Review of China's role in Development of Gwadar Port.

 
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Byline: Ahmad Ejaz and Unsa Jamshed

Pakistan-China strategic relations have been strengthened more since China has become the primary investor for building the Gwadar deep sea port. Chinese initiative to develop Gwadar port is good indicator of the steady expansion of Chinese maritime interest and strategic influence in South Asian region as well as Central Asia Persian Gulf and West Asia as port would connect these regions. Gwadar Port endures excessive strategic and economic significance for Pakistan and China as well. After Karachi and Qasim, it is the third most important deep-sea port of Pakistan. It is situated at the junction of international sea shipping and oil trade routes. The port offers China with a influential strategic base in the Arabian Sea and also the Indian Ocean. This could have regional effects in the long run.

The Port will help Pakistan monitor the sea lines of communications (SLOCs) originating from the Persian Gulf and the Strait of Hormuz. It will provide strategic leverage to Pakistan vis-a-vis India, as the port is far from Indian reach as compared to the other two Pakistani ports.

Introduction

Two major operational ports in Karachi and Bin Qasim were not properly meeting the requirements of shipment on regional level. After collapse of the Soviet Union, the central Asian region comprised of landlocked states also had acute need to have some access to port for trade. In 1992, the Ministry of Communication of Pakistan came up with an advertisement in the newspapers calling for 'expression of interest' in the Gwadar deep sea port. Eighteen foreign companies and twelve local companies submitted their expression of interest. It was decided to start the project with a Dutch company but before the agreement could have been signed to start the work on the port the National and Provincial assemblies in Pakistan were dissolved in 1993. After that Omani government also showed interest in the port to start some project there. Commerce Minister of Pakistan Chaudhri Ahmad Mukhtar visited Oman to discuss the project.

But deal with Omani government could not be matured because the opposition parties in Baluchistan Assembly and National Assembly alleged that the Gwadar would be under the US control as Oman had cordial relations with US. Finally Oman government lost its interest in the port.1 An international Consortium of Port Consultants, M/S PosfordDuvivier and Gifford and Partners of U.K in association with M/S Techno Consultant of Pakistan were appointed in 1996 to work out the detailed design of the port. The consultants suggested that port would be complete in two phases.2 But no progress was made.

China's Interests

General Pervez Musharraf took the construction of Gwadar port seriously. In May 2000, in the 11th session of Pak-China Joint Economic Commission, China had showed its interest in the construction of Gwadar port.3 When Chinese Primer Zhu Rongji visited Pakistan in May 2001 General Musharraf discussed with him the construction of Gwadar port.4 Communication Minister of Pakistan Javed Ashraf Kazi explained to him the strategic importance of the port.5 The construction of the port was expected not only to attract the trade and industry but also to open the door for tourism there and create more jobs in Baluchistan leading to the alleviation of poverty in the province.6 Zhu Rongji expressed his willingness to provide financial and technical assistance for the development of port.7 Later on Chinese Communication Minister Huang Zhendong visited Pakistan in June. He met Musharraf and discussed with him some details of the construction of port. The Chinese delegation also visited the site of port.

Huang told Pakistani officials that China was willing to extend all possible support based on the recommendations of experts.8 Chinese experts rejected the initial design of Gwadar port that was made by a British firm.9 According to Chinese experts it lacked the planning to accommodate long term requirements. Following the experts' recommendations, Pakistan requested China to take over the design of the project itself. The new design of the port included a large railway track and stations to connect Gwadar with rest of the Pakistan as well as with other countries such as Afghanistan, Central Asian States and Iran.10 Consequently the Chinese government announced $198 million financial assistance for construction of the phase-I of the port.11 Rest of the money was to come from the government of Pakistan, as the total cost of the project was $ 248 million.12 The break-up of Chinese assistance was as follow,

Grant $ 18 million: Interest free loan $ 31 million

Consumer loan $ 58 million

Buyers Credit $ 60 million: Total $ 198 million.

Pakistani component $ 50 million.13

Pakistan Minister of Finance and Economic Affair Shaukat Aziz visited China in August 2007 to negotiate the terms of credit for the project. He also signed three agreements relating to the construction of port. These agreements were,

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