Trading around the Cape: Australian security and the southwestern Indian Ocean
As the world moves into an era of increased strategic uncertainty, it would be unwise to assume the northern Indian Ocean sea lanes are reliable.
Dr Alexander Lee
Visiting Fellow, Strategic and Defence Studies Centre, Australian National University
Eloise Kelly
Project Officer, Strategic and Defence Studies Centre, Australian National University
14 May 2026
Join the Perth USAsia Centre in the lead‑up to the 2026 Indian Ocean Defence and Security (IODS) Conference for a new op‑ed series, Broadening Australia’s strategic focus in an Indian Ocean century. This series examines Australia’s shifting security environment and why Australia cannot afford to under‑prioritise the Indian Ocean. With Western Australia at the heart of this engagement, our experts will explore why expanding our strategic focus is a necessity for our nation’s future.
In the second article in this series, Dr Alexander Lee and Eloise Kelly emphasise the need for Australia to engage more with the strategic landscape in the southwest Indian Ocean – especially as sea lane disruptions in the Middle East make the Cape of Good Hope route a viable alternative for trade between Europe and Asia.
This opinion piece forms part of a larger body of research. You can read Alexander Lee and Eloise Kelly’s full report here: The Alternative Sealine – The Southwestern Indian Ocean and Australian Security
Key takeaways
The 2026 Iran war has caused the greatest disruption to Indian Ocean sea lanes in decades, with serious implications for Australia’s economic security. Worryingly, this conflict is not an isolated event, rather the most recent manifestation of a series of accidents and tensions that have disrupted Indian Ocean commerce and the global economy since 2020.
In March 2021, the Ever Given ran aground in the Suez Canal. In doing so, it blocked one of the world’s critical trade arteries for six days, holding up billions in trade. Just over two years later, Yemen’s Houthis began launching attacks on commercial shipping in the Red Sea, and their ability to block shipping has been a strategic wildcard in the Iran War. In such a strategic environment, where Middle Eastern trade routes are being blocked, it is apparent that the Cape of Good Hope route is not just a relic of the age of sail – it is a globally significant backup plan for trade between Europe and Asia.
In such a strategic environment, where Middle Eastern trade routes are being blocked, it is apparent that the Cape of Good Hope route is not just a relic of the age of sail – it is a globally significant backup plan for trade between Europe and Asia.
Australia’s strategic blind spot in the Indian Ocean
Australia’s defence strategy in recent years has rightly focused on the South China Sea, the Indonesian straits, the Pacific, and the northeast Indian Ocean. However, in doing so, policymakers have relegated an entire maritime theatre crucial to Australia’s – and the world’s – economic security to an afterthought. The western Indian Ocean trade routes are being threatened and are becoming uninsurable.
The 2024 National Defence Strategy does not mention the southwestern Indian Ocean as a region requiring strategic attention. This was reinforced in the 2026 National Defence Strategy, which noted that Australia’s interests in the Indian Ocean were confined to the northeastern Indian Ocean. Although defenders of this omission may contend that Australia’s strategic environment is so challenging as to necessitate a laser focus on the immediate region, the 2026 Iran war has shown just how fundamentally Australian economic security is tied to the maintenance of free and open Indian Ocean trade.
The numbers tell the story of the transformation of the southwestern Indian Ocean into an increasingly important trade and security artery. After the Houthi attacks, almost eight million metric tons of trade passed around the Cape of Good Hope daily in March 2024 – approximately eight times the volume transiting the Panama Canal in the same month. This directly affects the 14 per cent of Australia’s imports that come from the European Union, including advanced industrial and medical equipment that cannot be easily sourced elsewhere. Australia’s pending free trade agreement with the European Union, alongside a free trade agreement with the United Kingdom, will only increase the value of shipping between Australia and Europe.
The Indian Ocean is a critical strategic theatre
Great powers have noticed the region’s importance, and the strategic landscape around the Cape is shifting rapidly. China is aggressively expanding its influence across the key states of the southwestern Indian Ocean. Beijing conducted counter-terrorism drills with Tanzania and Mozambique in 2024 and elevated its relationship with Madagascar. China is well-positioned to shift from cooperation to securing port access, as it has successfully done in the northern Indian Ocean. Most concerning is South Africa, whose deteriorating relationship with Washington under the Trump administration, exemplified by the March 2025 expulsion of its ambassador over issues unrelated to the southwestern Indian Ocean, has pushed Pretoria further away from the West, despite strong historical ties with Australia and its allies.
Fortunately, Australia can address these challenges without diverting scarce resources from its primary strategic focus. What is required is leveraging existing relationships and extending proven programs into a neglected region.
