China's Access To Gwadar Port: Strategic Implications and Options For India

Download as pdf or txt
Download as pdf or txt
You are on page 1of 9

Maritime Affairs: Journal of the National Maritime

Foundation of India

ISSN: 0973-3159 (Print) 1946-6609 (Online) Journal homepage: http://www.tandfonline.com/loi/rnmf20

China's Access to Gwadar Port: Strategic


Implications and Options for India

Ms. Portia B. Conrad

To cite this article: Ms. Portia B. Conrad (2017) China's Access to Gwadar Port: Strategic
Implications and Options for India, Maritime Affairs: Journal of the National Maritime Foundation of
India, 13:1, 55-62, DOI: 10.1080/09733159.2017.1317123

To link to this article: https://doi.org/10.1080/09733159.2017.1317123

Published online: 26 Jun 2017.

Submit your article to this journal

Article views: 267

View related articles

View Crossmark data

Full Terms & Conditions of access and use can be found at


http://www.tandfonline.com/action/journalInformation?journalCode=rnmf20
MARITIME AFFAIRS: JOURNAL OF THE NATIONAL
MARITIME FOUNDATION OF INDIA, 2017
VOL. 13, NO. 1, 55–62
https://doi.org/10.1080/09733159.2017.1317123

China’s Access to Gwadar Port: Strategic Implications and


Options for India
Ms. Portia B. Conrad*

ABSTRACT
Since the establishment of diplomatic relations in 1951, Pakistan’s
desire for strategic parity with India and China’s efforts to propel
Pakistan as a strategic balancer to India have been the
overarching factors for the emergence of a security centric Sino–
Pak relationship. Over the years, it has diversified into an
economic-centric relationship. Although military and technological
transactions continue to dominate the economic relationship,
China began gradually pledging increased investment in
Pakistan’s economy and infrastructure. China became the primary
investor for building the Gwadar deep-sea port in 2002. Both
sides signed a free trade agreement and agreed to link China’s rail
network to Gwadar Port through the Karakoram Highway in 2008.
The commitment to develop Gwadar Port is a good indicator of
the steady expansion of Chinese maritime interests and strategic
influence in India’s neighbourhood.
This paper attempts to analyse the significance and implications
of the development of Gwadar Port for Pakistan, India and the
region as a whole.

Introduction
China’s strategic relations with Pakistan have been strengthened by volunteering to
develop the Gwadar Port, to boost Pakistan’s regional prominence. It became the
primary investor for building the Gwadar deep-sea port in 2002. Both sides signed a
free trade agreement and agreed to link China’s rail network to Gwadar Port through
the Karakoram Highway (KKH) in 2008. The management of Gwadar Port was handed
over to Chinese Overseas Port Holdings in 2013; it had previously been managed by Sin-
gapore’s PSA International. During President Xi Jinping’s visit to Pakistan in 2015,
China’s Belt and Road initiative was also aligned with CPEC-related projects in Pakistan
to be constructed under the Silk Road Fund.
The China–Pakistan Economic Corridor (CPEC) is an important component of Presi-
dent Xi Jinping’s Belt and Road initiative. When completed, the 2400-km corridor will
provide seamless connectivity from Kashgar in China’s restive northwest province, Xin-
jiang, to Gwadar in Pakistan’s restive southwest province, Balochistan. The commitment
to develop Gwadar Port is a good indicator of the steady expansion of Chinese maritime
interests and strategic influence in India’s neighbourhood.

CONTACT Ms. Portia B. Conrad consultantppr5@mea.gov.in


*
The author is working with the Ministry of External Affairs, Government of India. She can be reached at portiabconrad@
gmail.com
© 2017 National Maritime Foundation
56 P. B. CONRAD

