Navigating the Indo-Pacific: Strategic Priorities for the New EU Leadership

CSDS POLICY BRIEF • 30/2024

By Giulia Tercovich, Antonio Calcara, Daniel Fiott, Ramon Pacheco Pardo, Eva Pejsova, Michael Reiterer and Luis Simón

28.10.2024

Key issues

• The Indo-Pacific region should remain a strategic focus for the incoming European Union (EU) leadership, not least to sustain the key partnerships that help ensure regional and global stability.
• Strengthening defence and supply chain cooperation with Indo-Pacific partners is crucial for reducing Europe’s harmful dependencies and boosting technological innovation.
• As the global technology race intensifies, the EU must deepen its partnerships in the Indo-Pacific to stay competitive in cybersecurity, Artificial Intelligence (AI) and critical technologies.

 

Introduction

The EU is starting to take the Indo-Pacific seriously. While the Union may have seemed reluctant to follow the United States (US) in its “pivot” to Asia in 2011, the past few years have seen the EU overhaul its approach to the Indo-Pacific. Since the publication of the EU Global Strategy in 2016, the Indo-Pacific region has shifted from being a peripheral issue to a more central focus of European foreign and security policy. Recent years have seen the region’s strategic importance grow, especially in the fields of defence, technology and economic security. The EU’s two main partners in the region, Japan and the Republic of Korea (ROK), are at the core of these debates but Australia, India, New Zealand and the Association of Southeast Asian Nations (ASEAN) remain key partners for the EU’s engagement with the region. Indeed, with the Union’s 2021 Strategy for Cooperation in the Indo-Pacific there has been an intensification of engagement with the region, and the Union has become more practically engaged through initiatives such as digital partnership agreements and security cooperation. This new reality has, in turn, been reciprocated by the EU’s main partners in the region, as demonstrated by the support given by regional partners like Australia, Japan and the ROK in the response to Russia’s war against Ukraine.

Under the renewed leadership of Ursula von der Leyen, and with the ongoing war in Ukraine and tensions in the Indo-Pacific, the EU’s engagement with the region is expected to continue to grow. Yet, the new High Representative / Vice-President (HR/VP) will be expected to play a central role in coordinating the EU member states’ positions on the different dossiers related to the Indo-Pacific. While some fear that the newly nominated HR/VP, Kaja Kallas, will have limited interest in the Indo-Pacific, choosing rather to concentrate more on Russia and on maintaining EU unity in its support for Ukraine, the Indo-Pacific will become ever more vital for the EU’s security and prosperity. If anything, North Korea’s increasing involvement in  Russia’s aggression of Ukraine – and China’s ongoing support of Russia’s war machine – further underscore that reality.

In President Von der Leyen’s “mission letter” to Kaja Kallas, the Indo-Pacific region is mentioned specifically, albeit in a superficial manner. In advance of the Commissioner-designates’ hearings with the European Parliament, the incoming HR/VP has stated in her questionnaire answers to the Parliament that China will be a priority in terms of economic security and its growing relations with Moscow, but so too will building relations with Indo-Pacific partners be high on the agenda. However, it is still not clear how the new HR/VP will approach the Indo-Pacific partners. How should the incoming HR/VP prioritise the Indo-Pacific region? What are the main challenges and opportunities for the new EU foreign policy leadership in taking the Union’s partnership with Indo-Pacific partners to the next level? This CSDS Policy Brief combines our centre’s expertise to respond to these questions and to provide some food for thought to the incoming HR/VP.

Engagement with and in the Indo-Pacific: a strategic imperative for Europe

The Indo-Pacific region is of critical strategic importance for Europe due to its role in global economic growth, security dynamics and technological innovation. The region is home to some of the world’s fastest-growing economies and critical sea lanes that are vital for international trade, making its stability crucial for Europe’s own economic interests and prosperity. In this context, China poses a growing challenge for the EU in trade and security terms. For example, the recent EU tariffs to counter unfair subsidisation by China on electric vehicles (EVs)) have been met with retaliatory measures by Beijing targeting European exports such as cognac, dairy and pork products. What is more, China is displaying increasingly assertive and aggressive behaviour in the South China Sea, Taiwan Strait and other strategic areas, which all impinge on European security and interests.

