On March 11-12, 2014, I participated in a two-day workshop on “Emerging Markets & Mounting Tension: Doing Business in the Face of Potential Conflict in the Indo-Pacific Region” sponsored by the School of Public Policy of the University of Calgary, Canada.

The focus of the workshop was on examining challenges and opportunities created by the shift in global economic power towards the broader Asia-Pacific and Indian Ocean region. Workshop speakers included former Canadian ambassadors, Defense and Foreign Affairs officials: Amb (ret) Joseph Caron, Amb (ret) Marius Grinius, Doreen Steidle, Rear Admiral (ret) Nigel Greenwood (APCSS alumni/EC2000-1), energy company executives, and well-known practitioners and scholars such as James Boutilier (Special Advisor, Maritime Forces, Department of National Defense), Ian Townsend-Gault and Brian Job (University of British Columbia), Clive Schofield (Wollongong University, Australia), Gordon Chang (author and business writer), Peter Howard (Canadian Energy Research Institute), Douglas Goold (Asia Pacific Foundation) amongst others.

Robert Kaplan, well-known author and thinker, gave keynote address on “Asia’s Cauldron: Conflict across the Indo-Pacific” based on his forthcoming book. Robert Kaplan argued that China is trying to dominate the South China Sea in a fashion similar to the way the United States came to dominate the Caribbean over a century ago. Since it is the throat of international commerce, where the world’s sea lanes coalesce, the South China Sea is as central to Asia as the Mediterranean is to Europe. In terms of sheer commercial tonnage and hydrocarbon deposits, it is multiple-times more significant than either the Suez or Panama canals. It is also crowded with warships, as its energy-rich waters are disputed by China, Vietnam and other countries, with the U.S. Navy nervously looking on. The energy geography of the Indo-Pacific region is complicated by escalating territorial tensions among regional states competing in an environment of increasing demand and growing energy insecurity.

Several presentations were offered in five plenary sessions: “Canada’s Asia Scorecard,” “Geopolitical Challenges in Asia,” “Constraints to Growth in Asia,” “Energy Geography of the Indo-Pacific,” and “Canadian Business Experience in Asia.” All plenary sessions saw a very robust and lively discussion.

In the first plenary session, speakers expressed their views on Canada’s ability to capitalize on new business opportunities, forge stronger bilateral and multilateral relations and commit to a military/security presence in the Indo-Pacific region. This panel addressed Canada’s growing presence in Asia and the challenges presented in the competitive and rapidly changing economic environment. Several suggestions were made on dealing with some of the hurdles so that Canadian businessmen can take advantage of new opportunities.

The second plenary focused on the geopolitical challenges in Asia. There was a broad consensus that the Indo-Pacific region remains one of potential conflict and major arms procurement activities by several countries in the region could conceivably exacerbate regional tensions and insecurities. Furthermore, the maritime environment in the region is becoming more congested and complex. In addition to several disputes over islands in both the South China and East China Seas, naval forces (and most notably China’s navy), are growing in size as well as developing new and impressive capabilities. The region sits astride many key sea-lanes of communication and important chokepoints that have both economic and military significance.  Weak regional security architecture and a shortage of confidence building measures complicate a security environment that is increasingly vulnerable to armed strife.

The third plenary session examined factors, some unique to individual countries, some more broadly based, that act as constraints to uninterrupted growth in Asia. Although the middle class is expanding in several countries in the region along with rising expectations and demands for consumer and financial goods, other demographic trends are more worrying and may affect economic growth and stability in some countries. Both China and India have a profound surplus of males. China is also growing old before it grows rich and suffers from severe environmental challenges. Japan is also aging rapidly and its economy faces numerous hurdles as it attempts painful reforms. India struggles with serious issues surrounding corruption. Rule of law and a predictable regulatory environment is weak in many countries. These issues all have significant implications for Canadian business.

The energy geography of the Indo-Pacific region is complicated by escalating territorial tensions among regional states competing in an environment of increasing demand and growing energy insecurity. My presentation on the fast-changing “Energy Geography of the Indo-Pacific”* focused on addressing the following questions: What does future energy demand in Asia look like? What are the projections for oil and gas resources in the maritime region and what are some of the exploration and development challenges? How are these issues impacting commercial maritime traffic? It also outlined major energy trends in Asia, and examined the impact of North America’s energy boom on relations among consumers and producers and the emerging energy architecture. Another presentation on the South China Sea as a case study illustrated the connections between energy security/geopolitics and territorial and maritime disputes. This was set against the hydrographic and geological backdrop which suggests that while oil may be present, the speculative estimates suggested in some quarters are highly unlikely.

This conference concluded with a discussion of the experience of Canadian businesses in the Indo-Pacific region and identified some “best practices” from these experiences that will assist future Canadian business initiatives in the region.

* Note: Postd by Mary Markovinovic. Dr. Malik is working on a new paper on this topic. We'll let you know when it is officially published.