (figure 3), which handle over
35 Mb/d.
Their use is shared with regular flows of commercial maritime shipping, including containers and other cargos.
Two are extremely important: Hormuz and Malacca, since they account for over 60% of oil transits.
Hormuz represents the most important strategic passage in the world, solely because of its access to the oil fields
of the
Middle East, while Malacca is an active commercial point of transit between the Indian and Pacific Oceans.
From the Persian Gulf, two major axis of oil circulation serve Western Europe and the United States (westbound)
and
Pacific Asia (eastbound). As eastbound and westbound oil shipments grow, so too does the need to maintain the integrity
of the strategic passages that support its trade. This is particularly the case for China, since its oil imports
stretch from the Strait of Hormuz, Malacca and the South China Sea, most of which are patrolled by the United States.
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STRAIT OF MALACCA
The Strait of Malacca is one of the most important strategic passages in the world because it supports the bulk
of the
maritime trade between Europe and Pacific Asia, which accounts for 50 000 ships each year (600 per day).
The strait is approximately 800 km long and between 50 to 320 km wide (2.5 km at its narrowest point) and has a
minimum channel depth of 23 metres (roughly 70 feet). It is the longest strait in the world used for international
navigation.
Close to 30% of the world’s trade and 80% of petroleum imports to Japan, South Korea and Taiwan transit through
the strait, which represented approximately 11 Mb/d in 2003.
As the main passage between the Pacific and Indian Oceans, Malacca is an unavoidable bottleneck,
with the Strait of Sunda
(Indonesia) being the closest alternative (figure 6). - (see
full article)
For centuries, the Strait of Malacca has been part of the Arab trade routes linking the Middle East, Southeast
Asia and
China. By the early XVIth century the Portuguese conquered the stronghold of Malacca, a key trading centre after
which the strait bears its name. In 1867, England formally took control of the passage. Singapore became a main
harbour and other important centers, such as Malacca and Penang, formed the Strait Settlements. This control lasted
up to the Second World War and the independence of Malaysia in 1957.
As Pacific trade swelled after the Second World War, so too did the importance of the passage. Singapore, located
at the
southern tip of the Strait of Malacca, is one of the most important ports in the world and a major oil refining
centre.
Dredging is one of the main problems of the Strait of Malacca, since some sections are barely deep enough to accommodate
ships of approximately 300 000 deadweight tons. Because the strait is located between Malaysia, Indonesia and Singapore,
it is difficult to reach an agreement about how the dredging costs should be shared and how fees for its use should
be
levied. Political stability and piracy are also major issues for the safety of maritime circulation, especially
on the Indonesian side.
The Strait of Malacca leads to the South China Sea, another extremely important shipping lane and a region subject
to contention, since oil and natural gas resources are present. The Spartly 10 and Paracel groups of islands are
claimed in
whole or in part by China, Vietnam, Malaysia, Indonesia, Brunei and the Philippines.
The region has proven oil reserves estimated at 7.0 Bb with oil production accounting for 2.5 Mb/d. Given the substantial
economic growth in the region, large flows of oil, liquefied natural gas and other raw materials (iron ore, coal)
are transiting
towards East Asia. About 25% of the global shipping fleet transits through the region each year, underscoring the
importance
of the South China Sea as an extension of the Malacca chokepoint.
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CONCLUSION
Growing demand and squeezed supplies are unavoidable consequences of the geography of petroleum production,
distribution and consumption. The global economy is beginning to realize the full extent of a growing shortage
of oil and its
inherent economic and geopolitical costs. Current estimates place the peak of global oil production at around 2008-2010
(Deffeyes, 2001; Greene et al., 2003).
In the meantime, oil consumers are struggling to diversify their oil supplies, but most of the remaining oil reserves
are predominantly in the Middle East, a region which will remain the focal point of global oil shipments.
Although there is a current energy shift towards renewable and environmentally-friendly resources, such as natural
gas and eventually hydrogen, the move from petroleum is likely decades away (Rifkin, 2002). Even a transition to
natural gas, the reserves of which are substantial, would be very costly since entirely new distribution infrastructures
would be required,
including additional LNG carriers, terminals and processing facilities. Meanwhile, an era of insecurity and vulnerability
is
likely to prevail as petroleum circulation increases, with strategic chokepoints bearing the brunt of the tension.