Moreover, there is a growing entanglement between the Euro-Atlantic and Indo-Pacific regions. This is best typified by the deepening Sino-Russian partnership. Russia’s war on Ukraine has been de facto supported by China, and this geopolitical alignment raises concerns about the possible replication of such authoritarian cooperation in the Indo-Pacific. What is more, China and Russia are engaging other authoritarian regimes such as Iran and the Democratic People’s Republic of Korea (DPRK), which raises the prospect of the growth and consolidation of an authoritarian bloc capable of directly challenging European security. Indeed, with intelligence reports of North Korea militarily supporting Russia in its war on Ukraine, the growing entanglement of security dynamics in Europe and the Indo-Pacific requires a clear strategic vision on the part of the EU.

Europe’s interest in the Indo-Pacific is thus not only economic but also strategic, and it requires increased diplomatic and military coordination with Indo-Pacific partners to maintain stability. Europe needs to intensify its cooperation with like-minded democracies and help bolster multilateralism, as exemplified by the deepening EU-Japan and EU-ROK partnerships. Such efforts are crucial for Europe’s future geopolitical and economic positioning, and there is a real potential for the new HR/VP to deepen ties with other crucial Indo-Pacific partners such as Australia, India, Southeast Asia or Taiwan in the coming years. CSDS believes that the key to developing the EU’s partnership with, and presence in, the Indo-Pacific rests in deepening general diplomatic ties with key partners, while also building cooperation in key thematic areas such as cybersecurity, hybrid threats, maritime security, raw materials, technology and defence.

Nourishing and building on existing areas of cooperation

We should expect the EU to deepen its diplomatic and security ties with key partners in the Indo-Pacific region. For example, the EU already enjoys close ties with Japan through which a number of specific agreements have flourished: the Strategic Partnership Agreement (2018), the Partnership on Sustainable Connectivity and Quality Infrastructure (2019), the Green Alliance (2021), the Digital Partnership (2022) and the nearly finalised Security and Defence Partnership (2024). Likewise, the ROK-EU partnership has blossomed from an initial bilateral partnership focusing on a small number of areas such as trade and investment, the DPRK’s nuclear weapons programme or piracy in the Gulf of Aden, to a global partnership today covering multilateral governance, economic security, new technology development, security, soft power and cultural diplomacy. Like with Japan, the EU-ROK Digital Partnership (2023) and the forthcoming planned Security and Defence Partnership attest to the depth of the Union’s relations with Seoul.

With Australia, the EU has recently struck up a Critical Raw Materials memorandum of understanding (MoU) to better secure supply chains and strategic materials. The EU and India share growing concerns about the “no-limits friendship” between China and Russia, which could serve as a catalyst for deepening strategic cooperation with Delhi, a key partner for the EU in trade and technology. At the same time, the EU is strengthening ties with Southeast Asian nations. During the 2024 EU-ASEAN Ministerial Forum, both regional organisations reaffirmed their commitment to a rules-based order, economic resilience, the green transition and the need to address geopolitical and security challenges. In addition to regional cooperation, the EU is also enhancing bilateral ties with Southeast Asian countries. Bilateral free trade agreements are currently being negotiated with Australia, Indonesia, the Philippines and Thailand as part of the EU’s de-risking policies. Beyond economic factors, countries such as Indonesia, Vietnam and the Philippines hold strategic significance for the EU due to their role in the South China Sea, where restrictions on freedom of navigation could impact 40% of the EU’s trade. All of these vital partnerships will require further attention in the years ahead.

However, as time passes there is the risk of losing a unique moment of political momentum and the EU’s credibility. On the diplomatic front, the HR/VP could use her future good offices to help overcome the reluctance of some G7 country policymakers to acknowledge the need to involve key Indo-Pacific countries like the ROK or Australia more systematically in the group. Strengthening cooperation in security and defence with key Indo-Pacific partners is also among the top priorities including countering hybrid threats (e.g. “lawfare” and foreign interference), maritime security, new technologies and outer space. A more ambitious agenda could explore closer cooperation on situational awareness and intelligence sharing. The new HR/VP could use the forthcoming Security and Defence Partnerships with Japan and the ROK as launchpads for greater intelligence sharing and common threat analyses.