Relevance of Gwadar Port


Gwadar Port bears great strategic and economic significance for Pakistan. It is the third
most important deep-sea port of Pakistan, after Karachi and Qasim. It is located at the
junction of international sea shipping and oil trade routes. Hence, the port would
connect three regions – Central Asia, South Asia and West Asia.
The port provides China with a powerful strategic foothold in the Arabian Sea and also
the Indian Ocean. This could have regional implications in the long run. It will also place
the Pakistan Navy in a very strong position and may further strengthen its capabilities.
The port, besides being a corridor for trade to and from its docks, can potentially generate
at least two million jobs for the people of Balochistan alone.1
Separately, Gwadar Port will help Pakistan monitor the sea lines of communications
(SLOCs) originating from the Persian Gulf and the Strait of Hormuz. It will provide stra-
tegic leverage to Pakistan vis-à-vis India, as the port is far from Indian reach as compared
to the other two Pakistani ports. While leveraging its position, Gwadar Port will boost co-
operation between Pakistan and other countries in the oil and energy sector. Tourism,
trade, the hotel industry and state revenue will increase, which will further strengthen
the country’s economy. The port also offers tax-free investments and trade, thus attracting
large number of foreign investors to initiate new development projects and economic
investments.
Asia has the highest number of landlocked countries, and from a geopolitical perspec-
tive their access to the sea is difficult and expensive. For example, China’s hinterland is at
least 5000 km away from its coastal regions. Through CPEC, China would drastically cut
down the distance to the nearest port for its westernmost provinces, as Kashgar is 4500 km
from the Shanghai port whereas Gwadar Port is only 2800 km away. Gwadar Port would
provide China with access to Afghanistan and the Central Asian Republics (CARs). Due to
China’s Gwadar would provide an alternate route to the Indian Ocean or the South China
Sea.2
Gwadar is also significant for other countries in the region such as Turkmenistan,
which possesses large volumes of natural gas and oil but, being a landlocked nation,
cannot derive benefit from its natural assets. The Trans Afghan Gas Pipeline (TAP)
from Turkmenistan to Gwadar, the long-dormant project intended to pump Turkmen
natural gas to markets in South Asia, is now ready. Kazakhstan too has a lot of oil but
no means to access the international markets. A pipeline is also planned to transport its
oil to Gwadar and subsequently the rest of the world. Additionally, recent interest
shown by various international companies including Shell in setting up a mega oil refinery
in the area, and the interest of UAE business groups in Gwadar, are important develop-
ments in this context. The UAE has committed to invest US$ 30 billion, with a further
understanding of US$ 60 billion to build hotels, resorts and recreation centres in
Gwadar. Other Arab countries are expected to announce plans in the area.3

Development of Gwadar Port


Gwadar Port was constructed in two phases, with the technical and financial assistance of
China. The construction of Gwadar Port started in March 2002 after the Chinese decided
to provide US$ 198 million of the total US$ 248 million required for the first phase of the
port. The first phase involved the construction of three multipurpose ship berths. The
MARITIME AFFAIRS: JOURNAL OF THE NATIONAL MARITIME FOUNDATION OF INDIA 57

development work on Phase II was formally estimated at US$ 600 million, including the
construction of nine additional berths, one bulk cargo terminal, one grain terminal and
two oil terminals.4
China’s Harbour Engineering Company undertook this joint venture at an initial cost
of US$ 300 million. Pakistan had to pay US$ 50 million, and the remaining amount was to
be paid by China. The project was leased to the Port Singapore Authority. US companies
were competitive in providing the port with cranes and crane components, forklifts,
tractor and trailer units, an unloading system, a conveyor system, and security and
environmental equipment. As per the Memorandum of Understanding between China,
Pakistan and CARs, there is a plan to develop communication infrastructure from the
Caspian Sea in the west to Xinjiang in the east, converging at Gwadar Port in the south.

What does Gwadar Port mean to China?


China is concerned about the growing Indian naval power in the Indian Ocean and the
Arabian Sea. Moreover, the cordiality and warmth in Indo–US relations since the con-
clusion of their civilian nuclear cooperation on one hand, and cooperation between
India and Iran in Afghanistan and Central Asia on the other hand, are a matter of
concern for China’s longstanding strategic and economic objectives in the region.
India’s dual approach – to encircle Pakistan by establishing good relations with Iran
and Afghanistan, and to counter China’s economic and strategic planning – forced
China to use Pakistan diplomatically against India. As history suggests, Pakistan cannot
outperform India alone.
Pakistan needs active Chinese cooperation in the port of Gwadar, since it is the only
port which can serve the best interests of both China and Pakistan in the region. The
port will, therefore, enable China to keep a watch on India’s growing influence in the
Indian Ocean, the Arabian Sea, and the Persian Gulf. Hence, the possibility of any
future economic and military collaboration between India and the US in the region can
be effectively dealt with.5
Other economic and strategic leverage that China attaches to the port includes the
following:

