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segunda-feira, 7 de novembro de 2016

Lusophone opportunities in the Indian Ocean

O artigo em baixo foi inicialmente publicado na revista The Brussels Europe Press Club Magazine nº5, de Novembro de 2015.



Lusophone opportunities in the Indian Ocean
by António Vieira da Cruz

Por mares nunca de antes navegados
Passaram ainda além da Taprobana
(Luís Vaz de Camões, “Os Lusíadas”, Canto I)

Portuguese presence in the Indian Ocean
Portuguese is the 6th largest language in the world by number of native speakers and it is spoken by around 250 million people in the five continents. [1] But we might say that Portuguese culture is a tale of three oceans: the Atlantic, the Indian and the Pacific. Most of the times we hear news in Portuguese from Atlantic Brazil, Angola or Portugal; we may also think of Macau and Portuguese interactions with Pacific China or Japan; instead, I chose to write here about our relation with the Indian Ocean. By travelling through this ocean you will certainly face many people with Portuguese surnames, find Portuguese fortresses and churches, or even taste Portuguese cuisine influence in local gastronomy. There is a strong link between those people, those places and Portuguese culture. This is the intangible value of lusophony. But we can go forward – as Portuguese sailors did in the past – and find also very tangible ways to connect people and produce wealth.

Today, 90% of international trade and two thirds of all petroleum supplies travel by sea. Around 70% of the world traffic of petroleum products passes through the Indian Ocean. [2] What happens in the Indian Ocean always had repercussions in other regions. Two proverbs from the 15th century are significant: one says “if the world were an egg, Hormuz would be its yolk”; the other said “whoever is lord of Malacca has his hand on the throat of Venice”. [3] Well, the Portuguese conquered both Hormuz (1507) and Malacca (1511). When the Portuguese conquered Malacca, Ming China’s economy suffered. [4] Former President Hu Jintao recognized China’s “Malacca Dilemma”, by which the country is still dependent on the strait for over 25% of its exports and 15% of its imports. [5] Moreover, “40% of world trade passes through the Strait of Malacca and 40% of all traded crude oil passes through the Strait of Hormuz.” [6]

From the early 16th century until mid 17th century we may say Portugal dominated trade in the Indian Ocean by setting up forts at the important straits and ports along the coasts of Africa and Asia. Like Homer’s Odyssey and Virgil’s Aeneid draw maps to sail in the Mediterranean Sea, we could use The Thousand and One Nights’ Sindbad the Sailor story or Camões’s The Lusiads to sail in the Indian Ocean. From Camões we will find some clues to understand the importance of the Indian Ocean to Portugal and vice-versa. Inspired by the poet I would like to enumerate some key places for the lusophony, starting by South Africa and going through three continents by the ocean’s coastline until the end in Australia.

Cape Town, South Africa
The first European to cross the cape was Bartolomeu Dias in 1488. Until then the cape was called “Cape of Storms” (Cabo das Tormentas), but it was renamed by King John II of Portugal as “Cape of Good Hope” (Cabo da Boa Esperança), revealing his optimism to find a sea route to India. Camões writes about Adamastor, a terrible monster that sunk many ships and tells how the heroic Portuguese sailors overcame this obstacle. [7] The main exports of Cape Town are wine, petroleum products, grapes, apples, pears and quinces. It is also worthy to mention the growing tourism industry and the relevant financial, business services and real estate sectors.

Mozambique
Mozambique is the biggest Portuguese-speaking country in the Indian Ocean. Gas reserves are estimated to be the fourth largest in the world. [8] Mining and quarrying sectors accounted for 1.5% of the economy and energy accounted for 5%. However these sectors were expected to expand by more than 10% per year due to increased output of coal and gas. Important mineral extracted in the country are aluminum (2% of world’s production), beryllium (5%) and tantalum (6%). There is also a significant extraction of marble and production of cement. The main agricultural products in Mozambique are cotton, sugar cane, cashew, copra and cassava.

Zanzibar, Tanzania
Vasco da Gama passed in Zanzibar in 1498 and the island became a Portuguese possession for almost two centuries (1503-1698). Zanzibar's main industries are spices (cloves, nutmeg, cinnamon and black pepper), raffia, and tourism. The island where Freddie Mercury was born also exports seaweed. It is relatively autonomous from mainland Tanzania and Saul Bernard Cohen points out the island’s geopolitical potential: “the durability of the union of Zanzibar and Tanganika is increasingly in doubt. Should Zanzibar become independent, it could benefit from its location to become a gateway state linking East Africa to South Asia and Middle Eastern areas oriented to the Indian Ocean.” [9]

Mombasa, Kenya
Vasco da Gama was not well received by the King of Mombasa, who tried to ambush his units. With 1.3 million people, Mombasa is now the 2nd largest city of Kenya and it was part of the Portuguese Empire for more than 100 years (1593-1698 and 1728-1729). Mombasa has the largest port of Kenya and exports refined oil and cement. Tourism is its main industry.