Furthermore, the Indo-Pacific region should remain a central topic in transatlantic dialogues. Recent EU-US discussions highlight the importance of the EU maintaining active engagement in the Indo-Pacific, where it brings a unique added value. Contrary to some opinions, the idea that Europe should solely focus on its immediate neighbourhood while the US fully pivots to Asia seems unrealistic, given Europe’s significant economic and strategic interests in the region. Regardless of the outcome of the US presidential election in 2024, the HR/VP and the European Commission should continue to insist on regular dialogue with Washington on how best to nurture partnerships in the Indo-Pacific, respond to any aggressive actions by China or the DPRK in the region and more globally and meet the challenge of a growing authoritarian bloc that includes China, Russia, the DPRK and Iran.

Strengthening defence cooperation with the Indo-Pacific

Since at least 2013, when the European Council leaders met in Brussels for a dedicated summit on defence, the Union has sought to develop ways to boost European defence. Ever since Russia’s illegal invasion of Ukraine, however, Europe has rapidly – and at times haphazardly – scrambled around to procure ammunition and re-stock European militaries. When Kaja Kallas was Prime Minister of Estonia, she, together with other leaders of the European Council, utilised the Versailles Declaration to signal the need to revitalise Europe’s defence industry. This has subsequently led to a European Defence Industrial Strategy and plans to jointly develop common capabilities – the new Commission will also draft a White Paper on defence, to be delivered by early 2025. At the same time, we have seen dependencies on non-EU sources of military equipment grow since the war began. In some cases, countries such as the ROK have supplied Poland and others with much-needed military equipment.

Even if the new HR/VP will have no direct power over the procurement decisions of EU member states, there is a chance to put Europe’s defence industrial relations with the Indo-Pacific on a sounder footing. Not only could the HR/VP use future military exercises with Indo-Pacific partners to test new defence technologies, but she can give the Union’s diplomacy more of a defence industrial focus. This would include working with fellow Commissioners to develop more bilateral critical raw material agreements, as well as to explore the idea of signing bilateral security of supply agreements with close partners such as Australia, Japan or the ROK. Finally, the new HR/VP will need to think about what military support the EU could provide in case of contingencies in the Indo-Pacific, including in Taiwan or the Korean peninsula. It would be important for the new EU leadership to reflect both in terms of support in peacetime, such as increased coordination for Freedom of Navigation Operations (FONOPs), and in wartime, with the issue of potential ammunition supply to the Indo-Pacific.

Technological competition and strategic innovation

Technology is at the heart of the current geostrategic competition between the US and China, with profound implications for other Indo-Pacific countries and, of course, Europe. European countries have now realised that they are currently lagging behind Washington and Beijing in some of the most innovative technologies, such as those related to AI. To correct this course, the European Commission, with strong support from EU member states, has launched major initiatives to reposition Europe in strategic technologies, including the EU Industrial Green Deal (i.e. with a strong focus on green technologies), the EU Chips Act and several major projects of common European interest, ranging from cloud computing to hydrogen. These initiatives are complemented by the recent European Economic Security Strategy, which aims to promote the EU’s economic competitiveness, protect against risks and work with partners to address common concerns and interests.

The Indo-Pacific is arguably the key region to understand the current phase of technological innovation, as countries in the region are at the forefront of many of these technologies and they have access to rare earth minerals. Given the importance of the Indo-Pacific for technological competitiveness, the new EU leadership could look into three specific issues. First, Europe must continue to strive to be more competitive in strategic technologies, without any illusions that it can stand alone in such an interconnected world. In this context, it would be helpful to organise private sector fora to facilitate matchmaking and supply chain integration between companies based in Europe and those in the Indo-Pacific. Second, the EU should seek to align its innovation plans with those of its Indo-Pacific allies. Semiconductors are a prime example of this need for coordination to avoid duplication and oversupply, but 6G, AI, undersea cables and clean energy technologies could also be good candidates for greater coordination. Finally, the new HR/VP will be crucial in developing a robust “technology diplomacy” that facilitates the alignment of Europe’s industrial and technology agendas with those of its Indo-Pacific partners. There is certainly room for mutual learning: for example, Europeans can learn from Indo-Pacific partners on how to develop sustainable industrial policy plans, while Indo-Pacific partners can align themselves with advanced European legislation on standardisation and value-based technological innovation.

