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    South Asia
     Aug 9, 2006
Pakistan's port in troubled waters
By Elizabeth Mills

The port at Gwadar is without doubt currently Pakistan's flagship infrastructure project. A source of great pride for the Pakistani government, its much anticipated inauguration as the country's energy hub has been twice delayed and it is envisaged to become operational by year's end.

Built with Chinese assistance - just how much is debatable, though US$200 million for the first phase is an accepted figure plus loans - this multibillion-dollar scheme is regarded as not only an important economic asset but also a strategic one.

The first phase included the construction of three multi-purpose ship berths, while the second, to be completed by 2010, involves nine more berths, an approach channel and storage terminals, by which time it will provide full warehousing, trans-shipment and



industrial facilities. The Pakistani government is positioning Gwadar as "an energy port and hub for storage and refining".

No country knows the strategic value of the port more than India, which is unsettled at the prospect of having at the very least a possible Chinese listening post so close to home and at worst a possible Chinese naval presence on the Indian Ocean.

Consider for one minute, however, the possibility that despite the hype, fears, euphoria and general interest, Gwadar might just be a big, lumbering white elephant. Consider also the possibility that the security situation is now so poor in the area surrounding the port - and more widely in the surrounding province of Balochistan - that even the port's authorities are reportedly questioning whether the facility can become operational in the near term.

Autonomy-seeking rebels are fighting for greater political rights and a bigger share of profits from gas-rich Balochistan's natural resources. According to official data, there were 187 bomb blasts, 275 rocket attacks, eight attacks on gas pipelines, 36 attacks on electricity-transmission lines and 19 explosions on railway lines in Balochistan in 2005. At least 182 civilians and 26 security-force personnel died in the province during last year.

Consider further the possibility that the Chinese became entangled in Gwadar's construction as a mere investment opportunity rather than as a part of a grand strategic plan, and may have come to regret the decision as the death toll of their engineers working on the project has risen and the obstacles to the port's construction and operation increased.

These considerations aside, let's take a look at the development and its proposed facilities. Gwadar is in the restive southeastern province of Balochistan, sitting on the southern Makran coast, about 70 kilometers from the border with Iran and about 320km from Cape al-Hadd in Oman.

Pakistan already has one major commercial port at Karachi, but it is envisaged that while Karachi - due for expansion and modernization - will remain the key commercial and naval port, Gwadar, given its position, will be a regional energy hub.

Given that it is situated alongside sea lanes near the Strait of Hormuz, through which about 40% of the world's oil tankers pass, the government is eyeing Gwadar's position as a key entry point for energy supplies for Central and South Asia, as well as western China.

Alongside this, the Pakistani government has ambitions to develop Gwadar into a South Asian Las Vegas, a regional entertainment hub filled with casinos and five-star hotels.

This is a far cry from what Gwadar was just five years ago. Before the port's construction began (2002), Gwadar was considerably smaller, with just one high school, basic infrastructure and limited job opportunities.

In fact, most employment centered on fishing and small-scale smuggling in what is the country's poorest province. As a result, when the authorities made the port announcement, the town's inhabitants welcomed the decision, envisaging better prospects. After all, they had benefited from the construction of the Makran coastal highway, linking Gwadar with Karachi. Why should the port be any different?

Inevitably, there were dissenting voices, not least the tribal bigwigs who feared that urbanization would deprive them of their traditional power bases and influence. That said, for the man in the street, the positives of such a large project looked set to outweigh suspicions and fears.

In fact, what has unfolded is a tale of displacement, lost job opportunities, dubious land deals and increasing local violent hostility. The insurgency-related problems of Balochistan are well documented, but have been exacerbated in recent years by the new security threat emanating from the discontent surrounding the port's construction. A sense of local nationalism has emerged, fueled by disengagement with the fruits of the project.

The rapid increase in land prices in the region has made a small elite extremely wealthy, though for the everyday resident of Gwadar the reality is very different. Allegations of land grabs and shady deals are rife with the benefits accrued by influential outsiders and their cronies coming at the expense of the town's indigenous inhabitants. Most residents have also found themselves running short on water as well as displaced, rehoused inland, a considerable distance from the sea and their traditional fishing areas. And Gwadar reportedly still has just one high school, despite its burgeoning size.

Too little and too late, the authorities are now acting. The director general of the Gwadar Development Authority (GDA), Mir Ahmed Bukhsh Lehri, is on record as having in May pledged a huge infrastructure package. Lehri announced that infrastructure would be of an international standard and include a 350-bed hospital, a sports complex, a park, a mosque and a desalination plant as well as two new harbors and housing for locals. Perhaps this would have been welcomed several years ago, but it is difficult to envisage anything but a cold and skeptical reception to this news now.

