Gwadar Port Handed Over To China

Published Date: 02 Nov 2017

Fatima Fasihah Khan

Najeeha Humayun

Instructor: Amnah Mustafa

Course: International Relations

Section: M

Lahore School of Economics

Abstract:

Pakistan has handed over the management of its southeastern Gwadar deep-sea port to the China Overseas Port Holdings after failing to turn the strategically located port into a financial success. The deep sea port at Gwadar is visualized as becoming a regional hub, serving commercial traffic to and from Central Asian states and Afghanistan, the Middle East, the Persian Gulf, Xinjiang, Ian, and South East Asia. The development of the Gwadar port holds out for the regional countries immense economic returns. A road from Gwadar to Saindak, said to be the shortest route between Central Asia and the sea, is under construction. Goods and Oil Gas reserves could be shipped to global markets. It will nearly halve the overland distance from China’s Landlocked Western provinces to the sea: from about 4000km to China’s East coast, to just 2000km south to Gwadar. The Gwadar port and the highways connecting it to Afghanistan reduce the distance of Pakistan-Central Asia traffic about 500km. The construction of the Gwadar port is an important component of Pakistan’s overall initiative to facilitate trade with the landlocked states of Central Asia.

Acknowledgements:

We are grateful to ‘Almighty Allah’ Who enabled us to complete this rigorous task on time. We express our feelings of gratitude to our instructor and our research supervisor, Ms. Amnah Mustafa, whose sincere, proper guidance, candid efforts and concerned nature enabled us to complete this research. We would also like to thank parents, relatives and friends who provided us with plenty of ideas to cover our topic.

Table of Contents

Najeeha Humayun

Introduction: (Najeeha Humayun)

Globalization has transformed the world into a global village in the real sense of the term. Regional Integration is an important aspect of this process. Central Asia and South Asia are two important regions of the world. Central Asia is rich in natural resources particularly in oil and gas recourses while South Asia is a region which is developing with a rapid pace and its internal energy recourses are insufficient. The development of physical infrastructural linkage and increase in trade volume among the regions of Central Asia, South Asia, West Asia and Western China will be mutually beneficial. In this connection Pakistan’s Gwadar deep sea port has vivid prospects to emerge as regional trade and energy transportation hub. Gwadar is strategically located between increasingly important regions of the world: the oil-rich Western Asia, heavily populated South Asia and the economically emerging and recourse-rich Central Asia.

Location:

Gwadar is a fishing village on the Arabian Sea coast in the Pakistani province of Baluchistan. Baluchistan shares borders with Afghanistan and Iran to the West—Gwadar is just seventy two kilometers from the Iranian border and about three hundred and twenty kilometers from Cape-al-Hadd in Oman. More important is Gwadar’s proximity to Persian Gulf. It is situated near the mouth of this strategic body of water, and about four hundred kilometers from the Strait of Hormuz, through which abut forty percent of the World’s Oil tankers pass/ Gwadar is located on the Gulf of Oman close to the entrance of the Persian Gulf, and about four hundred and sixty kilometers west of Karachi.

Historical Background:

Gwadar, which in the local language means "The Gate of Air". Pakistan’s dream of having a deep water port at Gwadar is nearly as old as its existence. It started with the recommendation of Worth Kendrick who was deputed by the US for survey of the Baluchistan coast in 1954. Realizing the importance of Gwadar, Pakistan paid 5.5 billion in September 1958 to buy back the enclave from Sultanate of Oman. Ending over 200 years of Omani control, Pakistan identified Gwadar as a port site in 1964. However it was only in 2001 that significant steps towards making the proposal a reality were taken, when China agreed to participate in the construction and development of the deep sea port.

In 1993, Pakistan started feasibility studies for the development of a major deepwater sea port at Gwadar. The port project commenced on 12th March 2002 with the first phase completed in December 2005. The construction of the port has spurred other major infrastructure projects in the area. This induces the seven hundred kilometers of Makran Coastal Highway which is now complete. The road links Karachi with several ports along the coast including Ormara, Pasni, and Gwadar will be extended to the Iranian border in the future. The highway has reduced travel time to Karachi from forty eight hours to only seven hours. Other road projects include the Gwadar-Quetta-Chaman road and a road link to the town of Khuzdar in eastern Baluchistan.

