2.1
The Indian Ocean Territories—Christmas Island and the Cocos (Keeling) Islands—hold important strategic value for Australia, particularly as Australia’s exclusive economic zone and search and rescue areas extend significantly into the Indian Ocean. The strategic environment within the Indian Ocean region is changing, presenting new opportunities and challenges for Australia. The Indian Ocean Territories are vital strategic points, acting as staging points for Australia to extend its reach and build stronger defence ties with regional partners.
2.2
This chapter begins with a historical overview of the Indian Ocean Territories, illustrating the strategic relevance of Christmas Island and the Cocos Islands over the years. The islands’ role in advancing Australia’s interests and strengthening multilateral security in the region is explored, followed by an examination of the complex changing dynamics of countries undertaking activities in the Indian Ocean region. The chapter concludes by considering the regional security challenges pertinent to Australia.
Historical overview of the Indian Ocean Territories
2.3
The Indian Ocean Territories have advanced the strategic interests of various nations over the last century. The islands served as a post for military operations during World War I and World War II, and were subsequently used for phosphate resources. More recently, Christmas Island hosted Australian immigration detention facilities.
2.4
The British Government annexed Christmas Island in 1888 following the discovery of phosphate deposits. The Cocos Islands were also a British Dominion, although largely run by the Clunies-Ross family who were gifted land by Queen Victoria in 1866.
2.5
In a private capacity, Mr Julian Yates submitted in that the strategic importance of the Cocos Islands first became significant to Australia in World War I. The airfield at West Island in the Cocos Islands was developed as a strategic operating base by the British Royal Air Force and the Royal Australian Air Force for attacks on Japanese forces in Burma, Sumatra, Java and Singapore.
2.6
Australia also had its first naval victory in the Cocos Islands, in the November 1914 battle between HMAS Sydney and Germany’s SMS Emden. The SMS Emden sought to destroy the wireless station on Direction Island (part of the Cocos Islands), which was a vital communication link between Britain and Australia. Before the station was attacked the operators managed to send an SOS, which was received by HMAS Sydney.
2.7
The Cocos Islands were subject to a Japanese attack during World War II. The Japanese valued Christmas Island as a prime staging post and source of phosphate for Japanese industry. Following World War II, phosphate became important to the expansion of super-phosphate enriched agriculture in Australia and New Zealand.
2.8
Australia went on to acquire the Indian Ocean Territories in the 1950s. The formal transfer of the Cocos Islands from the British Colony of Singapore took place in 1955. Christmas Island was transferred to Australia in 1958 by the British Government. The Shire of Christmas Island states the Australian Government’s interest in the island was two-fold: phosphate; and exerting Australian influence and maintaining Australian security in the region.
2.9
Mr Yates informed the Committee that the growth of air transport led to Australia utilising the Cocos Islands as a refuelling point for civilian and military aircraft.
2.10
In their submission, Dr David Brewster and Professor Rory Medcalf from the National Security College at the Australian National University informed the Committee that in the 1970s Australia began to integrate itself with the United States’ military activities, and undertook joint patrols with the United States in and through the Cocos Islands. In subsequent decades Christmas Island has been considered useful for a range of purposes.
2.11
From the early 2000s onwards the Indian Ocean Territories hosted immigration detention reception and processing centres as part of the Australian Government’s border protection activities.
2.12
The Indian Ocean Territories are important strategic points for access to the Indian Ocean. Historically, the islands were used by the British for military operations during World War I and World War II, subsequently they were utilised for their natural resource of phosphate. The Committee heard evidence that at present, the islands are a good staging point for Australian activity in the Indian Ocean region.
Australia’s engagement in the Indian Ocean region
2.13
The Committee received evidence from the Department of Foreign Affairs and Trade that a secure and stable Indian Ocean region is crucial for Australia’s national security and prosperity; especially since Australia has vital economic interests in the area in the form of shipping routes for exports and imports. Furthermore, in its submission the Department also advised that Australia has an interest in strengthening strategic and defence cooperation with traditional and emerging partners.
2.14
The 2016 Defence White Paper notes that the Indian Ocean region, at present, has half of the world’s container traffic and one-third of bulk cargo travelling through it. In the next 20 years the region will see a substantial increase in intra-regional maritime trade, including food and, natural resources and energy. Supporting this, Major General John Hartley AO (Retired) from Future Directions International, told the Committee:
… the Indian Ocean will remain and in fact, if anything, will become an even more critical global trade, food and energy security area … I think that, as the 21st century comes about, this area will emerge as a leading strategic theatre. It will once again be the crossroads for global trade, [and] economic growth.
