PacNet #51 – 2023 PacNet Commentary half-year index

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July 7, 2023

The comprehensive half-year index includes each PacNet commentary published from January through June 2023 below. Click here to request a PacNet subscription.

  1. Taking the US-India relationship to the next level by David Santoro and Akhil Ramesh
  2. The Indian Coast Guard, the Quad, a free and open Indo-Pacific by Dr. Pooja Bhatt
  3. The 118th Congress and China policy – Continuity over change in defending America by Robert Sutter
  4. The Japan Coast Guard’s role in realizing a Free and Open Indo-Pacific by Capt. Kentaro Furuya (JCG)
  5. Australia’s Maritime Border Command: Grappling with the Quad to realize a free and open Indo-Pacific by Kate Clayton and Dr. Bec Strating
  6. Comparative Connections summary: January 2023
  7. Dealing with increased Chinese aggressiveness – PART ONE by Ralph A. Cossa
  8. Dealing with increased Chinese aggressiveness – PART TWO by Ralph A. Cossa
  9. The US Coast Guard: Provide public goods for a free and open Indo-Pacific by James R. Sullivan
  10. The inconvenient trust: Aspirations vs realities of coexistence between “the West” and China by Stephen Nagy
  11. What China’s challenge to NATO is, and what it isn’t by Rob York
  12. It’s up to the National Unity Government to forge “Union Spirit” in Myanmar by Shwe Yee Oo
  13. After China’s Party Congress, steeling for competition with the West by Kim Fassler
  14. South Korea’s Indo-Pacific pivot strategy by David Scott
  15. For India and ASEAN, an opportune reorientation by Dr. Shristi Pukhrem
  16. The world after Taiwan’s fall – PART ONE by David Santoro
  17. The world after Taiwan’s fall – PART TWO by David Santoro
  18. China has a digital grand strategy. Does the president know? by Dr. David Dorman and Dr. John Hemmings
  19. Rare earths realism: Breaking the PRC’s global refining monopoly by Brandt Mabuni
  20. How feminist is Canada’s Indo-Pacific Strategy – PART ONE: The Good by Maryruth Belsey Priebe and Astha Chadha
  21. How feminist is Canada’s Indo-Pacific Strategy – PART TWO: The ‘Needs Improvement’ by Maryruth Belsey Priebe and Astha Chadha
  22. The refresh of the Integrated Review: Putting Britain at the heart of the Atlantic-Pacific world by James Rogers
  23. Japan’s new strategic policy: Three overlooked takeaways by Thomas Wilkins
  24. How to help Korea-Japan rapprochement endure by Rob York
  25. Bangladesh’s remarkable journey and challenges ahead by Md Mufassir Rashid
  26. The UK integrated review and integrated deterrence by Brig Rory Copinger-Symes and Dr. John Hemmings
  27. Why China’s Middle East diplomacy doesn’t herald a new world order by Henry Rome and Grant Rumley
  28. A principled approach to maritime domain awareness in the Indo-Pacific by Ariel Stenek
  29. Toward a resilient supply chain to counter Chinese economic coercion by Su Hyun Lee
  30. Now is the time for a US-Japan-Taiwan security trilateral by Masatoshi Murakami
  31. Time for a shift on the Korean Peninsula by Daniel R. Depetris
  32. Europe’s China confusion does the world a disservice by Brad Glosserman
  33. Myanmar’s Coco Islands: A concern not to be ignored by Shristi Pukhrem
  34. The rise of ISKP in South Asia: A threat to regional stability by Neeraj Singh Manhas
  35. Mekong water usage tests China’s claimed good-neighborliness by Denny Roy
  36. How Biden can make the most of his Pacific Islands trip by Michael Walsh
  37. Comparative Connections Summary: May 2023
  38. EU holds the key to US-China rivalry by Stephen Olson
  39. AUKUS: Enhancing Undersea Deterrence by John Hemmings
  40. Decoding the infrastructure development on Myanmar’s Coco Islands by Shwe Yee Oo
  41. ASEAN unity and the Russia-Ukraine crisis by Shakthi De Silva
  42. Coast Guard cooperation: Heading off a troubling storm? by John Bradford and Scott Edwards
  43. Indo-Pacific middle powers: Rethinking roles and preferences by Alexander M. Hynd and Thomas Wilkins
  44. What happens in Crimea will determine Taiwan’s fate by David Kirichenko
  45. G7 attendance highlights South Korea’s growing stature by Jennifer Ahn
  46. Bangladesh’s Indo-Pacific outlook: A model for maintaining balance by Doreen Chowdhury
  47. Breaking the US-China logjam by Daniel R. Depetris
  48. A work in progress: The Indo-Pacific partnership for maritime domain awareness by Ahana Roy
  49. China’s military engagements with Cuba: Implications of a strategic advance in Latin America by R. Evan Ellis
  50. Despite Blinken’s trip, the US’ slide toward war with China continues by William Overholt