Pakistan is focusing on laying the Havelian-Kashghar (China) and Quetta-Kandahar (Afghanistan) railway tracks. Gwadar is going to be connected to Pakistan Railway network at an expected cost of $1.25 billion. The Gwadar deep-sea port emerges as a place of great strategic value, enhancing Pakistan’s importance in the whole region, extending from the Persian Gulf through the Indian Ocean to Southeast Asia and the Far East.

The construction of the Gwadar deep-sea port is just one component of a larger development plan which includes building a network of roads connecting Gwadar with the rest of Pakistan, such as the six hundred and fifty kilometers Coastal highway to Karachi and the Gwadar-Turbat road (One hundred and eighty eight kilometers). This network of roads connects with China through the Indus highway. Pakistan, China, Kazakhistan, Kyrghistan and Uzbekistanjmn67 are developing extensive road and rail links from Central Asia and Xinjiang to the Arabian Sea Coast.

Pakistan has started several projects, with financial and technical assistance from China, to develop Gwadar as a goods transit and trade point. The primary project is the construction of a deep-sea port at Gwadar to enable high-volume cargo movement to and from the landlocked Central Asian states. The new port will also encompass conversion facilities to allow for the movement of natural gas as a part of plans for a termination point for the TAPI natural gas pipeline. The secondary project is a coastal highway connecting Gwadar to Karachi, whose $200 million cost will be completely financed by the Chinese. Gwadar will serve as a port of entry for oil and gas to be transported by land to the western regions of China.

By extending its East-West Railway from the Chinese border city of Kashgar to Peshawar in Pakistan’s northwest, Beijing can receive cargo to and from Gwadar along the shortest route, from Karachi to Peshawar. The rail network could also be used to supply oil from the Persian Gulf to Xinjiang. Pakistan’s internal rail network can also provide China with rail access to Iran. The government declared Gwadar port a "Special Economic Zone" in the budget, 2003-2004. Oman has offered $100 million aid for the development of social and infrastructure facilities in Baluchistan. Out of $100 million, Oman has provided $7 million for extending of runway at Gwadar Airport, construction of jetties, up gradation of Gwadar hospital, provision of 100 engines to fishermen and construction of power house. Oman is also financing the construction of Gwadar-Hoshab Road, water supple scheme in Gwadar area and construction of irrigation dams. Rice Exporters Association of Pakistan (REAP) has decided to establish a rice zone in Gwadar to fetch the opportunities in the area after the construction of new port.

Pak-China Cooperation:

Pakistan and China friendship is considered higher than Himalaya deeper than Indian Ocean and sweeter than honey. Gwadar Port Project has become another milestone in Pakistan and China cooperation. Pakistan and China had signed a comprehensive agreement on March 16, 2002 at Beijing undertaking the task of construction of Gwadar deep seaport of universal standards. The work on the first phase of this mega project, which is being constructed by Chinese Harbor Engineering Company, is now at full swing. The project is bound to be a vital landmark in the economic development of the region. With the construction of a third port that Pakistan will not only be able to meet its own requirements of the future but also offer its port facilities to the neighboring countries. Central Asian Republics are endowed with mineral wealth and an educated and highly skilled and disciplined workforce.

Conceived as a gateway from China and Central Asia to the warm waters of the Arabian Sea, the Beijing-funded "mega port" of Gwadar is developing despite many hurdles. Gwadar port has the potential to become the world's largest deep-sea ports. In three years since its inauguration, the first phase of the project is already complete with three functioning berths. The total cost of the project was 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 estimated cost of the second phase is $526 million and includes the construction of 9 more berths and terminals. 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 Khyber Pakhtunkhwa (KPK) and Jalalabad in Afghanistan. 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.