Malindi (Melinde), Kenya
Pillar of Vasco da Gama in Melinde
Contrasting with the hostile reception south in Mombasa, Vasco da Gama was very well received by the Sheik of Malindi. This is where in The Lusiads the hero Vasco da Gama narrates a part of Portugal’s History. That is already a good reason to visit the place. In reality they signed a trade agreement and the Portuguese explorer hired a Muslim sailor– probably Ahmad ibn Mājid El-Melindi – to guide him through the Indian Ocean water until India. Then, the main exports of Malindi were ivory, rhino horns and agricultural products such as coconuts, oranges, millet and rice. In 1499 the Portuguese established a trading post in Malindi that served as a resting stop on the way to and from India. Malindi remained the center of Portuguese activity in the Eastern Africa until 1593 when the main base was moved to Mombasa. Nowadays the main industries in the region are tourism, cement and cashew.

Adding to the previous mentioned conquests of Hormuz and Malacca, we must ackowledge other strategic places that the Portuguese conquered, such as Socotra Island (Yemen) and Aden (Yemen) to control the entry of the Red Sea; Muscat (Oman), Sohar (Oman), Khor Fakkan (United Arab Emirates), Bahrain, Qeshm (Iran) and Bandar Abbas (Iran) to – with the help of Hormuz (Iran) – control the Persian Gulf.

India and Ceylon
The Portuguese presence in India is well known and lasted for 450 years. I will not take long about this here. Places like Goa, Daman, Dadra and Nagar Aveli, Diu, Kochi, Cannanore or Calecut were part of the Portuguese Empire. Also Mumbai was Portuguese for 127 years (1534-1661) and it was given to the British as a wedding dowry when Portuguese Queen Catherine of Braganza married King Charles II of England. This Portuguese queen was the one who introduced in English society the culture of tea and the use of a fork at the dining table. And today, Mumbai is the largest city in India and one of the world’s biggest with more than 12 million inhabitants. Spices and tea were the main imports from Portuguese India and Ceylon. Ceylon was Portuguese for 153 years (1505-1658), until it was conquered by the Dutch. Nevertheless, there are still many lusophone elements in current Sri Lanka and many people still bear their Portuguese names. Besides tea, Sri Lanka is rich in rubber, coconut and graphite. It is also important to note Sri Lanka’s tourism growing industry and its indisputable centrality in the Indian Ocean.

Chittagong, Bangladesh; and Bago, Myanmar
Also known by Portuguese as Chatigão or Porto Grande de Bengala, Chittagong has now a population of 7 million people and it is the second largest in Bangladesh. In 1598 there were around 2500 Portuguese in Chittagong. In 1616 Chittagong and the island of Sundiva were conquered and the remaining Portuguese people dedicated themselves to piracy. There are many descendents from Portuguese in that area and I met some Christians with Portuguese surnames still. Main industries nowadays are shipping, tea, consumer foods, textiles, cement, real estate and tourism. Chittagong is also central in the BCIM international commercial corridor, which will link Kunming (China) to Mandalay (Myanmar), Chittagong (Bangladesh), Dhaka (Bangladesh) and Kolkata (India). Likewise, other Portuguese adventurers went south to Myanmar and installed themselves in the Kingdom of Pegu (now Bago). Two of them were even acclaimed as kings: Salvador Ribeiro de Sousa and Filipe de Brito e Nicote. Unfortunately, that history did not end well. Brito e Nicote was impaled, his troops were made prisoners for life. Their descendents are still Christians, have Portuguese names and faces and can be found in rural areas in Ava and Bago areas. They are known as the “Bayingyi”. [10]

East Timor
Finally, and leaving many lusophone places to name, we must consider a country that has Portugal’s best support: East Timor. Where the Indian Ocean ends and the Pacific Ocean starts, the eastern part of the island of Timor was governed by the Portuguese and it is a Portuguese-speaking country on the other side of the world. Timor has been developing a partnership with Australia for the extraction of petroleum and natural gas resources in the waters southeast of East Timor. Regarding Australia, some theorists say that the first Europeans to reach Australia were Portuguese. But what we know for sure is that there is a large hardworking Portuguese community in Australia nowadays. [11]

Conclusion
Like the Portuguese, other great nations explored the Indian Ocean. The Ottomans, the Omanis, other Arabs and Persians, the Chinese, the Dutch, the French, the English, and now the Americans, the Indians and the Chinese again, all of them had different experiences on the region. But as we see the Portuguese experience is especially rich. If we dare to rediscover the lusophone Indian Ocean and reconnect with its people, we may find a very interesting advantage for trade and investments. For that, we must embrace lusophone values like the courage to turn a Cape of Storms into a Cape of Good Hope; or to partner with valuable people to achieve better results, like Vasco da Gama and Ahmad ibn Mājid did in Melinde; to think strategically like Afonso de Albuquerque did; and to conquer the hearts of native people, like St. Francis Xavier did in Goa and Malacca where he is venerated still today. So, the remaining question is… when will you start your lusophone enterprise?