Like the limited additional petroleum production capacity, the circulation capacity, which is mainly dictated by
the
chokepoints of oil circulation, leaves little room for additional growth . These geographical constraints cannot
be bypassed easily and will be a significant factor in global insecurity of oil supplies in terms of who will get
preferential
access to these limited resources. The situation is likely to become very tense among large consumers, such as
the
United States and China during the second decade of the XXIst century, as they compete, while the outlets of the
Middle East handle the last large volume supply routes of the petroleum era. Clearly, solutions for petroleum distribution,
namely the use of chokepoints, will require rationalized use, since additional economies of scale in maritime shipping
are difficult to achieve 11 and since alternative routes, including pipelines are limited and insecure. In spite
of all the challenges inherent to oil circulation, “the Spice must flow”.
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Table 1 Chokepoints: Capacity, Limitations and T (see
Full article)
Table 1 Chokepoints: Capacity, Limitations and Threats
Chokepoint Usage (ships / day, 2003) Additional Capacity Limitation Threat
Hormuz 50 Limited Narrow corridors Iran / Terrorism
Suez 38 Some 200 000 dwt and convoy size Terrorism
Bosphorus 135 Very limited Ship size and length; Restrictions by Turkey;
200 000dwt navigation accidents
Malacca 600 Substantial 300 000 dwt Terrorism / Piracy
Panama 35 Limited 65 000 dwt Not significant
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Southeast Asian Chokepoints
Keeping Sea Lines of Communication Open
by John H. Noer
December 1996
Conclusions
The Sea Lines of Communication (SLOCs) in the Indonesian Archipelago and the South China Sea remain critical "chokepoints"
for U.S. national interests.
Half of the world's shipping passes through the SE Asian SLOCs.
Closure of any of the SLOCs would raise shipping freight rates throughout the world. U.S. imports and exports would
be directly affected.
A serious blockage could cause a world-wide shipping shortage, and, at least in the short term, place severe pressure
on the economies of region.
The U.S. has direct and immediate mari-time economic interests to protect in the region, namely, orderly shipping
markets, commercial freedom of navigation, and stability on the South China Sea.
Merchant Shipping in Southeast Asia
Over half of the world's merchant fleet capacity sailed through the Straits of Malacca, Sunda, and Lombok in 1993,
or sailed passed the Spratly Islands. Over one third of the world's fleet weighing more than 1000 DWT visited the
region (Table 1).
The sheer volume of merchant shipping transiting the South China Sea gives the region global significance. Any
disruption on these high seas can impact all shipping worldwide.
The Straits: Chokepoints for Shipping
Many nations in Southeast Asia are either insular or peninsular, or have extended coastlines. Land transport infrastructure
is not well developed, so, most trade moves by sea. The region's seaborne imports and exports are growing rapidly.
Geographic and economic factors confer importance to certain key waterways.
The three "southern entrances" into the region: the Straits of Malacca, Sunda, and Lombok are particularly
important chokepoints in the world trade system. Equally important because of the threat of political and economic
disputes are the sea lanes passing the Spratly Islands in the South China Sea.
The Strategic Interests of the United States
The U.S. Navy has long been assigned the mission of protecting the SLOCs of Southeast Asia. During the Cold War,
the mission was viewed in strategic military terms: the United States needed to be able to move military supplies
through the region in crises, and deny the SLOCs to the Soviets. Now that the Soviet threat is gone, what national
interests are at stake?
Does it matter if merchant ships are forced to detour? Whose ships and whose trade use these trade routes? What
are American interests? To answer the question "Who benefits from free access to SE Asia SLOCs?" the
CNA team gathered extensive data on shipping and trade to analyze what would happen on the high seas if these SLOCs
were closed.
What if the SE Asia SLOCs Closed?
At present, events that could disrupt passage through the SE Asian sea lanes for an extended period are unlikely.
Nevertheless, unanticipated challenges might cause sustained disruption with serious consequences
Table 1
1993 Inter-Regional Shipping in S.E. Asian SLOCs
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Vessel Type
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Number of Ships
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% World capacity
|
|
|
|
|
|
Dry Bulk
|
2,573
|
60
|
|
Supertankers
|
297
|
59
|
|
Cellular
|
641
|
56
|
|
General Cargo
|
2,710
|
43
|
|
All Others
|
2,261
|
40
|
|
|
|
|
|
Regional Total
|
8,842
|
52
|
|
|
|
|
In principle, blockage of shipping lanes might not be a serious matter. Alternate routes are available.
