Strategic Weekly Analysis

1 June 2011 FDI Team

Vol. 2, № 19.

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From the Editor’s Desk

Dear FDI supporters,

Welcome to this week’s edition of the Strategic Weekly Analysis. This week, the Global Food and Water Crises research programme reports on the threat posed to the South African bid for the giant Square Kilometre Array (SKA) telescope by the practice of hydraulic fracturing, or “fracking”. This is a mining method that may adversely affect the telescopes by causing light or radio interference. South Africa’s problem may turn out to be Australia’s gain, as the issue of fracking has the potential to enhance Australia’s bid for the SKA.

The Northern Australia/Energy Security research programme discusses Australia’s role in a “nuclear renaissance” and outlines some of the benefits for this country and the world’s emerging economies.

Over in Africa, the Indian Ocean research programme looks into the outbreak of violence in the disputed Sudanese region of Abyei. The article reflects on the implications for China, India and Brazil, three key actors in the country’s energy sector.

Looking at the Middle East, the continuing violence in Yemen is considered, as is Saudi Arabia’s proposal for an anti-Iranian alliance. FDI Senior Analyst Sergei DeSilva-Ranasinghe examines the apparent controversy surrounding the alleged construction of a Chinese naval base at the Pakistani port of Gwadar.

Upcoming Strategic Analysis Papers will include Iran’s Increasing Arc of Influence, an examination of Iranian attempts to adopt a more prominent position within the Indian Ocean region. The Indian Ocean research programme will shortly be releasing the first in a series of Strategic Analysis Papers, looking at the national involvement of a number of countries in the Indian Ocean region. Among the first will be Japan, Brazil and South Korea.

From the Global Food and Water Crises research programme comes an analysis of the future of desalination plants as a potential answer to global water crises. The programme also investigates the food and water security outlook for Tanzania.

I trust that you will enjoy this edition of the Strategic Weekly Analysis.

Major General John Hartley AO (Retd)

Institute Director and CEO

Future Directions International

*****

Mining Undermines South African SKA Bid

Background

The South African Government’s bid to build the $2.5 billion Square Kilometre Array (SKA) telescope could be undermined by the effects of a mining technique known as “fracking”. These concerns play into the hands of Western Australian Premier Colin Barnett as he travels to Europe this week to promote WA’s bid for the project, which involves the construction of 3,000 interconnected telescope dishes covering one million square kilometres.

Comment

Concern has been raised in South Africa that the mining practice of “fracking” in the Karoo semi-desert region may cause light or radio interference, which could, in turn, negatively affect the operation of the SKA project planned for the same region.

The term fracking is short for “hydraulic fracturing”, a method of breaking up rock deep underground, using millions of litres of water, sand and chemicals. The mixture is pumped into the ground under high pressure and is designed to create cracks in the rock, releasing the shale gas.

Over the past months, propelled by environmental concerns, an organised campaign has been run against exploration companies, including Anglo-Dutch oil company Shell, that want to use the fracking mining method.

The South African Science and Technology Minister Naledi Pandor and Deputy Minister Derek Hanekom, have reportedly dismissed the concerns, saying that they will stop anything from interfering with the project. Pretoria has refused new mining applications for the Karoo while a study into the environmental impacts of fracking is carried out.

It could be useful news for Premier Barnett as he promotes the Australia-New Zealand bid in Europe this week. Similar questions about the effects of fracking on Australia’s SKA bid may also need to be addressed, however, as its planned SKA footprint also covers land being mined. For example, will the SKA project lock away the future mining potential of large parts of Australia?

In Australia, the Greens have warned that fracking could harm Australia’s water supplies. Early in 2011, the Western Australian Greens warned that the groundwater resources in the South-West, Mid-West and Kimberley regions of the State are at risk of being polluted by this mining method.

If there is substance to the concerns in South Africa, it may mean that Australia is the only remaining viable option for the SKA. In any case, the South African Government may actually be better served by forgoing the SKA project to pursue the potentially more lucrative mining option, although environmental concerns may dampen the government’s enthusiasm for mining.