1. China is heavily dependent on the oil from the Persian Gulf. At present its energy
supply chains pass via a very long route, through the Straits of Malacca. After this
oil reaches Shanghai, on the east coast of China, it has to be transported thousands
of miles over land to the western provinces of China. A route using Gwadar Port
and the KKH is relatively cheaper and shorter.
2. West Asia is an important region for China because of its huge oil and natural gas
imports from the region. The government of Pakistan has committed to provide a
naval base to China at Gwadar. This will not only help secure Gwadar Port but will
also take the “all-weather” friendship between China and Pakistan to new heights,6
and give China a foothold to influence developments in the region.
3. China will greatly benefit from the industrial zone by setting up industries close to the
markets.7 Moreover, Gwadar will potentially provide China with a strategic pivot that
could also be used for military purposes to gradually challenge US dominance over
China’s energy supply routes.
58 P. B. CONRAD

4. Gwadar provides China a transit terminal for crude-oil imports from Iran and Africa to
China’s Xinjiang province. Gwadar’s strategic advantage to China is due to its close
proximity to the Strait of Hormuz. The presence of US forces in the region poses a
threat not only to Chinese navy but also to its strategic commercial interest.8

It is also vital to understand the Chinese commitments, which are indicative of the impor-
tance that China attaches to Gwadar. The following are the major commitments of China
towards Gwadar:

1. China has been instrumental in designing the project. It is also providing approxi-
mately 80% of the cost of Gwadar Port in the shape of grants and soft loans. Over
500 Chinese workers have worked on the project on a 24-hour basis to complete the
port setup. There are still a large number of Chinese workers and engineers working
on the project.
2. China has further committed to provide money and resources as and when needed.
3. China is setting up a dry port at the Sino–Pak border to take advantage of the shorter
route to the sea through Gwadar.
4. China has paid US$ 360 million to Pakistan for expansion and upgrading of all weather
trafficability of KKH linking Pakistan with China. The contract for this has been
awarded to the Frontier Works Organization, which has started the project.
5. Feasibility and engineering studies to connect China with Gwadar through pipeline and
railway track have already begun. This railway track also has the significance of being
an engineering marvel of the world.9 Hence, sufficient resources have been spent on
studying the feasibility of the port.

Security of Chinese Interests


China’s security concerns with respect to CPEC are significant, particularly due to the dis-
turbance caused by militant groups, in its restive western region of Xinjiang. These con-
cerns have a direct impact on the project, and on Xinjiang’s ethnic Uighur and
predominantly Muslim community. Beijing’s attempts to place pressure on the Uighur
community have not yielded positive results, but have led to reactionary political violence.
This in turn incriminates Pakistan, because Uighur militant groups, like the East Turke-
stan Islamic Movement (ETIM), seek sanctuary in the Pakistan–Afghanistan border areas.
ETIM also has established links with al-Qaeda and the Taliban (and its affiliates) in Afgha-
nistan and Pakistan. The militant groups share operational capabilities with each other.
China perceives the ETIM as an obstinate threat, inimical to the Chinese state, and attack-
ing Chinese interests in Pakistan.
The CPEC therefore showcases China’s efforts to deliver security under the garb of
economic development. The Chinese are trying to sell their investments in Pakistan
through promises and propaganda, viz. creation of jobs, reduction in anti-state sentiment,
and improvement in the law and order situation. However, China’s real motive behind this
strategic project seems to be targeted at the militant threat in adjacent Pakistan. China is
attempting to secure its own territory. Hence, while CPEC is often represented as an econ-
omic initiative focused on infrastructure, transportation and energy, security concerns will
likely constrain the free flow of men and material, at least in the near future.
MARITIME AFFAIRS: JOURNAL OF THE NATIONAL MARITIME FOUNDATION OF INDIA 59