Inauguration:

Gwadar port began its cargo handling from March 15, 2008. The first ship carrying 60,000 tons wheat docked unloaded and safely sailed out from the Gwadar port. The local company chartered a panama class vessel for importing wheat from Canada. It was the largest ship to anchor in Pakistan. Pakistan's Minister of Ports and Shipping Nabil Ahmed Khan Gabol officially inaugurated the Port on 21st December, 2008. The port project aims to have facilities that could help to develop Gwadar as an industrial city that has privately owned warehouses and cold storage, private cargo handling equipment, truck yards and corporate infrastructure such as offices along the same lines as Jebel Ali, Hong Kong, Malaysia and Singapore. Gwadar may be a gateway to the landlocked states in Central Asia, Gulf, Afghanistan and China. The emerging new oil and gas centers around the Caspian seek outlets for their products and Gwadar offers a two-way outlet to markets east and west, north and south, unhampered by the conflicts in the region. The advantage of direct access to and from Central Asian States and through them by overland routes to Russia and Europe on the one hand and Korea and Japan on the other, which provides Pakistan a unique opportunity to cash in on its fortunate location. Gwadar can be developed into a multipurpose and mother port of the region which can accommodate mother ships of Post Panamax category and need a draft of 18 meters and above. The dredging was carried out to deepen the approach channel to 14.5 meters and third dredger was also inducted to expedite the process. The deepening of approach channel is carried out under phase-II but it was also included in phase-I to keep the status of the Gwadar Port. Pakistan has planned that the existing fish harbor at Gwadar would be used as mini-port for cargo handling purpose annexed with the Gwadar deep seaport and to replace the existing fish harbor. The government aims to construct a fish landing jetty and allied harbor facilities at Pishukan, Gwadar.

The Gwadar port project is improving the living standards and providing increased job opportunities to the people in the southwestern Pakistani province of Baluchistan. By extending technical and financial support China has helped Pakistan in translating its dream of the Gwadar port into a reality. Singapore port operator PSA International has started preliminary planning work to build the US$840M second phase of Pakistan’s Gwadar deepwater port.

To ensure future developments are carried out in an orderly, coordinated and planned manner, the Authority has appointed Arthur D. Little (ADL), Malaysia, Lyon Associates, USA and Indus Associated Pakistan to prepare a Master Plan for the Port, the related infrastructure and the business plan for the port. Pakistan has adopted the landlord concept for new port development. In practice, this means that GPA will drive the overall development of the port and will raise the funds for development of general port infrastructure (primarily dredging of access channels and construction of breakwaters), while private sector investors will be the primary source for the development of terminals and cargo handling capacity. The city development Master Plan will help to transform Gwadar city into an economic focal point for Baluchistan.

Prospects of Economic Development:

Gwadar facility as a hub port will contribute significantly to the revival of Pakistan’s economy. The Asian Development Bank has provided U.S. $500 million to build roads. There are also plans to lay a comprehensive rail link, along with a contemplated road network. After completion of both phases Gwadar port will have requisite infrastructure to attract its share of business. Gwadar port is advantageously located to serve South and West Asia, Central Asia in addition to western provinces of China, as compared to other competitor ports Baluchistan is also important for its untapped wealth of hydrocarbon, mineral, and metallic resources. Baluchistan sits on estimated reserves of 29 trillion cubic feet of natural gas and 6 billion barrels of oil. At present, Pakistan's overall trade with SCO member states plus observers is far below potential. Pakistan, Iran and the CARs are also members of the Economic Cooperation Organization (ECO) with immense potential to contribute to the economic development of the region. Pakistan and Central Asia are important to each other, as only Pakistan can provide the CAS (Central Asian States) with a comparatively cheaper and shorter outlet for its natural energy resources and its trade to the outside world through the ports of Karachi, Port Qasim and Gwadar.

The regional geo-economic developments underscore the geostrategic importance of Pakistan and particularly Baluchistan province. As per Warm Water Theory Makran coast attracted Tsarist Empire as well as the USSR. Several reasons were cited for the Soviet invasion of Afghanistan on 27th December, 1979 among those one was its quest to reach warm water and the nearest coast in this connection was that of Makran. Gwadar can provide round-the-year dependable communication and trade links with the world. There is no denying the fact that due to its location, Gwadar deep sea port has the potential to become a gateway for the Central Asia and Xinjiang. Xinjiang in China lies 4,500 kilometers from China's east coast but just 2,500 kilometers from Gwadar. This will make it possible for China to route some of its external trade through Gwadar sea port.

Challenges

Although there is an enormous quantum of trade that could flow through the Gwadar port, it is also faced with the tough and challenging task of competing with developed ports of the region. Concerted efforts are required for creating a conducive environment for industrialization of this region based on strategies, program and scientific approach, and efficient directions to make it a comprehensive and competitive project. If there is no broad based cooperation amongst regional and extra regional powers, there will be no security.

