The Alliance of Democracies: India and Australia


india-australia-flagThe rise of China as the opposite pole from the east in Asia-Pacific will have long standing ramifications on the Global Order. The Chinese dream to foist an order orienting from Beijing presents various economic and security challenges to countries in the region from the democracies like India, Japan, Australia and Indonesia to even the communist nations like Vietnam who are wary of the Chinese claims over the South China Sea and Western Pacific. The Chinese claims over the South China Sea based on the 9 Dash line and its land reclamations have put the Indo-Pacific into the spotlight of global power play. The UN Tribunal verdict of July 2016 invalidating China’s claim over the South China Sea and China’s utter disdain for international law is the perfect catalyst for countries in Asia-Pacific to rally around for the freedom of the navigation of seas, trade and security. The Chinese policy of bullying its neighbours into submission to its order could well lead to an alliance of democracies like India, Japan, Australia, Indonesia and Vietnam for strategic cooperation with a common objective of curtailing China.

The growing Chinese behemoth with a $10 trillion economy, a huge trade surplus and a commodity-driven market presents a challenge for the region. China has been one of the prime consumers of coal, which is one of Australia’s biggest exports. China has a huge trade surplus with India, Australia and even the United States due to being the global hub for low-cost manufacturing. The slowdown in the Chinese economy and the perils of Climate Change are pushing Asia-Pacific to a potential conflict as the rules of trade and commerce over the navigation of the seas are trying to be rewritten. The Chinese very well know that those who control the seas; control the world. They have learnt this from the British Empire whose navy dominated the world and was succeeded by the United States post-World War 2.

The US has been the prime power in Asia Pacific and the world with one of the largest naval fleets and bases from Djibouti to Diego Garcia to Guam to Okinawa. The US Navy leads by ten aircraft carriers; the largest by any country and maintains the freedom of navigation of the seas and is the enforcer of international rules. But as they say – nothings lasts forever. The US naval dominance is now being challenged by China in the South China Sea and the Pacific region. The Chinese contempt of international law backed by its threat to impose an ADIZ (Air Defence Identification Zone) in the South China Sea could further augment an alliance of democracies in Asia-Pacific that share a similar strategic concern though the United States will continue to play a pivotal role in the region.

While Japan and Australia already have a working relationship with the United States; India has only recently embarked upon a strategic engagement in Asia-Pacific with the US and its allies such as War Exercises like Malabar in the Pacific Ocean and the Military agreement of LEMOA. However, with the Chinese aggression only likely to escalate; it is crucial that these countries create a strategic multilateral and bilateral partnership among themselves instead of solely relying on the United States. This will have two advantages. Firstly, as the US vs. China battle gets bigger; the US military power will get stretched across the world with China igniting new theatres of conflict; and secondly; together India, Japan, Australia, Indonesia, Vietnam and South Korea etc., can present a formidable challenge to Beijing’s communist order in the region.

We can already see the alignments slowly taking shape in the region. How should India, the world’s largest democracy shape its bilateral ties in the region? This article is part of a series focusing on India’s ties with countries in Asia-Pacific. In this article, we will focus on the Indo-Australian ties. The Indo-Australian partnership could play a critical role in the strategic alignment of democracies in Asia-Pacific. Both India and Australia are strategically located with India having access to the vast Indian Ocean from Africa all the way to Malaysia while Australia has access to the Pacific and Southern Indian Ocean. Together they can enforce the rules for the freedom of navigation of the seas in the Indo-Pacific region. In addition, both have a significant land mass of arable land that is available for cultivation and a vibrant agricultural sector. They are both gifted with mineral resources such as coal, uranium, thorium, iron etc. Thus, the Indo-Australian partnership is an important component of an alliance of democracies in the Indo-Pacific to counter China’s aggression.

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While China and Australia have extensive ties, their recently concluded FTA has faced a lot of flak from various quarters in Australia. China is one of the largest importers of coal from Australia and the slump in its economy has only added to the unease in Canberra about coping with the changes in its significant commodity exports. Earlier this year, China also attempted to buy 1 percent of Australia through stealth which was stopped in the nick of time by the Australian authorities. This strategic purchase by China was aimed at not just owning land in Australia but also using it for foodstuffs and other agro products to feed its population back home given the paucity of arable land in China’s Northeast like Tibet and Xinjiang.

China’s economic slump, its deceptive land purchase attempt that was thwarted and the Australian opposition to the FTA followed by its backing of the UN Tribunal verdict against China in the South China Sea resulted in a Chinese state media outlet, Global Times calling Australia a ‘Paper Cat which will learn its lesson’ on the 30th July, 2016. The Chinese media openly mocked Australia by calling it “a unique country with an inglorious history, established through uncivilized means in a process filled with the tears of the aboriginals serving as the offshore prison of the UK” and said that its joint declaration with the United States and Japan stating that China “must abide” by the UNCLOS ruling smacked of “blunt double standards” considering Australia staked claim to over 42 percent of the Antarctic.

