Wednesday, February 20, 2013

The Gawadar Port Control to China - a Strtaegic Decision with far reaching effects on Pakistan's Economy

The picturesque Gwadar  coastline - Photo: MyPak

So it is finally done - the handing over the control strategically placed Gwadar port to China's to the state-owned China Overseas Port Holdings Authority (COPHA). The official transfer of Concession Agreement from the Port of Singapore Authority (PSA) to the China Overseas Port Holding Company was carried out in the presence of Pakistan's President Asif Ali Zardari on Monday, 18 February 2013.

It may be added for information that earlier the control was given to a Singapore based PSA International in 2007 in Pervez Musharraf's regime  ostensibly to appease the Americans - but with no benefit to Pakistan.

However, the recent decision to take over control from the Singapore company and give it to Pakistan's most tested ally China will have far reaching effects not only on Pakistan's economy and future development but also to enhance the already very cordial and mutually beneficial relations between Pakistan and China.

Although, the decision by the Pakistan's government is much to the annoyance of India and the United States who view the move with suspicion and and take it has a harbinger for increasing Chinese presence in one of the most important oil trade route of the world. But seeing the decision in the Pakistan's perspective, it is a decision that should have been taken much earlier which would have now started giving its dividends.

The Pakistan coastline along Arabian Sea and ports of Jiwani, Gwadar, Pasni, Ormara

Gwadar Port is strategically placed on the mouth of Strait of Hormuz, located approximately 460 km (290 mi) west of Karachi, 75 km (47 mi) east of Pakistan's border with Iran and 380 km (240 mi) km northeast of the nearest point in Oman across the Arabian Sea. It is situated on the eastern bay of a natural hammerhead-shaped Peninsula protruding into the Arabian Sea from the coastline. Gwadar is connected to the major port city of Karachi through N-10 or the Mekran Coastal highway, which can extend and divert goods movement from / to Gwadar to Karachi.

Gwadar is situated on the eastern bay of a natural hammerhead-shaped Peninsula protruding into the Arabian Sea from the coastline

Gwadar is also located on one of the busiest oil trade route from the Persian Gulf to the Indian Ocean  A Chinese foothold thus definitely irks India which is trying its best to control the sea routes in and out of the Indian Ocean, specially those leading to the Persian Gulf.

Likewise the USA is perturbed over the Pakistan government's decision as China may develop the Gwadar port into a naval base to ensure its strategic presence, thus thwarting any move by the US alone or a joint Indo-USA move to control the oil routes emanating from the Persian Gulf.

However, the strong reaction comes form India which thinks that with the presence of China right on the mouth of the Persian Gulf, the Gwadar Port will act as a listening post observation post to keep watch on the movement of its Navy around Persian Gulf and Gulf of Aden.

Gwadar Port: Strategically placed between mouth of Persian Gulf (Strait of Hormuz) and Indian Ocean

But seeing the decision purely from the Pakistan's future economic growth, the Chinese control of Gwadar will provide a number of benefits to Pakistan:

The Chinese presence will open a secure and easy route for China to the hot waters of Arabia Sea, which will mean development of road infrastructure from China to the entire length of Pakistan till Gwadar - ushering in a new era of development, specially that of severely under developed Balochistan province.
The  development North-South Trans Energy Corridor (TEC), linking Pakistan with China will improve the fragile health of Pakistan economy as the movement of cargo to/from China to Gwadar will mean payment o f transit route fees by China to Pakistan. The transit route envisages widening of exiting Karakoram Highway (KKH)as well.
 The trade route between Pakistan and China will also open vistas for the Central Asian Republics (CARs) and Afghanistan to utilize the TEC as it would also provide these republics with far shorter route than their exiting trade routes through Iran.
The Gwadar city itself will transform into a modern and thriving business city on its virgin beaches, attracting investment from Gulf and other countries. This will also help improvement of facilities and enhance tourism.
The development of Gwadar port will enhance the geo-political significance and importance of Pakistan in the area.
The development and port activities will boost Socio economic uplift of the province of Balochistan and create immense employment opportunities to the local youth in the emerging shipping related industries, oil refineries, oil storage facilities.
The port activities well before the Karachi port and handling of cargo from Gulf states at Gwadar will reduce congestion & dependency on existing Ports Complex at Karachi Port and Port Bin Qasim.
The availability of Gwadar deep sea port, like Karachi and Bin Qasim, the vulnerability of Pakistan vis-a-vis Indian Naval Threat to Karachi will reduce manifold as Pakistan would now have an early off-loading point from Gulf of its oil imports which otherwise got threatened during hostilities with India. 