The leadership of Pakistan, both civilian and military, is making the most of the econ-
omic, political and security opportunities that CPEC offers. The volatile security environ-
ment in Pakistan has resulted in miniscule foreign investment, which the country needs in
massive amounts to stimulate its economic growth. China’s promised investment, if deliv-
ered, will represent more than twice the amount of all foreign direct investment (FDI) in
Pakistan since 2008.10
Key Chinese concerns on Gwadar-related projects include:

1. China’s major concern of safety and security is in its Gwadar Port project in Balochistan,
through which China wants to have access to the Arabian Sea. Hence, Gwadar Port has
managed by the China Overseas Port Holding Company since February 18, 2013.
2. Chinese concerns also include the delay in the deployment of the Special Security Division
(SSD) by Pakistan for the CPEC. Plans for operationalising the division have been held up
by Pakistan’s civil–military wrangling. It is feared that the issue, if not resolved at the ear-
liest opportunity, could potentially affect the timelines of other projects under the CPEC.
3. The security and safety of over 14,321 Chinese engineers and technicians working in
various parts of Pakistan on 210 Chinese-aided small and mega projects, particularly
in Gwadar, Balochistan, has remained a matter of concern to Pakistan as well as to
the Chinese authorities.

To test the security of the CPEC, on November 13, 2016, a cargo ship carrying 60 contain-
ers left the dusty port of Gwadar in Balochistan, on the Arabian Sea, for the Gulf of Aden.
The 60 containers had left Kashgar on October 29, 2016, and were loaded on 125 trucks
before making the perilous journey on the KKH. The convoy crossed the Khunjerab Pass
into Pakistan-occupied Kashmir (PoK), before travelling to Quetta. This marked the first-
ever shipment through the CPEC.11 Subsequently, in December 2016, the Pakistan Navy
unveiled a special Task Force (TF)-88 commissioned for the protection of the Gwadar
deep-sea port. The TF-88 comprises warships, attack helicopters, unmanned aerial
vehicles and other surveillance assets. Earlier, it also raised a Coastal Security and
Harbour Defence Force for tackling threats along the coast, and stationed a Force Protec-
tion Battalion at Gwadar for the protection of Chinese workers. The establishment of TF-
88 and associated security apparatus marks intensifying China–Pakistan maritime and
naval cooperation.12 Further, recent media reports have indicated that China is set to
increase the number of its marine corps from 20,000 to 1 lakh as part of plans to
deploy them overseas for the first time, including at the strategic Gwadar Port in Pakistan
and the military logistics base in Djibouti in the Indian Ocean. The expansion is planned
to safeguard China’s maritime lifelines and its growing interests overseas.13

Implications for Pakistan


Gwadar Port has enormous strategic advantage for Pakistan too. It provides Pakistan with
strategic depth vis-à-vis India in the Arabian Sea. A strong Indian Navy and its presence in
the Arabian Sea pose a threat to Pakistan’s security. Besides, the development of Gwadar
Port will be a boon to Pakistan’s economy. It is said that CPEC investments are expected to
exceed all FDI in Pakistan since 1970. Over 7 lakh direct jobs are likely to be created by the
project in Pakistan.
60 P. B. CONRAD

Pakistan needs the active support and cooperation of China. Thus, Gwadar Port serves
an ideal place from the point of view of Sino–Pak naval collaboration to check and
monitor Indian expansionist designs in the Arabian Sea and Persian Gulf. The strategic
partnership between the two countries is a major development in this regard, by which
China has committed to provide Pakistan military hardware. Pakistan also received
Chinese naval assets including Type 054A-based frigates and air-independent propulsion
(AIP)-capable submarines. Previously, Pakistan had signed a US$ 600 million defence deal
with China, which includes the construction of four F-22P frigates for the Pakistani navy,
upgrading of the Gwadar and Karachi dockyards, and transfer of technology for indigen-
ous production of warships.14
Much would depend on the security situation along the proposed CPEC corridor. The
Western Corridor of CPEC, which connects Gwadar with Kashgar, runs through the
troubled region of Balochistan, Khyber-Pakhtunkhwa and the Federally Administered
Tribal Areas (FATA) of Pakistan. The viability of this project is also subject to the connec-
tivity between Gwadar and Kashgar, since the Senate Committee of the Pakistan Parlia-
ment is of the view that the width of the KKH is not adequate to cater to the envisaged
traffic volume that would be generated by the CPEC.15 Though the CPEC is expected
to address this inadequacy, the KKH passes thought terrain that may not be ideally
suited to handle heavy traffic.
Even though the first phase of Gwadar was completed in 2007, the operations of this
port are far below its optimum cargo-handling capacity. Thus, the biggest challenge for
Pakistan will be in ensuring that this port handles the required minimum traffic, in
order to be financially viable. For Pakistan, given the fact that its economic and population
centres are far from Gwadar, the role of China is even more important. As a result of this
paradox, the viability of Gwadar will largely be dictated not by the internal traffic gener-
ated within Pakistan but by that of the international trade route between the Arabian Sea
and China.
Lying in close proximity, Gwadar Port provides a golden opportunity to Pakistan to
intensify trade and commercial relations with the CARs, which contain the world’s
largest oil and gas resources. The construction of the new Gwadar deep-sea port on Balo-
chistan coast and its connected routes with Afghanistan actually reduce these distances by
500 km between Pakistan and Central Asia. As a result, it will further facilitate the transfer
of Central Asia’s vast energy resources into the world markets, thus providing Pakistan
with significant profits in transit fees.16

