The Indian Ocean has been growing in importance; for not only does it touch most of the dynamic economies of the region—which use its waters to further their economic aspirations—it is also turning into an area of considerable geo-strategic significance. The latter dimension has frequently made headlines, Somali pirates have ensured that. A much larger issue, one which has implications for free and open sea lines of communication in the Indian Ocean, in particular, arose recently when Oil and Natural Gas Corp. Ltd faced resistance from China while exploring hydrocarbons in two offshore blocks that lie within the Exclusive Economic Zone of Vietnam. China’s posturing follows its claim that it has “indisputable sovereignty" over the South China Sea and that China “has sufficient historical and legal backing" to support its claim. Although China has indicated that it would respect the freedom of passage of ships or aircraft from relevant countries in accordance with international law, the importance of the issue demands that it be dealt by all parties collectively.

These developments provide an ideal platform for reinvigorating the Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC), an organization that has largely remained moribund since it was established in 1997. The IOR-ARC currently has a membership of 18 countries that stretch from South Africa in the west to Australia in the east and has, as observers, China, Japan, Egypt, France and Britain.

Photo: Tim Rue/Bloomberg

IOR-ARC could finally get much-needed impetus to develop into a key regional institution as the mantle of leadership of the grouping has passed to India. The advantage that India has is that it has another strong protagonist, Australia, as the vice-chair. Importantly, both India and Australia can help garner the necessary political support from the members that would help IOR-ARC realize its objectives.

The explicit objective of IOR-ARC, as stated in its charter, was to “promote sustained growth and balanced development of the region and of the member states and to create common ground for region economic cooperation". Members made a conscious attempt to leave out security-related and political polemics, a point made by Gujral in his statement in Parliament.

One of the major failings of IOR-ARC was that an effective road map was not developed to address economic issues, which were the focus of the organization. Part of the problem was that the founding members had given themselves too wide and indefinite a mandate. The guiding principle was that the members of the forum would “focus on those areas of economic cooperation which provide maximum opportunities to develop shared interests and reap mutual benefits". This goal was to be realized by formulating and implementing projects for economic cooperation covering a wide spectrum of areas, including trade facilitation, promotion of foreign investment, facilitating movement of people, providing market access to service providers on a non-discriminatory basis, and development of infrastructure and human resources. These issues were expected to complement trade liberalization efforts, thus ensuring freer and enhanced flow of goods, services investment and technology within the region.

Instead, this crowded agenda created an operational problem. The issues listed were being addressed by almost all IOR-ARC members in their engagement at the World Trade Organization (WTO). These countries preferred adoption of multilateral disciplines in each of the areas, and therefore, IOR-ARC became their second best option. But with negotiations in the Doha trade round going nowhere because of the deep divisions among WTO members, IOR-ARC stands a chance to emerge as a forum where member countries can develop broad consensus on the substantive issues included in the economic agenda of the grouping.

Yet another substantive role that IOR-ARC is expected to play is to strengthen cooperation and dialogue among member states in international fora on global economic issues, with a view to developing shared strategies and take common position on issues of mutual interest. With many international negotiations, such as the one on climate change, witnessing deep divisions among participating countries, IOR-ARC can provide an ideal forum where its disparate membership can deliberate on ways to address issues that are critical for their mutual interest and also for the world.

Biswajit Dhar is director general at Research and Information System for Developing Countries, New Delhi.

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