49. A Tale of Two Ports; Gwadar versus Chahbahar

(Published in  World news report and Tazakhabarnews on 14 May 2015)

Two important declarations in the past few days have brought in to focus the importance of the Makaran Coast to Middle East as well as the Central Asian Region.
Firstly, the Chinese president Xi Jinping launched $46bn worth of infrastructure and energy projects in Pakistan during his recent visit. The main thrust of these is to strengthen the China-Pakistan Economic Corridor CPEC between the Pakistani port of Gwadar and the Chinese Xinjiang region. This also forms a part of the Chinese one belt one road and maritime silk route programmes. Chinese government and banks like, Industrial and Commercial Bank of China Ltd and China Development Bank will provide funds to Chinese companies investing in the projects. The likely Chinese companies are China Power International Development Ltd, Three Gorges Corp, ICBC Corporation, Zonergy Corporation, and Huaneng Group. The Chinese president has linked the investments to the safety and security of Chinese assets and workers since the projects involving railways, pipelines, and roads will cross through the insurgency infested areas of Balochistan.
The second important event has been the signing of MOU between Government of Iran and Government of India to develop the port of Chahbahar. The project will increase trade links between both countries. The Indian side has pledged to commit about $85 million to construct container and multi-purpose terminals.
Due to the geographical locations of Pakistan and Iran to the Caspian region and the fact that both provide the shortest routes to Arabian Sea ports, has led both the countries to progress developing infrastructure and connectivity of their ports with the Central Asian Region(CAR). Apart from oil and gas, the ports expect to harvest other trade commodities like cotton, which currently are routed through Russia to Middle East, East Asia and South Asia.
Just over 100 km apart, Gwadar the Pakistani port and Chabahar the Iranian port are competitors for accessing the CAR markets. Both Iran and Pakistan are wooing Afghanistan by giving trade and fees incentives to favour their respective port. Pakistan however fears that “Chabahar port would inflict a huge financial setback for Pakistan”.
As far as Afghanistan is concerned, its natural resources include, 2.2 billion tons of iron ore, 60 million tons of copper, and 1.4 million tons of rare earth elements such as cerium, neodymium, and lanthanum. It also has lodes of gold, silver, aluminium, zinc, lithium and mercury. The carbonite deposits in Helmand province itself are valued at $89 billion. The US, Russia, China, India, Pakistan and Central Asian Republics have shown interest in these deposits. Afghanistan being a land locked country is currently dependent upon Pakistani ports for its international trade. If Chahbahar port starts operating it would provide an alternate port to Afghanistan without encumbrance of insurgency. In view of the above, it makes sense to look at both the ports in some detail.
Gwadar
Gwadar lies in the Baluchistan province of Pakistan. A province, which is rich in natural resources like oil and gas. In fact, of Pakistan’s ~28tcf gas reserves, ~19tcf are in Baluchistan. The Baloch claim that, despite being the largest gas producer in Pakistan, they get only 20% of the royalty payments received by the other two gas producing provinces. They thus subsidise the rich provinces, even though they are in fact the poorest in the country and that nothing much has been done by the government for their development from the vast revenue generated from Baluchistan. No wonder that the Sui gas fields which lie in Bugti tribe controlled region, are the ones most affected by militancy. Baloch militants pose a credible threat to the vast span of gas pipelines, which are not possible to police or monitor effectively (for e.g. The Sui Southern Gas Company has a pipeline network of over 27,500 km covering Baluchistan and Sindh).
Current Phase of Insurgency. The Gwadar port development project was commenced in 2002.Millions of dollars poured in to the quiet village of Gwadar from Chinese and Pakistani investors (~$200mn was the Chinese investment for the first phase of the project completed in 2005). The premise was that Gwadar would be converted in to major port hub on the lines of Dubai and the locals would benefit most. The Baloch soon realised that this was not to be, and that once again their natural resources were being siphoned out by the Central government. In 2006, Pakistani Cobra helicopter gunships and F-16 fighter jets attacked Baloch areas suspected of insurgency; state organised disappearances and kidnappings culminated in killing of the Baloch leader Nawab Akbar Khan Bugti. The Then President Musharraf told his core commanders “the writ of the Pakistani government will never be challenged. Let that be a warning… if anyone challenges the writ of the government, I will crush it.”
‘Great Land Robbery’ story was published in The Herald in Jun 2008, claiming that hundreds of thousands of acres of land had been illegally allotted to non resident military and civilian personnel and resold to builders for residential and industrial purposes. The Baloch realised that their illiterate poor had been deprived of a rightful share in Gwadar’s growth. The insurgent attacks spiralled to about 33 attacks per month in 2009 and continue to this day, Pakistan blames India and Afghanistan for fanning the tribal Baloch sentiments against military excesses and economic exploitation. Many foreign analysts have however not found any credible evidence actively linking India with the Baloch insurgency. Gwadar has thus become the lynch pin for the Baloch hatred of Punjabi elite. Towards the end of Xi’s, visit this April 2015, separatist Baluch rebels launched attacks on a coastal radar station near Gwadar, and on a security force convoy in the Awaran district of the province.