Turning crises into cooperation
The 2023 Defence Strategic Review recommended expanding the Defence Cooperation Program into the Indian Ocean region, specifically mentioning the northeast Indian Ocean. Canberra should extend this to include Mauritius and perhaps other regional states. The cost is minimal, the goodwill substantial. Similarly, the Indo-Pacific Endeavour – Australia’s maritime security engagement initiative – already works with states in the heart of the Indian Ocean like the Maldives and Sri Lanka. Adding southwestern Indian Ocean states would create a natural network of countries with aligned interests in free trade and maritime security.
Australia’s membership in the Indian Ocean Rim Association (IORA) offers another low-cost avenue for increased engagement. IORA is designed precisely for this kind of maritime security coordination, yet Australia has not leveraged it as effectively as it could. The Howard government’s success in elevating the Asia-Pacific Economic Cooperation, particularly by expanding cooperation into new areas like trade, security, and climate change, provides a template, although Australia would need buy-in from partners such as India. The aftermath of the Iran war may provide an opening, having served as a dramatic reminder to all Indian Ocean states of the shared importance of freedom of navigation.
Similarly, the Commonwealth – which includes South Africa, Mozambique, and Mauritius – offers ready-made institutional architecture. The 2024 Apia Commonwealth Ocean Declaration specifically addressed maritime transport and shipping emissions, creating an opportunity for Australian climate and maritime expertise to be shared in southern Africa.
Strengthening regional partnerships and presence
In terms of the other great powers with a stake in the region, France and India present obvious partnership opportunities. Both have significant influence in the region – France through Réunion and its other territories, India through its growing presence in Mauritius and broader Indian Ocean strategy. The Australia-India-France Trilateral dialogue exists, but has been dormant since the announcement of the AUKUS pact. Reviving it with a southwestern Indian Ocean focus would provide a framework for coordination without requiring Australia to go it alone.
The final piece of the puzzle is recognising Australia’s own stake in the region. The Heard and McDonald Islands are not just about fisheries protection, as noted in the 2016 Defence White Paper. They represent a territorial foothold in a region that could become one of the world’s primary trade routes if Red Sea instability persists, and an asset that warrants reassessment in light of changed strategic circumstances.
These recommendations are not about militarising the Indian Ocean or diverting vital resources away from Australia’s primary focus on Southeast Asia and the Pacific. They are about hedging intelligently against disruption, building influence at low cost, and ensuring that when the next maritime crisis hits, Australia is not scrambling to understand a region it should have been engaging with all along.
[These recommendations] are about hedging intelligently against disruption, building influence at low cost, and ensuring that when the next maritime crisis hits, Australia is not scrambling to understand a region it should have been engaging with all along.
A new status quo
As the world moves into an era of increased strategic uncertainty, it would be unwise to assume the northern Indian Ocean sea lanes are reliable. The Red Sea and the Persian Gulf may stabilise and become primary avenues for international commerce again, or they may not. What is clear is that the southwestern Indian Ocean has returned to strategic relevance, and Australia’s trading partners and potential adversaries have noticed. Beijing certainly has.
Acknowledgements
This research was supported by the Australian Government through the Department of Defence’s Strategic Policy Grants Program. The views expressed herein are those of the authors, and do not represent those of the Australian Government or the Australian Department of Defence. The content of this piece was updated following the war in Iran.
For the authors’ complete report on this research, please read The Alternative Sealine – The Southwestern Indian Ocean and Australian Security
Related insights
The Alternative Sealine – The Southwestern Indian Ocean and Australian Security
The Red Sea has shown itself to be highly vulnerable to disruption. Houthi attacks beginning in late 2023 forced a major diversion of maritime traffic around the Cape of Good Hope, directly affecting Australia’s trade with Europe. Despite renewed reliance on the route and growing Chinese influence, Canberra still lacks a clear strategy to safeguard its interests in the southwestern Indian Ocean.
Views on defence and security from Australia’s Indian Ocean capital
Australia’s national security is evolving; energy, critical minerals, supply chains, digital infrastructure, and diplomacy are increasingly central to Australia’s strategic resilience. Simultaneously, WA is emerging as Australia’s strategic gateway to the Indian Ocean, and a central player in terms of regional security, beyond the narrow military focus of AUKUS.
AUKUS and the Indian Ocean: Why getting nuclear stewardship right, matters now
As the Indo-Pacific embraces nuclear technologies, the need for strong governance and effective regulation has become increasingly urgent. Australia, through AUKUS, has a role to play in shaping and managing this regulation.
The Indian Ocean is no longer secondary
The Iran war is again exposing a reality Australia has long overlooked: the Indian Ocean sits at the centre of the nation’s economic and strategic security.
Assumptions, not reality: Australia’s Indian Ocean challenge
Hormuz is not the end of the story. It is the beginning. Australia can no longer afford to assume stability in the Indian Ocean. And, with the right vision, Western Australia has the potential to become the nation’s strategic gateway to the region.
