Gwadar: From Slumber to Strategic Hub

    Written by: Aiza Azam
    Posted on: July 30, 2012 | Post your comment here Comments | 中文

    Gwadar Port - Gwadar Port

    Gwadar Port

    From an obscure fishing village on the coast of the Arabian Sea to a key lynchpin in the New Great Game, Gwadar has emerged from centuries of slumber as a playground for competing international interests. The Pakistani deep sea port is located on the country’s southwestern border in the province of Balochistan, and is ideally positioned to become an important regional commercial hub.

    The “Gate of Air,” as it is known in the local language, lies in a region as old as time, with a history that goes back to the Bronze Age. Gwadar came under the successive rule of the Persians, the Greeks, the Arabs and, ultimately, the competing local powers of the subcontinent. This rich history resulted in the amalgamation of diverse cultures and religions evident in its society today. Owing to its close proximity to the Middle East region, and because it remained under Omani rule for two hundred years, Arab influence is manifest. The Government of Pakistan purchased the enclave from the Sultanate of Oman in 1958, and eventually incorporated it into the province of Balochistan. Feasibility studies for developing it into a port city were begun in the early 1990s, and work on the project commenced in 2002. The port became operational in 2008.

    Gwadar’s geographical location gives it great strategic, military and economic importance. It lies at a mere 72 km from Iran, and approximately 400 km from the Strait of Hormuz, the crucial point through which the Gulf region transports 17 million tons of crude oil to the world every day. It acts as a natural port for the land-locked and energy rich Central Asian States, as well as for Afghanistan; in addition, it provides the shortest overland route to the waters in the south for China’s rapidly developing Xinjiang province. Being the closest point of access to the shipping lanes of the Arabian Sea it is ideally positioned to act as the major trans-shipment hub of the area.

    The construction at Gwadar was realized with the help of heavy Chinese investment. The total cost of the development of this deep sea port lies is estimated at US $1.16 billion, while its first Phase I cost US $248 million. The government of Pakistan government provided US $50 million, while China supplemented the rest in the form of grants (US $49 million), loans (US $89 million) and buyer’s credit (US $60 million). China also invested US $200 million in the coastal highway linking Gwadar to Karachi. In addition, it made available 450 engineers, hired over 500 local laborers, and provided general technical expertise for the project. Phase II is projected to cost over US $600 million, and the Pakistani government has entered into an agreement with the Port of Singapore Authority International to develop it. However, the PSAI was unable to fulfill the terms of the agreement, resulting in calls for Pakistan to cancel the Concession granted to it. China was widely seen as the natural successor to this project, and in May 2011, the Pakistani government announced that China had acceded to its requests to take over operations at Gwadar. However, such a measure has yet to materialize.

    China’s heavy investment in Gwadar Port has prompted reactions from regional actors, chief amongst which is India, which has expressed alarm at China’s increasing presence in the Arabian Sea, and has voiced fears over its so called String of Pearls strategy. India has strongly decried what it perceives to be Chinese encirclement of its territory. There has been much international speculation over the infrastructural developments and diplomatic agreements that China has entered into for the purpose of monitoring and protecting its maritime lines of communication. Alarmist reaction aside, China’s efforts at fostering contacts and partnerships with regional countries is aimed at expanding its commercial interests and enhancing its strategic positioning; it is a natural consequence of its rise as a global power.

    Chinese investment in Gwadar makes strategic sense. The current trade route for Chinese exports is from Shanghai to Dubai, via the Indian Ocean, a distance of 9000 miles; if this trade were routed from Urumqi to Gwadar, via Khunjerab, it would save about 5000 miles in distance and several days in transit time for the Chinese consumer goods being exported to the world market. Gwadar would also facilitate China in diversifying its existing oil import routes. Most of its oil imports from the Middle East, Sudan and Angola, transit through the Indian Ocean, resulting in China’s “Malacca Dilemma”; the crucial oil that lubricates its burgeoning economy passes through the pirate-infested waters of the Malacca Strait, while the alternate route is via the shipping lanes of the Strait of Taiwan, host to a U.S. presence. The development of Gwadar Port would provide a viable alternative. Crude oil shipped to Gwadar from the Gulf and beyond can be transported overland directly to Xinjiang, substantially reducing freight costs and supply time.

    The development of the Gwadar Port has also stoked Indian concerns over Pakistan, provoking unfounded claims that Gwadar poses an opportunity for its age-old rival to manipulate the jugular of world’s energy, and interdict Indian tankers in its proximity. The port is, in fact, the realization of a long held Pakistani objective and a much needed impetus for boosting economic growth. It is expected to attract investment into Balochistan, with the revenue that is generated being used to set up much needed infrastructure; this is crucial to the development of the area and the socio-economic uplift of the Baloch population. As a shipping hub, Gwadar would potentially pave the way for the establishment of shipping related industry, oil storage facilities, and an oil refinery amongst other things. It would also open up opportunities for the exploitation of Balochistan’s enormous untapped reserves of natural resources. Moreover, the development of Gwadar Port represents another area for Pakistan and China to strengthen their strategic, economic and diplomatic cooperation.

    Gwadar will also serve as a link to the various regions of Asia through the construction of a network of roads and railways: from the hydrocarbon rich CARs, to the oil rich Middle East, and the ever-growing economic mammoth that is China. It would play a pivotal role in the revival of ancient east-west commercial routes, and facilitate a trade network that would contribute to the economic uplift of the entire region.

    It is also important to note that Gwadar would provide Pakistan critical strategic depth along the coastline by serving as the country’s third naval base after Karachi and Ormara, its geographical location making it less vulnerable to attack or blockade in a crisis.

    For this broader vision to be realized, regional stability is crucial. With the impending American withdrawal from Afghanistan, fears have arisen over its political and security aftermath. An unstable Afghanistan threatens the success of any form of regional cooperation. Of all the concerned actors, Pakistan has the highest stakes. Having suffered more losses in the War on Terror than any other country in the region, it also has the most to lose from an unstable Afghanistan. Apart from the danger posed by the spillover of violent fundamentalism, instability within Afghanistan’s borders poses the biggest threat to the realization of regional economic integration. The access of the Central Asian States to the Arabian Sea is through Afghanistan; the safety of the planned energy pipelines, railway network and road infrastructure cannot be guaranteed without peace in the country. The survival of the Gwadar Port and the success of Pakistan as the regional conduit for trade and energy, depend on this stability.

     It has been speculated that the New Great Game will take on renewed momentum once American forces withdraw from West Asia. With a multitude of actors involved – Iran, India, China, Central Asia, Russia, the United States – Pakistan is uniquely positioned to benefit from the ensuing race for securing energy and for consolidating a strategic foothold. Gwadar Port is central to Pakistan’s long term interests, and it must ensure that it establishes the ancient “Gate of Air” as the fulcrum around which the region will turn.


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