2.15
Future Directions International informed the Committee that over one-third of Australia’s coastline borders the Indian Ocean. The Department of Foreign Affairs submitted that approximately half of Australia’s naval fleet is located along the Indian Ocean coastline. Moreover, Australia’s offshore oil and gas resources are concentrated in the Indian Ocean waters.
2.16
The Department of Foreign Affairs and Trade notes in its submission that Australia’s imports and exports are transported over shipping routes in the Indian Ocean, which are vital to Australia’s economic interests. Freight shipments departing from the Australian coast on the Indian Ocean accounts for over 50 per cent of Australian sea freight. This includes a large proportion of Australia’s resource exports and almost all (99 per cent) shipments of iron ore, which is Australia’s top export commodity. Any disruption of these shipping routes for both imports and exports would have significant consequences for Australia.
2.17
In its submission, the Department of Foreign Affairs and Trade informed the Committee that Australia’s exclusive economic zone applies to its territories. This extends Australia’s marine interests beyond the continental shelf of the Australian mainland, to the 12 nautical miles of ocean and seabed around each of the Indian Ocean Territories. Within this area, Australia has rights to explore and utilise the living and non-living natural resources of the waters and seabed, including fish, minerals and petroleum resources. The Department informed the Committee that these ‘resources are worth billions of dollars each year.’
2.18
The Department also advised the Committee that under international conventions Australia is obligated to provide assistance to any individuals or ships in distress within the Australian search and rescue region. Australia’s search and rescue region covers a large proportion of the Indian Ocean and borders the search and rescue regions of six other Indian Ocean rim countries. A recent example of the significance of Australia’s search and rescue region in an international context was Australia’s role in coordinating the search for MH370 in the Indian Ocean, in support of the Malaysian accident investigation.
2.19
Dr Brewster and Professor Medcalf informed the Committee of Australia’s multilateral view towards actions in the Indian Ocean region, observing that Australia’s actions in the Indian Ocean are done in conjunction with the United States and Australia’s Southeast Asian Defence partners. Supporting this view, the Department of Defence submitted that Australia participates in a range of cooperative bilateral and multilateral activities with regional partners. Regarding regional partners, Dr Anthony Bergin appearing before the Committee in a private capacity, highlighted the importance of collaborating with Australia’s closest neighbour, Indonesia, telling the Committee ‘it is absolutely critical that we [Australia] draw Indonesia into any Defence infrastructure developments in our Indian Ocean Territories.’
Potential strategic uses of the Indian Ocean Territories
2.20
The Indian Ocean Territories are strategically important to Australia. As Dr Malcolm Davis, appearing in a private capacity, told the Committee:
[There] is broad a consensus that the Cocos and Christmas Islands are strategically important. They have a role to play in Australia’s defence that is probably greater now than what was the case five or even 10 years ago.
2.21
Similarly, the strategic importance of the Indian Ocean Territories was also recognised by Mr Barry Haase, the Administrator of the Indian Ocean Territories, who told the Committee that local communities agree that there is great strategic importance to the Indian Ocean Territories.
2.22
The Department of Defence’s submission notified the Committee that Christmas Island is a valuable location for supporting border protection operations through the replenishment of Royal Australian Navy vessels and staging maritime patrol aircraft, as well as providing situational awareness of Australia’s northern approaches. Dr Brewster and Professor Medcalf further informed the Committee that Christmas Island may be useful for supporting air operations in Northeast Asia and further north, and intelligence collection, including surveillance of submarines transiting the Java Trench.
2.23
Further, the Department identified the Cocos Islands as having strategic value as a staging location for maritime air patrol and surveillance activities to monitor Australia’s approaches from the north-west and west. Similarly, Dr Brewster and Professor Medcalf submitted that the Cocos Islands are a potential mid-ocean staging point for refuelling and extending the range of Australian aircraft.
2.24
Further, Dr Brewster and Professor Medcalf submitted that the Cocos Islands would also be useful in supporting air operations westwards in the Bay of Bengal. Their submission also stated that if the Indonesian archipelago were to become obstructed, the Cocos Islands could be used for increased surveillance for greater shipping densities. They also indicated the Cocos Islands may lend themselves to other purposes, such as intelligence gathering through a satellite ground station, as part of an over-the-horizon radar system or for conventional radar.
