Energizing Strategies for the Indo-Pacific

US attention on the Indo-Pacific region may be intensifying, as signaled by two 2017 events: In October, the first shipment of US crude oil arrived in India’s Paradip Port, the first in more than four decades and in November, the United States, India, Japan and Australia held their first quadrilateral meeting in more than a decade. The two events could have been “a coincidence of scheduling or part of something larger – an effort to fuse the strategic opportunity of America’s energy revolution with an emerging US strategy to help transform the ‘Asia-Pacific’ into the ‘Indo-Pacific’ and include India in the larger task of managing China’s growing influence in the region,” explains Marc Grossman, a vice chairman of The Cohen Group and former US under secretary of state for political affairs. India has expressed concern about China’s far-reaching Belt and Road Initiative and launched its own Act East Policy. The Obama administration shunned China’s Asian Infrastructure Investment Bank, and the Trump administration withdrew from the Trans-Pacific Partnership. So the United States must convince India that a lasting strategy for the region is in place, and Grossman suggests that energy relationships and Quad cooperation present two options. – YaleGlobal

Energizing Strategies for the Indo-Pacific

The US must convince India that it has a strategy for the Indo-Pacific-region for countering China’s increasing dominance in Asia
Marc Grossman
Tuesday, April 3, 2018

India’s Prime Minister Narendra Modi meets with Japanese Prime Shinzo Abe, Australia’s Premier Malcolm Turnbull, and US President Donald Trump; India’s Paradip Port receives the first shipment of US crude oil
Quadrupling power: India’s Prime Minister Narendra Modi with Japanese Prime Shinzo Abe, center, Australia’s Premier Malcolm Turnbull, and US President Donald Trump; India’s Paradip Port receives the first shipment of US crude oil

WASHINGTON: In October 2017, the oil tanker New Prosperity arrived in India’s Paradip Port carrying the first shipment of crude oil from the United States in more than four decades. A few weeks later in Manila, diplomats from the United States, India, Japan and Australia held their first quadrilateral meeting in more than a decade, discussing how best to promote what they called a “free and open Indo-Pacific.”

The return of US energy shipments to India and the “Quad” may have been a coincidence of scheduling or part of something larger: an effort to fuse the strategic opportunity of America’s energy revolution with an emerging US strategy to help transform the “Asia-Pacific” into the “Indo-Pacific” and include India in the larger task of managing China’s growing influence in the region.

In recent years, the United States has benefited from a shale oil and natural gas production revolution. The Energy Information Administration estimates that by 2022 the United States will become a net energy exporter, while the International Energy Agency says that US output is expected to account for more than 80 percent of global supply growth in the next decade. The Trump administration intends to take advantage of America’s emerging energy dominance. The new US National Security Strategy notes, “As a growing supplier of energy resources, technologies, and services around the world, the United States will help our allies and partners become more resilient against those that use energy to coerce.”

One of those partners is India. In recent years, Indian oil companies have made substantial investments in US shale gas assets, while Indian public-sector firms have signed contracts for 7.85 million barrels of US crude; 1.6 million barrels have already been delivered. An Indian private sector giant, Reliance Industries, owner of the world’s biggest refining complex in Gujarat, has ordered 1 million barrels. And this month, with a 20-year contract to export liquefied natural gas to India and Japan, the Cove Point facility in Maryland begins commercial service.

Simultaneously, administration officials have been describing US interests in Asia as part of a vision for the “Indo-Pacific.” Former Secretary of State Tillerson called India, a core anchor of the Indo-Pacific region, “the most consequential part of the globe in the 21st century.” In his inaugural speech as US ambassador to India, Ken Juster said India is a “leading power in the Indo-Pacific region and beyond” and noted that together, the United States and India want to preserve regional stability and security.

Of course, the root of the current policy goes back several years. Former Secretary of State Hillary Clinton also used the phrase Indo-Pacific to describe the area, and the Obama administration supported official energy dialogues and private contracts for exports to the region. But there are new and intriguing developments in how US officials are using the Indo-Pacific framing explicitly to focus on the challenge from China.

