INDIAN OCEAN DIPLOMACY: CONTEXTUALISING NEOLIBERALISM AND THE NEW FOREIGN POLICY ORIENTATION

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Neoliberalism has become progressively more apparent in policy discourse. Neoliberalism refers to the revival of the doctrines of classical economic liberalism. The dominant political ideology shaping international relations is the ideological paradigm of Neoliberalism. Neoliberalism is established on the hypothesis that market individualism is fundamental to economic and social progress. The policies of Neoliberalism frequently infer reregulation rather than deregulation replacing controls on the market.   The concept of neo-liberal economic policies in small islands is an important driver of economic reform. 

The main feature in the foreign policies of Mauritius, Seychelles, Sri Lanka, the Maldives and Réunion islands is synchronising policies with the multipolar system and balancing foreign policy manifestation with outreach to different regions and regional groupings given the increased convergence of strategic interests of their neighbours. Without trade no country has been able to sufficiently develop its economy. In light of the neo-liberal approach, the five Indian Ocean islands seek to develop their trading capabilities because of the vulnerability in their fiscal positions and monetary contractions. These five Indian Ocean islands consider trade to be an influential tool in the process of decision – making. These small strategically situated islands are of manifold significance to major countries to maintain stability in the Indo-Ocean region.

The International Monetary Fund (IMF) and the World Bank are advising these island Nations to promote development by trade rather than by aid. The external trade policies of these Indian Ocean islands are expected to concentrate on new export prospects by identifying potential products and services in neighbouring regional blocs. Clearly, these island Nations opt for bilateral and regional trade agreements that have taken a neoliberal turn. As a result, interdependence exists between the neighbouring island Nations encircled by larger Nations   in parallel with the process towards preferential trading arrangements.

Many economists unanimously agree that the basis for regional economic integration between nations is mainly founded on the potential benefits linked with the process for regional development and economic growth. The reasoning behind the consensus of island Nations with their neighbour States is clear as these states and regional organisations provide the potential for substantial growth and development. Indeed, the five islands in the Indian Ocean have taken on the role of firming up their economic integration mandate through regional cooperation quite seriously. 

Indo-Pacific Diplomacy

 Currently, the Indo-Pacific is leading the global geopolitical discourse as an important regional strategy. More recently numerous States, at several points in time, have been introduced to and have advocated the Indo-Pacific strategy and the Quad concept (Dialogue between Australia, India, Japan, and the United States).

India and the five Indian Ocean islands have been some of the major beneficiaries of the new US foreign policy. The geographic positioning of Mauritius, Seychelles, Sri Lanka, Maldives and Réunion islands has been pivotal for these islands to be included when advancing the strategic interests of the US (United States of America) and India. The prime focus in the links that the US and India have with these five islands is trade diplomacy and maritime security.

These two major powers share solid and consistent economic interdependence. India pronounced its Indo-Pacific policy, which included principles on keeping the region “free, open and inclusive” in 2018 at the Shangri-La Dialogue. As a close ally of the US with its ‘Neighbourhood First’ foreign policy and Security and Growth for All in the Region (SAGAR) doctrine, India is pushing for stronger ties with its island neighbours. India is emerging as a regional power that has expanded its maritime orbit of security in the Indian Ocean.   

In relation to the predominance of economic diplomacy, India’s links with these five Indian Ocean islands has gradually advanced from the power-bound and trust-building neighbourhood strategy. In US foreign policy, a key focus area has been the Indian Ocean with noteworthy engagement and arrangements with the island Nations. In relation to Indo-Pacific issues, the European Union (EU) is in close consultation with the US. The EU’s collaboration with the five Indian Ocean island States takes place bilaterally and also in a broader multilateral setting.

Indian Ocean Islands: Prioritising the Trade Aspect

Nations engaged in regional integration arrangements are often lured by the potential gains from their participation in regional integration schemes such as the creation of free trade areas and customs unions. It can be observed that the five   Indian Ocean  islands that have joined the  South Asian Free Trade Area (SAFTA)  and the  African Continental Free Trade Area Agreement (AfCFTA)  are not entering only free trade zones.

They also get significant development support from larger wealthy States in the Indian and African continents, including gaining credibility from the economic and political institutions of South Asia and the African Union. The EU, as a single entity, remains as the largest global trading bloc. Mauritius and Seychelles are eligible to gain trade preferences from the European Union under the Interim Economic Partnership Agreement. Most of Réunion’s trade is with France.

This French territory has a new ambition, which is to become a digital gateway between Asia, Africa and the rest of Europe. The geostrategic location of the five Indian Ocean islands, connecting the East and the West on the new Maritime Silk Road, have the opportunity to access the  two large common markets in Africa and South Asia. 

Overall, it is important that measures are taken to guarantee the free flow of ideas and information on trade benefits and ease of doing business between these neighbouring islands. In addition, for the development of economic cooperation, deep sea ports and maritime shipping links with increasing cargo volumes are also seen as important focal points.

It can be said that regional integration has been a vital segment of foreign policy formulation.

Neoliberal Integration in the Indian Ocean Region

Unless trust is enhanced, it cannot be expected to achieve meaningful cooperation. Mauritius, Seychelles,
Sri Lanka, the Maldives and Réunion islands are considered by the US as key partners in the Indo-Pacific region and as the gateway to the Indian Ocean. These islands gain strategic importance in maintaining their political and economic interdependence due to their proximity to India and because they are island Nations. Having the largest economy in the South Asian region, will impact the future roles of India and its island neighbours. The high regional trading costs that act as a major impediment to trade growth have a negative impact on trade flows and bilateral trading arrangements between the Nations in the Indian Ocean region.

In this regard, successfully implementing the SAFTA and AfCFTA agreements will be advantageous to the five Indian Ocean island Nations and also the region at large. These factors highlight the significant room available for future growth and expansion through economic policy for Mauritius, Seychelles, Sri Lanka, the Maldives and Réunion islands with major powers such as US, India and the EU bloc.  

About the Author:

Dr. Srimal Fernando has a PhD in 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 the South  Asian Union.’

By Dr. Srimal Fernando