2.25
Mr Peter Jennings, appearing before the Committee in a private capacity identified criminal activity as a potential threat to the territories:
I would not rule out the possibility that you might see some sort of organised criminal activity come ashore [on the territories]. The people-movement issue is clearly one that is live ... [This would] cause Australia difficulty, [and] divert our attention.
2.26
Mr Jennings further told the inquiry that Australia needs to exercise a military presence on Christmas and the Cocos Islands to defend and maintain its interest in the territories. Mr Jennings said to the Committee that ‘the occasional visit of a patrol boat or something of that nature for an exercise to demonstrate sovereignty is a useful and cost-effective thing to do.’ To also demonstrate Australia’s commitment to and strategic interest in the islands, Dr Ross Babbage, the Chief Executive Officer of the Strategic Forum and Non-resident Senior Fellow at the Center for Strategic and Budgetary Assessments in Washington DC, noted the possibility of placing a local reserve unit on Christmas and/or the Cocos Islands. This idea is explored further in chapter 4.
2.27
Dr Babbage observed that Australia has very important relationships with Indian Ocean countries—including Indonesia and India—and other countries with a presence in the region, such as the United States and France. Dr Babbage noted that it would beneficial having exploratory discussions with those and other countries before Australia contemplated doing anything in the region. Similarly, Dr Brewster informed the Committee that Australia needs to factor in the value of its strategic partnerships with Indian Ocean rim countries and regional allies before pursuing any developments on either Christmas or the Cocos Islands.
2.28
Regarding infrastructure, Dr Anthony Bergin, appearing in a private capacity informed the Committee that Christmas Island and the Cocos Islands do not have the necessary size, geographic conditions and stability to develop and house a major Australian naval base, similar to the United States’ base of Diego Garcia. Further, Dr Babbage told the Committee that any infrastructure constructed on the territories will require Australia to give serious consideration as to how to defend it.
2.29
Mr Stephen Clay, appearing in a private capacity, told the Committee that Australia’s commitment to the Indian Ocean Territories would be demonstrated by ensuring that Christmas Island and the Cocos Islands have secure and vibrant economies. Dr Brewster told the Committee that Australia’s actions on Christmas and the Cocos Islands are a statement of strategic intent by Australia, and this intent is a positive opportunity to signal much greater aspirations in the region. Dr Babbage concluded his comments to the Committee by noting there may be potential benefits and future strategic uses of the Indian Ocean Territories which may have not yet been realised.
Changing dynamics in the Indian Ocean region
2.30
A clear theme which emerged from the evidence is that the Indian Ocean region is undergoing significant changes with new and emerging major powers pursuing new interests. For example, the Department of Defence submitted that due to the expanding strategic importance of the region, the region is witnessing growing competition among major powers, with India, the US and China increasing their levels of activity in the region. Mr Jennings stated that the Indian Ocean region is becoming more contested, with more competition between states. Dr Sam Bateman AM, Professorial Research Fellow at the Australian National Centre for Ocean Resources and Security at the University of Wollongong, and Dr Anthony Bergin, Senior Analyst at the Australian Strategic Policy Institute, submitted that the Indian Ocean region has become the focus of increased strategic attention and growing competition between nations.
2.31
In its submission, the Department of Foreign Affairs and Trade also commented that other powers such as Indonesia are rising in strategic weight and are expanding their presence and activity in the Indian Ocean region.
2.32
However, the National Security College’s submission informed the Committee that the United States’ military predominance in the Indian Ocean region has ‘never been in serious doubt’ since the 1970s. This can be attributed to the United States’ large strategic footprint in region, through its major naval base, Diego Garcia.
2.33
Commenting on the regional changes, Dr Babbage noted that in the 1980s, the ‘… centre of global power and global competition was in Eastern Europe.’ This has now shifted, meaning that East Asia is now the ‘centre of global conflict, tension and competition.’ This shift, Dr Babbage informed the Committee, means that the Indian Ocean Territories find themselves ‘in a completely different strategic environment’ that has ‘significantly altered the equation in terms of evaluating their strategic importance.’
Security challenges in the Indian Ocean region
2.34
The Department of Foreign Affairs and Trade in its submission informed the Committee of a series of security challenges in the Indian Ocean region including transnational crime especially drug trafficking, piracy and armed robbery at sea, large movement of irregular migrants, and irregular maritime migration, illegal fishing and terrorism.
2.35
The Department noted that the region is becoming a growing conduit for drug trafficking, with the Royal Australian Navy intercepting large quantities of drugs transiting the Indian Ocean region from East Africa. Heroin in particular is trafficked through the Indian Ocean from Afghanistan, Pakistan and Iran to Africa, then to the European and US markets.