The prime objective of Pakistan’s foreign policy is to develop beneficial and strong ties with all major powers and maintain cordial relations with its neighbors. But the ultimate success of the port hinges on its usage by the Central Asian Republics and in this respect, cooperation with Afghanistan, which lies between Pakistan and Central Asia, is critical. There is need to address genuine grievances, if any, of the stakeholders with regard to various projects in Baluchistan particularly Gwadar deep sea port. Measures should be taken to remove the sense of alienation, if any, of the people of Baluchistan and create local stakes in the province’s development. The interpolation of trade expected to flow through the Gwadar port suggests that the port can generate enormous revenues, provided economic and foreign policy options are handled properly.

Since it is a mega project with long term and short term local and regional impact it is facing many challenges which can be divided into local, regional and international. In this point in time security situation in the province needs improvement for full pledge utilization of the port. The Baluchistan province of Pakistan is also feeling the ripple effects of Afghanistan`s imbroglio. The menace of militancy and insurgency in the region further aggravated instability in the north western Pakistan. Though the whole federation is under the spell of terrorism but its impact is very much visible in Baluchistan, FATA and Khyber Pakhtunkhwa. Reconciling divergences of interests of the regional and neighboring countries is required.

Security and development are two facets of the same coin and reciprocate each other. One without the other is highly unlikely. Regional development and cooperation is basic component of all regional organizations like ECO (Economic Cooperation Organization), SCO (Shanghai Cooperation Organization) and SAARC (South Asian Association for Regional Cooperation). Regional and great powers have interests in peace in the region and for this physical infrastructural integration creates conducive atmosphere. The South and Central Asian Region is rich in natural resources like hydrocarbons. Multinational Corporations as well as powers both regional and global are taking keen interests in the oil and gas resources of the region.

The new geo-politics or what some observers call the New Great Game is also influencing the developments in the region. After 9/11 USA and its NATO allies have invaded Afghanistan and ousted Taliban from the corridor of power. Regional and neighboring countries supported USA in its war against terrorism. Russia, China, Central Asian Republics, India and Pakistan supported USA in war against terrorism. Russia consider Central Asia as it’s near abroad while China is strengthening its relations with oil and gas rich Central Asian States. Its domestic energy resources are insufficient for its fast growing energy needs. Central Asian transportation routes are directed towards Moscow. After the disintegration of USSR CARs are struggling to develop routes towards South Asia, turkey and China. The energy requirements of the regional powers will bring them to agree on projects like TAPI (Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline) and IPI (The Iran–Pakistan–India gas pipeline). Northern outlets and transportation routes are not sufficient for export of the Central Asian hydrocarbons and the alternative lies in the south particularly through Afghanistan and Pakistan and this is a point of convergence which can be developed.

The hand-over:

 Pakistani President Asif Ali Zardari 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 was signed by Pakistani officials and the Chinese Ambassador to Pakistan, Liu Jean, 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.

Under the contract, the port which will remain the property of Pakistan will be operated by the state-run Chinese firm — China Overseas Port Holding Company (COPHC). Earlier, the contract was given to the Port of Singapore Authority (PSA).

Liu Jean speaking on the occasion said that the transfer of Gwadar Port to China will bring tangible benefits to the two countries and contribute to peace, stability and development of the region.

"The ceremony was actually held to mark the transfer of the concession agreement from the PSA (Port of Singapore Authority) to the COPHC," said the president’s spokesman Farhatullah Babar.

The PSA is reported to have abandoned the project on the plea that Pakistan failed to meet obligations under the 40-year port-handling agreement signed in Feb 2007.

Media reports allege that the PSA, which was to spend $525 million on the project in five years, made no investment because of non-fulfillment of its demand for allotment of land worth Rs15bn.

Last year, the Supreme Court issued a stay order on the Gwadar Port contract, barring the PSA from transferring immovable property of the Gwadar Port Authority to a private party and allowed the Baluchistan government to become a party to the case.

In Dec 2010, China had offered the provincial government to construct 20 more berths and make the port fully operational if the port was handed over to it.

President Zardari praised the award of the contract to China as an auspicious development in Pakistan-China relations and expressed the hope that it would create new economic opportunities for Pakistan and Baluchistan.

