Wednesday, 22 October 2003

GWADAR AND CHABAHAR: COMPETITION OR COMPLIMENTARITY?

Published in Analytical Articles

By Rizwan Zeb (10/22/2003 issue of the CACI Analyst)

BACKGROUND: Pakistan and China last year signed a deal to build the $248 million deep-sea port, to be completed in March 2005. China is funding three-quarters of the project, supplying $ 198 million in a mixture of loans and grants, and Islamabad the remaining $ 50 million. Pakistan intends to take on other Gulf ports, especially Oman’s Salalah and UAE’s Jebel Ali and offer Central Asian states their most efficient warm-water access to both the west and the east.
BACKGROUND: Pakistan and China last year signed a deal to build the $248 million deep-sea port, to be completed in March 2005. China is funding three-quarters of the project, supplying $ 198 million in a mixture of loans and grants, and Islamabad the remaining $ 50 million. Pakistan intends to take on other Gulf ports, especially Oman’s Salalah and UAE’s Jebel Ali and offer Central Asian states their most efficient warm-water access to both the west and the east. Gwadar will be the shortest route for the Central Asian states and their proposed east and westbound exports of oil, gas and goods if the plan goes well. The Pakistan-China mega project was inaugurated in April 2002. As this ambitious deep sea port is now under construction, and if the vision of people at the helm in Islamabad and the Chinese builders is realized, in every likelihood it will be transformed into a futuristic gateway for trade to landlocked Central Asia. The location of Gwadar, on the Arabian Sea coast in South-western Baluchistan, is strategically significant as it is just on the opposite end of the Gulf of Oman and the straits of Hormuz. Pakistan’s National Highway Authority (NHA) and the Frontier Works Organization (FWO) are tasked to build a 700 km coastal super highway, which as planned will link Gwadar with the rest of Pakistan. This highway will link Karachi on the east with Jiwani to the west, close to the border of Iran. It is estimated this highway will most likely be completed alongside the Gwadar port. Goods shipped into Gwadar will be taken by road to Afghanistan via either the eastern route over the Punjab or in the future through a highway to Quetta and Qandahar. Once in Afghanistan, a road network currently under construction will take the goods to Tajikistan, Uzbekistan, Turkmenistan and deeper into Central Asia. Pakistan is very optimistic about the prospects and impacts of Gwadar. However, it seems that the project might have to face competition from the Iranian port at Chabahar which is also currently under construction. This implies that Gwadar will not be able to monopolize on a position as the main route to the sea from Central Asia. Iran, with assistance form India, plans to channel and monopolize trade from Tajikistan, Kyrgyzstan and Kazakhstan destined for the East and the Gulf via Chabahar. Some analysts assess as high the likelihood that Chabahar could actually grow significantly once the port project materializes.

IMPLICATIONS: The Iranian leadership is ardently and promptly working on the construction of the Chabahar port, which they see as an instrument in their policy to escape international isolation. Work is also swiftly underway for the construction of the Iran-Afghanistan transit highway. The third phase of the construction of this Transit Highway began on July 14, 2003. The estimated cost of the project’s third phase is 43 billion Iranian riyals and it is likely to be completed by March 2004. In this phase, 15 km of highway will be built, connecting Zahak district to the border post and onwards to the silk bridge being constructed over the Paryan river which serves as a natural border between Iran and Afghanistan. It has also been noted by observers that an estimated 60 per cent of construction work on the silk bridge has been completed. The main hurdle in the early completion of the highway is the bridge on the river Pyanj at Bandar Sher Khan on the Tajik-Afghan border. Interestingly, the US government is financing $21 million for the construction of this bridge. The three parties, Iran, Tajikistan and Afghanistan, have also recently signed the Anzob tunnel project agreement. This is a significant development, as this tunnel would provide safe and uninterrupted road access to the Chabahar port from Tajikistan. Iran has also agreed to provide Tajikistan a grant of $ 10 million for the speedy completion of the project. According to media reports, Iran has also decided to extend a $21 million credit to Tajikistan for developing its transportation and road sector. The development of two competing seaports as the gateway to central Asia is not bad, especially for the Central Asian states. However, if the parties try to compete and undercut each other, these projects could turn into another regional tussle. Instead of going solo, both Islamabad and Tehran may still explore ways to work together on the issue. The need of the hour is that Islamabad and Tehran have a joint approach on these projects instead of competing with each other. Tehran may not be able to win many friends in the region and thus may not be able to get rid of its isolation. Pakistan also feels a need to take measures to restore mutual trust with Iran. Especially now that the Taliban factor is gone, the endless competition is no longer necessary. Once this is done, there is no reason for not carrying forward the respective infrastructural initiative of Iran and Pakistan in mutually advantageous complementarity to each other. The initiative for developing the new Persian Gulf port of Chabahar can quite conveniently be linked up with the fast-developing Gwadar port.

CONCLUSIONS: The Pakistan-China joint venture to build a deep-sea port at Gwadar will be completed by March 2005, while Iran is working frenetically to complete its rival port, intended to channel trade from Tajikistan, Kyrgyzstan and Kazakhstan intended for the East and the Gulf, via Chabahar to India. Working in competition, these two projects will keep fueling the Iran-Pakistan rivalry, while this is not in the interest of either state, both of which face enough problems on other fronts and would be well-served by deepening the process of normalization in relations that has been initiated. A positive outcome of these two apparently rival projects would be to find mutual advantages and build them in complementarity to each other. The two projects can easily be linked with one another, and server different sectors or markets, reducing competitions but also reducing expensive duplication. This, if ever done, will dramatically transform the geostrategic landscape of the region. AUTHOR’S BIO: Rizwan Zeb is an Islamabad based security Analyst and Mahbub-ul-Haq Fellow with the Regional Center for Strategic Studies, Colombo, Sri Lanka. He is currently working on a book on Pakistan-Central Asian relations.

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