25 June 2014 | Vol. 5, № 22.

From the Editor’s Desk

Dear FDI supporters,

Welcome to the Strategic Weekly

Analysis.

This week, FDI is delighted to release its

latest Landmark Study, Food and Water

Security: Our Global Challenge. To

download the study, please click here.

We begin this week’s Strategic Weekly

Analysis by examining India’s decision to

ratify the IAEA’s India-specific Additional

Protocol as part of the 2008 Indo-US

nuclear deal.

Moving to the United Arab Emirates, we

examine new measures introduced to

address increasing competition for scarce

water resources.

Next, we consider the growing incidence

of Buddhist extremism in Sri Lanka. The

article discusses whether it is a developing

international trend or something that is

unique to Sri Lanka, due to unresolved

historical ethnic tensions?

Heading to southern Africa, we report on

the political instability gripping Lesotho

and its implications for South Africa,

including the possibility of a repeat of the

1998 military intervention.

We conclude this week’s coverage with an

assessment of the future usage of

unmanned aerial vehicles, or drones, in

South-East Asia, particularly in Indonesia,

where presidential hopeful Joko Widodo

has highlighted their utility in protecting

the country’s natural resources.

I trust you will enjoy this edition of the

Strategic Weekly Analysis.

Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International

*****

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India Ratifies the IAEA’s India-Specific Additional Protocol –

But Could It Start a Nuclear Arms Race?

India’s decision to ratify the India-specific Additional Protocol was slated to be done by this

year as part of the Indo-US nuclear deal and approved by the IAEA. This is a welcome move

and is to be applauded, but reports that India is expanding a uranium enrichment facility

have raised concerns.

Background

India has taken a big step in opening its civilian nuclear-power facilities to inspection by the

International Atomic Energy Agency (IAEA). This makes the programme more transparent

and, consequently, enhances international confidence, thus enabling greater energy

security. The ratification means that India will now be able to import more modern nuclear

technology from countries such as the United States, Japan and France, boosting its energy

security and improving its overall economy.

Comment

India’s agreement with the IAEA, which it signed in 2009, gives that body access to twenty of

India’s civilian nuclear-power facilities, including the Tarapur atomic power plant, the

Kakrapar Atomic Power Station, the Rajasthan Atomic Power Station at Rawatbhatta, Units 1

and 2 at Kudankulam in Tamil Nadu (Units 3 and 4 will also come under this regime when

they become operational), and the Nuclear Fuel Complex in Hyderabad. India’s military-

orientated nuclear facilities are, however, exempted from the terms of the Additional

Protocol. Under the terms of the protocol, IAEA personnel gain easy access to the facilities

through multiple-entry visas and guaranteed free communication facilities based on the

instrumentation they placed within the plants.

India’s 2008 civil nuclear co-operation agreement with the US gave it access to nuclear

technology and fuel. Its military facilities were exempted from international inspection by

the George W. Bush Administration under the terms of the agreement. China, Pakistan and

some European countries opposed the exemption, claiming that it undermined efforts to

control the potential spread of nuclear weapons.

The timing of the ratification appears to have been well-planned. Prime Minister Narendra

Modi is due to visit Washington in September and this will emphasise India’s commitment to

the terms of the July 2005 nuclear agreement with the US, under which it committed to

concluding an Additional Protocol with the IAEA. India, moreover, seeks to join the Nuclear

Suppliers Group, which governs the flow of nuclear materials and technology worldwide.

The NSG met in Buenos Aires on 24 June and will probably have noted India’s ratification of

the agreement.

On the other hand, the ratification of the Additional Protocol by India could also be an

attempt to deflect attention from the expansion of a facility that does not fall under the

IAEA inspection regime. The Indian Rare Metals Plant at Mysore in the southern state of

Karnataka is said to have added a new uranium hexafluoride plant to increase India’s

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capacity to produce weapons-grade uranium. Defence research group, IHS Jane’s, says that

the enhancement could potentially support the development of thermonuclear weapons.

That finding has been corroborated by the Stockholm International Peace Research Institute

(SIPRI) and the Washington-based Institute for Science and International Security (ISIS),

which brought to international attention the construction of a new gas centrifuge plant at

the complex in December last year. IHS Jane’s experts add that the new uranium enrichment

facility could become operational by mid- to late-2015.

Jane’s believes that the plant would be able to produce around 160 kilograms of uranium

enriched to around ninety per cent purity per year. That amount is roughly twice what the

nuclear submarine fleet that India is constructing is estimated to need – and enough to

make five atomic bombs. (India’s Arihant nuclear submarine is fitted with an 80-megawatt

reactor containing around 65 kg of uranium. India plans to induct three such submarines.)