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References

[3] KAPLAN, Robert D., in “Monsoon”, p. 7, Random House Trade Paperbacks, New York 2011.
[4] KAPLAN, Robert D., in “Monsoon”, p. 10, Random House Trade Paperbacks, New York 2011.
[7] CAMÕES, Luís Vaz de, in “Os Lusíadas”
[9] COHEN, Saul Bernard, in “Geopolitics of the World system”, p. 376, Rowman and Littlefield Publishers, Oxford 2003

domingo, 8 de março de 2015

China, Indonesia, India and the 21st Century Maritime Silk Road initiative

China’s President Xi Jinping announced last November that China will promote Asia’s connectivity by creating a $40 billion USD fund for the 21st Century Maritime Silk Road. This is part of the now called Chinese Dream, which according to President Xi Jinping consists on “the great rejuvenation of the Chinese nation”. [1] And according to SCMP, the “New Silk Road Economic Belt” and the “21st Century Maritime Silk Road” will build roads, ports, airports and railways across Central and South Asia”. [2]

President Xi Jinping was also quoted saying that “the Silk Road Fund will be open and welcome investors from Asia and beyond to actively take part in the project”. [3] It is therefore evident that this investment is not only a business opportunity for many regional and global companies, but also a political opportunity of regional cooperation for the countries of Southeast Asia, South Asia, Central Asia, East Africa and Middle East. This is a project that might have a positive global impact and could even re-launch the much needed regional cooperation with strategic partnerships in the South China Sea and the Indian Ocean.
 
Picture 1 - Current and Xi Jinping's routes [2]

The main challenges and opportunities of the “21st Century Maritime Silk Road” initiative are considerably dependent on how other key regional players – such as Indonesia and India – will engage with or influence the Chinese plan.

Let’s start by Indonesia. Indonesia has a new leader, President Joko Widodo, who is a pro-business reformer with an ambitious modernization plan for the country, projecting Indonesia as a “maritime axis” between the Pacific and the Indian oceans. Last Thursday, the 5th of March 2015, I was privileged to meet in Brussels the Indonesian Deputy Minister of the Coordinating Ministry of Maritime Affairs, Mr Arif Havas Oegroseno. As he said, the 5 pillars of Indonesia’s new maritime strategy are:
- Maritime Culture
- Maritime Economy
- Maritime Connectivity
- Maritime Security
- Maritime Diplomacy

According to Mr Oegroseno, next 4 years Indonesia will invest $57 billion USD in upgrading 24 harbors and 5 deep sea ports. Additionally, Indonesia will invest $70 billion USD in building 7 new yacht and cruise harbors and 9 new airports. This fundraising is currently being done and in Europe the main investors are from Denmark, France, Spain, Italy, Netherlands and Germany. All of these goals seem to work well for the Chinese Maritime Silk Road initiative. Moreover, general perception is that China and Indonesia have very close relations and Indonesia’s leadership in the Indian-Ocean Rim Association (IORA) next 2 years could play favorably for China’s projects in the Indian Ocean. Indonesia could also be helpful in softening relations between China and other ASEAN countries as Vietnam and the Philippines, with which there are some sovereignty disputes over islands and reefs in the South China Sea. The Silk Road Fund has definitely a big potential to be a key diplomatic and economic integration tool from which China and ASEAN countries can benefit.

Historically Indonesia has had an important role in Chinese exports to places like, for instance, Oman. Indonesia’s efforts to restore its infrastructures are crucial for the country to maintain that status of “maritime axis” between the Pacific and Indian oceans. Economic projections are also positive for the country. Indonesia is currently the 16th biggest economy in the world. As we can see below, PricewaterhouseCoopers (PwC) projects that Indonesia will be the 11th biggest economy by 2030 and the 8th biggest economy by 2050. While China will have a stable status quo as leader, India will dispute the 2nd place with the United States. [4]
 
Table 1 - Actual and projected top 20 economies ranked based on GDP in PPP terms [4]

