THE NAVIGATOR
AUGUST 2024
CANALS AND CONFLICT: AUGUST SEES SHIFTING GEOPOLITICAL TIDES ACROSS THE INDO-PACIFIC
By Dr Manali Kumar, Editor-in-Chief at 9DASHLINE
Welcome to the August edition of The Navigator – 9DASHLINE’s flagship newsletter, your trusted source for the latest developments across the Indo-Pacific. This month, we delve into the strategic and geopolitical currents shaping the region, with a particular focus on emerging maritime tensions and the shifting dynamics of regional alliances.
This month’s briefs explore two pivotal developments: Cambodia’s new Funan Techo Canal, a project poised to redefine regional maritime strategies and deepen China-Cambodia ties, and the escalating Kuril Islands dispute between Russia and Japan, a Cold War legacy that’s heating up once more. These pieces provide a comprehensive look at how infrastructure and military posturing are reshaping the geopolitical landscape.
In our Region Review section, we bring you the latest on India’s bolstering of defence ties with Japan and the United States, the political shifts in Southeast Asia with new leadership in Thailand and Vietnam, and the ongoing challenges in East Asia, where economic concerns in China and military tensions on the Korean Peninsula continue to simmer. We also cover significant developments in the Pacific, including Australia’s push for a regional security pact and the ongoing geopolitical manoeuvrings involving China, the US, and regional players.
We’re also excited to share the latest episode of THE BRIDGE, our monthly podcast in collaboration with the European Parliament in ASEAN. This month, Zsuzsa Anna Ferenczy and Richard Heydarian are joined by Ian Chong to decode the recent ASEAN Foreign Ministers meeting in Laos. They also explore the role of the Paris Olympics in enhancing people-to-people ties between Europe and the Indo-Pacific. Don’t miss this insightful discussion — tune in to deepen your understanding of the forces shaping this dynamic region.
As always, The Navigator is here to help you stay informed and ahead of the curve on the complex issues shaping the Indo-Pacific.
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CAMBODIA’S NEW CANAL: LOOKING DOWNSTREAM
By David MacSweeney, Founder at 9DASHLINE
The geopolitics of canals are rarely benign. Designed to serve a nation's strategic interests, once complete, they operate as powerful instruments capable of reshaping maritime strategies by permanently altering the geography they bisect.
Cambodia’s recently launched Funan Techo Canal project — intended to connect Phnom Penh to the Gulf of Thailand via the Mekong River — is no exception. Promoted as a vehicle for enhancing the country’s strategic autonomy, understanding its full significance and effect requires considering the ever-deepening China-Cambodia relationship.
Funded by China, the 180 km canal is projected to cost around USD 1.7 billion and is scheduled to be completed in 2028. Once operational, it is expected to reduce Phnom Penh's reliance on Vietnamese ports by approximately 70 per cent, providing Cambodia with significantly greater leverage when dealing with its neighbours. Unsurprisingly Mekong countries have expressed concerns over various environmental and security issues, including fears that the canal could facilitate upriver access for Chinese warships deployed to maintain security.
Trade between Cambodia and China continues to grow rapidly; bilateral trade increased by almost 30 per cent in the first two months of 2024 compared with the same period last year. From a regional perspective, ASEAN’s consensus-based model means that the asymmetric nature of deepening trade and security ties will likely serve as a useful conduit to help Beijing advance its interests.
While trade and economic development are key aims, financing for this project is part of Beijing’s Belt and Road Initiative. In a separate development next month, China is expected to transfer two naval ships and a deep-draft pier long enough to accommodate an aircraft carrier at the strategically located Ream Naval Base further along the coast.
Cambodia has long rejected accusations that it has become a vassal state, recently pointing to its decision not to provide China with exclusive military access to the Ream Naval Base. However, concerns persist that through rotational rather than basing arrangements Beijing could establish a foothold deep within the strategic Gulf of Thailand, conveniently situated on the edge of the hotly contested South China Sea.
In the long run, increasing trade and economic development in part facilitated by the Funan Techo Canal, along with a strong Chinese naval presence along its coast and waterways, will likely lead to closer ties and more formal agreements. Should this happen, as seems likely, Cambodia, rather than the canal, may turn out to be the real ‘mega project’.
THE KURIL ISLANDS DISPUTE: A COLD WAR LEGACY HEATING UP
By Connor Fiddler, Research Associate at 9DASHLINE
The Kuril Islands, seized by the Soviet Union from Japan at the end of World War II, have been a longstanding point of contention between the two nations, complicating diplomatic relations for decades. The Kuril Islands are a volcanic archipelago located between Japan's northern island of Hokkaido and Russia's Kamchatka Peninsula, stretching across the boundary between the Sea of Okhotsk and the North Pacific Ocean.
Over the past few years, Russia has significantly increased its military presence on the islands, constructing new bases, deploying advanced missile systems, and substantially increasing permanent military deployments. This militarisation has further strained relations with Japan, especially after the latter imposed sanctions on Russia following its invasion of Ukraine.
