Michael Richardson: Shippers call for end to straits' war-risk rating

As Southeast Asian states tighten security in the Malacca and Singapore Straits, one of the world's key waterways for international shipping, pressure is growing for insurers to withdraw a controversial rating that classed the channel as a war-risk zone threatened by both pirate and terrorist attacks.

Over the past 18 months, coastal states flanking the 965km long straits have taken more effective measures to guard against piracy and terrorism. Only two cases of piracy were reported in the straits in the third quarter of last year, compared to eight attacks recorded from January to June.

This has led to new demands for lower insurance rates and is also providing reassurance to China that the United States military will not be directly involved in securing a maritime artery that carries about three quarters of Chinese oil imports.

As a result, Beijing appears to be taking a more relaxed attitude towards countries like India and Australia, which have close ties to the United States, taking part in patrols of regional waters with the agreement of Southeast Asian governments.

And for the first time, Beijing has offered to provide aid to regional countries that want to improve their maritime safety and security.

Singapore shippers say that the risk of terrorism in the straits has eased and they are campaigning to persuade the organisation in London that sets guidelines for marine insurance to remove its war-risk rating.

The classification, announced last June, led to higher insurance premiums for vessels passing through the waterway, which provides the shortest route to and from Asia for international shipping between the Indian and Pacific Oceans.

In some cases, ships were having to pay an extra US$5000 ($7300) a trip. As many pass repeatedly through the straits, this amounted to a hefty surcharge.

Around 60,000 ocean-going commercial vessels ply the straits each year, carrying about one quarter of global trade, a substantial part of energy shipments and at least 75 per cent of the oil imported by Northeast Asia's industrial giants - China, Japan and South Korea.

China's main concern is to ensure that its vital energy and trade supply lines through the straits are not disrupted. It wants countries close to the Southeast Asian waterway to provide protection, thus keeping America at arm's length.

This may include India, which has improved its relations with China as well as the US. India has naval and air bases in the Andaman and Nicobar Islands near the western end of the Malacca Strait.

The Chinese ambassador to India, Sun Yuxi, reportedly said in October that although Beijing did not favour powers from outside Southeast Asia patrolling regional waters, "as far as India is concerned, we don't have a problem".

But Sun added that if the Americans "come and put their battleships there, we might worry about it".

In March 2004, amid rising concern about pirate attacks and possible terrorist strikes against shipping in the Malacca and Singapore Straits, a senior US military commander controversially suggested that US special forces or marines on high-speed vessels might be sent in to "conduct effective interdiction".

The warning underlined the strategic importance of the straits to many countries outside Southeast Asia, including the US, Japan and China.

It also prompted the three coastal states - Indonesia, Malaysia and Singapore - that flank the straits to tighten security in the waterway and ensure that their sovereign control was not challenged. Because the straits are relatively narrow, the shipping lanes run through the national waters of the three littoral states for much of its length.

In their latest step to keep the straits safe, the armed forces of Indonesia, Malaysia, Singapore and nearby Thailand have agreed on procedures that will allow a patrol ship from one of the four countries to cross into the waters of another in pursuit of pirates, terrorists or other suspected maritime criminals.

The four had earlier agreed to mount co-ordinated warship patrols in their own waters in the straits and to launch air patrols along the waterway used by an average of nearly 170 big ships each day.

Australia last month reached an outline agreement with Indonesia, Malaysia and Singapore to add Australian maritime aircraft to the air patrols, saying that each flight would carry observers from one of the three coastal states.

For their part, the US and Japan have offered to provide vessels to Indonesia to beef up its naval patrol capacity.

In September, China told a meeting in Jakarta held under the auspices of the International Maritime Organisation it was ready to help coastal states that requested aid to improve security and safety in the Malacca and Singapore Straits.

Ju Chengzhi, the director general of China's Ministry of Transportation, said that the Chinese government supported the efforts and the dominant role of the littoral states in safeguarding sovereignty and security in the straits.

"However, we have also been aware that the littoral states are facing increasing challenges from the continuing growth of maritime traffic in the straits and that their resources are being strained," he added.

* Michael Richardson, a former Asia editor of the International Herald Tribune, is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore.