Mar 252013
 

Mehmood Ul Hassan Khan

china-pakistan-gwadar-contract-670

Most recently, Pakistan’s government used its trump card and announced to hand-over the Gwadar Sea Port to its closed strategic ally China. It produced shock and awe in the region and also panic in the different important capitals of the world. Of course it has multiplier effects in the fields of socio-economy, geo-politics and geo-strategic. Now Pak-China strategic friendship has been further strengthened in many dimensions. It is estimated that after full operation the Gwadar Seaport will be linked with the world’s largest and deepest ports. It would be value addition in the economy of Pakistan with estimated revenue of $40-42 billion and the generation of two million jobs.

Salient Features of Contract

The government of Pakistan formally awarded a multi-billion dollars contract for construction and operation of Gwadar Port to China with the hope that the port’s development would open up new vistas of progress in Pakistan, particularly Balochistan. Under the contract, the port which will remain the property of Pakistan will be operated by the state-run Chinese firm China Overseas Port Holding Company (COPHC). Earlier, the contract was given to the Port of Singapore Authority (PSA).

The contract signing ceremony held in the Presidency was attended by President Asif Ali Zardari, Chinese Ambassador Liu Jian, some federal ministers, members of parliament and senior government officials. President Zardari praised the award of the contract to China as a propitious development in Pakistan-China relations and expressed the hope that it would create new economic opportunities for Pakistan and Balochistan. ‘Gwadar will soon be a hub of trade and commerce in the region as it holds the key to bringing together the countries of Central Asia and lends new impetus to Pakistan-China relations he further added” He also pinpointed the strategic importance of the port for China and Central Asian republics and its potential of integrating the economies of the countries in the region.

He said the Chinese provinces of Xinjiang and Tibet were closer to Pakistani ports than to any port in China and development of a trade corridor linking Xinjiang to the Middle East via Gwadar held great prospects. The president further elaborated 60 per cent of Chinese import of crude came from countries in the Gulf and the amount would increase in next decade. “Because of the proximity of the Gulf countries to Gwadar, oil flow from the region to China will be facilitated.” President Zardari said the building of infrastructure around the port would promote economic activity in Gwadar and Balochistan.

Regional Concerns

According to the official stance, Gwadar seaport would be an energy corridor. It would be hub of all kinds of economic and socio-economic activities in the days to come. However, the worsening law and order situation in the country and designs of main stakeholders of the region and world, Iran, Afghanistan, India, US and Russia may prove fatal to the productivity, efficacy and profitability of the seaport in the days to come.

On Feb 6 Indian Defence Minister A.K. Antony said New Delhi was concerned by Pakistan’s decision to transfer management of the deep-sea port to China, which had interests in a string of other ports encircling India. Foreign ministry spokesman dismissed those concerns “This is not something that any other country should have any reason to be concerned about.” The operation of this port will also affect trade at the Iranian ports of Bander Abbas and Chah Bahar. Therefore, Iran is likely to look at the development of this port with some reservations from economic and military points of views.

India-US Nexus China

China 2

India is cooperating with US in Asia-Pacific and in India Ocean to contain the expanding power of China. The development of new sea ports in the Strait of Malacca are aimed to dominate the sea routes of the region. Presence of Indian and US military will create maritime barriers to China in times of conflict. Full operationalization of Gwadar Sear Port would increase Chinese naval strategic presence in the region which would be a regional equalizer in the days to come. It would nullify the India-US strategy of encircling China. It may expand its influence in the Indian Ocean which may result in harming Indian interests. The port would enable Pakistan and China to take control of more of the world energy circulation and interdiction of Indian tankers.

