WEBVTT - China’s Power Play In the Indian Ocean

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Mauritius, an island in the Indian Ocean, is increasingly becoming

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<v Speaker 2>a popular travel destination.

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<v Speaker 1>It's the greenest green like I've ever seen.

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<v Speaker 2>Peter Martin is a Bloomberg correspondent covering Africa in the

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<v Speaker 2>Middle East. He's based in Nairobi, Kenya, in East Africa,

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<v Speaker 2>and last month he hopped on a four hour flight

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<v Speaker 2>to Mauritius.

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<v Speaker 1>I'm from the countryside in England and the plants growing

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<v Speaker 1>in this volcanic soil on the side of these dramatic

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<v Speaker 1>mountains and then surrounded by these perfect blue waters and

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<v Speaker 1>coral reefs. It's really a strikingly beautiful place.

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<v Speaker 2>But Peter wasn't in Mauritius to take a vacation. He

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<v Speaker 2>was there because the tiny island nation is now front

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<v Speaker 2>and center of an increasingly tense and vital global power play.

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<v Speaker 1>It's one of those parts of the world that after

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<v Speaker 1>the Cold War was a little bit forgotten, and it's

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<v Speaker 1>largely known for its perfect beaches and as a tax pavement,

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<v Speaker 1>but it's also the merged as a kind of crucial

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<v Speaker 1>theater for competition. This kind of interesting three way tussle

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<v Speaker 1>between China, India, and the United States.

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<v Speaker 2>Mauritius and its neighboring islands in the Indian Ocean are

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<v Speaker 2>strategically important for these global powers. They use the islands

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<v Speaker 2>as basis to protect shipping lanes in the Indian Ocean

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<v Speaker 2>and to project military power throughout the region, and China's

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<v Speaker 2>growing presence and influence in the Indian Ocean is raising

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<v Speaker 2>alarm in India.

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<v Speaker 1>India looks at the whole of the Indian Ocean region

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<v Speaker 1>as something akin to its backyard. Deli sees the region

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<v Speaker 1>as a place which is crucial to its ability to

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<v Speaker 1>do trade, to procure energy, and is non negotiable part

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<v Speaker 1>of its path to great power status. And so the

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<v Speaker 1>idea that any foreign power, but especially Beijing, could threaten

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<v Speaker 1>that is profoundly worrying for policymakers in Delhi. I think

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<v Speaker 1>it's fair to say that it keeps them up at night.

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<v Speaker 2>Welcome to The Big Take Asia from Bloomberg News. I'm Wanha.

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<v Speaker 2>Every week we take you inside some of the world's

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<v Speaker 2>biggest and most powerful economies and the markets, tycoons and

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<v Speaker 2>businesses that drive this ever shifting region. Today on the

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<v Speaker 2>show How Mauritius and its island neighbors got caught in

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<v Speaker 2>a power tussle between the world's biggest economies. And what

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<v Speaker 2>does China's growing cloud in the Indian Ocean mean for India,

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<v Speaker 2>the US and the rest of the world. Mauritius is

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<v Speaker 2>a tiny volcanic island about fifteen hundred miles from the

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<v Speaker 2>East African coast in the Indian Ocean. It has a

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<v Speaker 2>population of about one point three million people, and its

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<v Speaker 2>ties with one of its biggest neighbors, India, runs deep.

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<v Speaker 1>Mauritius had no indigenous population when Europeans showed up. The

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<v Speaker 1>island was primarily populated by Britain, taking ethnic Indians from

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<v Speaker 1>the subcontinent there as indentured laborers. About seventy percent of

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<v Speaker 1>the population are ethnic Indian and Mauritius doesn't have a

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<v Speaker 1>standing military, so it relies on India for that external security.

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<v Speaker 2>But in recent years the island has started to see

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<v Speaker 2>new influences emerge, especially in the island's capital, Port Louis.

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<v Speaker 1>China has poured infrastructure investment into the island. It's built

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<v Speaker 1>a substantial dam, invested in the Special Economic Zone. It's

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<v Speaker 1>built radio stations, shopping malls a long list of projects,

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<v Speaker 1>and you can see the way that the United States,

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<v Speaker 1>for example, has responded to it. The US embassy was

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<v Speaker 1>based or is still based in a kind of cramped

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<v Speaker 1>office building in downtown Port Louis, but Washington is pouring

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<v Speaker 1>three hundred million dollars into building a new mega embassy there.

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<v Speaker 2>The maneuvering by these global powers has put Port Louis

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<v Speaker 2>onto the map of global geopolitical hotspots. This week, Indian

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<v Speaker 2>Prime Minister Norendra Modi traveled to Mauritius for a two

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<v Speaker 2>day state visit to reinforce the island's importance to his country.