Photo: President Joe Biden speaks with Prime Minister of India Narendra Modi at the G20 Summit by Wikimedia commons. 

PacNet #33 – Myanmar’s Coco Islands: A concern not to be ignored

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The India-Myanmar relationship is rooted in shared history, culture, and religious values. India and Myanmar share a 1,600-kilometer (1,000-mile) land and maritime border in the Bay of Bengal, adding more significance to the bilateral relations. Furthermore, towns by the Myanmar-India border and cities such as Yangon and Naypyidaw house a large Indian diaspora of roughly 2.5 million.

With India’s active outreach to neighbouring countries with its “Neighbourhood First’ and “Act East” policies, India’s northeastern states are connected to Southeast Asia through Myanmar. As the only ASEAN country sharing a land border with India, Myanmar is a bridge between India and ASEAN.

The strategic importance of Myanmar—with over 1,200 miles of coastline along the Bay of Bengal and the Andaman Sea, proximity to the western entrance of the Malacca Strait, and a direct linkage to the Indian Ocean—in maintaining security and stability in the wider Indo-Pacific region is clear to more than just India. In the colonial era, the Japanese imperial forces and the army of the British Empire repeatedly clashed over the control of Burma for the same strategic reasons. Fast forward to 2023 and the “Malacca Dilemma” persists. The People’s Republic of China considers Myanmar a strategically important country in Southeast Asia for hegemonic ambitions in the region.

In January 2023, Maxar Technologies released satellite imagery revealing renewed levels of infrastructure and construction activities on the Great Coco Island. The Coco Islands archipelago lies less than 50 miles north of Andaman and Nicobar Islands—home to India’s first tri-service command. While there has been speculation of Chinese activity in the region since the 1990s, Maxar’s satellite imagery lends credence to this suspicion, and Chatham House in March 2023 showed satellite images of two new hangars, a new causeway, and an accommodation bloc. This has caused much concern, as it showed a newly expanded 7,500-foot runway and a radar station on the island.

Beijing, in its effort to establish an alternative route to the Indian Ocean, is leveraging the global isolation/ostracization of the Burmese junta in Myanmar by Western nations. Since the February 2021 Coup, Myanmar has returned to an era of isolation—ASEAN has drafted a Five-Point Consensus to navigate the return of normalcy in Myanmar, though to not much benefit. The United States and Europe have imposed sanctions on Myanmar, which increases Naypyitaw’s dependence on Beijing.

However, Beijing’s influence in Myanmar is not new. Even under democratic rule, Myanmar was one of the early recipients of Chinese aid under the Belt and Road Initiative. China-Myanmar cooperation was not limited to civilian infrastructure development. Military and strategic installations such the construction of the SIGINT station had begun in the 1990s with the placing of an antenna tower, radar sites, and other electronic facilities forming a comprehensive SIGINT collection facility. Beijing has slowly and steadily established more facilities, not just on the Great Coco Island, but also SIGINT listening stations in the Andaman Sea at Manaung, Hainggyi, and Zadetkyi in Myanmar. Through the China-Myanmar Economic Corridor (CMEC), part of the Belt and Road Initiative, Beijing has invested in infrastructure projects such as roads, bridges, and railway lines, providing it access to the Indian Ocean without having to go through the Malacca Strait.