The growing military infrastructure and Russia’s recent joint exercises with China on the islands have heightened the risk of conflict.
This month, Russia conducted military drills on the disputed islands, specifically Matua Island, where troops practised moving and camouflaging vehicles, reflecting ongoing tensions between Moscow and Tokyo over the territory. This development comes as Russia pushes back against Japan's growing military alignment with the US, which it views as a barrier to resolving the longstanding territorial dispute and signing a peace treaty.
ACROSS THE INDO-PACIFIC
South Asia
India has intensified its defence engagements with Japan and the US, focusing on enhancing strategic cooperation in the Indo-Pacific. High-level talks with Japan included discussions on expanding joint military exercises and advancing technology collaborations, while Japan continues to view its relationship with India as crucial in countering China’s influence. India also signed a Security of Supply Arrangement (SOSA) and a Memorandum of Agreement to assign liaison officers with the US, aiming to strengthen defence supply chains and enhance interoperability between the two nations' military forces.
Student protesters in Bangladesh, who played a key role in ousting Prime Minister Sheikh Hasina, are now considering forming a new political party to break the country's long-standing political duopoly and pursue broad structural reforms. The interim government, led by Nobel laureate Muhammad Yunus and including student leaders, is focused on preventing a return to authoritarian rule while navigating an uncertain political landscape.
In Afghanistan, new laws imposed by the Taliban further restrict Afghan women's rights, banning them from speaking in public and imposing severe limitations on their public presence, intensifying the group's control over their lives. Despite international condemnation, including from the UN, the Taliban has shown no signs of reversing these oppressive measures, leaving the future of Afghan women increasingly bleak.
Southeast Asia
Indonesia and Australia have finalised a new bilateral defence treaty to enhance their military cooperation, allowing the two countries to operate in each other's territories and increase interoperability between their defence forces. The agreement, significant for both nations' national security, will be officially signed during Australian Defense Minister Richard Marles' upcoming visit to Jakarta, despite concerns about Indonesia's non-aligned stance towards major power blocs like the US and China.
Paetongtarn Shinawatra, daughter of former Prime Minister Thaksin Shinawatra, was elected as Thailand's prime minister, continuing her family's political legacy. Her election follows a political deal installing her populist Pheu Thai Party in power while sidelining the more progressive party. She is Thailand's youngest and second female prime minister, after her aunt Yingluck Shinawatra.
Vietnam's new leader, To Lam, chose China for his first official overseas visit, emphasising the significance of Vietnam's relationship with its powerful neighbour, despite its growing ties with the US and Japan. Lam's visit, shortly after he was appointed general secretary of the Communist Party, underscores Vietnam's strategy of balancing its relations with major global powers, including China, the US, and Russia.
China is conducting military patrols and live-fire drills near its border with Myanmar, responding to the intensifying civil war across the border that has recently caused cross-border incidents. The Chinese military's actions aim to test and enhance their ability to maintain border security amid concerns over the conflict's potential spillover into Yunnan province.
East Asia
Pessimism is engulfing the Chinese economy. Growth is slowing and investors are becoming more risk-averse. Youth unemployment spiked to 17.1 per cent in July, the highest since the government started rereleasing data last year. Many Chinese now feel worse off than they did five years ago, especially lower-income households. Foreign investors pulled out a record USD 15 billion in the second quarter, reflecting deep pessimism about the Chinese economy’s prospects.
International experts say Beijing needs a “fundamental rethink” of the economy, and shift away from an overreliance on manufacturing and prioritise domestic consumption. But Beijing remains opposed to such reforms, for ideological and structural reasons. Experts say Beijing’s policies are forcing the global economy to absorb its overcapacity, putting it on a trade war path with the rest of the world. This story of what advanced democracies will do about it is just beginning.
In Taiwan, the Inter-Parliamentary Alliance on China (IPAC) held its first-ever summit in Taipei at the end of July. With 49 politicians from 24 countries participating, it was the largest-ever parliamentary delegation to visit Taiwan. From the ruling Democratic Progressive Party's (DPP) perspective, the summit strongly affirmed their belief that Taiwan's international visibility and prestige can improve through deeper cooperation with like-minded countries. The opposition Kuomintang (KMT) party believes Taiwan should prioritise accommodating China and keep international engagements low-key. It is a sign of the profound polarisation of the two major parties that the KMT did not attend the summit in Taipei.
Tensions continue to simmer on the Korean Peninsula with North Korean leader Kim Jong-un supervising a demonstration of new exploding drones destroying a target resembling South Korea’s main K-2 battle tank. Since May, North Korea has sent thousands of “gifts of sincerity” trash balloons, which on several occasions have disrupted operations at Incheon International Airport. CSIS’ Victor Cha said the balloons are the latest manifestation of NK’s new “decoupling” policy. The balloons are a form of “soft terrorism”, Cha argues, and alongside Kim’s abandoning of unification, reflect the weakness and insecurity of the North Korean regime. In these circumstances there is a heightened danger of escalation which needs to be managed, he says.