A decision on who will build the world’s most powerful telescope will be made in 2012.

Further reading:

https://www.skatelescope.org/

https://www.ska.gov.au

https://www.ska.ac.za/

 

Gary Kleyn

Research Manager

FDI Global Food and Water Crises Research Programme

[email protected]

*****

Australia’s Role in the Nuclear Renaissance

Background

The announcements, made in late May, by the Swiss and German Governments that they will phase out nuclear power, are premature. Australia has the ability to be the voice of reason in the international nuclear debate and to advocate the merits of atomic energy for developing nations.  

Comment

Civil nuclear power has, until recently, experienced an unprecedented renaissance, driven by attempts to mitigate climate change challenges and promote energy security. The Fukushima Daiichi emergency, and subsequent announcements by the Swiss and German Governments, in late May 2011, that they will phase out nuclear power stations, has led to increasing talk of the end of the “nuclear era”.

The need in emerging markets for uninterrupted, large scale, low-carbon energy will, however, offset potential demand shortfalls from the Japanese and European nuclear sectors. Australia, with its abundance of uranium assets, is in a prime position to exploit these opportunities.

Nuclear energy will continue as a fundamental element in the growth of emerging markets, as it is essential to promoting energy security. Current energy supply deficits within developing states can only be addressed by nuclear power. Although Japan’s nuclear emergency caused public concern in the BRICS states (Brazil, Russia, India, China and South Africa), it has done little to alter their long-term nuclear power aspirations. A good example is India, where 500 million people are without access to electricity, and atomic energy is essential to provide equitable access and allow the country to realise its full economic potential.

Further, atomic energy represents the best opportunity for emerging economies to decrease their carbon output, without sacrificing productivity. Unlike fossil fuels, nuclear energy emits no greenhouse gases. As argued by Zhao Chengkun, vice-president of the China Nuclear Energy Association, ‘nuclear is the only energy source that can be used on a mass scale to achieve the nation’s goal of developing cleaner energy.’

Australia has the world’s largest reserves of uranium and is currently the world’s third-largest producer, after Kazakhstan and Canada. Australia has the potential to become a nuclear ambassador, providing economic opportunities, while simultaneously promoting responsibility within the nuclear industry.

Diversifying the national export profile, away from the current iron ore and coal focus, will provide greater opportunities in the international market and help to offset the effects of price fluctuations on other commodities.

To ensure the long term viability of the sector and prevent future nuclear emergencies, it is imperative that Australia champions responsibility within the industry. The nation’s large uranium reserves and growing geopolitical profile, will afford Australia unprecedented influence in this matter.  

Liam McHugh

Strategic Analyst

FDI Northern Australia and Energy Security Research Programmes

[email protected]

*****

Sudan Violence Returns; Energy Interests Threatened

Background

Northern Sudanese armed forces recently took over the disputed region of Abyei, which lies on the border between northern and, soon-to-be-independent, southern Sudan. While the recent clashes have so far mainly been confined to Abyei, the potential for an escalation of violence still exists. Should that occur, it would not only negatively affect a state still recovering from civil war, but may also affect the interests of China, India and Brazil, all of which have significant resource interests in the two Sudans.

Comment

South Sudan is on course to become officially independent on 9 July 2011. However, the decision on whether Abyei would be part of northern or southern Sudan was left undecided in the 2005 Comprehensive Peace Agreement, which set the groundwork for South Sudan’s independence. This has placed Abyei at the centre of violent conflict between the two Sudans, whose differences and hostilities remain.

The potential for renewed north-south hostilities as a result of the violence in Abyei is very real, given the imminent independence of the south. This scenario is one that would negatively affect the economies of China, India and Brazil, and, in particular, the energy security of the first two of these nations, should it eventuate.