Cognizant of the strategic significance of these developments, the Indian government has raised the issue bilaterally with Myanmar. The Indian Ministry of External Affairs official spokesperson, Arindam Bagchi, said that “India will take all necessary steps to safeguard its interests” and that the government “keeps a constant watch on all developments having a bearing on India’s security.”

New construction activities on the island, not limited to naval ports and the possibility of a new airbase, pose challenges to India. Military leaders have long warned the possibility of Chinese infrastructure development on the island. As far back as 2005, junta leaders invited Indian defense officials to tour the island and lay to rest any concerns of Chinese involvement.  Upon the visit, the then-Chief of Indian Naval Staff Admiral Arun Prakash categorically dismissed concerns of military infrastructure development on the island.

Recent developments refute this and, importantly, this coastline provides direct access to the Indian Ocean, giving China an enormous advantage over major competitors, including India. If this comes to fruition, Beijing will be able to control both the eastern part of Malacca Strait via its artificial islands in the South China Sea and the western part through CMEC and Coco Islands in Myanmar. For nations that seek to maintain a safe and secure Indo-Pacific, China’s infrastructure development on the Coco Islands adds a new dimension to this challenge.

Despite US and European sanctions, New Delhi has joined Tokyo, Moscow and Beijing in maintaining diplomatic relations with the military government in Myanmar. The Chinese activities on the Coco Islands raise questions about the benefits of that engagement for New Delhi. The military leadership in Naypyidaw has counted primarily on neighbouring states—India, China, and Japan and Russia—to keep its economy afloat. It may be time for the military leadership to rethink its support for Chinese infrastructure development on the islands, given that it cannot afford to lose more partners.

Shristi Pukhrem ([email protected]) is a Senior Research Fellow at India Foundation. The views expressed are personal.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Photo: Myanmar’s military chief Senior General Min Aung Hlaing and Prime Minister Narendra Modi by PIB.

PacNet #19 – Rare earths realism: Breaking the PRC’s global refining monopoly

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“The Middle East has oil, and China has rare earths.” – Deng Xiaoping (1987)

Rare earth elements (REEs) are a class of 17 metals essential to the technology, transportation, energy, defense, and aerospace industries. These are used for high-powered magnets and precision parts in anything ranging from batteries, solar panels, and wind turbines to smartphones, lasers, and jet engines. The People’s Republic of China (PRC) came to dominate global supply chains for these valuable inputs during the Deng-era of foreign policy characterized by the adage, often translated as “hide your strength, bide your time.” Subsidized state-owned enterprises were empowered to drive competitors out of the rare earths mining and processing businesses, giving the PRC a virtual monopoly by the late 1990s.

The wider world only came to appreciate the strategic implications of this concentration in 2010, when a maritime dispute between the PRC and Japan triggered a total halt of rare earths exports from the former to the latter. Though trade resumed after the incident, the episode highlighted both the vulnerabilities that the dependency allowed, and the PRC’s willingness to exploit those for political leverage. Japan was subsequently motivated to begin investing in alternative suppliers abroad, while the United States moved to jumpstart its own shuttered domestic capacity.

State of the market

Thirteen years later, the green shoots of new market entrants display a small but meaningful movement towards diversifying the world’s REEs supply. The United States and Australia have demonstrated political resolve to break the PRC’s hold on the market. Japan and India are also attempting to establish domestic industries but the barriers to entry remain formidable. The industries of mining and ore refinement are notoriously lengthy and capital-intensive—doubly so in countries with complex licensing and ecological surveying requisites. The PRC still dominates the entire vertical industry and can flood global markets with cheap material, as it has done before with steel and with solar panels. In 2022, it mined 58% of all REEs, refined 89% of all raw ore, and manufactured 92% of REE-based components worldwide. There is no other global industry so concentrated in the hands of the Chinese Communist Party, nor with such asymmetric downstream impact, as rare earths—so the United States and other should pursue further diversification with unique urgency.

