In a world currently besieged with natural disasters, failed crops and a raging pandemic, the export of food, medical supplies and aid depends now, more than ever, on secure and efficient global supply chains.
For many countries working their way through various stages of economic recovery, the dependable supply of raw materials and energy sources such as iron ore, coal, steel, oil, and gas is pivotal, supporting public infrastructure spending and investment. This in turn creates jobs.
In popular economic theory, this has the potential to stimulate both domestic and international economies.
However, as the blockage of the Suez Canal last month demonstrated, these global supply chains are fragile, easily prone to disruption by external forces such as geopolitical instability, piracy, terrorism, bad weather, and accidents.
In the case of the Suez Canal incident, the blockage occurred in a maritime chokepoint – a trade-critical narrow channel connecting two main bodies of water, such as an ocean and in-land sea. Other key maritime chokepoints linking to the Indian Ocean include the Strait of Hormuz and the Malacca Straits, through which most of the world’s oil and gas is transported through every day.
A short-term disruption to a global supply chain can often result in a temporary increase in shipping costs, fuel prices, intermittent supply shortages, delivery delays, and tighter budgets.
Nothing the world is not already experiencing with the pandemic.
However, due to the pandemic, frozen manufacturing lines and widespread panic buying, global supplies have been stretched thin. Many countries no longer have a supply buffer to shield them from short-term shortages caused by disruptions to their supply chains.
As a result, the cost of everyday goods such as energy sources, fruit, packaged goods, coffee, building materials, and furniture has seen a drastic – and so-far permanent – increase over the last year.
Transportation fees have formed a large part of these rising prices, as border closures, shortage of staff, quarantines and sporadic demand has resulted in increased operating costs.
Further shocks to the global supply chain like the blockage in the Suez Canal only accelerate and cement these rising costs and delays, putting pressure on families, companies and countries already buckling under the strain of the pandemic. Here in Australia, a country who has been largely unaffected by the pandemic, we have seen shortages in food, toilet paper, building materials and skilled labour.
For the increasing number of countries and families around the world living on-or-below the poverty line, this is an additional pressure they cannot absorb.
The strategic implications may resonate far longer.
With approximately 90% of critical goods such as food, energy sources and raw materials being transported by sea every day, the safety and efficiency of maritime chokepoints is critical to maintaining international stability.
However, for the past few decades, rising powers in Asia such as India, China, and Japan, as well as existing powers such as the US, have begun to focus their strategic attention on the need to secure trade routes and maritime resources, both through covert diplomatic means as well as through the potential need to exert force.
This pivot is strongly reflective of old maritime strategies which were largely put aside by the neo-liberal West by the end of the Cold War in favour of air force technology and missile systems, predominately those of U.S. naval officer and historian Alfred Mahan and British naval strategist Sir Julian Corbett.
Both Mahan and Corbett place great importance on the need for aspiring great powers to secure their maritime interests. These interests can range from defending coastlines, protecting trade routes, projecting power and influence, and denying enemies from accessing – or profiting – from those same naval spaces.
As an export-oriented economy with import-dependent energy requirements, China has particularly strong economic and strategic interests in maintaining access to maritime chokepoints and controlling regional naval spaces such as the South China Sea and Indian Ocean.
As of 2018, two-thirds of China’s trade was conducted through the Strait of Malacca, the Indian Ocean, and the Suez Canal. In the same year, 80% of China’s oil imports, 72% of coal imports, and 11% of their natural gas imports were required to cross the Strait of Malacca and South China Sea to reach mainland China.
Reflecting a Mahanian strategy mindset, which emphasises naval superiority as essential for resource security and the rise of a regional power, Chinese leadership has stressed the need to develop China into a maritime power for more than two decades, a plan that is now beginning to come into fruition.
Largely made up of Chinese foreign investment projects, the Belt and Road Initiative seeks to re-establish ancient land routes throughout Asia and link them with the traditional sea routes largely used today, utilising railways, pipelines, highways, Special Economic Zones, Economic Corridors, and Sea Ports.
Once completed and successfully inter-connected, these projects would enable China to bypass maritime chokepoints where they may not wield much influence and diversify their lines-of-communication and trade with other countries and regions.
Next door, India and Japan have followed China’s lead, with both countries undertaking similar inter-regional infrastructure projects to establish their own position in the region. India, vying to become a regional power, is particularly threatened by China’s ‘string of pearls’ across the Indian Ocean – made up of deep-sea ports and Economic Corridors in countries such as Pakistan, Myanmar, and Sri Lanka.
The strategic possibility for China here is to allow them to better contain India and limit its control over the Indian Ocean and its vital sea lines of communication and trade.
Again, this mindset comes back to the naval strategies of Mahan and Corbett. Both argue that in order to for a country to establish itself as the regional power – from where they can extend their influence even further – they have to control the seas.
Mahan believed in total control, with the ultimate goal being that the dominating power has destroyed every last resource of the enemy, preferably in a large, decisive battle. This strategy can be seen throughout history, with one example being the recurrent naval battles between Britain and Spain throughout the 16th century.
Corbett however, believed that no one power could ‘conquer’ the seas. Rather, an established power could only seek to control strategic points such as trade routes, economic zones, and areas rich in resources. From here, the country – or alliance – could project influence, deny/allow access, and ultimately increase their own power.
It is this last strategic mindset that many global powers have begun to divert their resources towards in recent years.
Perhaps the most obvious example in the region, China’s man-made islands in the South China Sea establishes an area of control where the country can deny access to a resource-rich area and simultaneously defend their coastline, pushing the combat zone further out to sea where their missile systems project the greatest amount of power.
On the other side of the growing tensions, the United States’ growing military presence in the region, as well as the importance placed in the recent meeting of the QUAD (consisting of the US, Japan, Australia, and India) points towards the region’s growing interest and commitment to this “Control, Deter, Deny” strategy.
The blockage of the Suez Canal – though short-lived – would have been closely followed by many established and rising powers with vested interest. For many, it would have acted as a wake-up call, with many international corporations and countries already seeking to source other transport routes or methods that are less vulnerable to regional crises, political instability, or – in the case of the Suez Canal incident – bad weather or human error.
For countries such as China, India, and the US, the incident would have had blindingly clear strategic implications, validating the ever-growing focus on the need for maritime control and power.