Why all this fuss over Gwadar?

Published: February 22, 2013

Gwadar 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. PHOTO: REUTERS

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.

Global attention

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.

Indian concerns

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.

What’s next?

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.

Read more by Farooq here or follow him on Twitter @faruqyusaf

Farooq Yousaf

Farooq Yousaf

A research analyst, programme consultant and content editor at the Centre for Research and Security Studies, Islamabad, along with pursuing his Research Studies in Public Policy from Germany. He tweets as @faruqyusaf (twitter.com/faruqyusaf)

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • Sane

    China is true friend of Pakistan. Great country and great nation. Pakistan must do all to strengthen friendship with China at the most.Recommend

  • Nitish

    Moreover, Pakistan has rarely expressed concerns on India purchasing state of the art weaponry from its friends, such as Israel.
    There is a difference.India purchased since it has enough money to buy it now.India didnt buy it by selling or mortgaging its piece of land or port of great strategic importance.Looking at the fragile and unstable situation occurring in baloochistan one may fear that pakistan surrendered Gwadar airport to china forever . Recommend

  • Jingo

    @Nitish:

    Gwadar airport to china forever ??? :O

    I thought Gwadar is a sea portRecommend

  • ss

    @Nitish:
    this is none of you indians’ business even if we hand over whole Pakistan to China let alone the strategic location surrounded by indian agentsRecommend

  • Hermes MSafiri

    Congrats to the author.
    Gwadar should have been developed since a long time. The US will have a problem with this because this could become a very strategic port for China and, don’t forget, become the main supply route for Iran.
    Good luck Pakistan, finally a bold move.Recommend

  • joy

    @ ss
    @Nitish: “this is none of you indians’ business even if we hand over whole Pakistan to China let alone the strategic location surrounded by indian agents.”
    In that case it should be none of your Pakistanis business if Afghanistan tells NATO forces to stay on.Recommend

  • Ahmad

    Dubai well never want gwadar to do business .no matter how hard Pakistan tryRecommend

  • Nitish

    @Jingo:
    Tahnks for the correction…It just came hurriedly… Recommend

  • Nitish

    @Jingo:
    Thanks for the correction…It just came hurriedly…Recommend

  • Optimist

    @ Nitish

    It came hurriedly?
    .
    It is obvious that our neighbours rush to condemn us, without thinking for a second whether it is factually correct or not!!Recommend

  • Dr Dang

    Whats next ?
    Islamabad on Ebay.Recommend

  • ifty

    Joy
    ‘In that case it should be none of your Pakistanis business if Afghanistan tells NATO forces to stay on’

    How is that in anyway similar to the previous example, by the US being in Afghanistan, Pakistan is being destabilized as the terrorist start running over the border to Pakistan and cause havoc on the way, how is India facing the same problem if China happens to build Gawadar Port.
    Oh and my cousins in Afghanistan hate the US and NATO and want them to leave! How wouldn’t went theyve already killed 50,000-60,000 civilians in the matter of 12 years. Recommend

  • ifty

    @Joy
    ‘In that case it should be none of your Pakistanis business if Afghanistan tells NATO forces to stay on’

    How is that in anyway similar to the previous example, by the US being in Afghanistan, Pakistan is being destabilized as the terrorist start running over the border to Pakistan and cause havoc on the way, how is India facing the same problem if China happens to build Gawadar Port.
    Oh and my cousins in Afghanistan hate the US and NATO and want them to leave! How wouldn’t went theyve already killed 50,000-60,000 civilians in the matter of 12 years. Recommend

  • http://www.bigitbusiness.com Shah Nawaz

    I think it is a good step taken by the Pakistan government, i will arrange much needed funds for the development of the port. Also China will make the most out of this port. Good decision!!!Recommend

  • Nishant

    really
    learn something from the past
    whenever China has intervened in any country, it has resulted in disastrous consequences
    Cambodia, Vietnam, North Korea and now you want the same

    go ahead then, there is a thing called foreign venture and giving full control, why cant you run it yourself
    or maybe China made everything, not a single penny paid by pakistan, so obviously they will claim it’s ownershipRecommend

  • Nishant

    i wonder why Pakistanis want India to mind their own business,
    oh wait just like the Afghans want Pakistan to mind its own business. Recommend

  • danish

    good read, but the writer beside pointing to the exit psa in frustation forgets to ponder much.
    remember- gwadar port was conceived as 2 phase project in 2002 or 1998.
    phase 1 would be built by china 100%, and all the equipment for it landed in Karachi, transported via new coastal highway.
    phase2- will be 80-20% of Pakistan and china once phase1 becomes operational.

