Gwadar port integral to China maritime expansion

ISLAMABAD: China's acquisition of a strategic port in Pakistan is the latest addition to its drive to secure energy and maritime routes and gives it a potential naval base in the Arabian Sea, unsettling India.

The Pakistani cabinet on January 30 approved the transfer of Gwadar port, a commercial failure cut off from the national road network, from Singapore's PSA International to the state-owned China Overseas Port Holdings Limited.

The Pakistanis pitched the deal as 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 slash thousands of kilometres off the distance oil and gas imports from Africa and the Middle East have to be transported to reach China, making Gwadar a potentially vital link in its supply chain.

China paid about 75 per cent of the initial $250 million used to build the port, but in 2007 PSA International won a 40-year lease with then-ruler Pervez Musharraf who was reportedly unwilling to upset Washington by giving it to the Chinese.

Although it may take up to a year for the deal to be signed, Gwadar would be the most westerly in a string of Chinese-funded ports encircling its big regional rival, India, which was quick to express concern over the impending transfer.

In Nepal, China is building a $14 million "dry port" at Larcha, near the Tibet border, along with five other ports and and is upgrading transport links with an eye to the huge Indian market.

In Bangladesh, China is one of four countries, including India, Japan and the United States, interested in building a $5-billion deep-sea port at Sonadia island in the Bay of Bengal, according to the shipping ministry.

Sri Lanka in June 2012 opened a new $450 million deep-sea port at Hambantota, close to the vital east-west sea route used by around 300 ships a day, built with Chinese loans and construction expertise.

Although China has no equity stake in Hambantota, they have taken up an 85 percent slice of Colombo International Container Terminals Limited, which is building a new container port adjoining the existing Colombo harbour.

Beijing is also a key backer of a port and energy pipeline in Myanmar that will transport gas pumped offshore and oil shipped from Africa and the Middle East to China's Yunnan province, due to be finished by the end of May.

The ports were dubbed China's "string of pearls" – or potential naval bases similar to those of the United States – in a 2004 report for the Pentagon.

But some analysts now pour cold water on suggestions that Beijing is scouting for naval bases in the Indian Ocean.

Andrew Small, an expert on China-Pakistan relations, believes that most of Beijing's concerns can be resolved through cooperation, as seen in anti-piracy exercises in the Gulf of Aden that last year included drills with the US.

"In the near-to-medium term, it appears that China's interests in this part of the world lean far more towards developing capacities to deal with threats to sea lanes of communication, Chinese citizens overseas and so on," he told AFP.

"Plenty of Indian naval strategists are highly sceptical of the likelihood of many of the locations... actually being used as military facilities by China."

But Small does believe that Gwadar is the most mostly likely port to be developed by China for use by the Pakistan Navy, and potentially their own.

"Pakistan is probably the only government where the level of trust between the two militaries is high enough to make that a completely reliable prospect," he said.

When asked about Gwadar, Chinese foreign ministry spokeswoman Hua Chunying said Beijing supports "jointly undertaken matters which are conducive to Chinese-Pakistani friendship and to the development and prosperity of Pakistan".

Other Pakistani experts suggest that Islamabad is more likely to give the Chinese navy access to its existing naval bases of Karachi or Qasim.

"China can always use those. So they do not have to build another naval base at this stage," said Hamayoun Khan, who teaches at the National Defence University in Islamabad.

Fazul-ul-Rehman, former director of the China Studies Centre at the Institute of Strategic Studies Islamabad, dismisses the prospect of China going to war in the Indian Ocean and calls Indian concern "propaganda".

But he says China has become more cautious about big investment projects in Pakistan due to security concerns. Taliban, sectarian and separatist violence blight Balochistan, the southwestern province around Gwadar.

In 2004, three Chinese engineers helping to build Gwadar were killed in a car bombing. The same year, two Chinese engineers working on a hydroelectric dam project in South Waziristan were kidnapped, and one of them died.

As a result, Rehman says there is a long way to go on China-Pakistan economic cooperation and emphasises that Gwadar will be a long-term project with Beijing looking for future alternatives to shipping routes for its oil and gas imports.