Strategic Significance

Gwadar Port is on the conduit of three most commercially important regions of the world. The oil rich Middle East, Central Asia bestowed with natural resources and South Asia having the potential for growth, for 21th century.
(a) The Gwadar Port would be mutually beneficial for both Pakistan and China as well as for many other regional countries.
(b) It would increase China’s strategic presence in the Arabian Sea. China maintained one of the largest merchant ship fleets and it is estimated that due to Chinese management at the port it would definitely attract Chinese ships which would trans-ship into the Persian Gulf.
(c) It would be great boost for Pakistan maritime sector. Gwadar possesses great potential and its handing over to a Chinese company has offered unlimited opportunities to Pakistan in the fields of trade and commerce, joint ventures, maritime economy, and the last but not the least, naval defencee in the days to come.
(d) Presently Transit Trade facilities are provided to Afghanistan from Karachi and the same can be extended to CARs from Gwadar.
(e) It would be one of busiest strategic routes because the port’s close proximity to the Persian Gulf’ which provides 60 percent of worlds oil and overlooking the strategic lines of communication.
(f) The transit route through China towards Central Asia would offer the most viable option for international trade to the western part of China, which lays at long distance from Chinese ports in the east as well as for Gulf countries and Central Asian states.
(g) The establishment of special economic zones, free trade zone, and Export Processing Zone (EPZ) would attract foreign investment creating innumerable job opportunities for local youth and increase the living standard.
(h) Further development to local fishery industry. Fish processing at Gwadar will further generate employment.
(i) Gwadar has an immense potential for attracting both domestic and international tourist with a unique landscape. The God gifted landscape, matchless environment, the turquoise sea water with golden sand beaches would definitely main source of attraction to many regional and international tourists.
(j) Construction industry would be booming

Further Needed

Development of its infrastructure and connectivity with the hinterland
The government needs to build road and railway linkages to use Gwadar as an alternative port for the country and to offer its utilities to regional land-locked states of CIS.
Coastal refinery would be optimal choice

Economic importance of global seaports

Round the globe seaports are playing an important role in socio-economic uplift. Countries like the US, Australia, China, UAE and many others are earning handsome revenues from their seaports. For an archipelago like the Philippines with 7,107 islands, seaports play a crucial role in economic development.

More than 232,900 jobs were generated by activity in the Port of New York and New Jersey in 2000-04 while salaries generated equalled as much as $12.6 billion. $5.8 billion contributed to local, state and federal tax revenues, with $2 billion remaining in the port region.

Likewise, a lot of hope is pinned on the Gwadar port. According to some regional and local experts Gwadar seaport would be pearl of the economy in the days to come. According to its geo-strategic importance, Gwadar has also become an issue of conflict among the main stakeholders of the region.


Future socio-economic benefits

It is expected that on full operational capacity, Gwadar seaport will emerge as the third largest seaport in Pakistan after Karachi and Port Qasim. The port will reinforce Pakistan’s economic development and rapidly transform the Makran belt into an important industrial and trade centre.
Pakistan is interested in securing its full operational capacity not only as a trans-shipment port, but also as an energy port by establishing refineries, building storage capacity, and laying pipeline ensuring secure and reliable supplies to Western China. Pakistan would receive $40-42 billion in revenue. Gwadar would handle trans-shipment traffic for the Gulf and ports on the Arabian Peninsula. Pakistan also plans to use it as the main trade link with land-locked Afghanistan and Central Asia through Gwadar. It would be a major refining point as it is located near the largest hydrocarbon reserves of the world. Iran has already planned to build an oil refinery. The government of Oman has also wishes to establish oil refinery in Gwadar. It is estimated that Gwadar deep seaport would be able to handle ships up to 30,000 dwt bulk carriers and 25,000 dwt container vessels. It would accommodate panamax vessels in its proximity and encourage feeder services for Middle Eastern ports like Dubai and Salalah ports due to its low port charges. It is hoped that a chain of warm water ports on the mouth of the Persian Gulf along with modern transport and communication facilities would surely make Pakistan a huge business hub in the 21st century.

Win-Win Situation for China

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It is also win-win situation for China. Xinjiang lies 4,500 km from China’s east coast but just 2,500 km from Gwadar. This will make it possible for China to route some of its external trade through Gwadar port. It will enable Pakistan Navy in nexus, with the Chinese Navy to maneuver the Indian Naval presence as far as the Bay of Aden and prevent its influence to expand near the Gulf of Suez.