Strategic Options for India


India’s strategic interests in the region make it essential to develop clear policies, capable of
facing existing as well as potential challenges that may arise in the future.
India could follow up on the work of developing an alternative trade corridor via Iran.
On September 12, 2000, India signed an agreement with Iran and Russia for the develop-
ment of the International North–South Transport Corridor (INSTC). This corridor will
enable the movement of goods from Indian ports to Bandar Abbas in Iran and then on
to Central Asia via rail and road linkages and the Caspian Sea route, bypassing Pakistan.17
Chabahar provides India an easier land–sea route to Afghanistan, with whom it has fos-
tered close security cooperation and economic interests over the years. India’s
MARITIME AFFAIRS: JOURNAL OF THE NATIONAL MARITIME FOUNDATION OF INDIA 61

commitment to Chabahar connectivity will improve road as well as maritime connectivity,


giving a boost to trade relations. Chabahar Port, once fully developed, will provide land-
locked Afghanistan an alternative port/infrastructure and linkage, via Iran, to that of Paki-
stan; and India will gain full-fledged cargo-handling facilities on a large scale in the Gulf of
Oman. All three countries will acquire both terrestrial and marine trade access to each
other, the extant oil and gas resources, and other nearby countries of Arabia, plus the
resource-rich Central Asian countries.18
India should showcase its robust policy on PoK, where it ensures that China addresses
the breach of its sovereign territory. The strategy should go beyond building partnerships
with the US in the Asia-Pacific. The CPEC in a way legitimises Pakistan’s ownership over
PoK. India should pose its concerns to the international community, on how, in the guise
of securing CPEC, China can permanently position troops on Pakistan soil not too far
from Indian border.
India needs to work on its own counter-strategy by offering a plan for a direct India–
China Silk Route Corridor (ICSRC) that could run along the traditional Ladakh–Xinjiang
axis. A shift in thinking can no longer be put off, for it would mean not just breaking the
connectivity bottlenecks but finding interlocking economic interests for India’s northern
states.19 It could serve multiple interconnecting advantages for India, from infrastructure
building to buying a guarantee against Chinese misadventures.

Conclusion
The CPEC sets the stage for China to wield preeminent economic, military and diplomatic
influence in Pakistan. The agreement for Chinese companies to construct 51 Chinese-
aided infrastructure, energy and military projects shows that Beijing’s engagement with
Pakistan is for the foreseeable long term. It seeks to bind Pakistan to China as power gen-
eration, transport, commerce, research and development and the defence of Pakistan will
all be increasingly tied to Chinese investment and interests.
The CPEC runs through the PoK territory, which is India’s sovereign land. For India,
this is the primary concern about CPEC, and therefore the port of Gwadar will soon add to
the unresolved issues between India and Pakistan. Chinese indifference towards Indian
concerns and Chinese investments in PoK are serious irritants to India. However, it
must be noted that this is not the first time that China has invested in or undertaken
major projects in PoK.20 The Chinese-controlled and -monitored base in Gwadar is a
serious threat to India’s maritime interest and predominance in the region. It may also
be said that the steady expansion of China’s activities is intended to shift the current
naval balance of power in the Indian Ocean region. The presence of an extra-regional
power in its backyard has security implications for India. With Iran and Russia announ-
cing their desire to join the CPEC to access Gwadar Port, it is pertinent for India to
respond to the changing maritime balance in South Asia.21