Brig Nadir Mir, in an interview to D S Hurrell of Dallas College, highlighted the importance of Gwadar Port by saying:
"Gwadar Concept is not limited to the Mekran Coast. It is in fact an Economy Changer for all of Pakistan - a Bonanza for Baluchistan, Optimizing Pakistan’s Multiregional Geography for Geo-economics gains and Pakistan’s economic bonding with China, Central Asian States – Russia, West Asia – Iran, Turkey, Saudi Arabia, Gulf States and Africa."
"Gwadar Port is concept based. The concept is to synergize Pakistan’s multiregional (Geo-Strategic) location, Open Sea Board for Oil – Gas Pipelines, Energy Centre, Transshipment, Transit, Trade, and Finance Generation."
"In fact, Gwadar is the future of Pakistan."
The American author Robert D Kaplan sums it all, “At the intersection of Empires, the Port City of Gwadar could become the new silk route nexus.”

Like Dubai, which provides transit-shipment facilities and is presently handling 322,050 tons of cargo annually, the Gwadar port can also be developed into providing transit-shipment facilities. The transit cargo (liquid and dry both) can easily be undertaken from Gwadar and transported to any part of the world in a short span of time, in comparison to other ports. Imagine a ship carrying 5,000 – 8,000 containers, the enormity of warehousing, transportation and manpower required to handle all this.

With the Gwadar port under China's control, many other related developments that were not undertaken by Port of Singapore Authority would now be realized, such as:

  • The immediate investment of $750 million to improve the infrastructure and addition of additional berths for increased shipment activity.
  •  Development of Gwadar-Rattodero Motorway to link Gwadar with Indus Highway through Turbat, Awaran and Khuzdar.
  • Development of rail link from Gwadar to Quetta for easy flow of goods towards north.
  • Expansion of Gwadar airport for wide bodied aircraft.

For China, it is the best thing that could be happen to it as it would flourish its economy due to shortened trade route from the Sea of Japan / East China Sea to the Middle East by thousands of miles and provide an easy access almost to the doorstep of the Middle East.

China will be now be able to import oil from the Middle East and roue it to China through South-North corridor provided by Pakistan and reduce transportation costs otherwise costing very dearly to China at present.

The port which has a limited ship handling facility, is going to be expanded to handle over fifty ships in time. This expansion would make Gwadar a central hub of trade and transit activities for all sea traffic from/to Persian Gulf.

Andrew Small, an expert on China-Pakistan relations, told AFP "In the near-to-medium term, it appears that China's interests in this part of the world lean far more towards developing capacities to deal with threats to sea lanes of communication, Chinese citizens overseas and so on."

Even otherwise  China which paid almost 75% cost of the development of Gwadar port, justifiably deserved to have been given the rights to operate the port.

China which is a true ally of Pakistan, which has stood by us in all times of need, would with its presence at Gwadar port will be in a better position to support and assist Pakistan than what the Singapore based company could have.

For the land locked Central Asian Republics and Afghanistan, the development of Gwadar port will be of significant economic benefits than the Iranian Ports (Chah Bahar and Bandar Abbas), for these ports will not be able to attract and generate business while the Iranian state remains hostile to major western powers. Moreover, these ports are in creeks and require colossal maintenance cost, which from a business point of view, is not so attractive. Even for Afghanistan, transit trade route from Gwadar to Afghanistan is much shorter than the present Karachi-Afghanistan route.

As for the political situation of Balochistan which is very volatile and uncertain, Chinese ambassador to Pakistan did not look much worried about it. In a query that whether China was worried because of the law and order situation in Balochistan, Jian said security was the responsibility of the Pakistan government. He said at present China had been working on at least 120 different projects in Pakistan; the government had given them security and they were not worried at all.

The Arabian Sea coastline on the southern edge of Balochistan is very important to Pakistan as development of this coastline will provide many opportunities to Pakistan to develop the under developed and under privileged Balochistan province and develop it on the lines of Gulf states, provided it has the resources.

The Chinese control of Gwadar will provide Pakistan with the much need resources to go ahead and make Pakistan an important country all along the oil route from Strait of Hormuz on the mouth of Persian Gulf onward to the Indian Ocean. This will also usher in a new era in the friendship of Pakistan and China.

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