The spokesman quoted the president as saying

‘Gwadar will soon be a hub of trade and commerce in the region as it holds the key to bringing together the countries of Central Asia and lends new impetus to Pakistan-China relations."

The President said the handing over of the operation of Gwadar Port to China is a manifestation of growing ties adding that it shows the trust in the Chinese ability to deliver on infrastructure projects in Pakistan.

He highlighted the strategic importance of the port for China and Central Asian republics and its potential of integrating the economies of the countries in the region.

He said the Chinese provinces of Xinjiang and Tibet were closer to Pakistani ports than to any port in China and development of a trade corridor linking Xinjiang to the Middle East via Gwadar held great prospects.

President Zardari said, "We also need to build infrastructure around the Gwadar Port to promote regional trade and commerce."

The president said 60 per cent of Chinese import of crude came from countries in the Gulf and the amount would increase in next decade. "Because of the proximity of the Gulf countries to Gwadar, oil flow from the region to China will be facilitated." The president praised the role played by Federal Minister for Ports and Shipping Babar Khan Ghouri, who did not attend the ceremony, in the transfer of port operations to China.

China paid about 75 per cent of the initial $250m used to build the port but in 2007 the PSA won a 40-year operating lease.

Four agreements were signed on this occasion to finally hand over all the operations of Gwadar Deep Sea port to China Overseas Port Holding Company. Managing Director China Overseas Port Holding Company signed the agreements on behalf of his company with Syed Parvez Abbas Chairman Gwadar Port Authority, Aqeel Karim Dhedhi Chairman AKD Securities, and representatives of National Logistics Cell and Singapore Port Authority which were the share holders when the Gwadar Port was handed over to Singapore Authority.

Fatimah Fasihah Khan

Why did the PSA leave? (Fatima Fasihah Khan)

One is forced to ponder as to why a firm, like 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.

Implications:

Besides reviving the port’s commercial activity, the Chinese company will have to take steps to appease the local population which suffers from poor socio-economic conditions. Pakistani political and security authorities face the challenge of averting any interference by external forces in Baluchistan as well as sabotage by the militants.

Though China maintains a policy of non-interference in the domestic affairs of other countries when pursuing its business interests, Pakistan’s own capacity for conflict resolution is wanting in many respects. Yet, ongoing processes to increase provincial financial autonomy and the creation of employment opportunities would have a stabilizing impact not only on the coastal region of Makran but on several troubled districts of mainland Baluchistan as well. Chinese ships docking at the harbor will bring jobs to local inhabitants and revenue to the provincial and federal government.

The ancient and historic city of Kashgar is located 2,200 miles from the nearest seaport, compared to 950 miles from the Gwadar port. China would have to invest heavily in the construction of a container capacity highway across the rugged terrain of Baluchistan to the southern Punjab city of Multan. Pakistan’s road network in the Punjab and Khyber Pakhtunkhwa provinces are of international standard and rather secure. The last journey through the Northern Areas and particularly the Hunza region requires additional significant Chinese investment and work is already underway.

The Gilgit-Baltistan region of northern Pakistan, bordering China, has seen severe sectarian clashes, most recently last year when pro-Taliban militants murdered Shi’ite commuters near the Kohistan area. The clashes have damaged trade relations with China as well as the security situation of locals, which has been exacerbated by a presence of external elements including radicals affiliated with Iran and the Taliban, a lack of business opportunities, and government disengagement. Greater cross-border trade in the mountainous north of Pakistan and China’s far west is bound to bring improvements in this regard. While the possibility of a rail link seems too costly in the short and medium term, China is in Pakistan to stay and cash in on the available geographic and political advantages.

After abandoning the Iran-Pakistan pipeline, India has opted to develop the Iranian port of Chahbahar, which may serve as a military base in the long term while serving as an energy hub in the medium term. The Chahbahar project is no less complicated for India than Gwadar is for China. Pakistan is geographically linked with China while Iran is distant from India. Pakistan enjoys access to international trade, investment and banking while Iran is clamped by international sanctions owing to its adventurous security and foreign policy. In a bid to improve Pakistan’s relations with India as a counterbalance to China, the U.S. has unsuccessfully called on Islamabad to ease tensions with India over Jammu and Kashmir and give trade a chance. Islamabad is moving cautiously on trade with India knowing that Delhi could use it for greater access to the Afghan market.