India can develop thermonuclear weapons, which have far greater explosive force than

“conventional” nuclear ones, by blending enriched uranium with plutonium.

This view could have some validity. India uses China as a benchmark in most things –

economy, military, etc. Since China has thermonuclear weapons, it is no big step to believe

that India would like to possess those, too. As Mark Fitzpatrick, director of the non-

proliferation programme at the International Institute for Strategic Studies (IISS) remarked,

‘[Thermonuclear weapons] bring India closer to matching China, which is how most Indians

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would probably see it.’ They will, moreover, add to India’s nuclear deterrence capability,

increase its status and give it added impetus for a seat on the United Nations Security

Council.

The very real danger here is that, in attempting to raise its status vis-à-vis China, India could

start a nuclear arms race with Pakistan, which does not have a no-first-use policy. The recent

report that China is supplying Pakistan with two more nuclear reactors only adds to this

dilemma.

Lindsay Hughes Research Analyst Indian Ocean Research Programme lhughes@futuredirections.org.au

*****

Increased Investment to Secure Water for Agriculture in the

UAE

In an effort to address increasing competition for water in the UAE, farmers’ groups, the

UN and government departments are adopting a number of water-saving technologies.

Background

The United Arab Emirates (UAE) has, on average, only 500 cubic metres per person of fresh

water available each year. Growing urbanisation and increased population density are

driving water consumption, while limited arable land and an arid climate are putting greater

pressure on agricultural production. The UAE has a national policy to develop a self-

sufficient agricultural industry; however, this will require a secure water supply. Increased

investment in projects to reduce wastage in agricultural systems, increase water availability

and expand agricultural production, is leading to the adoption of water-saving technologies,

which include Bubbler Irrigation Systems and Greenhouses.

Comment

Abu Dhabi, the UAE’s most populous emirate, has introduced the use of Bubbler Irrigation

Systems on a number of local farms in an effort to reduce agricultural water consumption.

Managed by the Abu Dhabi Farmers’ Services Centre (ADFSC), the initial trials have resulted

in a 46% reduction in water use on those farms.

According to Abu Dhabi’s Environment Agency current groundwater usage is approximately

15 times that of aquifer recharge rates. The agricultural sector consumes roughly 72%of the

total water consumed in Abu Dhabi, with 94% of consumption sourced from groundwater. It

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is expected that by 2025 the annual national water demand will have doubled from the

2009 consumption rate of 4.5BCM, representing an increase of close to ten per cent

annually.

Recent policies and subsidy reductions targeting the use of water intensive crops have

produced a significant drop in water use for irrigation. The Bubbler Irrigation systems

provide low volume irrigation, which reduce the rates of water loss through evaporation,

runoff and overwatering. The ADFSC is providing training to farmers in the use of water

saving techniques and assisting them in rolling out the new irrigation systems.

The ADFSC is hoping to reduce agricultural water use by 40% through the new programmes.

According to Gulf News, it has distributed the new irrigation systems to more than 90% of

farms in Abu Dhabi’s Western Region.

The UN Food and Agricultural Organization (FAO) is also working with the UAE’s Ministry of

Environment and Water (MoEW) to install greenhouses for agricultural production, in a bid

to boost food security. According to the FAO, greenhouses use only ten per cent of the

water required for open farming production and reuse water normally lost through

evaporation and plant transpiration. The use of solar power to run the greenhouses

increases the system’s sustainability and reduces the burden on the UAE’s main power grid.

According to UN-Water the Middle East will face major water shortages by 2030. Already

importing around 70% of its food requirements, the UAE has a national policy of agricultural

self-sufficiency, which is likely to create greater challenges as water demand from all sectors

increases. Technology adoption to increase water use efficiency, careful management

practices and an emphasis on public-private partnerships, must be balanced with nation-

wide water-saving strategies to ensure that the UAE remains water secure. While the

increased development of desalination plants and water recycling will cater to the UAE’s

growing industry and urban demands, water-saving technologies, as demonstrated by the

ADFSC, are critical to maintaining water availability for agriculture and thus long-term food

security.

Sinéad Lehane Acting Research Manager Global Food and Water Crisis Research Programme slehane@futuredirections.org.au

*****

Page 6 of 12

Sectarian Violence in Sri Lanka: The Rise of Buddhist

Extremism?

Sectarian violence between Buddhists and Muslims in southern Sri Lanka exhibits a

disturbing trend of Buddhist extremism, exemplified by hard line Buddhist Singhalese

groups, such as Bodu Bala Sena (The Buddhist Power Force, or BBS). But is this part of a

trend developing internationally, or is it unique to Sri Lanka, due to unresolved historical

ethnic tensions?