While this is ironical considering China’s expansionist agenda, it is par for the course for it. India too has borne the brunt of the Chinese hypocrisy in respect of its NSG membership in June this year which China objected to, on account of India not being a signatory of the NPT (Non-Proliferation Treaty). China has been one of the sponsors of the two prominent rogue nuclear states in the world: North Korea and Pakistan and this has been ably documented. The above also shows why India and Australia need to cohesively converge strategically and further enhance the strategic partnership as the nucleus of the alliance of democracies in Asia-Pacific against the Chinese order.

Ties between India and Australia date back to the era of the British Raj when both the nations were colonies of the British Crown. While India attained Independence on 15th August 1947, Australia retained the Queen, the British Monarch as the head of the state while maintaining a functional autonomy with its Prime Minister. Both are a part of the Commonwealth group of Nations. Though both were on opposite sides during the Cold War era, relations between India and Australia started warming up post 1991 when India opened its economy for private sector and foreign investors. Since then, there has been no looking back on their economic ties. Exports from Australia to India that were $530 million in 1989-90 crossed a billion dollars at the start of this century. Trade between them grew by 24.6 percent between 2000 – 2009 making India, Australia’s 10th largest trading partner and 5th largest export destination. India is currently the 17th largest investor in Australia while Australia is the 22nd largest investor in India in terms of investment, trade and commerce.

According to the United Nations Food and Agricultural Organization (FAO), Australia ranks first in the world for actual arable land per capita at 2.67 ha/per capita. In comparison China has only 0.08 ha per capita. Australian farmers are among the world’s most productive and efficient; giving Australia one of the lowest global levels of severe land degradation. India has the second highest land bank of arable land in the world after the United States at 157.35 million hectares as per the World Bank. India has far more arable land than China; despite its holding only about 34 percent of China’s landmass. India’s biggest problem is despite engaging over 50 percent of its landmass in agriculture; its contribution to GDP is only about 14 percent. Moreover, India has a massive population, the second highest in the world to feed. This has made India look overseas for the offshore farming of crops and cereals, a recent example being the land leases for pulses with Namibia. While Australia could also serve as an offshore hub for Indian pulses, there is great potential to deepen cooperation in this sector. They can collaborate on technology and farming methods to better the crop productivity and efficiency, making it easy for India to implement tools like the Soil Cards and crop analysis methods effectively. There is also great potential for Virtual Water Trade between the countries to produce crops that are not competitive but complementary. India and Australia together have the potential to become the food and bread basket of the Indo-Pacific region and convert their bilateral ties into a powerful geopolitical tool. With an impending water crisis in the future, much of which will be caused by China’s extensive damming in the region; this partnership has the potential to disarm the enemy without firing a single bullet! We have covered Virtual Water extensively in our book: The New Global Order. When we combine Indo-Australian food dominance with their control over the Indian Ocean and West Pacific, the ramifications can be simply staggering.

India despite being rich in rare earth minerals imports coal and uranium from Australia. The bulk of Australia’s exports to India are in the mining sector such as material, equipment, technology and services comprising 20 percent of its total exports in 2015. For India, coal is crucial. 78 percent of its energy demands are met by coal fired plants and most of this coal comes from Australia. India has been sadly unable to optimize its extensive coal reserves in Central and Eastern India on account of red tape and with it now becoming a signatory to the Climate Change Agreement, its mining activities within the country will become curtailed and open up new avenues for cooperation with Australia in alternate energy: uranium for its nuclear powered plants. Australia holds 40 percent of the global uranium reserves and produces nearly 70 percent of the world’s uranium fuel. Australia and India have already signed a deal during Prime Minister Abbot’s 2014 visit which was ratified in 2015 by the Australian Parliament paving the way for nuclear commerce between the two countries.

Going beyond power, agriculture and mining; there is also further potential in the services sector which has been India’s prime export to Australia. The emphasis has been on the IT Sector and Tourism Information Technology and its related services. Nearly all major India IT giants like Infosys, Satyam, TCS, HCL, Polaris Software, NIIT, Wipro, Tech Mahindra, i-Flex, and iGATE etc. operate in Australia. Infosys, Satyam and HCL have setup software development centres in Australia while Polaris has established a performance diagnostic and testing centre in Sydney. Other major Indian investments in Australia include those by the Oswal Group (ammonia plants); Sterlite Industries (copper mines); Aditya Birla Group (copper mines); Gujarat NRE Co. (coal mines) and Asian Paints. Indian behemoth Reliance has entered into a partnership with Uranium Exploration, Indian Farmers Fertiliser Cooperative (IFFCO) has invested over AUD 100 million in Australia’s Legend Holdings phosphate projects with buyback arrangements and India’s National Mineral and Development Cooperation (NMDC) and Rio Tinto have entered into an agreement for joint exploration in India, Australia and other countries.

