Opportunities

Australia’s enthusiastic embrace of the Indo-Pacific construct has led to not only a greater awareness of the interconnectedness of the Pacific and Indian oceans but has come with a new strategic ambition. This ambition has framed Australia’s immediate region as encompassing the Pacific, Southeast Asia and the northeast Indian Ocean, continuing to Antarctica.

This is an enormous area for a middle power of limited resources to prioritise. It is an indication of both the more challenging external environment and the considerable opportunities that the region presents.

While the Pacific and the Southeast Asia have been traditional regions of focus for Australia, expanding its engagement towards the northeast Indian Ocean is essential for Australia to embrace its status as an Indian Ocean state.

The instigation for much of Australia’s burgeoning regional engagement came through the lens of environmental security and the response to the 2004 Indian Ocean tsunami. The tsunami response was a demonstration of a whole-of-government approach to foreign policy, drawing upon the defence force, the diplomatic corps and AusAID under the direction of the Department of the Prime Minister and Cabinet. It was also a whole-of-nation effort, with businesses, community groups and individuals also volunteering their time and donating generously.

Australia’s response was primarily directed at the Indonesia’s Indian Ocean-facing provinces of Aceh and North Sumatra, as well as Sri Lanka and Maldives. But critical to these efforts was the formation of a “core group” of humanitarian responders with the United States, India, Japan. This coordination would eventually lead to the creation of the Quad and – inspired by former Japanese prime minister Shinzo Abe’s speech “Confluence of the Two Seas” – would shift how Australia understood its role as an Indian Ocean power regarding how it could enhance relationships and have a capacity-building impact for both itself and for partner countries.

Casting its eyes westward, Australia has primarily centred its engagement on India. As an emerging great power, building habits of trust and cooperation with India are an imperative for a world where it will play a far greater role. The abundance of opportunities presented by India’s massive population and growing market power are undeniably attractive.

Given its size and the sheer breath of opportunities it potentially provides, India has been central to Australia’s engagement in the Indian Ocean region. There has been a significant step-up in the relationship in recent years. This is certainly the case in the defence and security space, and a burgeoning major trading partner.

This increased closeness between Australia and India is not solely at the state level. Both Indians and Australians are highly active in the world and have built strong relationships of mutual interest. There are highly active networks of social and interest groups – addressing a range of issues from climate change through to gender, peace and security issues. Women’s leadership and women’s contributions are also strong between Australia and India. Alongside this, there are deepening business, academic and sporting links. These links have accelerated as Australia’s Indian diaspora has grown substantially over the past two decades.

Although recent changes to Australia’s visa system may limit the number of Indian students in Australia, education will still be an important component of the relationship, particularly with Australian universities looking to expand into India, and the increased exchange between academic institutions. India’s vast youth population in search of opportunity and Australia’s expertise in international education should continue to complement one another.

Australia’s need for specific skills will also provide opportunities with India. The pilot Mobility Arrangement for Talented Early-professionals Scheme (MATES) will allow young Indian graduates from fields related to engineering and information technology to live and work in Australia for up to two years. This is seeking to fill Australia’s skill shortages in these areas, as well as build greater opportunities for collaboration in these fields between Australia and India.

India’s desire to be an electric vehicle manufacturing power, presents complementarities with Australia’s critical minerals resources, emerging hydrogen expertise, and the Western Australian government’s investment in green steel manufacturing. With the African continent’s abundance of certain critical minerals, and the desire among Western countries to challenge China’s current dominance of green technologies, the Indian Ocean has the potential to become the future green tech theatre. Which will present both opportunities and geopolitical contestation.

Countries like Sri Lanka, Bangladesh and Maldives are also entering Australia’s radar. Over the past decade Australia has increased cooperation with Sri Lanka’s navy and coast guard to help combat people smuggling, which has included Australia gifting Sri Lanka two patrol boats and a surveillance aircraft. In May 2023 Australia opened a new High Commission in Maldives, signalling not only the value of the relationship, but a desire to enhance its presence in a strategically important location.

Often overlooked due to its gigantic neighbour, Bangladesh is an emerging power in its own right as the world’s eighth largest country. With an average economic growth rate of 7 per cent over the past decade, it is following the export-oriented development path of East Asian countries, and therefore has become heavily invested in trade routes through the Indian Ocean. Australia is currently assisting with design work for two ports in Bangladesh, reflecting its importance as a manufacturing hub.

Bangladesh presents a considerable market for Australian goods and two-way trade. Bangladesh’s manufacturing industries require reliable and consistent sources of energy – something Australia can provide – and demand for staple pulses like lentils and chickpeas is high.