The United States: Reviving heavy industry

Beijing’s 2010 dispute with Tokyo was one of its several assertive foreign policy maneuvers to set off alarm bells in Washington and precipitate the Obama administration’s “pivot to Asia.” As the swiftness of the PRC’s rise continued to outpace expectations during the Trump years, American political appetite shifted from defending hegemony in Asia, to addressing its own vulnerabilities at home—including the outsourcing of mining industries for REEs, amongst others such as lithium, nickel, and graphite. The global bottleneck for midstream industry segments like refining is so severe that the few American rare earths miners in operation send their raw ore to China for processing, before it returns to the United States as permanent magnets for use in F-35s, Tesla Model 3s, and the like.

In conjunction with an overarching strategy to address this weakness by revitalizing domestic supply chains for critical minerals, the US government is supporting the buildout of processing facilities in California and Texas for two rare earths juggernauts in-the-making—MP Materials, an American company, and Lynas Rare Earths, an Australian firm. Additionally, the Biden administration’s recent Inflation Reduction Act provided tax incentives for critical mineral businesses, and supercharged two faculties that will allow the executive branch to bolster industrial development on an ad hoc basis: the Department of Energy’s Loan Programs Office and the Defense Production Act. The United States should continue focusing grants towards ventures past the proof of concept stage in rare earths refining and magnet manufacturing, so that they can then access the Department of Energy’s lending resources to scale quickly.

People’s Republic of China: Tightening the reins

The media often characterizes the PRC’s rare earths dominance as the “trump card” of wolf warrior diplomacy, but Xi Jinping likely understands that the implicit threat of applying this leverage outweighs the cost-benefit of its actual use. The international environment of today is far less forgiving than that of 2010, and a rare earths embargo applied tomorrow on a nation like Japan or the United States would easily spark a bellicose trade dispute and push a tsunami of funding towards emerging competitors.

However, there exists a dangerous window during the next several years, when the PRC’s influence over the global industry is diminishing but still overwhelming enough to put importing nations in a bind. In this sense, Beijing could still use its “trump card” over a critical political moment—becoming even more tempting once its monopoly’s decline appears inevitable. Beijing’s cognizance of this scenario is reflected in its recent merger of three state-owned mining giants into the China Rare Earth Group. This massive consolidation allows the party to more easily control the market and develop synergies to bring costs even lower, which will hamper foreign upstarts.

Realist conclusions in a global market-based system

In the long run, monopolistic behavior will be solved by the interconnected markets on which modern society is built. The strategic calculus and narratives between great powers may be swiftly changing, but the fundamental rules of the game remain. The more likely the world perceives the weaponization of the rare earths industry by Beijing, the more pressure will be applied on the two competitive market forces already working towards solutions.

The first is the potential for new market entrants. Rising Chinese export tariffs and spiking prices signal opportunity. Canada, India, and the United Kingdom have all recently announced their intent to develop their first domestic refineries for REEs, with national security interests undoubtedly providing propulsion. Relatively small investments now could pay off big by shaking up market dynamics later this decade, so the United States could seed promising ventures abroad, and consider this high-profile sector an opportunity to build up “friendshoring” partnerships with alternate producers.

The second is the threat of substitutes. Necessity is the mother of invention—and if substitutes can replace REEs in end-use products, then supply fears may be sidestepped. The embedded risks of REEs have already been driving manufacturers like Toyota and Volkswagen to redesign their electric motors with less rare earths or alternative (albeit less efficient) magnet metals. The US departments of  Energy, Defense, and Commerce have been pursuing alternatives, but governments should also consider rewarding companies who find innovative ways of designing their products without REEs, in the style of bug bounties. Even without implementing substitutes, establishing backup options builds supply chain resilience and saps the power of a monopoly.

Tetrataenite is one promising breakthrough in magnetic alternatives. Until recently, this nickel-iron alloy was only observed in meteorite samples, but last year was successfully replicated in a University of Cambridge laboratory. Experts say it has an outside chance at upending the entire rare earths industry in the years to come.

