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Gwadar Port, Where Chinese And Pakistani Ambitions Meet

Gwadar, Pakistan
Gwadar, Pakistan
Emmanuel Derville

GWADAR — Landing at Gwadar International Airport is a bit like landing on the moon. The tarmac lies in the middle of a desert, and there's no other aircraft in sight except for a C-130 from the United Arab Emirates Air Force. The place seems all but abandoned.

In the area around the airport, houses under construction are scattered among dunes and bushes. Closer to the center of Gwadar, sand tracks run between the houses. This port city in the province of Balochistan on the Arabian Sea, is one of Pakistan"s poorest. The population lives on fishing. The beach from which the boats leave is covered with garbage, wrapped in a putrid smell.

But, like a mirage out of nowhere, a gigantic billboard for a real estate project announces the future: "Gwadar Green Palms housing project," the poster proclaims, showing glass towers sparkling in the middle of the night, lined up along a port. Although Gwadar is home to only 263,000 inhabitants, it's the spearhead of the project China announced five years ago to resurrect the silk roads between Asia and Europe.

Since 2015, China has invested some $55 billion in Pakistan to build roads, railways and power plants. With the China-Pakistan Economic Corridor, the CPEC, Beijing wants to open up the Western part of its territory by linking it to Gwadar and the Arabian Sea. Pakistani authorities are also thinking big — very big.

Dostain Jamaldini, director of the harbor and of Gwadar Port's Free Zone, heaps praise on the site's potential. "In 20 years' time, it will be one of the largest ports in the world," he says. "We've finished a 602-meter-long dock with five cranes to unload the containers. We're going to build five docks this year."

The key to the port's development will be the free industrial zone, which is expected to accommodate private groups and boost exports. For the time being, though, the dock seems to be at a standstill. Aside from a Pakistani frigate and a civilian boat, there are no ships on the horizon.

Pakistani authorities are also thinking big — very big.

Jamaldini continues his visit on the rooftop of his building, which offers an unobstructed view of the harbor and its surroundings. "Here you have a three-story office building under construction," he says. "And on these lands under development, we will have five plants built by Chinese and Pakistani investors. There will be an assembly site for motorcycles, a fishmonger's shop and a food oil factory, all for export only."

Barriers to growth

The official show of optimism is all well and good. Except it seems to ignore the many and very real obstacles that lie ahead, not the least of which are the shortages in Gwadar of such basic things as drinking water and electricity. For two years now, the parliamentary committee in charge of the CPEC has been highlighting that very point, noting, among other things, that with just 10 centimeters of rainfall per year, the region is one of Pakistan's driest. There have even been reports of people breaking into homes and business to steal water.

Education is lacking as well. In Balochistan, an estimated 73% of the population aged over 15 is illiterate, according to a 2004 census. Few of the new construction jobs are going to locals. That, in turn, is adding fuel to the fire of the province's decades-old independence movement. Bombings carried out by separatists and armed Islamic groups killed 134 people last year. Foreign dignitaries are thus a rare sight in Gwadar. A French parliamentary delegation to Pakistan in November couldn't secure permission to go there. And accredited journalists are kept away from the population.

And yet, at the highest level of government, confidence still prevails. Senior officials, generals, and some parliamentarians are convinced that the development of Gwadar and the CPEC will bring Pakistan out of the rut. "With the CPEC we will learn from the Chinese and draw inspiration from their business model," says Mushahid Hussain, a senator who chairs the parliamentary commission on the CPEC.

The business community also wants to believe in the project. "Some labor-intensive Chinese companies are starting to relocate abroad to lower their production costs," says Muneer Kamal, president of Pakistan Stock Exchange Limited, the Karachi-based stock exchange. "The CPEC provides for the development of nine special economic zones. This is an opportunity to attract Chinese groups and create jobs."

Solar-powered street lamps line the streets of Gwadar — Photo: wetlandsofpakistan/Wikipedia

Perfectly positioned

What Gwadar does have going for it is location — at the crossroads of Central Asia and warm seas. Its expansion illustrates the old Pakistani dream of connecting a port in the Arabian Sea with Central Asia, home to hundreds of billions of cubic meters of gas and billions of tons of oil. For decades, Pakistan has aspired to become the hub from which these reserves would be exported throughout the world.

While the construction of a gas pipeline from Turkmenistan to Afghanistan and Pakistan started in 2015 in Turkmenistan, the war in Afghanistan constitutes a serious obstacle. Nevertheless, Turkmenistan, Uzbekistan, Tajikistan and Kazakhstan have all expressed their desire to use the port of Gwadar for their exports.

The expansion of Gwadar only exacerbates Pakistan's rivalry with India. Last December, Iran inaugurated the port of Chabahar in collaboration with the Indians. New Delhi co-financed the work, after committing in May 2016 to a loan of $150 million. The two partners want to endow Chabahar with a capacity of 8 million tons of cargo per year, compared to 2.5 million currently. India must develop its own access route to Central Asia, bypassing Pakistan.

Pakistani authorities aren't letting that dampen their enthusiasm. The port of Chabahar, they note, won't be as deep as Gwadar. They also downplay the complicated security situation. Between 2007 and 2015, the conflict with the Pakistani Taliban plunged the country into civil war. Countless foreign investors fled the country. Since then, violence has quieted down and Pakistan hopes to turn the page on the dark years of terrorism, though in Quetta, the capital city of Balochistan, attacks continue to take place on a regular basis. Still, the vice-president of the Chamber of Commerce, Muhammad Ayub, is confident that "in 15 years, we will become an economic tiger."

Strings attached?

Pakistanis are banking on a privileged relationship with China. "We've been the best friends of the Chinese since the 1960s," says Sen. Hussain.

But Chinese help is not a gift.​

In Gwadar, Dostain Jamaldini swears that Chinese aid is purely altruistic. "They're doing it for us! Together, we have already built the Karakoram Highway (linking northern Pakistan to Western China through the Karakoram mountains). We helped China get closer to the United States by arranging the meeting between Mao and Kissinger in 1971. And the Chinese are the only ones who have agreed to invest in Gwadar. The Americans, the Japanese, the IMF, the World Bank all refused," he argues.

But Chinese help is not a gift. Pakistan's minister of ports and shipping said last year that Gwadar was leased for 40 years to the China Overseas Ports Holding Company, which collects 91% of the revenues. The CPEC's $55 billion is financed through loans and investments. "There are capital outflows in the form of loan repayments and dividends paid to Chinese groups. All this weighs on our foreign exchange reserves, which are already in bad shape," the economist Kaiser Bengali warned in the columns of the daily The News. "The government didn't explain how it was going to repay all this."

There have been rumors, furthermore, about the development of a Chinese naval base. Located a short distance from the Strait of Hormuz, Gwadar offers a strategic position for the Chinese war fleet, which has bolstered its presence in the Indian Ocean in recent years. Jamaldini admits that the possibility of Chinese frigates mooring in his port is quite real.

"The Pakistani navy already has a base and logistics center here," he says. "A warship can dock wherever it wants as long as it pays. If a frigate arrives in Gwadar, it will improve the port's revenues. But our priority is to attract cargo ships."

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