Four months after the U.S. ordered its troops into Afghanistan to remove the Taliban regime, China and Pakistan joined hands to break ground in building a Deep Sea Port on the Arabian Sea. The project was sited in an obscure fishing village of Gwadar in Pakistan's western province of Baluchistan, bordering Afghanistan to the northwest and Iran to the southwest. Gwadar is nautically bounded by the Persian Gulf in the west and the Gulf of Oman in the southwest.
Although the Gwadar Port project has been under study since May 2001, the U.S. entrée into Kabul provided an added impetus for its speedy execution. Having set up its bases in Central, South, and West Asian countries, the U.S. virtually brought its military forces at the doorstep of China. Beijing was already wary of the strong U.S. military presence in the Persian Gulf, which supplies 60% of its energy needs. It was now alarmed to see the U.S. extend its reach into Asian nations that ring western China. Having no blue water navy to speak of, China feels defenseless in the Persian Gulf against any hostile action to choke off its energy supplies. This vulnerability set Beijing scrambling for alternative safe supply routes for its energy shipments. The planned Gwadar Deep Sea Port was one such alternative for which China had flown its Vice Premier, Wu Bangguo, to Gwadar to lay its foundation on March 22, 2002.
Pakistan was interested in the project to seek strategic depth further to the southwest from its major naval base in Karachi that has long been vulnerable to the dominant Indian Navy. In the past, it endured prolonged economic and naval blockades imposed by the Indian Navy. To diversify the site of its naval and commercial assets, Pakistan has already built a naval base at Ormara, the Jinnah Naval Base, which has been in operation since June 2000. It can berth about a dozen ships, submarines and similar harbor craft. The Gwadar port project, however, is billed to crown the Pakistan Navy into a force that can rival regional navies. The government of Pakistan has designated the port area as a "sensitive defense zone." Once completed, the Gwadar port will rank among the world's largest deep-sea ports.
The convergence of Sino-Pakistani strategic interests has put the port project onto a fast track to its early completion. In three years since its inauguration, the first phase of the project is already complete with three functioning berths. The Chinese Premier Wen Jiabao will be on hand to mark the completion of this phase in March this year. Although the total cost of the project is estimated at $1.16 billion USD, China pitched in $198 million and Pakistan $50 million to finance the first phase. China also has invested another $200 million into building a coastal highway that will connect the Gwadar port with Karachi. The second phase, which will cost $526 million, will feature the construction of 9 more berths and terminals and will also be financed by China. To connect western China with Central Asia by land routes, Pakistan is working on building road links to Afghanistan from its border town of Chaman in Baluchistan to Qandahar in Afghanistan. In the northwest, it is building similar road links between Torkham in Pakhtunkhaw (officially known as the Northwest Frontier Province) and Jalalabad in Afghanistan. Eventually, the Gwadar port will be accessible for Chinese imports and exports through overland links that will stretch to and from Karakoram Highway in Pakistan's Northern Areas that border China's Muslim-majority Autonomous Region of Xinjiang. In addition, the port will be complemented with a modern air defense unit, a garrison, and a first-rate international airport capable of handling airbus service.
Pakistan already gives China most favored nation (MFN) status and is now establishing a bilateral Free Trade Area (FTA), which will bring tariffs between the two countries to zero. Over the past two years, the trade volume between the two countries has jumped to $2.5 billion a year, accounting for 20% of China's total trade with South Asia. Informal trade, a euphemism for smuggling, however, is several times the formal trade. The proposed FTA is an implicit acceptance of the unstoppable "informal" trade as a "formal" one. More importantly, Chinese investment in Pakistan has increased to $4 billion, registering a 30% increase just over the past two years since 2003. Chinese companies make up 12% (60) of the foreign firms (500) operating in Pakistan, which employ over 3,000 Chinese nationals.
The growing economic cooperation between Beijing and Islamabad is also solidifying their strategic partnership. Before leaving for his visit to Beijing this past December, Pakistani Prime Minister Aziz told reporters in Islamabad: "Pakistan and China are strategic partners and our relations span many areas." The rhetoric of strategic alignment is duly matched by reality. Last year, China and Pakistan conducted their first-ever joint naval exercises near the Shanghai coast. These exercises, among others, included simulation of an emergency rescue operation. Last December, Pakistan opened a consulate in Shanghai. The Gwadar Port project is the summit of such partnership that will bring the two countries closer in maritime defense as well.