Oil has been the primary reason for Chinese and Indian involvement in Sudan over the last decade. China has invested over US$20 billion in Sudan, which has funded initiatives such as dams and refineries, as well as a 1,600-kilometre oil pipeline to the Red Sea.[1]  As a result, China now has command of 40 per cent of Sudan’s oil sector and imports 60 per cent of Sudanese oil production.

India has also become a major player in Sudan, which it sees as being beneficial to its energy security and strategic interests in Africa and the Indian Ocean region. Bilateral trade between India and Sudan totalled US$1.0 billion in 2010. New Delhi has also invested US$2.5 billion in the development of the Sudanese hydrocarbon sector, with the aim of helping to address India’s growing energy security requirements.[2]

Energy security has not been the only motivation for increased foreign involvement in Sudan. Brazil’s involvement in recent years has come in the form of investments in Sudan’s agricultural, construction and engineering sectors. This has been largely for the production of ethanol, of which Brazil is a leading global producer. The first ethanol plant in Sudan, which opened in June 2009, was designed and manufactured by Dedini, a Brazilian company. Such involvement has meant that Brazil has been able to become a major competitor to India and China for strategic clout in Sudan, as well as in the wider Central and East African regions.  

Increased tensions and hostilities between northern and southern Sudan would have adverse effects on the interests of all three powers. As many of the oilfields are located in South Sudan, they may be vulnerable to attacks from the north, should all-out conflict resume. This would likely lower, or perhaps halt, the supply of Sudanese oil, thereby affecting the economies of India and China, both of which are dependent on reliable energy supplies to sustain their economic growth. Brazil would also be adversely affected, as a resumption of violence would render Sudan a geostrategic burden and set back Brazil’s ability to achieve greater influence in Africa and the Indian Ocean region.

Bruno de Paiva

Future Directions International Research Intern              

Indian Ocean Research Programme

*****

Instability Continues in Yemen

Background

Clashes between forces supporting Yemeni President Ali Abdullah Saleh and tribesmen loyal to Sheikh Sadeq al-Ahman continue as Saleh refuses for the third time to accept a GCC-sponsored request to step down.

Comment

A decisive outcome appears unlikely in the short term. Neither side has the military means nor the authority to defeat the other, especially as Saudi Arabia in not prepared to intervene.

President Saleh has the support of most of the armed forces elements, especially those in and around the capital. The defection of the northern-based 1st Armoured Brigade is a noteworthy exception. On the other hand, tribal elements remain divided with the al-Houthi tribes in the north preparing for another move towards independence. Nor is it clear that the southern separatists are prepared to support the overthrow of Saleh either.  Meanwhile, there are unconfirmed reports that al-Qa’ida in the Arabian Peninsula has set up checkpoints and occupied government buildings.

Saudi Arabia, despite its support for the Gulf Co-operation Council (GCC) proposal that Saleh step down within 30 days and pave the way for elections in return for immunity, is not prepared to use its financial support to bring about a decisive outcome. 

In part this may be because no single entity would emerge that had the authority to govern Yemen. It may also be because Saudi Arabia sees itself distracted by its attempts to limit Iran’s influence in the region. Others have claimed that Riyadh does not want to see a government change on its borders because of a popular revolution.

As a result, at least in the short term, a stalemate is likely to eventuate with increasing anarchy as tribal elements seek to take advantage of the situation.

Major General John Hartley AO (Retd)

FDI Institute Director and CEO

*****

Saudi Arabia Proposes anti-Iran Alliance

Background

Saudi Arabia has asked Pakistan, Malaysia, Indonesia and the Central Asian republics to join it and its Gulf allies in an alliance, aimed at containing the influence of Iran and supporting the Saudi-led intervention in Bahrain. While these countries are yet to openly come out in favour of such a grouping, the United States has expressed concern that any such alliance may only further exacerbate tensions and end up strengthening Iran’s hand.   