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<v Speaker 1>So the Modi administration, partly because of China's increased presence

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<v Speaker 1>in the region, has spoken for many years about a

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<v Speaker 1>neighborhood first policy. Delhi very much sees Mauritius as part

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<v Speaker 1>of its extended neighborhood and wants to show that it

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<v Speaker 1>is going to put in the work to show Mauritius

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<v Speaker 1>that it's valued in Delhi and to make sure that

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<v Speaker 1>its voice is being heard in the tolls of power

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<v Speaker 1>in Port Louis.

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<v Speaker 2>Peter spoke to the Foreign Minister of Mauritius for this story,

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<v Speaker 2>and he said, while the government welcomes the investment, politicians

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<v Speaker 2>are also very much much aware of the tight rope

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<v Speaker 2>it has to walk with all of these competing interests.

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<v Speaker 1>He was very frank that in the past, small nations

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<v Speaker 1>like Mauritius feel like they've been ignored by major powers,

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<v Speaker 1>and that's changing, and it's changing to the advantage of Mauritius.

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<v Speaker 1>He was very explicit about that. I think you see

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<v Speaker 1>like a strong recognition there that there's a lot to

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<v Speaker 1>be gained from engaging with China, but if you go

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<v Speaker 1>too far down that path, it creates problems for your

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<v Speaker 1>relationship with the US and India. So the country is

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<v Speaker 1>really trying to sort of balance itself there between these

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<v Speaker 1>three competing powers.

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<v Speaker 2>Peter says, what's happening on Mauritius with these three global

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<v Speaker 2>powers is playing out all across the Indian Ocean on

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<v Speaker 2>different islands and surrounding coastal countries. One big reason for

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<v Speaker 2>all this jockeying trade the Indian Ocean sits in the

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<v Speaker 2>middle of major shipping routes and key maritime choke points

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<v Speaker 2>that allow oil to move between Europe, Asia, Africa, and.

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<v Speaker 1>The Middle East. This region is essential to global trade.

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<v Speaker 1>It's essential to global energy flows. It's home to something

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<v Speaker 1>like forty percent the world's offshore petroleum, and historically India

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<v Speaker 1>is overwhelmingly dependent on maritime trade as a lifeline for

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<v Speaker 1>its economy. It's something like eighty percent of India's oil imports,

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<v Speaker 1>ninety five percent of its trade by volume come in

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<v Speaker 1>through the Indian Ocean, so it's really crucially significant.

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<v Speaker 2>But trade is only half the reason these global powers

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<v Speaker 2>have their eyes on the Indian Ocean. It's strategically vital

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<v Speaker 2>for India for maybe obvious reasons, but it's also become

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<v Speaker 2>strategically important to China.

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<v Speaker 1>China's first overseas military base was constructed in Djibouti on

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<v Speaker 1>the Horn of Africa, opened in twenty seventeen and gives

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<v Speaker 1>China potential to project power across the Middle East. And

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<v Speaker 1>if you look at the Pentagon's list of places where

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<v Speaker 1>the US believes that China is interested in establishing overseas bases,

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<v Speaker 1>they more or less draw a ring around the Indian

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<v Speaker 1>Ocean region. And if you're looking at this from Delhi,

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<v Speaker 1>it's profoundly threatening.

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<v Speaker 2>For decades, India focused on threats that would come by land.

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<v Speaker 2>When it came to security. India shares a border with China,

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<v Speaker 2>and thousands of troops from both sides have engaged in

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<v Speaker 2>ten standoffs along the disputed frontier since the nineteen sixties.

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<v Speaker 2>Peter says China's growing quest for influence on land and

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<v Speaker 2>sea has forced India to think of its namesake Ocean

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<v Speaker 2>as a second border with China.

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<v Speaker 1>When we were reporting this story, we talked to Indian

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<v Speaker 1>policymakers and one of the things that they said to

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<v Speaker 1>us was that India's attitude toward overseas basing has changed.

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<v Speaker 1>It now recognizes the fact that it's going to need

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<v Speaker 1>to project military power further overseas, and it's going to

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<v Speaker 1>need to contest China's influence in the region in a

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<v Speaker 1>much more.

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<v Speaker 2>It's not just China in India that have a horse

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<v Speaker 2>in this race. The US is a big player in

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<v Speaker 2>these waters too. That's after the break. India and China

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<v Speaker 2>are jockeying for control in the Indian Ocean, and Bloomberg

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<v Speaker 2>reporter Peter Martin says that tussle is being closely watched

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<v Speaker 2>by the US.

