This commentary was first published by The Lowy Institute.

Two recent naval exercises demonstrate the potential for Russia-China cooperation in the Indian Ocean, and how the two present a much greater threat to a continued US role and influence in the region than either would individually.

Last year, South Africa hosted a maritime exercise with Russia and China, the first-ever trilateral exercise among the three countries. Exercise Mosi was designed, according to the South African Navy, to “enhance interoperability and maritime security“ and showed the three countries’ willingness to work together to counter security threats at sea, such as terrorism and piracy. There were the obligatory social and cultural activities, and then military maneuvers that focused on a surface gunnery exercise, helicopter cross-deck landings, boarding operations and disaster control exercises.

China and Russia followed this up in December 2019 with another trilateral maritime exercise with Iran in the Gulf of Oman called Exercise Marine Security Belt. The exercises included live-fire drills and an anti-piracy exercise involving Iranian commandos. According to the Iranian naval commander, the exercises’ message was that “Iran cannot be isolated.” A Chinese spokesman stated: “The naval drills aim to deepen exchange and cooperation among the navies of the three countries, and display their strong will and capability to jointly maintain world peace and maritime security”.

Both China and Russia have gradually been increasing their presence in the Indian Ocean. Russia recently announced it would establish a naval facility in Port Sudan on the Red Sea. China opened its first overseas base in Djibouti in 2017, and China’s navy has increased operations in the Indian Ocean region over the past three decades.

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The Covid-19 crisis may have slowed further moves towards cooperation this year. Moscow just hosted the 12th BRICS summit virtually, which doesn’t lend itself to deep military engagement. But the trilateral exercises are notable because they signal Moscow’s and Beijing’s desire to cooperate in the region. And more importantly, they reveal that regional powers such as South Africa and Iran, as well as other countries, welcome the increased role of China and Russia.

Relations between South Africa and the United States were already strained when Pretoria agreed to the trilateral exercises last year. Under the Trump administration, the United States grew critical of South Africa’s UN voting record. Washington also declined to exempt the country from hikes in tariffs on US imports of steel and aluminum. In contrast, China has pledged the most investments of any country in South Africa. Russia has followed in its footsteps in building political, military and trade ties across sub-Saharan Africa.

Iran has even more reason to build relations with China and Russia. Since the US withdrawal from the Iran nuclear deal in 2018, Iran has strengthened its ties to China and Russia, using multi-billion-dollar loans from the two countries to resist US sanctions and deepening defense cooperation and intelligence sharing.

Smaller countries can also find the Russia-China nexus useful. According to a Chinese-language source, Sudan, a long-standing regional partner of China, first proposed hosting a Russian base in 2017 as a counterbalance “against aggressive acts of the United States”.

In other words, China and Russia together may be better equipped to compete with the United States and its allies in the Indian Ocean region for influence, for several reasons.

Moscow may be more willing than Beijing to play the ringleader role in organizing and directing opposition against the United States, but it doesn’t have the economic heft to make such cooperation a winning proposition for Indian Ocean states.

While China has considerable resources, it is more concerned about provoking the United States and potentially worsening already poor relations. China often argues that it is a different type of great power, one that does not engage in hegemonic behavior such as alliance formation. China is also keen to avoid sparking a countervailing coalition against it.

For these reasons, Beijing often tones down its rhetoric about the nature of its relationship with Russia. China claimed the Indian Ocean exercises do “not target any third party”. For Russia, however, overtly undermining the United States is a key component of its strategy and plays well domestically for Putin.

On the other hand, China has the economic resources to wield influence and invest heavily in Indian Ocean countries. In Pakistan alone, Beijing has pledged an estimated $87 billion in funding and completed roughly $20 billion worth of projects. Recently, Beijing and Tehran reportedly agreed to a 25-year deal to expand China’s investment in Iranian banking, telecommunications, ports and railways in exchange for oil.

While China and Russia are nowhere near dominating the Indian Ocean region militarily, their combined influence may promise trouble for the United States and its partners. The two countries will likely work together to inure their partners to international pressure, including over human rights violations. And those partners will receive security benefits (such as military access) and economic benefits (such as preferential economic ties) in return. Although it seems a bit exaggerated, there is some truth to Iranian Admiral Hossein Khanzadi’s declaration that strategic coordination with Russia and China means “the era of American free action in the region is over”.

China and Russia may be slow in enhancing their strategic coordination in the Indian Ocean slowly, but the intent is there. The United States and its allies may still be dominant militarily. But we should be careful not to fall under the illusion that this guarantees influence. With China and Russia presenting themselves as strong alternative powers, the United States and like-minded countries have to work that much harder to promote sustainable economic development, protect international rules and norms, and ensure peace and security in the region.