The TATA Group has enhanced their investment in a mining joint venture (led by Vale of Brazil) in Queensland. India’s Adani Group, has acquired a coal mining prospect from Linc Resources in the Galilee Basin in Queensland valued at $1 billion. Adani has also acquired the rights to manage the Abbot Point Coal loading terminal for a period of 99 years at a cost of $ 1.83 billion. This deal has come under vociferous criticism from NGO’s like Greenpeace who are opposing this citing clean energy. Greenpeace is trying to derail Australia’s mining exports as well as India’s development projects. It is running a smear campaign citing the damages caused by mining and farming run-offs in the Great Barrier Reef and has even admitted to falsely using a photo of a coral reef in the Philippines damaged by a super typhoon to warn of the perils facing the Great Barrier Reef for this purpose. Other major Indian exports to Australia are Gems, Pearls, Jewellery Leather goods, Textile, Chemicals etc.

Tourism is another big avenue for Indian exports to Australia with the majority being education and student oriented. The number of Indian students studying in Australia has rapidly increased from 20,512 in 2004 to over 120,000 in 2009. Australia overtook the UK as the second most favoured destination for Indian students after the United States. India is now the third largest source of immigrants to Australia, after the UK and New Zealand and the second largest source of skilled professionals mainly comprising of teachers, doctors, accountants, engineers and IT professionals. Moreover, the Indian diaspora is widely spread across Australia and contributes significantly to the Australian economy.

The presence of the Indian diaspora across Australia also has the advantage of harnessing India’s soft power and the export of its universal rules of “Vasudhaiva Kutumbakam”. With the addition of the World Yoga Day by the UN, India can now introduce its Yoga, music, art, dance and Ayurveda to Australia. In return, Australia can introduce India to its sporting prowess that creates world class athletes and a population that places great emphasis on physical fitness. The combination will be a perfect symphony of physical and mental wellbeing. The Indian Government recently organized a “Festival of India” showcasing dance, music, theatre and art including Yoga across seven cities in Australia, the first ever of its kind. India’s biggest cultural export to South East Asia and East Asia influencing the far off regions has been Buddhism and this is also an important aspect of its soft power diplomacy. Unlike China which spreads soft power in a hard way through Confucius Institutes where it promotes the Chinese way of life by dilute the culture of the host countries, Indian soft power is about universal peace, harmony and democratic values.

We have seen how the bilateral relations between India and Australia have blossomed over the last decade or two; more so with the growing threat of China in Asia-Pacific. Another facet of the Indo-Australian cooperation has been visible at multilateral forums where India and Australia have complemented each other on complex issues pertaining to politics, conflicts, trade and economics. The ASEAN Summit and the East Asian Summit are ways for New Delhi to expand its influence over South East Asia and the East Asian countries giving an alternative to the smaller countries that are uneasy with the growing influence of China in their backyard.

Australia follows a dual model of being a part of a US led alliance and advocating regional and multilateral ties. This is where India and Australia should align in creating a regional multilateral architecture outside the two power blocs of US or China in Asia-Pacific. Australia, a part of the TPP (Trans Pacific Partnership) with the US and its allies has already advocated India’s entry into APEC, a global economic and trade governing body which could significantly elevate the role of India in the global arena. Australia has also been positive about India joining the NSG as a responsible nuclear power.

Despite the immense of prospect of growth and cooperation between these two countries, India and Australia have some issues to be ironed out like the FTA and various clauses relating to Intellectual Property Rights and Investor-State Dispute Settlement (ISDS) which could further enhance the economic and trade partnership between the two countries. Apart from this, New Delhi and Canberra should now elevate their partnership to a strategic level and aim to build a consensus among the majority of the democracies in the region about following a rule based international order for the Freedom of Navigation of Sea, Trade and Commerce etc. It is also imperative for India and Australia to take the lead for creating a regional architecture on the lines of an alliance of democracies like Japan, South Korea, Indonesia, Vietnam etc. against a prospective communist order that China seeks to impose on the region and the world.

Nelson Mandela has said, “I have cherished the ideal of a free and democratic society in which all persons will live together in harmony and with equal opportunities” while Aung San Suu Kyi has said “Democracy, like liberty, justice and other social and political rights, is not “given”, it is earned through courage, resolution and sacrifice”. The time is ripe for the torchbearers of democracy: India and Australia to unite against a sharply contrasting ideology that threatens to envelop the Indo-Pacific and its existing civilizations.

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