Gwadar Port: Geo-economic and Geostrategic Dimensions

The awarding of the multi-billion dollar contract for construction and operation of Gwadar Port to China Overseas Port Holding Company (COPHC), a state-run Chinese firm, in February this year, has added a new chapter in decades-long Sino-Pak partnership. The project is mutually beneficial for both countries in the region for it will not only give them a corridor for greater commercial activity but will also bring closer the Central Asian countries. It is also expected to earn them a great strategic leverage. The recent agreement is the part of a plan to open up an energy and trade corridor from the Gulf region, across Pakistan to western China.

The transfer of project operations to China caught attention of the international media and triggered discourse on the economic and strategic shift that the presence of China tends to induce in one of the world’s major maritime zones. Naturally, it raised concerns of major stakeholders in the Indian Ocean, particularly Pakistan’s eastern neighbour, India, and the United States.

It was March 2002, when the groundbreaking of Gwadar Port marked the execution of the decades-old plan of Pakistan to build a deepwater seaport (Panamax port) at its coastline in Balochistan province. Highlighting the paramount geo-economic and geostrategic significance of the port, the then president Pervez Musharraf said:

‘The Gwadar port shall provide modern, up-to-date facilities for cargo vessels in line with modern ports. The coastal highway which is also being constructed simultaneously with the port, will provide a very healthy linkage between Karachi and Gwadar ports. If we see this whole region, it is like a funnel. The top of the funnel is this wide area of Central Asia and also China’s western region. And this funnel gets narrowed on through Afghanistan and in Pakistan northern areas into Pakistan and goes through Pakistan and the end of this funnel is Gwadar port. So this funnel, futuristically, is the future economic funnel of this whole region. All the top of this funnel, the broad top of the funnel, anything going into it or out of it, Pakistan and Gwadar port provides the real input, the inlet and the outlet into it. There is no doubt that Gwadar port, when operational, will play the role of a regional hub for trade and commercial activity.’

The port was established with the help of a Chinese construction company and the first phase of the project was completed with initial investment of 248 million dollars in a record time of four years. After completion of the first phase of the project, the operational contract was given to the Port of Singapore Authority (PSA) through open bidding in 2007. Owing to some unforeseen reasons, the PSA expressed reservations on investing the agreed amount in five years time. Also, it failed to operationalize the port as expected and agreed in the contract. Later on, Pakistan offered the operational contract to China which the latter rejected.

With the changing dynamics of regional politics and the global shift that has taken places during past couple of years, apparently, three key factors compelled China to opt for taking the operational command of the Gwadar port. First, the increasing US influence in the Asia-Pacific poses considerable economic and strategic challenges to China. Second, Gwadar port provides China with an alternative route and eases its reliance on Strait of Malacca. Third, the expected withdrawal of the US forces from Afghanistan by 2014 is going to provide other countries a room for economic ventures Afghanistan as well as the Central Asian Republics.

To the US and India, it’s quite a perturbing development. The policy analysts in both the countries are wary of China’s greater access to the Indian Ocean through Gwadar as it poses a challenge to the commercial and strategic interests of the US and India. Some quarters in the US referred to China’s entry into Gwadar as part of its ‘string of pearls’ strategy which refers to Chinese Sea Lines of Communications (SLOCs) extending from mainland China to Port Sudan straddling over Strait of Malacca, Strait of Bab-el Mandeb, Strait of Hormuz and run through some significant maritime centres, including Pakistan, Sri Lanka, Bangladesh and Maldives. It is believed that the array of ports that China has established in the Indian Ocean region, including a port in Hambantota, Sri Lanka; a port in Chittagong, Bangladesh and a port and pipeline complex off Myanmar’s coast in Rakhine region; would help the country maximize its control over the commercial and naval activity across the Indian Ocean.

Indian concerns are no different than the America’s. India is apprehensive of Chinese presence in Indian Ocean. For couple of obvious reasons, India is also flustered on China’s control over a port in Pakistan.  Through Gwadar, China would be in a position to invalidate the India-US ‘counter China strategy’. India also fears that China’s growing influence may result in harming Indian interests. Above all, India believes that the port would enable Pakistan to take control of more of the world energy circulation and interdiction of Indian sea-borne trade. However, India seldom mentions its plans to invest profusely in Port of Chabahar in southeastern Iran. The port was partially built by India in 1990s and is located on the flanks of Indian Ocean and Oman Sea.

Criticism and apprehensions apart, economically, the port is expected to be the hub of trade and commerce in the region as it holds tremendous opportunities to boost economic prospects and activity in Pakistan. Pakistan has a coastline of about 1100 km along the shores of Arabian Sea. Total annual trade of Pakistan is about 38 million tonnes out of which 95 per cent takes place through sea. According to projected estimates, Gwadar port will exponentially increase the shipping activity in other ports (Karachi port and Ports Qasim) as well. However, Baloch nationalists have expressed reservations and has severely criticised the decision to provide China access to the Gwadar port. They view it as an unlawful exploitation of the resources and depriving people of Balochistan of their own economic asset. Also, they are sceptical of China’s plans believing it would lead to further militarization of the region.

While analysing the future of Balochistan with reference to Gwadar port, Robert D. Kaplan, an American Geopolitical analyst stated:

‘One key to its (Balochistan) fate is the future of Gwadar, a strategic port whose development will either unlock the riches of Central Asia, or plunge Pakistan into a savage, and potentially terminal, civil war.’

From a geostrategic perspective, Pakistan will have a strategic depth and access to the finest naval facilities. It may also enjoy greater maritime interaction with the Middle East countries as well. The Chinese naval presence may also meliorate Pakistan’s coastal defence. It will also give Pakistan an edge over India, economically and strategically.

China heavily relies on the Middle East for energy resources and hence the country is involved in trade, exploitation and development here and in African region. The Gwadar port can provide the Chinese with a listening post to observe the naval activities of US in the Persian Gulf 460 km further west of Karachi and away from Indian naval bases. In military and strategic terms, Gwadar port can help China to monitor the SLOCs from the Persian Gulf. Gwadar has strategic importance for China as about 60 per cent of its crude supply comes from Gulf countries that are close to Gwadar. Besides, owing to historical affiliations with Indian Ocean region, China considers it its right to be associated with every activity in the Indian Ocean.

Along with opportunities, a number of challenges and risks are also involved in the Gwadar port project for both Pakistan and China. Baloch nationalists’ stance towards the project and the continued unrest in Balochistan needs to be dealt with carefully and sensitively. China, while expanding its influence in the Indian Ocean, may also come across the problem of distance for shipping activity.  The unrest in Balochistan may also pose some security-related risks and challenges to development activity in Gwadar. Moreover, China needs to be cautious and conscious of its internal economic and political weaknesses which, at certain point, may cause trouble to its greater interests in the Indian Ocean.

As the Gwadar port project will require time to be fully functional, speculations and predictions will keep circulating and resonating in the media and policy circles of major stakeholders. Nevertheless, the port is destined to change the future course of commercial activity in the region.