Gwadar Port. Gwadar had a population of about 5000 in 2001, mainly comprising of poor fishermen, once the Chinese assisted deep-water port development began, it has crossed a population of 125000. Apart from a network of roads, rail air and infrastructural projects, Pakistan plans include a liquid natural gas (LNG) terminal, an international airport, a cement plant, an oil refinery, and a steel mill. China’s interests at Gwadar are very clear; China is looking for monitoring of its Gulf oil supply route as well as an opening for import/ export trade from its Muslim majority Xinjiang Autonomous Region.
The first phase of Gwadar port was completed on schedule by the Chinese in 2005. The running of the port was leased for 40 years to PSA International of Singapore in 2007 by the Pakistani government. The agreement however ran into problem with Pakistan blaming PSA of not keeping their end of contract with respect to the investments promised by them. The running of the port has now been handed over to the Chinese. With Gwadar port commencing operations it has given the Chinese an opening in to the Arabian Sea, a strategic depth to Pakistan navy and some cause for worry to India. In 2008 the then Chief of Naval Staff, Indian Navy Admiral Sureesh Mehta said Gwadar could be used by Pakistan to “take control over the world energy jugular.”
Importance for China. Oil tankers from Gulf transit about 6000 nm and those from the African coast transit about 10,000 nm before they discharge their energy cargo at Chinese ports. Both the tankers routes have to pass through Malacca Straits in addition to problem zones in their respective routes. If tankers can unload at Gwadar, they would have to travel only about 680 nm from the Gulf and about 3000 nm from African coast (Angola). Pak-China pipeline from Gwadar to Kashghar in Xinjiang is likely to run parallel to the Karakorum highway and cover a distance of about 1500 miles over tough mountainous terrain. It would also provide berthing facilities to PLA Navy. Indicators that China is seriously contemplating Pak-China energy corridor are evident from the following development projects:-
-Phase II of Gwadar port and International Airport at Gwadar by China Harbour Engineering Company.
-Petrochemical city (including oil refining capacity of 421,000 bpd) by Great United Petroleum Holdings Company Limited.
-Rail link up to Xingjian by Dong Fang Electric Supply Corp.
-Upgrading of Karakoram high way.
-Construction of Kazakhstan-China and Turkmenistan – China pipelines and their eventual augmentation by feed from Gwadar-Kashghar pipeline.
– Most important of all the recent pledge of nearly $38 bn (of a total of $46 bn) infrastructure and energy projects in the region by the Chinese President.
Chahbahar
The Chabahar port project is very important for Afghanistan since it would enable shipping goods to Middle East and Europe as well as allow inflow of key goods to Afghanistan. Economically it would imply a significant boost to its trade and investment in much needed infrastructure. This has now become a distinct possibility with the US and Iran about to reach an understanding on Iran’s Nuclear program.
The port of Chabahar is located in the south of Baluchistan and Sistan Province and it is the only Iranian port with direct access to the Indian Ocean. It has historically been a trade centre because of its access Oman Sea and Persian Gulf. Chabahar port has an area of 11 sqkm and is interestingly located at the same latitude as the Miami port in the Florida. The weather at Chabahar port is quite similar to Miami port in that it is very pleasant in summer. It is also one of the coolest ports of the Middle East. The port has been under construction since 1973 but lack of resources has resulted in delays in its completion. Shahid-Kalantary and Shahid-Beheshti are two important ports in Chahbahar. Its location outside of the Persian Gulf and Strait of Hormuz has been very beneficial to Iran’s trade since the Iran – Iraq war. The port will be connected to the Trans-Iranian railway with the completion of the Kerman-Zahedan railway.
A trilateral agreement was signed between Iran, India, and Afghanistan In 2003. India was to build a road, known as Route 606, connecting Delaram, the border city of Afghanistan to Zaranj the Capital of Nimruz province in Afghanistan. Iran was to build a highway from Chabahar up to Delaram. Border Roads Organization of India constructed the Delaram – Zaranj highway and it was completed in 2009.
With the likelihood of West easing sanctions on Iran, India has once again stepped in with a modest investment to construct container and multipurpose terminals; this would make Chabahar operational in future. It would also provide India with ease of trade with Central Asian Republics, Afghanistan and Iran. Chahbahar does not lie in an insurgency-ridden area like Gwadar therefore, it is clear that nations would prefer Chahbahar.
India needs to keep promoting Chahbahar as a strategic port on the Makaran coast as it addresses both the ease of trading as well as India’s security needs in the region.