For example, ships denied access to the Malacca Straits might use Sunda. The Straits of Lombok and Makassar offer
an alternative
to the South China Sea. These detours are not so large, and after all, merchant vessels offer one of the cheapest
modes of transport.
In practice, however, it turns out that blockage of these SLOCs would matter a great deal. Nearly half the world
fleet would be required
to sail farther, generating a substantial increase in the requirement for vessel capacity. All excess capacity
of the world fleet might be absorbed, depending on the number of straits closed and how long they remained closed.
The effect would be strongest for crude oil shipments and dry bulk such as iron ore and coal. (See Table 2.)
Closure of the Straits of Malacca would immediately raise freight rates. Denial of the SLOCs passing the Spratly
Islands to merchant shipping would disrupt world shipping markets even more severely generating shortages. Freight
rates around the world would be affected, thus adding costs to American imports and exports. All trading nations
have a vested interest in preserving stability on the SE Asian SLOCs.
The experience with the closure of the Suez Canal seems to indicate that such a disruption might increase freight
rates by as much as 500 percent. Note that military or physical SLOC closure is not required. Suppose war-related
uncertainty over the Spratlys caused maritime insurers to either increase rates or deny coverage in the region.
Shippers might be motivated to reroute shipping via safer sea lanes. The factor that converts a localized maritime
concern (SLOC blockage) to a global economic event (freight rate crisis cum capacity shortfall) is the huge volume
of shipping involved in the South China Sea.
Table 2
World capacity vs SLOC Closure
|
Ship
|
Normal Excess Capacity
|
On closure of
Straits of Malacca only
|
On closure of Spratly Islands SLOCs
|
|
Type
|
1990/94
|
Available Excess
|
Available Excess
|
|
Cellular
|
24.3%
|
12.6%
|
+0.7%
|
|
General
|
19.8%
|
06.8%
|
-4.0%
|
|
Bulk
|
14.3%
|
05.5%
|
-2.2%
|
|
Tanker
|
13.7%
|
0.00%
|
-9.6%
|
|
|
|
|
|
|
Total
|
15.4%
|
03.6%
|
-5.8%
|
|
|
|
|
|
Note: percentages of the world fleet
Trade Through the Straits
Well over one half trillion dollars worth of long-haul inter-regional seaborne shipments passed through these key
chokepoints in 1993. This $568 billion was over 15 percent of all the world's cross-border trade, and does not
include trade within the region. Malacca and the Spratly SLOCs are the main routes.
Japan, Australia, and the nations of Southeast Asia send over 40 percent of their trade by sea through these narrow
waterways. Their economic vitality depends on free access to these sea lanes. U.S. prosperity in turn relies on
the economic health of our trade partners. (See Table 3.)
Flags and Vessel Ownership
Most vessels plying the region fly flags of convenience. The most common flag in the region is Panamanian; the
second is Liberian. Japanese interests own more ships operating in the region than any other country. Most are
"flagged out," so Japanese presence is discretely understated. U.S. interests are third behind Japan
and Greece in terms of capacity owned passing through the Straits of Malacca in 1993. Over three quarters of U.S.-owned
ships in SE Asia flag out.
There is often little correlation between nationality of registration and the nationality of owners, and these
factors often have little relationship to the economies shipping or receiving cargoes. The concept of "nationality"
as applied to shipping is thus ambiguous. Policies that would try to discriminate among shipping on the basis of
nationality are based on a false premise. "Nationality" is not a meaningful concept when applied to merchant
shipping, which has a chameleon-like quality. Maritime policies should be "internationalist" in nature.
The Straits of Malacca
There is a legitmate concern for safety in the crowded, shallow, and narrow Straits of Malacca. In 1993, 114 large
merchant vessels per day travelled on inter-regional voyages through Malacca. Local and other shipping increases
the total.
Indonesia and Malaysia prefer that deep-draft supertankers use the deeper and less crowded Straits of Lombok and
Makassar. They do not. Over 1,100 fully laden supertankers annually pass eastbound through the Straits of Malacca,
many with only a meter or two of clearance between their keels and the channel bottom. Most go to Japan or Northeast
Asia, while about 20 percent go to Singapore.