Initially, China was reluctant to finance the Gwadar port project because Pakistan offered the U.S. exclusive access to two of its critical airbases in Jacobabad (Sind) and Pasni (Baluchisntan) during the U.S. invasion of Afghanistan. According to a Times of India report on February 19, 2002, Gen. Musharraf had to do a lot of explaining for leasing these bases to America. China, the Times of India reported, was also upset with Pakistan for allowing the U.S. to establish listening posts in Pakistan's Northern Areas, which border Xinjiang and Tibet. When China finally agreed to offer financial and technical assistance for the project, it asked for "sovereign guarantees" to use the Port facilities to which Pakistan agreed, despite U.S. unease over it.
In particular, the port project set off alarm bells in India which already feels encircled by China from three sides: Myanmar, Tibet, and Pakistan. To counter Sino-Pak collaboration, India has brought Afghanistan and Iran into an economic and strategic alliance. Iranians are already working on Chabahar port in Sistan-Baluchistan, which will be accessible for Indian imports and exports with road links to Afghanistan and Central Asia. India is helping build a 200-kilometer road that will connect Chabahar with Afghanistan. Once completed, Indians will use this access road to the port for their imports and exports to and from Central Asia. Presently, India is in urgent need of a shorter transit route to quickly get its trade goods to Afghanistan and Central Asia.
These external concerns are stoking internal challenges to the port project. Baluchistan, where the project is located, is once again up in arms against the federal government. The most important reason for armed resistance against the Gwadar port is that Baluch nationalists see it as an attempt to colonize them and their natural resources. Several insurgent groups have sprung up to nip the project in the bud. The three most popular are: the Baluchistan Liberation Army, Baluchistan Liberation Front, and People's Liberation Army. On May 3, 2004, the BLA killed three Chinese engineers working on the port project that employs close to 500 Chinese nationals. On October 9, 2004, two Chinese engineers were kidnapped in South Waziristan in the northwest of Pakistan, one of whom was killed later on October 14 in a botched rescue operation. Pakistan blamed India and Iran for fanning insurgency in Baluchistan.
Moreover, the Chinese in Pakistan are vulnerable because of their tense relationship with the Uighur Muslim majority of Xinjiang. Stretched over an area of 635,833 square miles, Xinjiang is more than twice the size of Pakistan, and one-sixth of China's landmass. However, it dwarfs in demographic size with a population of 19 million people. Beijing is investing 730 billion yuan (roughly $88 billion USD) in western China, including Xinjiang, which opens it up to the six Muslim countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Pakistan, and Uzbekistan. Despite this massive investment, displacement of Uighers from Urumqi, Xinjiang's capital, is drawing fire, where the population of mainland Chinese of Han descent has grown from 10% in 1949 to 41% in 2004. In direct proportion, the population of native Uighurs has declined from 90% in 1949 to 47% in 2004. Tens of thousands of displaced Uighurs have found refuge in Pakistan where the majority of them live in its two most populous cities: Lahore and Karachi.
The East Turkestan Islamic Movement (ETIM) is fighting against Chinese attempts at so-called "Hanification" of Xinjiang. Pakistan, which along with China and the U.S. lists the ETIM as a terrorist organization, killed the ETIM's head, Hasan Mahsum, in South Waziristan on October 2, 2004. Seven days after, two Chinese were kidnapped from the area, one of whom was killed in a rescue operation. The thousands of Chinese working in Pakistan make tempting targets for violent reprisals by the ETIM or Baluch nationalists.
The realization of economic and strategic objectives of the Gwadar port is largely dependent upon the reduction of separatist violence in Baluchistan and Xinjiang. Chinese response to secessionism is aggressive economic development, which is driving the Gwadar port project also. The port is intended to serve China's threefold economic objective:
First, to integrate Pakistan into the Chinese economy by outsourcing low-tech, labor-absorbing, resource-intensive industrial production to Islamabad, which will transform Pakistan into a giant factory floor for China; Second, to seek access to Central Asian markets for energy imports and Chinese exports by developing road networks and rail links through Afghanistan and Pakistan into Central Asia; Third, to appease restive parts of western China, especially the Muslim-majority autonomous region of Xinjiang, through a massive infusion of development funds and increased economic links with the Central Asian Islamic nations of Pakistan, Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
The port, by design or by default, also provides China a strategic foothold in the Arabian Sea and the Indian Ocean, although to the alarm of India and the unease of the U.S. sitting opposite the Strait of Hurmoz, through which 80% of the world's energy exports flow, the Gwadar port will enable China to monitor its energy shipments from the Persian Gulf, and offer it, in the case of any hostile interruption in such shipments, a safer alternative passage for its energy imports from Central Asia. Its presence on the Indian Ocean will further increase its strategic influence with major South Asian nations, particularly Bangladesh, Nepal, Pakistan, and Sri Lanka, which would prompt the Indians in turn to re-strengthen their Navy.
Sidharth K Menon
Defence and Intelligence Analyst