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Introducing the new book, Lawrence H. Summers, president emeritus of Harvard University and the Charles W. Eliot University Professor at the Kennedy School, called the co-authors’ analysis of collaborative governance “micro microeconomics” that shows how particular tasks and particular commitments of resources, once decided on, are going to be best accomplished. This work, Summers noted, sheds light on situations involving both cooperation and competition — aspects that affect almost any complex problem yet are rarely considered by economists.

A key element of collaborative governance, noted Zeckhauser, is the sharing of discretion. Rather than contracting at one pole and complete laissez-faire at the opposite pole, in a collaborative governance process, the two parties involved play a role in determining what is produced and how it is produced. It is a process that calls on the best capabilities of both the private and public sectors and that grants each of them an element of control. Sometimes that process results in triumphs, sometimes in tragedies, and other times in outcomes that are “in-between.” The book analyses cases of this entire gamut. “We hope that this volume provides guidance on how the triumphs can become more common, the tragedies more scarce, and the in-between outcomes improved,” said Zeckhauser.

Collaborative Governance in the Time of COVID-19

The unfolding of the COVID-19 pandemic provides dramatic current illustrations of collaborative governance. The urgent need for an effective vaccine created the conditions for a successful partnership between the U.S. government and the pharmaceutical sector, with the former offering both regulatory processes and significant financing, the latter its innovation. Consider the Moderna vaccine, which, based on evidence from clinical trials, is over 90% effective at preventing laboratory-confirmed COVID-19 illness. The vaccine was created within less than a year using a new approach, based on Messenger RNA technology, by a company that had never before produced a commercial product. “This is a triumph of collaborative governance,” said Zeckhauser.

The vaccine distribution process in the United States, however, has proved to be challenging and chaotic. Zeckhauser contrasted this experience with China’s activation of technology giant Tencent, which is using its ubiquitous WeChat application to allow individuals to easily find where the vaccine is distributed and sign up for vaccination appointments. “There is probably a lesson here in the way these two outcomes came about. We hope that individuals in both China and the United States will examine the lessons in this volume to see how they can achieve outcomes for their citizens that produce public benefits more effectively.”

A Spectrum of Policy Domains

The book details how China and the United States grapple with the complexity of producing the goods and services they need to meet a broad array of public goals. Eggleston surveyed the five broad policy domains she and her co-authors examine in the book through detailed historical legacies and case studies of the application of collaborative governance in both countries.

These domains include the railroads that build the nation historically in both countries and China’s high-speed rail network; real estate's intricate tangle of public and private partnerships; hosting the Olympic Games and the experience of the public and private sectors in that endeavor in both countries; education provision; and state and market in population health and health care in both countries. The book spotlights the different ways in which both countries produce public goods and services in these broad policy domains.

East and West

Professor Yijia Jing of Fudan University, an expert on privatization, governance, and collaborative service delivery, participated in the discussion with the book co-authors and shared insights on public-private relationships in China. Collaborative governance in the country, he said, has undergone a gradual process of institutionalization. He observed that Chinese local governments apply different strategies in collaborating with private companies. For example, local governments like Guangdong and Shanghai partner in different ways with digital giants Tencent and Alibaba to build up their digital capacities — collaborations through which they have been learning how to balance their multiple roles as partners, policymakers, and market regulators.

Jing noted that China uses collaborative governance not only in domestic arenas but also in areas of international development, through entities such as the BRICS Development Bank and the Asian Infrastructure Investment Bank. China is also promoting collaborative governance as part of its Belt and Road initiative.

A Call for Transparency

The Dragon, the Eagle, and the Private Sector helps decision-makers apply the principles of collaborative governance to effectively serve the public. The book's overarching conclusion is that transparency is the key to the legitimate growth of collaborative governance. In the United States, said Donahue, the principle of governmental transparency is widely accepted as a broad-spectrum accountability device. He recognized that he and his co-authors do not expect China to adopt the U.S. approach to transparency, but expressed their hope to see more transparency “with Chinese characteristics.” “It is crucial for China to embrace the transparency imperative because the evil twin of collaborative governance is cronyism or corruption,” Donahue argued.

In many countries and policy arenas, collaborative governance could effectively increase innovation but is not available because the populace is convinced that any interaction between the public and private sectors amounts to corruption on the part of elites against the public interest. The potential in China to create public value through interaction between its public and private sectors is enormous, concluded Donahue. ”It would be a shame to squander that.”