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<v Speaker 1>If you think about the issues and areas that matter

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<v Speaker 1>to the US most, what does it need to maintain

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<v Speaker 1>its future as a superpower. At the center of that

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<v Speaker 1>is its ability to continue to be a global trade

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<v Speaker 1>player and to have access to global international markets. So

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<v Speaker 1>if you're an American strategist looking at how do we

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<v Speaker 1>keep global trade flowing, then maintaining freedom of navigation in

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<v Speaker 1>the Indian Ocean region, ensuring that energy and goods can

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<v Speaker 1>continue to go back and forth, is crucial to America's

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<v Speaker 1>ability to continue to be a global trading partner.

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<v Speaker 2>One other major reason the US cares so much about

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<v Speaker 2>the region security. The US has a major military base

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<v Speaker 2>that it runs with the UK on a remote island

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<v Speaker 2>in the Indian Ocean called Diego Garcia, a British territory.

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<v Speaker 1>So if you look at a map of the Indian Ocean,

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<v Speaker 1>Diego Garcia is right in the center of it. Used

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<v Speaker 1>historically to monitor maritime communications, to monitor submarine activity, used

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<v Speaker 1>later in the War on terraf by the US to

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<v Speaker 1>launch bombing raids on Afghanistan and Iraq, and so really

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<v Speaker 1>important strategic location there.

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<v Speaker 2>Last year, the UK drafted a deal to hand back

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<v Speaker 2>Diego Garcia and some other islands to Mauritius in order

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<v Speaker 2>to comply with the UN Court ruling. There's some uncertainty

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<v Speaker 2>where their president Donald Trump will sign off on the deal,

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<v Speaker 2>which includes a provision to keep the military base on

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<v Speaker 2>the island for at least another ninety nine years. But

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<v Speaker 2>the US needs more than an island air base in

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<v Speaker 2>the Indian Ocean to counter China's growing influence in the region.

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<v Speaker 2>It needs other partners to help, with India at the

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<v Speaker 2>top of the list.

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<v Speaker 1>Washington is very much aware that it needs to support

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<v Speaker 1>India as a potential partner in that competition with China.

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<v Speaker 1>Washington would very much like India to beat the sheriff

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<v Speaker 1>in the region. I've heard Washington policymakers use that phrase

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<v Speaker 1>as it confronts the reality that it can't be everywhere

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<v Speaker 1>all the time with the same amount of resources.

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<v Speaker 2>So you've got China and India throwing money into development

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<v Speaker 2>and infrastructure projects in the region, in Mauritius and in

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<v Speaker 2>other places, while the US is pulling back on foreign aid.

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<v Speaker 2>I mean, USAAD has been gutted. Is the US at

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<v Speaker 2>a disadvantage because it's not funding projects the way Indian

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<v Speaker 2>and China are Is that part of the conversation.

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<v Speaker 1>It's definitely part of the conversation. Washington was the world's

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<v Speaker 1>largest aid spender, and lots of that aid went to

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<v Speaker 1>countries across the Indian Ocean region. There are commentators, especially

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<v Speaker 1>if you talk to former Biden officials, who say that

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<v Speaker 1>this opens a potential door for Beijing, but it's not

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<v Speaker 1>clear cut and.

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<v Speaker 2>Do we have a sense of how this jocking for

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<v Speaker 2>power in the Indian Ocean will play out?

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<v Speaker 1>I think when you look at the Indian Ocean from

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<v Speaker 1>the perspective of Beijing and New Delhi, China fears that

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<v Speaker 1>its access to Middle East oil could be cut off

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<v Speaker 1>and feels the need to position military assets in the

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<v Speaker 1>region and to gain diplomatic influence in the region. India

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<v Speaker 1>looks to the region as its backyard, as the first

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<v Speaker 1>place that it needs to assert itself as a rising power,

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<v Speaker 1>and it feels like Beijing is encroaching on its ability

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<v Speaker 1>to do that. Washington doesn't feel a threat in quite

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<v Speaker 1>the same direct way, but President Trump has been very

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<v Speaker 1>clear about his identification of China as a major economic threat.

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<v Speaker 1>So it's really about Washington looking to keep his own

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<v Speaker 1>voice in the conversation, but then looking at how can

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<v Speaker 1>it partner with other countries to make sure that China

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<v Speaker 1>doesn't become the dominant voice in the region.

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<v Speaker 2>This is The Big Take Asia from Bloomberg News. I'm wanh.

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<v Speaker 2>This episode was produced by Nameing Young Young and Jessica Beck.

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<v Speaker 2>It was edited by Patty Hirsh and Neil Munschi. It

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<v Speaker 2>was fact checked by Young and Naomi, mixed by Alex Sugira,

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<v Speaker 2>and sound designed by Jessica. Our senior producer is Naomi Shaven.

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<v Speaker 2>Our senior editor is Elizabeth Ponso. Our executive producer is

0:12:46.200 --> 0:12:50.040
<v Speaker 2>Nicole Beemster Bower. Save Bauman is Bloomberg's head of podcasts.

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<v Speaker 2>See Next Time, MHM.