Comment

In a pointed message to Tehran, the head of the Saudi National Security Council, Prince Bandar bin Sultan al Saud, has asked Pakistan, Malaysia, Indonesia and the Central Asian republics to give their diplomatic support to Saudi-led efforts at containing the majority Shi’ite revolt in Bahrain. This would lend support to the Sunni-led Bahraini Government and its regional allies, Saudi Arabia and the Arab states of the Gulf
Co-operation Council. The door has been left open for possible military contributions in the future.

Saudi Arabia leads a 4,000-strong force that entered Bahrain in March 2011, at the invitation of the ruling al-Khalifa family. Saudi troops make up most of the intervention force, while the other GCC states have contributed smaller numbers. Iran denies overtly supporting the Bahraini protesters, but the Arab states remain suspicious of their longstanding rival across the Persian Gulf.

Despite the attractiveness of limiting Iranian influence, Washington is concerned that overall religio-political tensions could be increased by such an alliance. This would hamper the chances of a peaceful outcome to the recent Middle East uprisings and possibly push Bahraini Shi’ites towards Iran. Were the alliance to take shape, it could lead to discord in US-Saudi relations.

Pakistan has yet to comment, other than to state that it has no plans to despatch additional forces to Bahrain. Pakistani forces have been training their Bahraini counterparts for some time but are, according to Islamabad, not involved in the invention.

Malaysia has previously backed the Saudi involvement in Bahrain and has stated its willingness to send peacekeeping troops, if requested by the Bahraini Government. Malaysian Prime Minister Datuk Seri Najib Razak stated on 13 May, that:

‘These forces will assist the legitimate mission of Gulf Co-operation Council forces, which are playing a vital role in ensuring the success of the national dialogue in Bahrain. If invited, Malaysia will consider it a great honour to offer assistance in this noble effort.’[3]

As yet, no response to the Saudi alliance proposal has been forthcoming from Kuala Lumpur or the other countries that were approached. It may be that, like Washington, they too view an anti-Iran alliance as a step too far.

Leighton G. Luke

Research Manager

Indian OceanResearch Programme

[email protected]

*****

China Refutes Gwadar Naval Base Conjecture

Background

The Pakistani Defence Minister Ahmed Mukhtar has affirmed that Pakistan is appreciative of China’s willingness to operate Gwadar port, and is also keen to see that ‘a naval base is constructed at the site of Gwadar for Pakistan.’ Predictably, the remarks attracted international attention. They reinforced existing views among foreign commentators, who believe that China has intentions to build a series of naval bases in the Indian Ocean, which have been referred to as the “string of pearls”. Nonetheless, it should be equally emphasised that any analysis of Gwadar should be seen as a microcosm of China’s wider relations and interests with Pakistan and the region, which often tend to be understated.

Comment

In response to Minister Mukhtar’s comments, China was quick to issue a statement denying that it has any interest in setting up a naval base at Gwadar. ‘China and Pakistan are friendly neighbours engaged in extensive co-operation across the board. As for the co-operation project you mentioned, I have not heard about it,’ said a senior Chinese Foreign Ministry spokesperson. Regardless of China’s denial, controversy associated with Gwadar and China’s naval ambitions in the Indian Ocean, is likely to be sustained for many years to come.

The story of Gwadar is an interesting one and, much like the other Chinese-funded and -built ports in Bangladesh, Burma and Sri Lanka, has attracted a lot of commentary about its intended function. While it is indeed possible that, in the longer term, China may have ambitions to use the port as a base for its warships to operate in the western Indian Ocean, this scenario has yet to materialise, and quite possibly may not eventuate at all.

Outside the potential for naval use, Pakistan’s rationale to use Gwadar as a hub and link to the wider region appears to have been the key determinant that led to its construction, as once stated by Prime Minister Shaukat Aziz:

‘This can also be a potential energy port for the region. We are also looking at Gwadar as a major refining point, as it is located near the largest hydrocarbon reserves of the world. The Gwadar port will be linked to Central Asian republics, besides the Coastal Highway, the Indus Highway and the Karachi Coastal Highway. A railway link with the entire country is also being considered.’

