Geo-economic Alliances


International Relations and Foreign policy address the shifting nature of the global power hierarchy. Foreign policy is the constituent of foreign relations, covering the goals and objectives a country wants to attain in its relations with other States.  In international politics, small Island States are increasingly becoming vital and influential actors. These States perceive the important role played by multilateral diplomacy in increasing their engagement and amplifying their voices. This necessitates a dependence on collective solidarity and the implementation of creative solutions.

Sri Lanka and Maldives are a part of South Asia and its sub-regional groupings while Mauritius, Seychelles and Réunion are a part of Africa. The dynamic changes in the international environment necessitate a deep strategic observation on the place and role of islands in the contemporary Indian Ocean regional order.   The Indian Ocean Region (IOR) Island Alliance continues to function as the foundation of IOR diplomacy. From the perspective of islands, long-term stability in the IOR can only be guaranteed if nations in the East African, South Asian and Gulf regions carry out restructuring and implement modernisation measures that follow models of regional integration. In the current context, apart from the island perspective, India also recognises the security and stability requirements of the Indian Ocean Island neighbourhood. In order to maintain a balance of power, the traditional powers in the Indian Ocean continue to work together across the maritime domain.

The current challenge is about how this should be applied in practice.  One might debate that cooperation and integration can provide solutions to the prevalent issues. Island nations have exclusive prospects to offer a new agenda for the IOR.  A question frequently being posed is “if efficiently designed, will economic interests drive the Alliance of the five Indian Ocean island nations towards an area of deep integration? Are there political limits to regional integration, and if they exist, how can they be addressed?” However, the economic prospects of IOR islands will mainly depend on the route taken by the traditional and non-traditional powers.  Sustaining a solid collective economic policy, particularly in its financial aspect, should progress towards addressing any new challenges that these five islands might face.  

Energy constitutes an important aspect within the IOR island neighbourhood. As such, for Mauritius, Seychelles, the Maldives, Sri Lanka and Réunion relationship with oil-rich countries is of great importance. These islands should widen their circle of economic partners to take full advantage of the opportunities offered by globalisation and trade liberalisation. The policy of easing trade gaps between   these nations through the African Continental Free Trade Area (AfCFTA), the South Asian Free Trade Area (SAFTA) and even with ASEAN (Association of Southeast Asian Nations) – Free Trade Agreement (FTA)   complements and stabilises the single market in the Indian Ocean Region. Furthermore, these five Indian Ocean islands hold a dominant place in India’s Neighbourhood First and Security and Growth for All in the Region (SAGAR) policies. These links open a new window of opportunity that will make active use of economic diplomacy to aid in accomplishing these ambitious goals. Therefore, the argument presented here highlights ideas as a stimulus for structural reform, but it clearly identifies that multiple factors shape the development of long-term dispositions in foreign policy.


Promoting regional consciousness requires massive efforts. The SAARC (South Asian Association for Regional Cooperation) is itself a new or evolving foreign policy actor. A robust SAARC   also works to the disadvantage of its neighbours.  SAARC has the prospects of bringing nations together.  The eight SAARC nations had chosen to aspire for their own integration projects. India   will progressively function as an engine of growth for the Indian Ocean Region.   There are a number of agreements in place to facilitate regional trade. The SAFTA arrangement of SAARC that created a free-trade area of 1.9 billion people is being considered as key to successful trade liberalisation.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) consists of seven member States out of which five are members of SAARC, namely Bangladesh, Bhutan, India, Nepal, and Sri Lanka. The other two member States are from South East Asia.  BIMSTEC is a possible alternative to accomplish the objectives of integration in the rest of South Asia.

BIMSTEC will mostly be attempting to develop extra-regional blocs. Specifically, India has been advancing its neighborhood policy in a spirit of generosity and has also been   linking maritime strategy in the IOR. The Indo-Sri Lanka Free Trade Agreement (ISFTA) and the SAFTA could have major positive outcomes on Sri Lankan trade flows. Traditionally, as its immediate maritime neighbours, India has placed greater attention on Sri Lanka and the Maldives.  India’s bilateral relations with its neighbours have seen significant improvement.  India had a trade surplus of about US$ 3.8 billion with Sri Lanka in 2021.


The new market created from the AfCFTA agreement is estimated to be as large as 1.3 billion people across Africa with a combined gross domestic product (GDP) of US$ 3.4 trillion. The AfCFTA is an operational start towards the Africa common market. States that have ratified the AfCFTA agreement appear to have approved the Rules of Origin on over 81 per cent of tariff lines. AfCFTA provides the opportunity of resolving the prevailing restrictions that limit intra-regional trade in Africa.

Mauritius and Seychelles

The regional value chains have a low level of integration. AfCFTA provides Mauritius and Seychelles the golden opportunity to enter Africa’s vast market. The first trade agreement signed by India with an African country is the Comprehensive Economic Cooperation and Partnership Agreement (CECPA); an important milestone in the trade and economic ties between Mauritius and India.   India is developing the island facilities in Mauritius and Seychelles as these would become crucial anchor points for India in extending its outreach and engagement architecture in the IOR in the future.


The Indian Ocean Commission (IOC) is an international organisation with a Francophone island identity. France is a member of the IOC to permit Réunion to wholly contribute to regional cooperation in the Southwest Indian Ocean. Alongside France, Mauritius and Seychelles are members of the IOC.  Currently, Mauritius is permitting trade preferences under the IOC trade regime. The leading financial supporter of the IOC is the European Union (EU).

The definition of small Island States evidently differs with the factors selected for gauging the magnitude of States. Over the years, there have been vital reassessments of the foreign policies of IOR Islands. Currently, the foreign policies of the five Island States comprise of a mixed bag of progressive outlooks on international affairs with a pursuit of economic programmes.

Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O.P. Jindal Doctoral Fellowship and SAU Scholarship under the South Asian Association for Regional Cooperation (SAARC) umbrella. As a Lecturer he focuses on comparative politics of Small Island Developing States (SIDS). Dr. Fernando is an academic specialist in International Relations and an adviser on New Regional Diplomacy. He has received accolades such as the 2018/2019 ‘Best Journalist of the Year’ in South Africa (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union.

By Dr. Srimal Fernando