Cybersecurity and critical raw material cooperation

The Indo-Pacific region is a hub for emerging and dominant players in 64 critical technologies, particularly in cyber and digital applications. The EU plays a significant role as a technology and research and development (R&D) promoter through initiatives like Horizon Europe and a variety of scholarship programmes that benefit leading research institutions. Steps like the EU’s digital partnerships with Japan, Singapore and the ROK, the establishment of the EU-India Trade and Technology Council and negotiations for a digital trade agreement with the ROK are positive signs in this sense. Furthermore, boosting R&D collaboration through association agreements under Horizon Europe, including with the ROK and Japan, is vital. Linked to such initiatives is the question of cybersecurity and the EU’s strategic partners in the Indo-Pacific – ASEAN, India, Japan and the ROK – face increasing cyber threats, both politically and criminally motivated. Enhancing security cooperation, joint deterrence and fostering “cyber diplomacy” is critical to improving cybersecurity, protecting key infrastructure, combating disinformation and establishing AI governance.

Additionally, securing critical raw material supplies is important for the EU, and Critical Raw Material diplomacy should be directed to key Asian partners, not least because of the Union’s vulnerability to supply chain disruptions and dependencies. We should keep in mind that China is using its control of critical minerals in a strategic manner, with export controls designed to increase coercive measures in pursuit of Beijing’s geopolitical objectives. Through the Critical Raw Materials Act, the EU is pushing for a global network of reliable raw material supplies. Inspiration can be taken from the EU-Australia MoU on critical raw materials, where the two partners are exchanging expertise and actions on ‘exploration, extraction, processing, refining, recycling and processing of extractive waste’. To date, the EU has raw material partnerships with 14 countries (Argentina, Australia, Canada, Chile, Democratic Republic of Congo, Greenland, Kazakhstan, Namibia, Norway, Rwanda, Serbia, Uzbekistan, Ukraine and Zambia) but only one (with Australia) comes from the Indo-Pacific. There is much greater scope, therefore, to build similar partnerships with other like-minded Indo-Pacific states.

Conclusion

This is an opportune moment for the incoming HR/VP to think strategically about the growing importance of the Indo-Pacific for European security. Europeans are seeing the direct influence of Indo-Pacific countries in the Ukraine war (both positive and negative), and so there is a growing interplay between the Indo-Pacific and Euro-Atlantic regions. The Indo-Pacific’s significance to the EU’s foreign policy will only continue to grow in the coming years, driven by the region’s own central role in security and defence, technology and economic security. This CSDS Policy Brief has suggested that the new HR/VP spearhead the Union’s approach to the Indo-Pacific based on these specific policy priorities:

1) Develop the full potential of the forthcoming EU-Japan and EU-ROK Security and Defence Partnerships, especially in the area of intelligence sharing.

2) Cooperate with the US and like-minded partners on actively engaging with the Indo-Pacific through regular dialogue on China, partnerships and the growing ties between China, Russia, the DPRK and Iran.

3) Organise private sector fora to facilitate supply chain integration between European and Indo-Pacific companies.

4) Explore the idea of developing security of supply agreements in defence between the EU and key partners in the Indo-Pacific.

5) Plan for EU defence manufacturing capacity needs in case of simultaneous contingencies in the European and Indo-Pacific regions.

6) Use the EU’s increased maritime presence in the Indo-Pacific to launch FONOPs with close partners.

7) Experiment with and test new and existing defence capabilities and technologies during EU military exercises with close partners in the Indo-Pacific.

8) Align the EU’s innovation plans with close partners in the Indo-Pacific, especially in terms of semiconductors, AI, 6G, undersea cables and clean energy technologies.

9) Conduct technology diplomacy more generally in the Indo-Pacific to exchange best-practices on R&D, supply chain management, standardisation and legislation.

10) Promote Horizon Europe and other EU-sponsored research initiatives to develop and strengthen digital partnerships.

11) Develop technology and approaches to enhance cybersecurity across Europe and its like-minded partners in the Indo-Pacific.

12) Work towards and finalise more critical raw material partnerships with countries in the Indo-Pacific.

The new HR/VP has the opportunity to shape the EU’s engagement with the region, focusing on deepening partnerships with key Indo-Pacific nations and strengthening Europe’s strategic autonomy in the process. By addressing the challenges of defence dependencies, technological competition and cybersecurity, the EU can ensure a more secure and prosperous future for both Europe and the Indo-Pacific. Given the centrality of the US to the Indo-Pacific, the forthcoming presidential elections offer the incoming HR/VP an additional reason to reflect strategically on the Union’s role in the region.

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