The recently unveiled National Security Strategy notes that “China seeks to displace the United States in the Indo-Pacific region.” The Trump administration, and now many others in both political parties, have concluded that the effort, pursued by every president since Richard Nixon, to bring China into the global system has failed, and that Beijing should be taken at its word as it pursues its vision of the future. During his speech to the 19th Party Congress in October 2017, President Xi Jinping said China was a “great power” or a “strong power” 26 times, applauding a “new era” in which China will be “moving closer to the center stage.” The March vote of the National People’s Congress to do away with presidential term limits in the Constitution only reinforces this view.

A critical part of China’s efforts is the Belt and Road Initiative, an infrastructure and connectivity initiative with broad geostrategic consequences. China’s vision for BRI is to create or consolidate diplomatic and economic ties with more than 60 countries, encompassing by some estimates 30 percent of global GDP, by investing more than $5 trillion in infrastructure projects in these nations, including $62 billion in infrastructure projects in the China-Pakistan Economic Corridor.

New Delhi has opposed BRI from the start, seeing it as an effort to surround India. In response, Prime Minister Narendra Modi is pursuing an “Act East Policy” to promote economic cooperation with countries in the region. The United States must convince Modi that it has an integrated Indo-Pacific and energy strategy. Otherwise, India may make decisions that cut across US interests, such as Delhi’s investment in the Chabahar Port in Southeast Iran.

America, which once promoted its own New Silk Road vision, has responded to BRI with a mixture of attempted engagement and anxiety. In November 2016, I suggested that there might have been possibilities for Washington and Beijing to pursue modest joint projects in Pakistan and Afghanistan, but now this seems unlikely. President Barack Obama’s decision to shun the Asian Infrastructure Investment Bank and the damaging decision by President Donald Trump to abandon the Trans-Pacific Partnership agreement have provided China with an opening to set its own course, using BRI, for the region’s future economic development.

Are there US options for countering China and shaping an alternative narrative to BRI?

One is to harness the US energy revolution to advance US interests in the Indo-Pacific by implementing earlier energy deals in the region and promoting new ones. In October Deputy Energy Secretary Dan Brouillette traveled to Tokyo, where Japan’s Trade and Industry minister announced plans for a $10 billion public-private effort to build natural gas terminals, power plants and other facilities, many in the United States. The Cove Point terminal is the first gas liquefaction project and export facility on the East Coast and provides commercial liquefied natural gas service for India. And in February, the United States and Australia announced an intent to launch the US-Australia Strategic Partnership on Energy in the Indo-Pacific region. These new energy relationships provide alternative, price-competitive energy sources and a cleaner fuel that has the potential to tackle the region’s toxic air.

A complementary option is to further deepen quadrilateral cooperation among the United States, India, Australia and Japan. The “Quad,” originally conceived by Japanese Prime Minister Abe in 2007, was disbanded by then Australian Prime Minister Kevin Rudd in 2008 out of concern for Australia’s relationship with China. The Quad meeting in November, while intentionally understated and limited to mid-level government participation, was significant. This forum gathers together the four most powerful nations who want to have influence in the region. The Quad countries will not match China’s BRI resources. But cooperation in energy might preserve some space to work with countries who welcome aspects of the BRI, but also fear Chinese domination.

It is always a danger for outsiders to attribute strategic coherence to random events, even if astutely stitched together. We will know more as America’s role in both global energy markets and the Indo-Pacific evolves, yet – to borrow from statistician Nate Silver – perhaps there is a clear signal of US intentions and objectives in the noise.

Ambassador Marc Grossman is a Vice Chairman of The Cohen Group. A US Foreign Service Officer for 29 years, he retired in 2005 as Under Secretary of State for Political Affairs. The ambassador was the US Special Representative for Afghanistan and Pakistan, 2011-2012, and a Kissinger Senior Fellow at Yale in 2013. The author wishes to thank Ingrid Henick, Kate Fernandez and Shelby Stone for their support producing this essay.

The article was posted on March 29, 2018.

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