Australia has the alliances to shape the Indian Ocean's future, but its strategy needs work

The Iran war and intensifying great power competition have transformed the Indian Ocean from a strategic backwater into a volatile maritime theatre. A new Lowy Institute Policy Brief sets out what Australia can do to shape the post-war order in a region it has previously overlooked.

Dr Alexander Lee, in a paper entitled How great power rivalry returned to the Indian Ocean and the stakes for Australia, argues that the closure of the Strait of Hormuz and the disruption to global trade routes have impacted Australian economic security and soured public opinion towards the United States.

Dr Lee notes that Australia’s geography, including its vast exclusive economic zone, and its strong multilateral relationships with regional powers, give it a firm footing to take a greater leadership role in the Indian Ocean.

Yet, he argues, Australian strategic guidance still confines Defence engagement to the Pacific, Southeast Asia and the Northeastern Indian Ocean, leaving the Northwestern Indian Ocean out of scope — despite the Iran war proving that disruptions there hit Australia just as hard.

Meanwhile, China, Japan and India are all deepening their footprint in the region, and the United States, despite pouring assets into the Iran war, has given the wider Indian Ocean a lower strategic priority than other Indo-Pacific theatres.

Dr Lee calls for Australia to update its strategic guidance to bring the Northwestern Indian Ocean into Defence's engagement, use the Iran war and Red Sea crisis as a catalyst to reinvigorate the institutions built for Indian Ocean partners, and deepen cooperation with Japan, India and France to help keep the Ocean open and stable before China fills the gap left by a distracted Washington.

“The Iran war has forced the Indian Ocean onto the world’s agenda,” writes Dr Lee.

“Disrupted trade routes, an unprecedented concentration of great power assets, and the fragility of existing institutions have created a moment of genuine strategic opportunity for Canberra.”

“After a century of relying on others to secure the Indian Ocean, Australia now has the geography, the alliances, and the credibility to chart its own course,” Dr Lee concludes.

KEY FINDINGS

• The Iran war and intensifying great power competition have transformed the Indian Ocean from a strategic backwater into one of the most volatile maritime theatres of the decade.
  
• Australia is unusually well positioned to shape the post-war Indian Ocean order: it has the region’s largest exclusive economic zone, strong relationships with regional powers, and a moment of genuine institutional opportunity as the region is reordered.
  
• Updating strategic guidance to include the Northwestern Indian Ocean, reinvigorating regional institutions, and deepening cooperation with Japan, France and India will ensure Canberra shapes rather than inherits the post-war settlement.

ABOUT THE AUTHOR

Dr Alexander Lee is a Visiting Fellow at the Strategic and Defence Studies Centre at the Australian National University, where he researches Australia’s strategic policy. His other research interests include nationalism and the far right in Australia, and Australian military history.

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