Background

Disunity between the minority Buddhist and the majority Muslim factions in Sri Lanka, has

led to the rise of Buddhist nationalist groups, such as the BBS. These groups, in a similar

fashion to the Liberation Tigers of Tamil Eelam (LTTE), are not opposed to inciting violence to

achieve their goals. The recent violent clashes between Muslims and Buddhists in the Sri

Lankan coastal towns of Aluthgama and Beruwela, led to at least three deaths and seventy-

five injuries. These incidents indicate that the popularity of the BBS may be on the rise, along

with the potential for further conflict.

Comment

Ethnic and religious tensions in Sri Lanka are nothing new and are undoubtedly a significant

part of the island state’s history. Civil conflict over these tensions has, to a large degree,

defined Sri Lanka; the United Nations human rights body has recently launched an

investigation into alleged war crimes that took place during the civil war. That war ended

after decades of fighting, with the defeat of the Tamil Tigers by the Sri Lankan military in

2009.

Muslims in Sri Lanka constitute ten per cent of the population. They are far outnumbered by

the Buddhist population, which is around seventy per cent of the total. The BBS has become

more popular in recent years. It accuses Muslim minorities of enjoying unearned political

and economic influence. On 14 June, conflict broke out between the BBS and the local

Muslim population, in the Muslim-dominated coastal towns of Aluthgama and Beruwela.

Domestic and international sources accuse the Sri Lankan Government of inaction and of

failing to protect Muslim minorities. Accusations have also been levelled against the

government claiming that Muslim requests for increased security were ignored.

Violence and religious clashes have been on the rise in Sri Lanka since the January 2013

Buddhist mob attack on a mosque in the capital Colombo. Further violence was therefore

inevitable. But are these riots a sign of growing Buddhist extremism on an international

scale, or a unique, nationally orientated conflict? Growing concerns over strikingly similar

conflicts in Burma could indicate the former. Reports issued as recently as 18 June, describe

Rohingya “refugee” camps in Burma/Myanmar as being more akin to concentration camps.

The Rohingya people are a Muslim minority living mainly in Burma/Myanmar. Since 2012,

hundreds have been killed in Arakan/Rakhine state and more than 100,000 people have

been displaced.

Page 7 of 12

The very real danger now facing Sri Lanka is a descent into ethnic-fuelled violence, similar to

the Burmese situation. To prevent this, the Sri Lankan Government must take a hardline

approach to groups such as the BBS. In response to the clashes, the government has

imposed a curfew on the affected towns and deployed a military presence to the affected

areas. Forty-nine people, a mix of Buddhists and Muslims, have also been arrested in

connection with these events; but further action is needed at the policy level. To prevent

future conflicts, the Sri Lankan Government must address the ethnic tensions dividing the

country and absolutely condemn extremist groups, such as the BBS.

An escalation in violence is likely if action is not taken. The Burmese example should act as a

cautionary tale of a worst-case scenario. The culture among the authorities of turning a blind

eye to these extremists must be eradicated.

Natasha Howells Research Assistant Indian Ocean Research Programme

*****

South Africa Concerned that Lesotho Instability May

Compromise Water Supplies

South Africa will be monitoring developments in Lesotho with some concern, but another

military intervention is unlikely while the kingdom’s water exports continue unhindered.

Background

The renewed political instability in the southern African kingdom of Lesotho is unlikely to

significantly affect regional dynamics, but as it is the source of much of the water supplied to

South Africa’s mining and industrial heartland, the concern for Pretoria is that water supply

infrastructure may again be used as a bargaining chip among the disputants. While the

probability of a South African military response appears very low, Pretoria will be closely

watching events in Lesotho, particularly given the consequences for the South African

economy of any significant disruption to water supplies.

Comment

On 19 June, the Lesotho Congress for Democracy (LCD), led by Mothetjoa Metsing,

announced that it would withdraw from the three-party ruling coalition, sparking a new

round of political turmoil in the impoverished highland kingdom. In discussions held on 20

June, the LCD indicated that it would remain in the coalition, easing fears of a coup. Lesotho

has experienced at least eight coups d’état and constitutional crises since independence in

1966.

Page 8 of 12

Junior coalition partners, the LCD and Basotho National Party (BNP), were angered that

Prime Minister Thomas Thabane, leader of the All Basotho Convention (ABC), frequently

acted without consulting them on key issues of governance. When they threatened a no-

confidence vote, Thabane’s response was to dissolve parliament on 10 June, with the

consent of constitutional monarch, King Letsie III.

