Pakistan and China on Thursday agreed to a multi-billion dollar deal that would see Beijing provide eight submarines to the Pakistan Navy, in an agreement that analysts are calling the largest-ever defence deal China has agreed to with any country.
Despite the magnitude of the deal, government officials did not provide any details, even declining to confirm the size of the transaction. However, the composition of the Chinese delegation with which the agreement was reached suggests that the arrangements have been struck for purchase of eight submarines.
“Pakistan and China have reached an understanding on matters of defence cooperation relating to Pakistan Navy,” announced the finance ministry after a meeting with Chinese authorities. “Financial arrangements to this effect were also concluded.”
According to a briefing that the defence ministry gave to parliament in April this year, Pakistan was negotiating a deal for acquisition of submarines from China. In the same month, the UK-based Financial Times, citing a retired senior official, claimed in a report that the contract could be worth $4 billion to $5 billion, the largest defence deal ever by China.
Sources in the finance ministry said that Pakistan would make down payments to China in four installments and the delivery of the submarines will be made in the coming years.
The financial arrangements were agreed during a meeting between Finance Minister Ishaq Dar and Xu Ziqin, President of the Chinese state-owned China Shipbuilding & Offshore International Company Limited (CSOC).
Finance Secretary Waqar Masood and Economic Affairs Secretary Saleem Sethi assisted Dar. Chinese Ambassador Sun Weidong also participated in the negotiations.
CSOC is the trade arm of China Shipbuilding Industry Corporation (CSIC) and its main business is the manufacture, repair, lease, and sales of military ships and submarines.
Sources in the finance ministry said that the agreement is still subject to final review form higher authorities in Beijing, following which a formal agreement will be signed. The press release issued by the ministry after the event was vague. According to the release, Dar said that the visit by the CSOC delegation to Pakistan would enhance and further strengthen their bilateral economic and defence cooperation.
The release quoted Xu thanking Dar for his contribution in concluding the arrangements, saying it was reflective of the deep rooted China-Pakistan friendship.
Last month, both the countries had also signed an agreement for construction of six patrol vessels for the Pakistan Maritime Security Agency (PMSA). The agreement had been signed by China Ship Trading Company (CSTC) and the Pakistani defence production ministry. According to the agreement, four ships will be constructed in China while the remaining two will be built at Karachi’s Shipyard under a transfer of technology agreement.
Published in The Express Tribune, July 24th, 2015.