Disclaimer
The views expressed/discussed in this paper are for the purpose of generating an informed
discussion and do not necessarily reflect the official policy of the Ministry of External
Affairs on the subject.
62 P. B. CONRAD

Notes
1. For Pakistan, “Gwadar Port and Its Importance for Pakistan”, http://forpakistan.org/
gwadar-port-and-its-importance-for-pakistan/ (accessed March 3, 2017). China’s challenge
of ensuring energy security is “the Malacca Dilemma”. Chinese President Hu Jintao recognised
the strategic significance of the Malacca Dilemma in November 2003, noting that “certain
powers have all along encroached on and tried to control navigation through the Malacca
Strait”.
2. Islamabad Policy Research Institute, “Significance of Gwadar Port”, http://www.ipripak.org/
significance-of-gwadar-port/ (accessed March 3, 2017).
3. Gwadar Private Scheme Information Centre, “Chinese Interest and Investment”, https://
gwadarprivatescheme.wordpress.com/chinese-investment/ (accessed March 3, 2017).
4. Zahid Ali Khan, “China’s Gwadar and India’s Chahbahar: An Analysis of Sino–India geo-
strategic and Economic Competition”, Strategic Studies, https://www.academia.edu/
6938073/China_Chinas_Gwadar_and_Indias_Chahbahar_an_analysis_of_Sino-India_geo-
strategic_and_economic_competition (accessed March 3, 2017).
5. Ibid.
6. Gwadar Private Scheme Information Centre, “Chinese Interest and Investment”, https://
gwadarprivatescheme.wordpress.com/chinese-investment/ (accessed March 3, 2017).
7. Ibid.
8. Khan, “China’s Gwadar and India’s Chahbahar”.
9. Ibid.
10. Daniel S. Markey, “Behind China’s Gambit in Pakistan”, http://www.cfr.org/pakistan/
behind-chinas-gambit-pakistan/p37855 (accessed March 15, 2017).
11. Ananth Krishnan. “The Silk Road Gamble”, India Today, November 17, 2016, Magazine,
Opinion.
12. Manpreet Singh Chawla, “CPEC Drives China-Pakistan Naval Cooperation”, National Mar-
itime Foundation, http://www.maritimeindia.org/View%20Profile/636191849360662945.pdf
(accessed March 16, 2017).
13. Press Trust of India, “China to Expand Marine Corps for Deployment in Gwadar, Djibouti.”
The Indian Express, March 3, 2017, World News.
14. Bilal H. Khan, “Pakistan Navy Modernization Program”, PakDef, http://pakdef.org/pakistan-
navy-modernization-program/ (accessed March 15, 2017); Khan, “China’s Gwadar and
India’s Chahbahar”.
15. Syed Irfan Raza, “Karakoram Highway Inadequate for CPEC Traffic, Says Senate Panel”,
Dawn, November 7, 2016, Comments.
16. Khan, “China’s Gwadar and India’s Chahbahar”.
17. Vijay Sakhuja, “Gwadar: Can India Checkmate India?”, Institute of Peace and Conflict
Studies, http://www.ipcs.org/article/india/gwadar-can-india-checkmate-china-3811.html
(accessed March 5, 2017).
18. Syed Mudassir Ali Shah, “View from Pakistan: Chabahar vs Gwadar.” Deccan Chronicle, May
11, 2015, Opinion.
19. P. Stobdan, “China Pakistan Economic Corridor Needs A Counter Strategy”, India Writes,
http://www.indiawrites.org/china-pakistan-economic-corridor-needs-a-counter-strategy/
(accessed March 5, 2017).
20. Jayadev Ranade, “Implications of the China–Pakistan Economic Corridor”, Vivekananda
India Foundation, http://www.vifindia.org/article/2016/july/19/implications-of-the-china-
pakistan-economic-corridor (accessed March 11, 2017).
21. Chawla, “CPEC Drives China–Pakistan Naval Cooperation”.

You might also like