According to Chinese official figures, China’s 80 percent of imports from Iran is oil, while it is the third largest importer f oil to China after Saudi Arabia and Angola respectively. Imports of oil from Saudi Arabia to China are expected to increase by 11 percent during 2013, and while by 2015 China aims to import 61 percent of its crude-oil needs. Iraq, Kuwait, Oman, Sudan and Libya are the main importers of Chinese oil pursuits. In this connection, Gwadar would become the common gateway for the Chinese SLOCS (Sea Lines of Communication); thus making it an indispensable and an unavoidable option for China.

Moreover, China has some serious geo-strategic issues with the regional countries on the issue of various islands and the Chinese SLOC pass through the Indian Ocean, Strait of Malacca and South China Sea which would create trouble in the days to come and Gwadar under such circumstances eventually becomes a safe heaven. It is estimated that China trading oil via Gwadar will help China save $20 billion annually.

Energy Corridor

Pakistan has a window of opportunity to reach out to landlocked Central Asian States and the energy-rich Afghanistan to warm waters. Gwadar is situated just 624 nautical kms to the east of the Straits of Hormuz through which 60 per cent of the world’s oil passes. Gwadar would be the terminus of gas pipelines from CARs including multibillion dollar pipelines reaching either from Daulatabad’s fields in Turkmenistan, South Pars fields in Iran or from Qatar. Gwadar can provide a strategic base to China for expanding her high-energy stakes. China needs Gwadar port facilities for future oil and gas imports.

Naval Defence

Emerging geo-political and geo-strategic scenarios in the region and around the globe values the importance of a potent and effective navy. It protects shores uncertainties and maritime economy. It encourages blue economy and merchant navy too. It safeguards deep waters sovereignty against piracy and any kind of human trafficking. It achieves regional naval power equilibrium.

Most recently, Pakistan Navy and Royal Saudi Naval Forces (RSNF) held joint exercises in Naseem Al Bahr-X. The mutual vested interest between Pakistan Navy & the RSNF will enable the two navies, with joint-operational preparedness, to counter common conventional and asymmetrical threats in the Persian Gulf, Gulf of Aden and the Red Sea. It is estimated that Pakistan would further consolidate its deterrence capability in the naval defence and also enable it to maintain peace and stability in eastern and western waters by flexing its new naval muscle and use it as a negotiation tool where and when required.

The recent AMAN-13 Exercise, the fourth in the series of maritime security exercises since its inception in March 2007, has witnessed a gradual rise in the number of participant states. It attracted naval ships from 13 countries including the US and China and observers from 20 other states. It projects Pakistan’s commitment to maritime security and peace in the region and the globe. The full operationalization of Gwadar Sea Port would enhance Pakistan and China’s naval cooperation and coordination in the days to come.

Concluding Remarks

Handing of Gwadar Sea Port to China further reflects the importance of Pak-China strategic friendship. It has multiplier effects in terms of trade and commerce, energy supplies, joint ventures, foreign direct investment and the last but not the least, naval defence. It would also be value addition to our shipment, freight and forwarding industry, fishery industry and even construction sector in the days to come.

On the contrary the sin of Gwadar would be immense if it is not tackled with rigorous diplomatic efforts. Hot pursuits of energy have already transformed the region from safe heaven to blazing hill. It has even ruined the simple and pure souls of humanity. In order to manage the spillover effects from the sin of Gwadar, the government and the Armed Forces of Pakistan must be at same page. Regional main movers and shakers are in search of easy prey to be killed. Regional geo-political and geo-strategic scenarios would be changed altogether after the US withdrawal from Afghanistan. So, in order to fill the vacuum, Pakistan and China should be prepared and alerted. Gwadar Sea Port is jewel of Pakistan which must be protected from the ill designers because it is closely associated with our future socio-economic prosperity, geo-political comfort and the last but not the least, geo-strategic cushion.

[lastupdated]

Mehmood Ul-Hassan Khan

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