Why all this fuss over Gwadar?
Gwadar lacks basic infrastructure and the navy/government was uncooperative with the PSA. Will China change this?
It came as no surprise when, on Monday, the Pakistani President Asif Ali Zaradri handed over the operating rights of the Gwadar port officially to China in a high profile ceremony arranged at the President house in Islamabad.
A memorandum of understanding (MoU) was signed by Pakistani officials and the Chinese Ambassador to Pakistan, Liu Jian, which meant that the world renowned, yet little functional, Gwadar port was transferred from the Singapore based Port of Singapore Authority (PSA), which had initially signed a 40 year lease deal in 2007, to the Chinese state-owned China Overseas Port Holding Company (COPHC).
Pakistan tagged it as the second most important investment by China in the country after the Karakoram Highway.
So why did the PSA leave?
One is forced to ponder as to why a firm like the PSA, having all the capital and a 40 year lease contract, left within five years of its contract.
The reason is simple and obvious; frustration.
The firm was demanding a piece of land annexed to the port, belonging to the navy, in order to develop the port and industrial estate but the navy refused to vacate, citing security reasons, and thus leading to PSA’s exit - as it meant the government failed to fulfill its promises made while signing the agreement with the PSA.
It will now be imperative to see whether China also demands the same piece of land and if the navy will change its stance considering Pakistan’s ties with China.
From East to West, the event gathered worldwide media attention. The western media, in particular, gave high profile coverage to this deal solely on the basis of Gwadar's strategic location coupled with Chinese involvement in the project. The concern and focus laid by the western media on this issue was particularly seen in various headlines of mainstream newspapers, such as The New York Times which titled the story as “Chinese Company Will Run Strategic Pakistani Port”.
An interesting fact, overlooked by most, is that even after this supposedly multi-billion-dollar deal, the ownership of the port still remains with Pakistan. China would initially be investing huge sums of money to make the port completely functional after which the question of its productivity would come into the equation.
Strategic Location of Gwadar
(Image Source: The New York Times)
As seen from the image above, Gwadar is indeed located at a very strategic location. It not only provides an important sea trade route and centre but also joins Pakistan - or in current case China - with most of the oil producing countries through the Strait of Hormuz.
This means that the port can serve as a key for solving major trade woes not only for China, by reducing thousands of trade miles, but also for Pakistan, which once deemed Gwadar as a potential answer to Dubai’s international port.
Ironic though, Gwadar is far from even being labelled as a fully operational port as it lacks basic infrastructure facilities such as roads and storage houses.
Among its critics, India is the most prominent that raised concerns over Gwadar agreement calling it a threat to India’s maritime security. Indian military analysts are of the opinion that the port’s only objective for China is to encircle India in the sea through the famously known concept of String of Pearls, or the Chinese ally ports encircling India.
Gwadar port, if taken in Indian security context, is a port nearest to the West, and thus serves as an important link to this string of pearls.
In response to such concerns, China’s national People’s Daily wrote that the strategic importance or location of the port is still in its potential stage, rejecting Indian concerns on the basis of economic arguments.
In the past three days, the Indian media and defence analysts have gone to great extents on national TV to target Pakistan and China for this deal calling it purely a strategic-military manoeuvre against Indian security.
Such concerns apparently are exaggerated and uncalled for as, first, Pakistan is in need of an economic push to save it dwindling economy. Moreover, Pakistan has rarely expressed concerns on India purchasing state of the art weaponry from its friends, such as Israel.
Catch for China?
The Gwadar port, which was on the verge of becoming a White Elephant for Pakistan, has received the economic push it required to fulfill its potential. Even though it is still unclear when a complete takeover of the port and development work would take place, such an agreement is a positive omen for a country that is currently constrained by its socio-economic woes.
The agreement is good for Pakistan as long as it can manage the project, whereas for China, it opens up a wide array of opportunities in terms of energy trade with the Middle-east and the West. If things go according to plan, the port can help in improving China’s security for maritime energy trade along with providing support to Chinese naval fleets active in counter piracy operation in the Arabian Sea and the Gulf of Aden.
One can hope that learning from mistakes committed in the PSA deal and not investing in infrastructure for Gwadar, the Pakistani authorities will focus on this aspect in order to bolster cooperation on the project with China and help develop a potential sea-trade centre for the region.
On the other hand, Gwadar port also presents a bleak picture and dark side of Pakistan’s lack of management potential and inability to manage mega projects itself. It would be in Pakistan’s favour if China and COPHC do not face the same hurdles as PSA did because Gwadar, even today, holds an important key to Pakistan’s socio-economic prosperity.
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