The Pacific
This month, all eyes were on Tonga as the 53rd Pacific Islands Forum took place. Among the key issues, Australia was pleased to finalise an ambitious Pacific-wide policing pact that may see China squeezed as a regional security provider. China's ambassador to the Pacific reacted with anger after Pacific leaders rejected a push from the Solomon Islands to strip Taiwan of its status as a "development partner" to the Forum. China’s special envoy to the Pacific reportedly called the communique “unacceptable” and pushed for its removal. In line with the Pacific 2050 Strategy for the Blue Pacific Continent, leaders were under pressure to deliver tangible progress on critical issues such as climate change, economic development, geopolitics, and security. During his meeting with Pacific leaders, UN Secretary-General Antonio Guterres urged major polluters to accelerate their transition from fossil fuels, emphasising the urgency of addressing the climate crisis.
Amid recent unrest, the French Ambassador to the Pacific reaffirmed France’s stance in the region, declaring unequivocally: “New Caledonia is France”. Meanwhile, Palau has accused China of "weaponising tourism" in a bid to force the island nation to sever ties with Taiwan. In contrast, China pledged to strengthen ties with Fiji during a meeting between the countries' leaders in Beijing, while in Suva, Prime Minister Rabuka is pursuing amendments to Fiji’s controversial 2013 constitution, widely viewed as a positive step toward enhancing democratic governance.
The US announced plans to upgrade the political status of its Pacific territories, signalling a renewed commitment to the region. Kiribati’s decision to close its borders to diplomats until 2025, as elections take place — potentially impacting Australia and New Zealand’s presence — raises questions about the country’s strategic alignment.
Nauru became the first South Pacific nation to join SpaceX’s Starlink Community Gateway service, a move that could drive significant advancements in education, healthcare, and economic opportunities. Elsewhere concerns about debt-trap diplomacy persist following the recent unveiling of Vanuatu's new — China funded — presidential palace.
Following last year’s launch of the ‘China and Pacific Island Countries Center for Disaster Risk Reduction Cooperation’, which has seen enhanced cooperation between China and nine Pacific nations, this month saw Australia and New Zealand committing USD 28 million to help Pacific Islands Countries build climate disaster warehouses.
In AUKUS-related developments, Australia has indemnified the US and the UK against liability from nuclear submarine risks under a new treaty, which allows any party to exit the collaboration on nuclear-powered submarines with just one year’s notice. And finally, Papua New Guinea has fulfilled a longstanding promise to Niue by providing USD 1.2 million in financial aid.
THE BEST OF 9DASHLINE
This month we spotlight some of 9DASHLINE’s most insightful reads covering key emerging geopolitical trends across the Indo-Pacific that have significant global implications.
Locked in paralysis: Vietnam's anti-corruption campaign and tightened public sphere
Vietnam’s General Secretary Nguyen Phu Trong, who passed away in July 2024, left a legacy defined by a rigorous anti-corruption campaign and tightening control over civil society. Since 2016, his conservative leadership focused on consolidating the Vietnamese Communist Party's power, but these efforts have led to a state of paralysis, with civil society severely repressed and political and economic activities stalled.
As the party prioritises maintaining its authority, Dr Mai Truong (Assistant Professor, Marquette University) explores the future of activists and NGOs in Vietnam.
NATO and Northeast Asia: A growing partnership
The NATO Summit in Washington underscored the Biden administration's efforts to deepen ties between NATO and Indo-Pacific partners, including Japan, South Korea, New Zealand, and Australia. As global conflicts increasingly intersect, Japan and South Korea have shown a keen interest in aligning with NATO, driven by concerns over Russia's aggression in Ukraine and China's rising assertiveness.
Here, Emma Chanlett-Avery (Director of Political-Security Affairs, Asia Society Policy Institute) argues that the future of these partnerships hinges on continued US leadership, as rising isolationism in American politics could push NATO and its Indo-Pacific allies to reinforce their cooperation to maintain the international liberal order.
China’s cautious quest to draw Afghanistan back into the fold
Since the Taliban's takeover of Afghanistan, China has actively engaged with the regime, advocating for increased international dialogue and enhancing bilateral ties. While bilateral trade has surged, significant investments remain limited, reflecting China's cautious strategy due to security concerns and the challenging investment environment.
In this insightful read, Sarah Godek (Research Associate, Stimson Center’s China Program) analyses how China views Afghanistan and its goals in increasing its involvement in the South Asian country.
Myanmar is slipping towards Balkanisation
The Ta'ang National Liberation Army (TNLA) relaunched its Operation 1027 against Myanmar's military junta in June 2024, marking significant territorial gains by resistance forces. However, deep divisions among Ethnic Armed Organisations (EAOs) and the National Unity Government's (NUG) struggle to unify them raise concerns about Myanmar's potential fragmentation, despite the junta's continued control over key cities.
Here, Ophelia Yumlembam (Research Assistant, University of Delhi) explores how the ongoing conflict risks a prolonged civil war and further humanitarian crises.
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