The uneasy coalition was formed after the last general election in 2012, but the ABC and the

LCD now accuse each other of attempting to form a new coalition government with the main

opposition party, the Democratic Congress.

For now, fears of another coup, or possibly another mutiny among Lesotho Defence Force

personnel, have receded, but the divisions remain. So far, at least, the parties are still

talking, the military remains onside and the streets of the capital, Maseru, remain calm. If

that continues, South Africa is unlikely to despatch personnel to Lesotho. Nevertheless, if

the situation deteriorates, as the Stratfor intelligence organisation noted on 20 June,

Pretoria may well decide to act to safeguard its interests with a short military intervention.

As was the case in 1998, however, the presence of South African military forces may not

necessarily be welcomed by the Basotho.

During the unrest that year, a number of Lesotho Defence Force personnel occupied and

threatened to breach the Katse Dam. In the subsequent botched military intervention by

South Africa and Botswana, on behalf of the Southern African Development Community,

much of Maseru was badly damaged and almost 70 people died, including eight South

African troops.

Completely encircled by South Africa, Lesotho is dependent on that country, both as a

source of revenue from water exports and for the remittances from Lesotho nationals

working in South Africa. Large numbers of Basotho work in the mines of South Africa and

any stoppages caused by their compatriots shutting off the water, would be felt in Lesotho,

too.

The South African economy is already in a weakened condition, due to the continuing mining

strike in the “Platinum Belt”, the downgrading of its credit ratings and reduced growth

forecasts. Consequently, there will be little tolerance for any disruption to water supplies

from the Lesotho Highlands Water Project, which supplies much of the demand in the

mining and industrial heartland of Gauteng Province.

The Lesotho Highlands Water Project, which is funded by South Africa under a 1986

agreement, involves the construction of dams and tunnels in the two countries and the

generation of hydroelectric power in Lesotho, for export to South Africa. Phase One of the

project was inaugurated in 2004 and Phase Two, which began in 2010, is scheduled for

completion by mid-2023 at a cost of 11.2 billion rand ($1.1 billion).

From Pretoria, the Department of International Relations and Co-operation expressed ‘grave

concern’ at the ‘unusual movements of the Lesotho Defence Force Units’. It went on to say

that ‘the South African Government and SADC will not tolerate any unconstitutional change

Page 9 of 12

of government in the region ….’1 Currently, however, both South Africa and the United

States – Lesotho’s second main trading partner – have indicated their overall confidence in

the ability of the coalition parties to achieve a workable solution.

Australia has minimal trade relations with Lesotho, but the balance of trade is very much in

favour of Lesotho. Australia imported $1.8 million worth of goods, primarily clothing, from

Lesotho in 2012-13, while exports were only valued at $31,000. The real concern will be for

Australian companies doing business in South Africa, if the SA economy were to suffer as a

result of developments in Lesotho.

With the Parliament dissolved for nine months and the next elections not due until 2017,

more instability can be expected, as the fragile coalition appears unlikely to hold for that

length of time. Even if the coalition does hold and unrest is avoided, it is probable that it will

only result in the postponement of another no-confidence vote until the parliament

resumes.

Leighton G. Luke Manager Indian Ocean Research Programme lluke@futuredirections.org.au

*****

Indonesia May Acquire Drones and Modernise Military to

Protect Natural Resources

Presidential frontrunner Joko Widodo has said that he intends to employ drones as a

means of protecting the country’s territory and safeguarding its natural resources.

Regardless of the success of its indigenous drone programme, challenges such as illegal

logging and fishing, piracy and counterterrorism mean that drones will be a favoured

option.

Background

Presidential favourite Joko Widodo has emphasised the importance of protecting

Indonesia’s natural resources, saying that he intends to modernise the Indonesian military

and acquire unmanned aerial vehicles, or drones, if elected. The announcement, which was

made during the third presidential debate on 22 June, comes as the archipelago continues to

struggle with illegal fishing, piracy and logging. While much of the debate was dominated by

talk of domestic welfare, the country’s newfound interest in drones and its desire to

1 ‘Government Media Statement on the Unfolding Situation in Lesotho’, Department of International

Relations and Co-operation, Pretoria, 19 June 2014.

Page 10 of 12

modernise its military underlines the increased tension and military build-ups that are

currently occurring in the region.