Aside from pressing into the two competitive market forces of new entrants and substitution, the United States should continue subsidizing the rapid development of its rare earths supply chains—particularly the midstream layers: ore processing, mineral refining, and alloying. The faster it can do so, the narrower the window will be for Xi Jinping to play hardball during the waning years of China’s monopoly, and the less likely that opportunity is to coincide with an attempted invasion of Taiwan.

The economic downturn, domestic discontent, and international scrutiny resulting from Beijing’s stringent COVID-19 lockdown policies have left Xi Jinping’s political capital temporarily spent as he works to patch up relations and entice businesses back to the PRC. To break the global refining monopoly without sparking a larger geopolitical firestorm, an inflection point in broadening supply diversification needs to be achieved soon.

Brandt Mabuni ([email protected]) is a resident WSD-Handa Fellow at Pacific Forum. 

An earlier version of this article was published on Pacific Forum’s Young Leaders Blog.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

PacNet #42 – Their money our way: Influencing highly capable allies and partners

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“Allies and partners”—multiple US strategy documents contain these three words, and senior leaders reinforce the need for their contributions at every opportunity. The US Department of Defense largely builds relationships and capabilities with allies and partners through security cooperation.

A paradigm shift is long-overdue, however. At present, significant resources and detailed processes focus on engagement with developing countries, defined by lower income levels. Countries with high-income levels are assumed to be self-sufficient capability-wise and given less attention. While helping countries in need might seem logical at first, it overlooks our most capable allies and partners in the acquisition of advanced weapons systems critical in a coalition war fight. Left unchecked, a significant acquisition today may be of little coalition value in the future, increasing US burden-sharing commitment. Herein lies the problem explained through a story of two camps.

Type 1: Building-partner-capacity camp

This is the predominant camp within the security cooperation enterprise. Building partner capacity programs encompass security cooperation and security assistance activities funded by US government appropriations. The primary authorization for the US Department of Defense is Title 10 US Code Section 333. The fiscal year 2021 funding amount inclusive of smaller capacity building authorizations was approximately $1 billion. This camp’s members enjoy control over initiative implementation since US government appropriations fund the activities. This drives proactiveness. Countries that desire capability development in areas such as border security or counterterrorism—mainly developing countries like the Philippines or Vietnam—frequently benefit from this authority.

The US Department of Defense takes extraordinary measures to ensure the success of its building-partner-capacity efforts, given the funds are taxpayer dollars. Initiatives must demonstrate that the country cannot achieve the desired capability absent US assistance. Department of Defense Instruction 5132.14, Assessment, Monitoring, and Evaluation for the Security Cooperation Enterprise establishes the framework for building-partner-capacity programs. Planners spend significant time anticipating partner requirements, developing initiatives, and carefully applying over a multi-year time horizon. Teams of US government contractors work to evaluate progress toward campaign plan objectives. This camp has a large following and many organizational battle rhythms incorporate its planning milestones.

Type 2: Capacity-built partner camp

This is the less popular, independent, and sometimes neglected camp. Highly capable countries generally possess formidable military capabilities given high-income status, self-funding force development, and arms acquisitions. Plainly, they are thought of as capacity-built, requiring little US attention specific to their capability development efforts. Although major US arms transfers to highly capable countries have congressional notification criteria through the foreign military sales process—the US government’s program for transferring defense articles—these are intended as checks allowing congressional objection to the sale, if warranted. Camp members operate reactively, believing that if a country is using sovereign funds, the United States cannot dictate use. Their resulting modus operandi is to receive the purchase request, ensure it meets administrative standards, and action it through a series of procedural and legislative requirements before delivering the capability. Sometimes neglect turns to attention for this camp when a country announces the purchase of the latest fifth-generation aircraft worth billions. However, this attention is fleeting, as once the purchase contract is signed, members revert to transaction mode postured for the next sale. Highly capable countries frequently engaged in foreign military sales transactions with the United States are Australia, Japan, or South Korea.

Although reactive and neglected, camp members administered a foreign military sales portfolio valued at approximately $28 billion in Fiscal Year 2021—nearly 28 times the dollar value handled by building-partner-capacity camp members. With such a sizeable sum alongside the most advanced weapons systems, it is counterintuitive that most of the attention and emphasis resides with the building-partner-capacity camp. While multiple regulations guide how international arms transfers should be processed and exported, no document exists that outlines how the US Department of Defense should influence acquisitions of US-origin equipment by highly capable countries.