Indeed, China’s interest in Gwadar is a confluence of strategic and economic considerations. This is demonstrated by China’s and Pakistan’s interests in linking the port to China’s south-western border. Strategically, Gwadar which is approximately 2,500 kilometres from China’s south-western border, offers China direct access to the Strait of Hormuz, the Arabian Sea and the Gulf of Aden.

Similarly, by using Pakistan as a corridor to the Indian Ocean, China has the opportunity to stimulate trade and development in one of its largely underdeveloped border regions. To link Gwadar to China, both countries have committed to building road and rail projects, such as the widening and upgrade of the Karakoram Highway, to facilitate enhanced connectivity and trade.

China may not immediately benefit from the Gwadar facility, due to either Pakistan’s political instability or the costs related to the project itself. Its involvement is perhaps more indicative of its intention to strengthening its long-term interests in Pakistan. Indeed, Pakistan is an important strategic ally in facilitating China’s interests throughout the Muslim world, and an equally important partner in its perennial fight against Uighur secessionists, who have the potential to destabilise China’s interests throughout the region.

Such variables would indicate that, if Pakistan is keen for China to set up a naval base at Gwadar, China may hold a different view on the matter, even if it finds the proposal attractive. Setting up a naval base in Gwadar is likely to further polarise China’s relations with the US and India, a situation that China is unlikely to want in the near term.

In addition, while many observers point to the security of sea lanes being a point of serious concern for China, it is equally possible that China, for the time being, is content for the US, India and the West to underwrite the hugely expensive exercises of maintaining large naval forces in the Indian Ocean to ensure the security of sea lanes.

As long as it is not detrimental to China’s interests, maintaining the status quo at this stage is likely to save Beijing from committing its resources, which are being used more shrewdly elsewhere to strengthen its growing soft-power influence in the region. 

Sergei DeSilva-Ranasinghe

FDI Senior Analyst

[email protected]

 

*****

What’s Next?

  • Edith Cowan University’s SECAU Security Research Centre is presenting a series of events in celebration of National Cyber Security Awareness Week, which is being held across Australia until Friday, 3 June. Events will feature presentations by academics and guest speakers across a number of different areas. For more, visit www.staysmartonline.gov.au or, to RSVP, contact [email protected]
  • An Australian delegation is attending the Association of South-East Asian Nations (ASEAN) Chiefs of Police Conference. Underway since 31 May, the conference is taking place in Laos until 3 June to discuss regional anti-crime co-operation.
  • The Australian-British Chamber of Commerce is holding an executive lunch at the Parmelia Hilton Perth, with Atlas Iron Limited CEO David Flanagan on 2 June from 12.00pm-2.00pm. To book, visit www.britishchamber.com
  • French Foreign Minister Alain Juppé is to visit Israel and the Palestinian Territories on 2-3 June.
  • On 3 June, from 7.30am-9.00am, Professor Ross Garnaut will be speaking on the topic “Responding to Climate Change in our National Interest”. The breakfast is to be held at the Parmelia Hilton Perth and will be hosted by the John Curtin Institute of Public Policy, the Australian Sustainable Development Institute and the Sustainable Energy Association of Australia. For more details, visit: https://www.business.curtin.edu.au/files/PPF_Breakfast_Ross_Garnaut__3_June_2011_DRAFT_v3_write1.pdf
  • The tenth International Institute for Strategic Studies Asian Security Summit will be held in Singapore from 3-5 June. Representatives from 28 countries will attend.

 

 

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

 

 

Published by Future Directions International Pty Ltd.

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[1]Sharife, K. ‘Rules of Engagement: Has China's $20 billion investment in Sudan's oil industry paid off?’,Forbes,4 May 2010.

[2]Commodity Online, 29 April 2011, ‘South Sudan to honour oil contracts with India’.

[3]New Straits Times, 14 May 2011, ‘Peacekeepers to Bahrain if needed’.

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

Published by Future Directions International Pty Ltd.
Suite 5, 202 Hampden Road, Nedlands WA 6009, Australia.