Cold War 2.0 in South China Sea, Indian Ocean could harm nations

Are we entering a new Cold War? The question is not merely of academic interest because tensions are escalating between the US and China in the Indian Ocean and the South China sea. Earlier this month, the USS Decatur is reported to have come within 45 yards of Chinese destroyer Lanzhou near the Gaven Reefs in the South China Sea whilst conducting Freedom of Navigation (FON) operations. A US Pacific Fleet spokesman explained, "The (People's Republic of China) PRC destroyer conducted a series of increasingly aggressive maneuvers accompanied by warnings for Decatur to depart the area. The PRC destroyer approached within 45 yards of Decatur's bow, after which Decatur maneuvered to prevent a collision."
This is not the only incident in the region generating tensions. Recently, the British Navy's HMS Albion conducted FON operations near the Paracel Islands. The warship was met with an aggressive Chinese response - a frigate and two helicopters were sent to intimidate the British action.
China maintains that the British were engaging in provocation - a claim that is difficult to square with international law because China's claims of sovereignty over artificially constructed islands are disputed. Moreover, China's territorial claims are hotly disputed by several countries including Vietnam, the Philippines, Malaysia, and Taiwan. Notably, in a case brought by the Philippines, the Permanent Court of Arbitration in The Hague issued a landmark ruling in 2016 snubbing China's claims about the legality of its actions in the South China Sea. China continues to disregard the ruling and is apparently undeterred by the FON operations conducted by the US and Britain. It continues to militarise the South China Sea without regard for the concerns of smaller states in the region.
China's quest for maritime dominance is not confined to the South China Sea. In recent years it has sharply increased its activity in the Indian Ocean - both to protect its vital line of communication to important energy and trade markets in Africa and the Middle East, and to constrain India, its chief regional rival. China is building up a substantial presence in the Indian Ocean - via the so-called "string of pearls" to constrain India. It built a major port in Djbouti in 2017 and established a military base in that country. The port is strategically important - close to the Bab Al Mandeb Strait, which is a major chokepoint. China's actions are not surprising - over 60 per cent of its oil imports come from the region and it is a major lender to African countries. These interests have to be protected - the signal is that economic means may be backed up by force, if necessary.
Sri Lanka embraced China in the aftermath of international ostracism following its annihilation of the LTTE. Its traditional ally, India, turned reticent due to domestic opposition primarily from the state of Tamil Nadu which has ties to the Tamil population in Sri Lanka. China took on the mantle of economic rescue and built a major port at Hambantota. When Sri Lanka was unable to make repayments, the country was forced to turn over majority stake in the port to the Chinese and sign a 99-year lease.
China is also building a major port at Gwadar, in Pakistan, ostensibly as part of its BRI, to provide a "gateway to Asia." China's ambitions include the construction of an international port city, a financial district, and an airport. There are plans to house about 500,000 Chinese professionals in the Port City - eerily like a colony. China's interest in Gwadar is no doubt to gain access to the Indian Ocean and open up another front against India in any potential conflict. There is already talk about building a military base close to Gwadar à la Djbouti.
Similar to Sri Lanka, and Djbouti, Pakistan is already heavily dependent on China economically - about 46 per cent of its trade deficit is to China. It is not clear that Pakistan can repay the investment in these facilities which advance China's interests to a greater extent. Given the state of Pakistan's economy and its unemployment rate, the need for 500,000 Chinese workers in Gwadar is also not apparent. It is also not clear how China's treatment of Muslims will be received by Pakistan's population. A potential loss of these territories to China as in the case of Sri Lanka cannot be ruled out.
To be sure, incidents such as the near collision involving USS Decatur are only likely to increase as China becomes more assertive on the back of its build-up in the Indian Ocean and the South China Sea. One can only imagine the consequences of an actual collision in a contested area - aside from the risk of military conflict, tensions between China and the US will have a debilitating effect on world trade and severely hit the economies of countries in the Indian Ocean region. The US has to step up its engagement in Africa and Asia - not with homilies but with concrete investments to provide a counterweight to China's monopoly and prevent debt traps.
Coevally, it has to work with democratic states to draft a code of conduct - as mooted by Sri Lankan Prime Minister Ranil Wickremesinghe - to lower the risk of conflict and reduce the militarisation of the region. Regional powers such as India, Sri Lanka, Indonesia, Vietnam, and the UAE should build better naval capabilities, share information to distinguish between benign and malicious naval actors, and coordinate their actions to ensure that the region benefits from the blue economy. A new Cold War does not benefit anyone.
Sandeep Gopalan is Pro Vice-Chancellor at Deakin University, Australia