The problem with camp politics

The urgency to develop a required capability with a country does not power the building-partner-capacity camp. It is foremost a matter of the fiscal responsibility of US government funds and whether a partner’s return on investment is worthwhile. Despite widespread support and emphasis, countries benefitting from building-partner-capacity programs generally do not possess fifth generation fighters, ballistic missile defense systems, or precision munitions effective against the US pacing threat. If so, they would be considered capacity-built. The lack of consideration within the security cooperation enterprise to influence acquisitions of a highly capable ally or partner is equivalent to waiting to be told what to do.

While pundits may argue that foreign national acquisition decisions are sovereign, foreign military sales are a way to achieve US ends with a partner. Proactivity, to achieve an end is necessary, regardless of the funding source. Building-partner-capacity camp members could have an easier job. Rarely would a partner dismiss no-cost training and equipment provided by the US government; little convincing is needed. However, for members of the capacity-built partner camp, influencing a major acquisition decision toward the foremost interest of a collective coalition requirement, not a country’s unilateral desires, is incredibly challenging.

Operationalizing capability development

A method to influence ally and partner capability development is to operationalize it. Operationalizing within US military decision-making and joint planning processes elevates it to commander’s business, gaining the level of visibility and attention necessary. It also projects future capabilities to inform and perhaps one day be incorporated into US campaign and contingency planning.

Operationalizing capability development would flow as follows. First, understand and agree on the most prevalent threat bilaterally; in some regions, this is clear. Second, understand the enemy force structure and likely courses of action. Third, based on enemy capabilities, examine the partner’s current capabilities; this will require comparing the performance characteristics of weapons systems to determine strengths and weaknesses between the two forces to identify partner capability gaps. Finally, identify the capabilities needed to address the gap.

In some cases, capability gaps can be further scoped to a particular weapon system depending on the scenario. In other cases, a significant acquisition desire by a partner may require discouragement, especially if marginally effective against a threat and risks tying up defense budgets for multiple years. The resulting capabilities and supporting weapons systems become critical enablers to integrated deterrence.

Operationalizing ally and partner capability development in the context of the Ukraine conflict provides good insights. When Russia invaded Georgia in 2008, the regional threat was clear. Reports also indicated that Russian tactics used in Georgia were strikingly similar to those used in Ukraine today. Additional lessons were learned during the annexation of Crimea in 2014. The United States thus had 14 years to identify required defense capabilities bilaterally and influence Ukraine to acquire them through foreign military sales in the required quantities. The weapons systems the US government rapidly transferred to Ukraine early in 2022 are not the latest modern arms, minus some tactical drones. Stingers began fielding to the US military in 1978, Javelins in 1996, and M777 Howitzers in 2005. Significantly, the US Army was on a path to retiring Stingers. Although some of these weapons were initially purchased by Ukraine using their national funds, they fell short, given the overwhelming quantities eventually provided by the US government.

A need for evolution

Influencing the capability development and acquisition decisions of highly capable allies and partners is long overdue. In a future where multinational operations and burden sharing will be the norm, the United States cannot do it alone. Washington must pay close attention to, and influence where possible, foreign capability strategies and acquisition roadmaps. Emphasizing allies and partners, particularly the highly capable ones, does little good if the United States has no strategy to shape capability contributions before there is a crisis. Operationalizing ally and partner capability development is the first step in developing such a strategy. Doing so provides the evolutionary leap necessary for the security cooperation enterprise.

Lieutenant Colonel Jason Kim (j[email protected]) is a US Army Foreign Area Officer with deep interests in security cooperation. Jason served at various levels to include the service component, combatant command, and US Embassy overseeing security cooperation and assistance programs for the past 10 years with Indo-Pacific countries. The views expressed are those of the author and do not necessarily reflect the official policy or position of the Department of the Army, Department of Defense, or the US Government.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.