    Lets look back Pakistan in 2007 time, and gather re-read mainstream news available.

    US warns india and pakistan to stay away from IPI projects. India complies, and Pakistan as usual confuse or flirt with US and Iran.
    US raises concern with FO of Pakistan about chinsese interest in developing Gwadar.
    In Baluchistan, near pasni/gwadar 11 chinese engineer got killed.
    In Khuzdar, 7 chinese engineer were taken hostages.

    Dubai world was denied bid to operate san-francisco sea port, and it was handed over to PSA.
    PSA enjoys US trust.
    In context, Pakistan was pressured to deal with PSA, and not china. And Govt of Pakistan played delayed/flirt/bluff game to overcome US pressure.

    In this time of 2013, US is talking about exit from Afghanistan. And after much rudness, PSA decided to back down.
    Now the planned procedure is ready for execution.
    Port is handed over to China, who in the first place made 40 mill investment to build gwadar phase1. Phase 2 will be launched after phase 1 comes into full opertional swing.Recommend

  • raheel

    Whavever it is, i think it is a good step too. Considering the situation Pakistan is in, this could lead to some progress especially in Balochistan. I dont know what the nieghbours are so concerned about, the least they could do is to appreciate the positive aspects of such a decision.Recommend

  • ashu

    @ss… You must be insane to say that the gwadar port is none of india’s business …. well in that case i should tell you that anything that threatens india’s national security or of its citizens is indeed india’s business by default………..Recommend

  • baloch

    an important piece is missing from the article. the people of Gwadar. how much were they involved before selling their land and their port. Shame on Pakistan for selling what belongs to the people of gwadar and to Balochistan. Recommend

  • Harsh Srivastava

    India thinks the port brings China nearer to India. Also itcould be used for military purposes as well. This does bother India..and rightly so.

    Pakistan has all the interests in the world to get the port developed. Port also provides an alternative to Karachi port and give a big boost to country’s economy. If it bothers India.. it’s India’s problem..not Pakistan’s. Pakistan is not there to solve India’s problems.Recommend

  • imtiaz

    Wondering why India so concern about Gwadar Port, it’s is nothing to do with their security as port is near Iran border not india…I m hoping that Pakistan-China relation will be further stronger and china will help Pakistan in future as well to improve Pakistan economical conditions.Recommend

  • abhi

    I think slowly Pakistan is being occupied by china.Recommend

  • BlackJack

    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.
    Silly comparison. A weapon is a weapon, what difference does it make who the manufacturer is, since it is going to be used by India and not by Israel; an apt comparison would be Pakistan’s concerns over the India’s plans to ‘encircle it’ using Afghanistan – while India is investing in projects that Afghanistan cannot afford on its own, yet it keeps the entire Pak nation awake at night with a steady flow of the most amazing conspiracy theories.
    India’s concern is that a Chinese presence in Gwadar would put pressure on Indian energy supplies in event of a war. However, I feel this is a highly overrated concern, since the port is of value to China only if there is infrastructure to enable transportation of hydrocarbons from the Persian gulf through Gwadar to China, which today passes through the most dangerous terrain in the world; China will not pump money into the port until they are certain of its long-term viability. It is just that what used to be a white elephant for Pakistan will become a hamster for China.Recommend

  • http://[email protected] Burjor

    As Pakistan thinks that America has taken more than it has given, over the years, and therefore we are not as close as we use to be as during the 50′s and 60′s, similarly if and when the Chinese come, very shortly Pakistan will accuse the Chinese of the same treatment, and will want them out.

    It must be understood, that the people who wield power in Pakistan, whether religious or political, have a very narrow vision of the world, they simply do not accept people of other religions, different races, different languages, different looks, different cultures. This attitude is going to play a role in the future relations between the two countries.

    Pakistani’s have an attitude problem. Look what happened to East Pakistan, Look what is happening to the Hazaras, look what has happened to the minorities, Hindus, Christians, Ahmadi’s etc. Pakistan has become a most intolerant nation.

    For the Chinese to come in on a big scale, in order to build infrastructure as the thinking goes, there will be many Chinese people settling in Pakistan for a long time. The Chinese will eat, drink, live as they do in China. With very narrow minded, intolerant behaviour, coupled with the Balochistan problems, terrorism, etc, this relationship is going to see the reality of life.