Comment

In the third of seven presidential debates on 22 June, Joko Widodo, universally known by his

nickname Jokowi, stated his intention to modernise the country’s military and protect its

natural resources by using technologies such as drones if elected. Answering a question from

a member of the audience on national defence, Jokowi claimed that illegal fishing costs

Indonesia some 300 trillion rupiah, or roughly $26.7 billion, per year. He also mentioned

that, aside from illegal fishing in Indonesian waters, drones could also be used to halt illegal

logging and forest burn-offs, which shroud much of South-East Asia in haze every year.

Given Indonesia’s sprawling geography, drones are likely to become a cheap and effective

option in tackling many of these issues. With some 17,500 islands, of which 6,500 are

inhabited, patrolling such a large swathe of territory is no easy task. While efforts to upgrade

the navy have recently begun, the country still cannot adequately safeguard its maritime

borders and exclusive economic zone. This has become especially worrying as the country

looks to capitalise on its abundant natural resources. As well as being one of the world’s top

producers of fish, the South-East Asian giant is also thought to have plentiful reserves of

natural gas, particularly shale.

Estimates by the Energy and Mineral Resources Ministry have put the Indonesia’s shale gas

reserves at around 574 million cubic feet. If correct, that would make it roughly comparable

to the amount of shale in the United States, where an energy revolution has made it a net

exporter of oil and gas. Moreover, given that Indonesia is currently a net importer of oil,

which is heavily subsidised and drains billions of dollars from the government accounts each

year, there is a considerable need to shore up such resources for the future.

Given what is at stake, therefore, it is not surprising that Indonesia looks set to produce

drones en masse. Yet, it also underlines the growing tensions and increased military build-

ups that are currently occurring in the region. With the area now a hotspot for territorial

disputes, maritime piracy and terrorism, drones have become an increasingly attractive

option for states wishing to monitor land and maritime borders, guard oil and natural gas

fields and detect forest fires and damage from natural disasters. As Douglas Dawson,

director of international business development for the Aero Services Division of General

Atomics, says, ‘given the dispute in the Spratly Islands, piracy, counterterrorism, illegal

logging and fishing, there is a market.’

In fact, at the February 2014 Singapore Air Show, it was drones, rather than conventional

aircraft, that took centre stage. As the New York Times reported, ‘military contractors from

Austria, Australia, Israel, the United States and other countries showcased unmanned aerial

vehicles, or UAVs, throughout the week at Asia’s largest air show, hoping to make deals with

militaries across the Asia-Pacific region.’ By the time the six-day trading portion of the event

was over, some US$32 billion worth of commercial deals had been announced, with Brunei,

Indonesia, Malaysia, Singapore and Thailand the biggest customers.

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With a number of countries, including Singapore, said to be developing their own indigenous

drone programmes, the amount spent on UAVs is set to increase markedly in the future, too.

So far, however, Indonesia’s attempts to develop its own drones have not been as

successful. The Wulung drone, first manufactured in 2012, can fly for up to four hours and as

far as 73 kilometres from its ground controller; that pales in comparison to US drones, which

can fly for over a day, oftentimes thousands of kilometres away from their controllers on the

ground. Whether Indonesia continues with its indigenous programme remains to be seen.

But, as regional tensions simmer, and issues such as illegal logging and piracy continue,

drones are likely to become a permanent fixture in the skies of South-East Asia.

Andrew Manners Research Analyst Indian Ocean Research Programme amanners@futuredirections.org.au

*****

What’s Next?

The fourth annual Zambia International Mining and Energy Conference and Exhibition concludes on 25 June in the capital, Lusaka.

The US Navy-sponsored Rim of the Pacific Exercise (RIMPAC) commences on 26 June in Hawaii. The 23 participating countries include Australia, Canada, China, France, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the United States. The exercise ends on 1 August.

Kuwait will hold parliamentary by-elections on 26 June to replace five lawmakers who recently resigned.

The 23rd Ordinary Summit of the African Union is underway in Malabo, Equatorial Guinea, with the theme “Agriculture and Food Security”. The Assembly of Heads of States and Governments will take place on 26 and 27 June.

Indian External Affairs Minister Sushma Swaraj will visit Bangladesh on 26-27 June.

A five-day visit by a Chinese delegation led by Vice President Li Yuanchao to Tanzania to discuss investment and co-operation concludes on 28 June.

Indian President Pranab Mukherjee is slated to travel to Beijing on 28 June to celebrate the 60th anniversary of the Panchsheel Treaty between India and China.

Investors from Bangladesh will participate in the first meeting of the China-led Asian Infrastructure Investment Bank, to be held in Beijing on 28-29 June.

French Foreign Minister Laurent Fabius will visit India from 29 June - 1 July.

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Any opinions or views expressed in this paper are those of the individual authors, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: lluke@futuredirections.org.au Web: www.futuredirections.org.au