Regarding South Asia, the situation is not simple. We must bear in mind India’s crucial role in it. China has a strong alliance with Pakistan, as we can see by emblematic Chinese sponsored infrastructures such as the Karakoram highway and the Gwadar deep-sea port. Besides that, China has a close relation with the current government of the Maldives [5] and has major investments in Sri Lanka and Bangladesh. This is why the String of Pearls Theory is popular not only in India but also within international analysts. According to this theory, China would have as strategy the encirclement towards India, its economy and military, in order to dominate the Indian Ocean. In fact, the “21st Century Maritime Silk Road initiative” has been seen by the Indian media as a Chinese rebranding of its String of Pearls. [6]

With the election of Prime-Minister Narendra Modi in India last year, many things have been changing India as well as in South Asia. With programmes like “Make in India” [7] or by reducing bureaucracy, the new Indian government has shown that pro-business policies are their main priority. Also in neighbor countries like Sri Lanka things are changing. Sri Lanka’s previous President Mahinda Rajapaksa developed in his 10 years consulate a very close relation with China, endorsing China’s Maritime Silk Road initiative and welcoming Chinese investment in the country’s infrastructures, such as in the ports of Colombo, Tricomalee and others. [8] But in January 2015, against all odds, President Rajapaksa lost the elections and the new President Maithripala Sirisena took office. President Sirisena is much closer to India than its predecessor was and he promised to establish “equal relations” between China, India, Pakistan and Japan. [9] In Sri Lanka, as in Bangladesh and also in inland countries as Nepal and Bhutan, China must have India’s role in consideration for its Maritime Silk Road project. China has some diplomatic challenges in these cases, since cooperation and even coordination with India will probably be much more effective for business than competition or confrontation. Prime-Minister Modi is visiting its neighbor countries in South Asia in a second round since his election last year. This tells us that India will not open hand of his leading role in the region.

Other countries like Japan, Australia or New Zealand could be also interested in the new infrastructures and opportunities generated by the “21st Century Maritime Silk Road” initiative. Arguably, the ongoing negotiations of the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) can somehow affect the flow of investment, commerce and partnerships related to the Maritime Silk Road. However, for the time being, this threat is not meaningful for two main reasons: first, the negotiations completion will take time; and second, it will probably result in a complementary market rather than in damaging competition.
 

Picture 2 - CSCL Globe, the biggest cargo ship in the world, with capacity for 19100 TEU containers

In Europe the “21st Century Maritime Silk Road” initiative is being received with great expectations. Just this week the Chinese cargo ship passed by the Port of Zeebrugge in Belgium, increasing people’s interest on the issue. [10] Illustrating this, the Port of Zeebrugge has offices in Shanghai and the King of Belgium will visit China by June 2015.

Finally, this week Heritage Foundation and New Direction Foundation presented in Brussels [11] the 2015 Index of Economic Freedom [12]. According to this index, Hong Kong maintained the status as the world’s freest economy for the 21st consecutive year. Singapore ranks 2nd in this index that considers as indicators the rule of law, government size, regulatory efficiency and open markets. As Goldman Sachs recognizes, the Shanghai-Hong Kong Stock Connect launching in the 17th of November 2014 “allows mainland Chinese investors to purchase select Hong Kong and Chinese companies listed in Hong Kong, and lets foreigners buy Chinese A shares listed in Shanghai in a less restrictive manner than has previously been the case.” [13] Such policies and the Maritime Silk Road investments will allow Hong Kong and Singapore to reinforce their status as the main business centers of Southeast Asia.

António M.C. Vieira da Cruz
Brussels, the 7th of March 2015

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Sources:
[1] http://www.nytimes.com/2013/06/05/opinion/global/xi-jinpings-chinese-dream.html?pagewanted=all&_r=1
[2] http://www.scmp.com/news/china/article/1657213/road-chinas-past-future
[3] http://www.reuters.com/article/2014/11/08/us-china-diplomacy-idUSKBN0IS0BQ20141108
[4] http://www.pwc.com/gx/en/world-2050/assets/pwc-world-in-2050-report-january-2013.pdf
[5] http://www.scmp.com/news/china/article/1593453/maldives-supports-chinas-plan-maritime-silk-road
[6] http://thediplomat.com/2014/02/the-maritime-silk-road-vs-the-string-of-pearls/
[7] http://www.makeinindia.com/
[8] http://www.maritimesun.com/news/sri-lanka-supports-chinas-initiative-of-a-21st-century-maritime-silk-route
[9] http://www.the-american-interest.com/2015/01/09/a-snag-in-chinas-string-of-pearls-strategy/
[10] http://www.marinelink.com/news/zeebrugge-globe-calls386567.aspx
[11] http://newdirectionfoundation.org/content/how-free-are-european-economies-brussels-march-4th-2015
[12] http://www.heritage.org/index/
[13] http://www.goldmansachs.com/our-thinking/trends-in-our-business/stock-connect/