    When people from other nations come, the relationship undergoes real tests. Pakistan’s friendship with China is government to government, i.e.official. There is very little people to people contact. Consider how people from Pakistan have settled in China. Compare the numbers with the people who have settled in America, U.K. western countries. Therefore this relationship will undergo real tests, if and when the Chinese do become serious, which itself will take many years to decide. Recommend

  • QC

    If Pakistan cannot even handle a port, how can they launch Pakistan made missiles let alone a Nuke? Sounds fishy.Recommend

  • Siddiqui

    why o lord why!!! why they poke nose in neighbours’ matters. they have problem with everything. they never accepted the independence of this country. and they celebrate their so called “INDEPENDENCE DAY” although it was not actually independence. wake up wake up (o 0) with both eyes wide open. and they read and comment on articles even though they are rushing :-/ and on every article. nitin dont you have any work in your country??? Truth hurts…ouch….Recommend

  • Nitish

    @Siddiqui:
    Dude right now i m studying,working on a project and frankly commenting is part of my learning.Yes i was leaving for HAL and was in hurry.Some times i even put trash comments with lots of grammatical mistakes.You can call me a troll.Thanks to the ET moderator for editing my comments in better manner and correcting grammatical mistakes .I would always like a troll war on this forum however ET readers r very much sensible.TOI is too fatal for me.Anyway I just wrote whatever it came to my mind and i really dont care about others opinion.Recommend

  • Abbas, ZA

    @Siddiqui: We are thankful for the independence as the current state of Pakistan proves.When did you last read newspapers? 1970?Recommend

  • Mohsin Abid

    @Nitish:
    lmao for ur sense of humor :P nitish go read between the lines and rework on ur history and knowledge area , strategically important port <3 is the property of Pakistan,, China is just gonna help operating it and functioning it :P for its friend country named Pakistan , and u people are already out of ur senses :P hold ur horses and let this port function u will see then :P WHAT PORT GWADAR HOLDS FOR YOU :P
    no comments on ur purchasing power :P and purchasing those weapons :P but still one thing learn to make them :) outsourcing achi nhi :D Recommend

  • Sidrah

    It’s great that Gawadar is getting developed but why give full control to China? If it has such a huge strategic importance for Pakistan then shouldn’t we control it instead of giving it in the hands of a foreign country.

    In real life there are no friends just allies and how do we know that in time of need Chinese run Gawadar port could be used by Pakistan?

    Chinese are not only investing in Pakistan but in a lot of countries including western countries however their governments have made laws to safe guard the rights of locals and interests of the country in time of need. Pakistan has to do the same too.Recommend

  • Ahmed

    India is making objection for the sake of objection.

    Gwadar remains under-developed and Balochistan lacks the infrastructure required for any permanent Army/Navy bases. For trade you build one road or pipeline. For Army/Navy to be supplied, you need multiple wide road networks that can carry equipment. As usual, India is crying over nothing. Ignore them.Recommend

  • Nitish

    @Mohsin Abid:
    , China is just gonna help operating it and functioning it :P for its friend country named Pakistan , and u people are already out of ur senses
    Wishful thinking….
    but still one thing learn to make them :) outsourcing achi nhi :D
    Hame bhi achha nahi lagta par kya karein hamara neighbor pakistan hi to hai na….quite hopeful one day we will succeed to develop indigenous one..Recommend

  • Siddiqui

    @Abbas, ZA : dear i could not get your point. can you elaborate. and as per my comment the day they celebrate on 15th August, it was not an independence day actually, still they named it after ours. history…read read read….

    @Nitish: having views are different thing and opposing something just for the sake of opposing it is some thing different. indian media has brain washed indian population against pakistan that you guys always comment negatively.

    anyways its a never ending debate. enjoy your life as you please.

    life is too short to hate. love everything and try to live in peace.Recommend

  • Zakiya Baig

    A.S.A…
    If a person have useable thing but he can,t utilized for betterment of his life because he can’t refine it due to money or other problems. If he took up some initiative towards positive things like Pakistan did in the matter of Gwadar…..So, we should not claim wrong things towars descion. A person who is giving his precious thing to another its mean he is also feeling grief towards this act. But, he knows that i can’t use it as better as another can…..If i talk about India’s claim…..Listen we want peace and prosperity in this region. If we both not talk in a peaceful way in any matter and quarrling everytime we can not attain peace in our countries. We are youth we can bring change and our commulative cooperation towards positive things brought us on freindship. As a Pakistani i’ll say you I want peace and prosperity in the region. Not only my country also in your country b/c we all are human being. plz start it from today kuk bachy he baro ko kareeb lane ki koshesh karte hain. We should feel proud on our national Languages…Be happyRecommend