If proof were needed of the local population's changed attitude, it is witnessed in the security situation. When the port's construction first started, it was reported that about 200 Chinese engineers operated freely in the town, welcomed by its inhabitants and housed without security fears among the population. As the project has developed and local grievances increased, the number of engineers has steadily decreased and the 20 or so who are now left are stationed at the army's barracks, under guard 24 hours a day. A number have died in attacks, the largest of which occurred in May 2004 when three were killed and 11 others (nine of whom were Chinese) injured in a car-bombing.

At odds with this disconcerting reality is the international attention being paid to the port. Admittedly, some of the key international port operators are notably absent from bidding for the project, but even so, the past few months has seen a flurry of speculation over which international company would win the rights to operate the port. Will it be DP World of the United Arab Emirates or Hutchison Port Holdings of Hong Kong, or perhaps even Singapore's PSA International, all of whom have submitted an expression of interest (EoI)? Perhaps, however, the question that should be asked is whether the whole scheme is actually viable.

Currently, the Pakistani government forbids foreigners from traveling without its permission in parts of Balochistan because of the broad security risk. In fact, anyone seeking to do so first has to secure a no-objection certificate. It is unclear just how the authorities are going to get around this obstacle once Gwadar the tourist city is up and running.

As the situation stands, a five-star entertainment resort in a part of Pakistan surrounded by barely controlled desert (and not forgetting that Afghanistan's Taliban-heavy provinces border Balochistan) will surely top the attack list for a range of militant and terrorist elements. Partying aside, the prospects similarly look poor for the viable operation of the port.

Its inauguration has been delayed twice, and even now it is not entirely clear when it will begin operating. It appears that the port is at the stage of becoming operational but remains unsupported by surrounding infrastructure.

President General Pervez Musharraf has belatedly urged the various ministries to work together on this, with the failure to put in place rail, road and communications links to the rest of the respective networks preventing the port's grand opening. So what's causing this delay? A bit of ministry rivalry, perhaps, or a lack of funds? Apparently not. No, instead, the security situation is the key problem.

This is evidenced in the current debate over rail links. All that was required was a link from Gwadar to the network at the Quetta-Kohi-Taftan junction. Reports that emerged last month suggested that a feasibility study had been concluded and that "problems" had been identified, prompting the ministry to consider alternative routes. The original proposed route ran through a particularly restive central part of the province, but the alternative poses topographical challenges, given the area's steep gradients.

Add to this the security situation in Gwadar itself and the vision of that white elephant looms large. Sources who spoke to Asia Times Online were allowed on a recent visit to the area and secured the rare opportunity to talk with port officials. Surprisingly, they proved to be candid in their views, openly expressing their fears that poor security in the area would constitute such a deterrent that the port would not be able to function normally. Certainly, the regular news reports detailing bombings in and around Gwadar underline this continuing threat. A recent selection reveals attacks on hotels under construction and even the GDA's offices.

The government cannot be oblivious to the situation around Gwadar, though it has arguably been overshadowed by the wider ongoing separatist insurgency in the province. It is notable that a dual strategy for Balochistan's troubles has emerged more clearly during 2006.

The federal authorities currently favor a policy of targeted military action accompanied by effective development spending. Interestingly, negotiation does not appear to be an option, with regional leaders either in detention or served with exit certificates, preventing their return to the province without arrest.

A total of Rs10 billion (US$167 million) has been funneled into developmental projects in Balochistan and the Federally Administered Tribal Areas, though it is unclear whether any of these funds will be targeted on the needs of residents or whether they will service the requirements of a burgeoning tourist center.

In many respects, the government is warranted in trying to exploit the location of Gwadar and should be both commended and supported for its foresight in looking to tap into the lucrative energy-transit network.

That said, if it fails to surmount the security problems and, even more basically, cannot put the fundamental infrastructure in place for the development, Gwadar's port looks set to fail at the first hurdle.

Not only will this come at considerable economic cost, but it will undermine relations with China and simply make the Pakistani authorities look foolish. If Gwadar is a test case for Pakistan's wider aptitude for diversification and grand-scheme expansion, it appears it will receive a poor report card.

Elizabeth Mills is an analyst covering political and security issues, with an emphasis on South Asia.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)


China's pearl loses its luster (Jan 21, '06)

China's pearl in Pakistan's waters (May 4, '05)

 
 



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