Southeast Asian Sea Lanes of Communication
Source CIA map 802385
The Policy Implications
In early 1995, Secretary of State Warren Christopher issued a warning to the nations quarreling over the Spratly
Islands. The United States does not take sides in this dispute, but will not accept the disruption of trade passing
through the South China Sea. The American position is based on direct national economic interest, as well as quasi-altruistic
concern for the welfare of other nations. The United States has direct and immediate economic interests to protect
in
the region, as SLOC blockage could immediately and directly disrupt the U.S. economy. The United States also
needs to protect its trade links to healthy, prosperous trading partners to maintain its own prosperity
Table 3
Inter-Regional Trade via SE Asia SLOCs
|
|
Percent of 1993
|
|
|
|
Imports
|
Exports
|
|
Japan
|
42
|
42
|
|
Australia
|
53
|
40
|
|
SE Asia
|
53
|
55
|
|
NIEs*
|
28
|
26
|
|
China
|
10
|
22
|
|
Europe
|
11
|
7
|
|
United States
|
5
|
3
|
|
World
|
15
|
15
|
* NIEs - Newly Industrialized econonies: Taiwan, South Korea, Hongkong
All nations benefit from the free flow of world trade, which requires freedom of movement on the high seas.
The current international consensus in favor of commercial freedom of navigation is a natural state of affairs,
and a
logical extension of the global trend towards free trade. The public will continue to expect the U.S. Navy to carry
out the traditional mission of protecting trade on the high seas. During the Cold War, the threat of the Soviet
Union dominated military thinking. "Threat analysis" determined the size of the force required to meet
the Soviet threat;
an American force capable of meeting that threat could handle all other missions.
Now we live in a world where the threats are more vague, more diffuse. The distinction between defense against
threats versus pursuit of national interests is now less well defined.
Facts
The trade pattern via the chokepoints is dominated by a flow of high-volume raw materials moving north and east,
and high-value finished goods returning south and west.
Japan has the largest volume of inter-regional trade and shipping through the SE Asia SLOCs. Much of Japan's traffic
could easily reroute in a crisis, but at a cost.
Australia is heavily dependent upon the Straits of Lombok, especially for the shipment of iron ore to China. Most
inter-regional trade through Lombok is Australian.
Economies closest to the SLOCs are the most dependent upon them.
Closure of the Malacca or Spratly SLOCs could generate a massive increase in freight rates worldwide, and hit bulk
shipments hardest.
Interpretations
The concept of "Freedom of Navigation" has both economic and strategic significance.
Naval sea lane protection is a mission with economic merit in its own right.
The fact that SLOC closure hits nearby countries hardest should be a stabilizing factor. Countries best able to
either defend or close SLOCs are motivated to keep them open.
The U.S. has immediate and direct maritime interests in stability in the South China SE Asia SLOCs.
Other nations have even more stake in free movement of shipping on SE Asia SLOCs. These nations should be motivated
to cooperate, and share the costs of naval SLOC protection
Recommendations
The United States should encourage other nations to share in the costs of protecting SLOCs in general, and the
SE Asian SLOCs in particular. /li/ul ul li The United States should foster international consensus in both regional
and global forums to keep SLOCs open because the economics of world trade require it. /li/ul ul li The United States
should encourage Australia and other regional nations to ensure the viability of the Lombok-Makassar route, which
would be vital to the region if the South China Sea became dangerous, or if Malacca were unavailable. /li/ul ul
li Protecting shipping for economic reasons should become as important a national priority as protecting it for
military reasons. /li/ul Dr. John H. Noer is an economist in the Policy, Strategy, and Forces Division of the Center
for Naval Analyses, Alexandria, VA. He is the author of the NDU Press book Chokepoints: Maritime Economic Concerns
in Southeast Asia (1996).
-------------------------------------------------------------
The Strategic Forum provides summaries of work by members and guests of the Institute for National Strategic
Studies and the National Defense University faculty. These include reports of original research, synopses of seminars
and conferences,the results of unclassified war games, and digests of remarks by distinguished speakers.
Editor in Chief - Hans Binnendijk
Editor - Jonathan W. Pierce
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