China took control of the strategic Gwadar port on Monday, as part of a drive to secure its energy and maritime routes that also gives it a potential naval base.
The cabinet had approved the transfer of Gwadar, currently a commercial failure cut off from the national road network, from Singapore’s PSA International to the state-owned China Overseas Port Holding company on Jan 30.
It had not been clear when the actual handover would take place, but President Asif Ali Zardari presided over the signing of a memorandum of understanding on Monday.
“The contract of operation of Gwadar port is formally given to China. Today, the agreement is transferred from the Port of Singapore Authority to China Overseas Ports Holding Company Limited,” Zardari announced.
The president promised Gwadar will soon be a “hub of trade and commerce in the region”, adding that it holds the key to bringing together Central Asia countries.
“The award of this contract opens new opportunities for our people… It gives new impetus to Pakistan-China relations.”
The deal offers an energy and trade corridor that would connect China to the Arabian Sea and Strait of Hormuz, a gateway for a third of the world’s traded oil, overland through an expanded Karakoram Highway.
Experts say it would cut thousands of kilometres the distance which oil and gas imports from Africa and the Middle East have to travel to reach China.
“Gwadar port will enhance trade and commerce not only between Pakistan and China but also in the region,” said Zardari.
China paid about 75% of the initial $250 million used to build the port but in 2007 PSA International won a 40-year operating lease.
Former president Pervez Musharraf was reportedly unwilling to upset Washington by giving control of the port to the Chinese.
On February 6 Indian Defence Minister AK Antony said New Delhi was concerned by Pakistan’s decision.
However, foreign ministry spokesman Moazzam Ali Khan dismissed those concerns last week, telling reporters: “This is not something that any other country should have any reason to be concerned about.”
Analysts suggest that security concerns have made China more cautious about big investment projects in Pakistan.
Published in The Express Tribune, February 19th, 2013.