ISLAMABAD, PAKISTAN — Pakistan recently handed over management of its strategic deepwater Gwadar seaport to China. Both countries insist the deal is a “purely commercial venture.” But critics and financial analysts are skeptical about the remote port's economic viability and believe it will be used for military purposes.
The Gwadar port lies near the Strait of Hormuz, gateway for about 20 percent of the world’s oil. Beijing provided most of the port's initial $250 million construction cost, as part of a plan to establish a trade and energy corridor from the Gulf, through Pakistan and on to western China.
Since it was first handed over to a Singaporean operator in 2007, however, the isolated facility has been a commercial failure. Baluchistan's ongoing instability and local political opposition are largely responsible.
But Pakistani authorities blamed the Singaporean operator and decided to transfer control to a state-run Chinese company. President Asif Ali Zardari oversaw the signing ceremony in Islamabad.
“The award of this contract opens new opportunities for our people, particularly for the people of Baluchistan. It gives new impetus to Pakistan-China relations. It takes a step further our political cooperation into the realm of economic cooperation,” said Zardari.
Supporters of the deal, such as director of the privately-run Strategic Studies Institute, Fazal-ur Rehman, hope the Chinese intervention will speed up the critical improvements still needed at the port.
“It is still an ongoing project. It is not complete. So, by bringing in China means that we can ensure investment on the infrastructure, we can ensure investment on the up gradation and completion of the project,” said Rehman.
Many critics in Pakistan remain skeptical that anyone will be able to make Gwadar economically viable, given the instability and poverty of surrounding Baluchistan province. They say just building the road and rail links to the port could take years - if they are ever built at all.
Ishaq Baloch, a senior nationalist leader in Baluchistan, said federal authorities never consulted with local officials on the deal with China.
“When you will not give the sense of ownership to the native people, they will oppose the mega projects. They will oppose such economic activities if they are not getting benefit from them, and we have a very bitter experience about [previous projects run by] China [in Baluchistan]" said Baloch.
Independent analysts, like former ambassador Arif Ayub, say Pakistani policy makers long have warned about the challenges of developing the Gwadar port. He said handing control to China may not yield any economic benefits.
“It is purely a white elephant [expensive business venture without value], which we are trying to wash our hands of,” said Ayub.
In India, officials have called China's role in the port “a matter of concern” because of suspicions it will be used by the Chinese Navy.
“We try to maintain a balance in our country and there is a need to take steps to maintain this balance between India and China on this [Gwadar port] issue,” said Indian Foreign Minister Salman Khurshid.
Pakistan foreign ministry spokesman Moazam Ahmed Khan dismisses such concerns and insists the port remains a viable business opportunity, despite its challenges.
“I think we should only look at this venture as an economic and commercial venture solely focused on improving development of the area helping Chinese good[s] reach other markets, getting China a shortest route for its energy supplies,” said Khan.
If successful, the Gwadar port could be a key piece of China's growing energy infrastructure, cutting by half the distance between China's western provinces and the sea.