2.36
The Department also noted that piracy and armed robbery is a concern in areas connecting to the Indian Ocean region. Since 2011, piracy has abated in the Gulf of Aden, which carries 30 per cent of Australia’s trade. However, the underlying causes of piracy—lack of economic opportunities and governance in Somalia—remain in the Gulf. Furthermore, piracy in the Malacca Strait has increased and includes instances of petty theft to complex operations, such as hijacking oil tankers, siphoning its oil, and selling the oil on the black market.
2.37
The Department further advised that the region is susceptible to large movements of irregular migrants, given the large, dense populations, and potential for displacement caused by factors including conflict and political unrest, human rights issues, environmental degradation, and natural hazards. The Department of Immigration and Border Protection submitted that the Indian Ocean Territories in particular have been consistently targeted by people smugglers and used for landing points for import and export of prohibited goods and illegal, unreported and unregulated fishing.
2.38
The Department of Foreign Affairs and Trade also noted in the future the region may be indirectly affected by factors which may threaten stability and security, such as the effects of climate change, and social change brought about by development of technology and globalisation. Furthermore, Major General Hartley AO (Retired) told the Committee that some of the outcomes of climate change could be quite significant for the region, and commented that the demand for food and water within the region will increase. The Committee heard that, at present, it was uncertain whether Australia and other regional nations had the capacity to meet the regional demand.
Committee comment
2.39
Australia has a long history of engagement with both Christmas Island and the Cocos Islands. Throughout the last century, the Indian Ocean Territories have contributed to Australia’s strategic interests in a number of ways—including for military, border-protection, and humanitarian purposes—and the territories remain an important platform for Australia’s engagement in the Indian Ocean region.
2.40
The Committee notes the importance of the Indian Ocean region in protecting Australia’s national security, as a conduit for Australian and global trade and economic activity, and as a source of a valuable natural resources.
2.41
Within this context, the Committee appreciates the ongoing strategic role for the Indian Ocean Territories. Both Christmas Island and Cocos Islands provide Australia with a strategic interest in the Indian Ocean and the broader Indo-Pacific region, and extend Australia’s strategic reach beyond the mainland.
2.42
However, the Committee acknowledges the view that the strategic value of the Indian Ocean Territories depends, to some extent, on Australia’s engagement in the region. Evidence relating to Defence operations and capability are considered in chapters 3 and 4.
2.43
The Committee also notes the view that Australia’s commitment to the Indian Ocean Territories is, in part, demonstrated by the presence of vibrant communities and sustainable economies on the islands. Evidence relating to the local communities is discussed in further detail in chapter 5.
2.44
More broadly, as noted above, the Indian Ocean Territories support Australia’s engagement in the Indian Ocean region. The Committee notes that Australia works closely with a number of bilateral partners and as a member of regional organisations to enhance international cooperation, security, and advocacy in the region. These efforts are discussed in further detail in chapter 3.
2.45
The Committee accepts the view that the Indian Ocean region is an increasingly dynamic environment. The region is host to a number of rapidly growing economies and populations, and the role of the region in facilitating global trade is expected to become even more critical. Moreover, the evolving nature of the geopolitical environment introduces a further degree of uncertainty in the region.
2.46
As the region continues to evolve, Australia’s engagement with the region will also evolve. Over time, this may alter the strategic importance to Australia of the Indian Ocean Territories and present new opportunities. The Committee therefore encourages the Australian Government to consider a more regular assessment of the broader Indian Ocean region, and the strategic importance of Indian Ocean Territories in particular. Regular consideration of these issues will ensure that Australia is well placed to be able to respond to changes in the region.
2.47
In line with the Committee’s oversight over the external territories and in recognition of the importance of the Indian Ocean Territories, the Committee is committed to inquiring into the Indian Ocean territories, including their strategic contributions, at least every five years. The Committee is well placed to consider the importance and strategic issues of the Indian Ocean Territories, drawing on the expertise of relevant stakeholders.
2.48
In light of the changing dynamics in the Indian Ocean region, the Committee recommends that the Australian Government refer an inquiry that considers Australia’s Indian Ocean Territories and its engagement in the broader Indian Ocean region to this Committee, at least every five years.
2.49
The Committee notes the evidence received about a range of security challenges in the region, including transnational crime, irregular maritime migration, and terrorism. The Committee supports Australia’s ongoing engagement with partners in the region to address these security challenges.