As a Least-Developed Country, Bangladeshi products currently enter Australia duty-free and quota-free, however Bangladesh is projected to graduate out of this status in 2026. Maintaining these conditions through expanding the current Australia-Bangladesh Trade and Investment Framework Arrangement will be critical to enhancing the trading relationship, and for Bangladesh’s continued growth. It is important to recognise that big export items like energy or agriculture are not the only 22 What does it look like for Australia to Strengthen its Indian Ocean Engagement way for bilateral relations to develop, with small company-to-company links on a range of niche goods and services having a huge impact on building a wide spread of relationships.

These market opportunities throughout the region are mostly being led by private industry. There is the potential for more support from Export Finance Australia and Australian Development Investments (ADI).

There is also the potential for the Australian government to engage with local experts to help understand local priorities, which can in turn better inform Australian engagement through more targeted development assistance and capacity building. In 2024 Australia’s High Commission in Bangladesh commissioned a multidisciplinary study from local Bangladeshi experts to look at the country’s economic security. The objective of the study is to get a picture of where and how Bangladesh’s economic and trade policies intersect with geopolitics and geo-economics, identify opportunities and vulnerabilities, and assess options that might strengthen and enhance the resilience of the Bangladesh economy. These types of programs should be expanded and extended to other countries across the region.

Despite its impressive recent growth, Australia continues to provide development assistance to Bangladesh. In recent years this has centred on care for the large Rohingya refugee population. These refugee camps are a heavy burden for Bangladesh to carry and it is the responsibility of countries like Australia to provide essential items for these people’s lives, but also pathways to resettlement. There is a lot of goodwill and a diplomatic dividend to be earned from Bangladesh in assisting with this considerable problem.

There are other unique challenges where Australia’s scientific expertise could be of assistance to Bangladesh. Within the Bay of Bengal there is a “dead zone” – an area of about 60,000 square kilometres that has depleted oxygen levels. This poses a grave threat to fishing stocks in the bay. Finding an understanding of the nature, causes, and potential remedies, is of critical importance to all states that depend on the bay.

Issues around environmental degradation and climate change are central to the non-traditional security threats that the region faces. For Australia is it essential to have an intimate understanding of what truly affects people in vulnerable areas and how they perceive these threats. Australia can then tailor its engagements accordingly. With a current lack of mechanisms or structures in the Indian Ocean region to facilitate cooperation on environmental security, there is scope for Australia to make it a key pillar of Indian Ocean engagement, as is the case with Pacific island states.

In relation to informal migration that has originated from Sri Lanka Australia has shown initiative, coordinating with the Sri Lankan navy, as well as providing vessels and an aircraft. These initiatives have the potential to advance to broad cooperation on maritime domain awareness and as well as IUU fishing.

While maritime asylum seekers are a primary concern for Australia, there are also broader issues of human trafficking that emerge from the region, and demand-side factors from Australia that are driving these problems.

Military coordination is about maintaining the peace, and the region has a strong commitment to providing United Nations peacekeeping forces. Bangladesh, India, Nepal and Pakistan are four of the five largest contributors to UN peacekeeping missions. India is also a locus of peacekeeper training.

What does it look like for Australia to Strengthen its Indian Ocean Engagement It was one of the first countries that sent women as peacekeepers, and it has a training institute that is now training women across the region, particular in ASEAN countries. Australian assistance would serve Australia’s interests in both India and through Southeast Asia.

Collaboration through South Asia can often be impeded by the region’s political history. Indian Ocean countries can be wary of what they perceive as overbearing or hegemonic Indian behaviour, so collaborative projects can be more appealing when they have an outside guarantor. An example of this is the India-Japan-Bangladesh connectivity program to link Northeast India to the Bay of Bengal via Bangladesh. There is the opportunity for Australia to present itself as a trusted partner and broker for engagement within South Asia.

In the coming decades as power continues to shift both to and within the Indo-Pacific, Australia will need to reconceptualise where its areas of interests lie, and this will include moving its vision westward. This will particularly be the case as China build its relationships and presence in East Africa and among the western Indian Ocean islands. While Australia’s current focus is on the northeastern Indian Ocean, the region is a single strategic theatre, and so the groundwork of building relationships throughout the whole region should be considered a priority.

India is the biggest player in the region and for bigger issues to reach positive outcomes they require India’s support. However, there is a trust deficit between other Indian Ocean states and India that needs to be overcome, and Indian-led initiatives tend to fail due to this. This presents Australia with the opportunity to be a diplomatic organiser. It can be a state that is seen as an honest broker, and which can help South Asia overcome some of the historical baggage and difficult relationships that prevent the region from solving some of its collective problems.