Owing to persistent Chinese lobbying of Pakistan’s business community, military and political parties, Islamabad continues to defy U.S. pressure to moderate its relationship with Beijing. Washington has argued against Pakistan’s handover of the strategic port to the Chinese company as it may "expand the tensions over the Strait of Hormuz to the Baluchistan coastal areas." India’s Defense Minister recently stated to media regarding the Gwadar handover that "In one sentence, it is a matter of concern for us." Moreover, China’s presence in the Arabian Sea is problematic for the U.S., not least due to its positions on Iran. However, unlike India, the U.S. has limited its reaction to bilateral diplomatic channels.

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.

For all practical purposes, Gwadar offers China an ideal and largely reliable route for petroleum supplies from the Arabian Peninsula. Currently, Chinese oil tankers ferry 80 percent of the hydrocarbons imported from the Gulf through the Strait of Malacca, followed by the turbulent waters of the South China and Yellow Seas. Imports via Gwadar will not only reach China sooner and safer, but also at a lower cost.

The oil-exporting Gulf nations including Saudi Arabia are also stakeholders in the success of the Pakistan-China Gwadar venture. With their eyes on Chinese economic growth and increased reliance on petroleum, the Arab nations have occasionally impressed upon Pakistan the importance of improving its control over the Baluchistan province. While Gwadar is the most valuable among China’s touted string of pearls ports such as Bangladesh’s Chittagong and Sonadiya, near the city of Cox's Bazaar, and Sri Lanka’s Hambantota, the deal not only strengthens Pakistan’s Middle Eastern linkages but may also solidify its connections with Central Asia. 

Indeed, for China, the control of Gwadar port would mean a shot in the arm for its long cherished plan to strengthen its dominance over the Indian Ocean region. China’s new naval strategy of "far sea defense’ is aimed at giving Beijing the ability to project its power in the oceanic waters in which both US and India have stakes but then as a section of defense analysts point out, given the geographical advantages that India enjoys in the Indian ocean, China will have difficult times upstaging India in the Indian ocean region. But China continues to stress the point that takeover of Gwadar port was "conducive" to maintain regional stability and would enhance bilateral cooperation. "The transfer of the managing rights is a business project that falls under trade and economic cooperation conducted between China and Pakistan," said a spokesman of Chinese Foreign Ministry. 

Gwadar has such a geo-strategic and geo-economic significance that can enable China to exploit its future energy needs, much to the annoyance of U.S.

Spokesperson Hong Lei expressed:

"The operation of the port is a new project in China-Pakistan business cooperation, and adding that it is also a part of bilateral and mutually beneficial cooperation."

Significantly, the widely debated "String of Pearls" theory which was originally conceived by a team of experts at the US based consultancy Booz Allen essentially underpins Chinese strategy of involvement with countries along its Sea Line of Communication (SLOC) extending from South China Sea to the Indian Ocean. A section of strategic analysts hold the view that "String of Pearls" provides China a robust platform to leverage its diplomatic and commercial ties to further its energy security and strategic interests on a long term basis.

India’s Response:

On Feb 6 Indian Defense Minister A.K. Antony said New Delhi was concerned by Pakistan’s decision to transfer management of the deep-sea port to China. Foreign ministry spokesman Moazzam Ahmad Khan dismissed those concerns, telling reporters: "This is not something that any other country should have any reason to be concerned about."

India has made its reaction explicit over Pakistan’s decision to hand over administrative control of the strategically located Gwadar Port from Singapore to a Chinese company. Antony’s statement reflected the fact that they are not happy over this important decision of Pakistan.

President Zardari said the building of infrastructure around the port would promote economic activity in Gwadar and Baluchistan.

But some analysts warn that it may be some time before Pakistan can benefit from China’s takeover of Gwadar, stressing that the connecting roads and an expanded Karakoram Highway still need to be finished.

Hence 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.

Indian media and defense analysts have gone to great extents on national TV to target Pakistan and China for this deal calling it purely a strategic-military maneuver 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.

The Indians fear that through administrative control of this port, China might get access to the strategically important Persian Gulf and the Arabian Sea and even extend its military clout to these waters by using this port as a naval base.

Although Pakistan and China have made it clear that this port is commercial and would not be used for military purposes, Indian apprehensions have not been allayed. Each and every nation is within its sovereign rights to develop its ports and give their management and control to any country it finds suitable.