  • Ali Baba

    Again Pakistan Vs India Debate. I disagree we are different (two nation theory). We are the same. “STUPIDRecommend

  • F

    Your country, your port. Your decision – to be a permanent tenant in your own homeland. Yet another piece of crucial real estate rented out to yet another power. No lesson learnt from serving those Americans and those “strategic” assets from the Ummah. Recommend

  • G. Din

    Look for Chinese “experts” imported to run Gwadar to be picked up like sitting ducks by BLA because, after all, Pakistan has made China its partner in exploiting their natural resources without any benefit to them.
    They have done so before, too! Who can blame them?Recommend

  • Gratgy

    @Ali Baba
    Again Pakistan Vs India Debate. I disagree we are different (two nation theory). We are the same.

    No, we consider our territory as our mother, you mortgage your territory to the ChineseRecommend

  • Insaan

    @ss:
    this is none of you indians’ business even if we hand over whole Pakistan to China let alone the strategic location surrounded by indian agents

    It is shame no Muslim country is giving Zakat to Pakistan. Pakistan has to get help from people who don’t believe in GOD (Chinese) and also Christian majority countries.

    What happened to Islamic banking? Why no Muslim country wants to give Interest free loans to Pakistan?

    Talibans will never let something like this happen. As soon as they come in power they will take over the port and send Chinese back home.Recommend

  • allen

    @ss:
    just like u gave a large part of land to china in KASHMIR .Recommend

  • Milind

    @Ali Baba – Most apt & wisest comment on this blog..Recommend

  • Baloch

    Its is incredible to notice about the post and the comments about Gwadar which clearly mention the China’s gain,Indian concerns, Pakistan’s surrender and US dismay, but they all fail to highlight the most significant factor ” Balochs” . The utter disregard speaks volume about the mentality which has been suppressing the voice of Baloch for years. The events of last 8 years prove that without the consent of Baloch people, any mega project will succumb to failure.Recommend

  • sherkhan

    @Baloch:

    I think it is the Balochs that will benefit from the port as it will create jobs for them. Before that, it was just a useless port. I know the government is always against you people but it is also against the Pashtuns, the Hazaras and many others. We just have to wait for the right rulers to lead us and hope for better outcome from GwadarRecommend

  • sherkhan

    @F:
    I guess its the age of outsourcing ;)Recommend

  • sherkhan

    @allen:
    I second that ! I dont know why its hard for some to come out of their shellsRecommend

  • aba

    @Nishant:
    we Pakistanis are the one who supported more than 3 millions afghanis in war what the hell have you done for afghanistan we got destabilized due to this so kindly stop barking and dont get jealoused. tthank youRecommend

  • aba

    @ashu:
    than its our business to support mujahidin in kashmirRecommend

  • Naresh

    @Author Ji :
    .
    I doubt very much if China will use Gwadar for Importing Oil and Natural Gas emanating from Persian Gulf, Red Sea, West Africa etc etc.
    .
    For the above mentioned CHINESE IMPORTS, China has been Building an Oil and Natural Gas Pipe Line from the Myanmar Deep Water Port of Kyaukpyu to Kunming in China as Xinhua reports the pipelines are designed to carry more than 22 million tons of oil and more than 420 billion cubic feet of natural gas per year.
    .
    Please refer to the following Article :
    .
    China Kunming to Myanmar Kyaukpyu DWP pipelines to open in June 2013
    .
    http://www.oilseedcrops.org/2013/01/23/chinas-kunming-to-myanmars-pipelines-to-open-in-june-2013/
    .
    Additional Link :
    .
    Original Link XinHua News : China-Myanmar pipelines to be completed in May 2013-03-11
    .
    http://news.xinhuanet.com/english/china/2013-01/21/c_132116981.htm
    .
    CheersRecommend

  • noreen sajjad

    Gwader will boost up world economy and best chance for Pakistan to attract internation bussiness and prove it place as international responsible country of interest for all civilizations..Recommend