Indo-US Strategic Partnership is a threat to the security and strategic interests of some states in the region but India did not care even an iota for their concerns and apprehensions in this respect. Pakistan is not bound to consider concerns of India or any other state for that matter.

It made this decision in its own larger interests and handed over the control of the Gwadar Port to a state with whom it has all-weather and long-standing strategic partnership.

Gwadar Port is a living example of Pak-China cooperation in an area which is beneficial for both the states. China has provided funds and technical assistance for this purpose. The need for construction of this port was felt due to rising commercial activities on and insufficiency of the Karachi port which could not fulfill the requirements of a maritime state which depends for most of its trade on sea routes.

Its commercial value for China lies in the fact that it can be conveniently used for transportation of oil and gas from the Middle East and Central Asia to western China through Karakoram Highway.

In the absence of the Pakistani port facilities, it is required to use the long and circuitous sea routes of the Indian Ocean and enter the South China Sea after passage through the Straits of Malacca. This route, besides being long and expensive, is hazardous and unreliable because it passes through those parts of the Indian Ocean where Indian and US influence is dominant and might create problems for China’s trade and commerce, especially imports of vital energy sources such as oil and gas upon which its rising economy is so dependent.

This is an area where they can hit Chinese interests more easily during times of tension and clash. The Gwadar Port provides an alternative route to China which might ensure uninterrupted supply of hydro-carbons to its mainland without being blocked by India or the US.

This is one of the hidden objectives of the Indo-US Strategic Partnership to create a bloc against the rising power of China and enhance their joint potential to protect the vital sea lanes for their commercial and military activities and make these hazardous for China.

China does not and cannot challenge the Indian and US supremacy in the Indian Ocean where these countries have already entrenched their respective positions to the exclusion and disadvantage of China and other powers. If the US or India ever made any attempt to block Chinese commerce or trade in the Indian Ocean, the latter has the option of using the Pakistani route via Gwadar Port. India’s concern of China using this port for extending its military muscles into the strategically important Persian Gulf and the Arabian Sea are baseless. Both Pakistan and China have made it clear that this port is meant only for commercial purposes and under no circumstances will it be used for military objectives.

Pakistan cannot allow China or any other nation to use the Gwadar Port or any other territory or asset under its sovereign control as a military base against another country because it would jeopardize Pakistan’s own security at the hands of the power or powers whose security or interests are threatened so. But neither can it be deterred by the pressure tactics of India or the US from giving the management and control of this port to China and allowing it to use it for commercial activities. China is our all-weather friend whose assistance in the economic and military development of Pakistan is hidden from none.

Giving management and control of the Gwadar Port to the US or any other power closely allied to it would have jeopardized Pakistan’s own security as well as security of China. It would have put Pakistan to a great disadvantage. Already its presence in Afghanistan and connivance at the Indian subversive activities against Pakistan from the Afghanistan is a matter of concern for us.

Pakistan could not give control of such an important strategic asset to an unreliable country that has entered into strategic partnership with its main adversary and itself denied the same privilege despite the fact that it is its old friend, the greatest non-NATO ally and the front-line state in the War against Terror.

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 Baluchistan.

Conclusion

So, it goes without saying that the transferability of the Gwadar port to China was necessary, seeing as how Pakistan does not possess the necessary resources to assist the development of the port and could not transform it into what it can be, at least not as efficiently as China can. A country that cannot run without the support and funds of IMF and World Bank was undoubtedly unsuitable to undertake such a large project. The lack of infrastructure and investment in this country made it obligatory to hand it over to someone who could fund the expansion, improvement and progress of the port. It was significant to consider a country that only had economic interests which would allow Pakistan to share the resulting benefits. Rather than allowing it to fall in the hands of USA who would only make considerations for its own advantage, it was in our benefit to have assigned this duty to China and shifting ownership to a country that is willing to support us and work together with us as allies. USA and Pakistan differ in their strategic goals whereas China and Pakistan have a firmly established strategic relationship without the existence of any conflicting aims. As far as India is concerned, they need to adopt a cooperative approach to the situation as Gwadar provides it with the shortest overland link to oil-rich regions; if Gwadar is exploited to the fullest, India will benefit. Hence, handing over this responsibility to China was in our best interest as it is quickly paving its way towards becoming the world super power.