The Chabahar-Gwadar Conundrum

The prevailing sense of elation about the supposedly ultra-bright prospects of the Gwadar-CPEC projects has in recent times been dampened by news about the expected rise of  an adjoining port, a mere 70 kms away across the border in Iran. The signing of a trilateral MOU between India, Iran and Afghanistan to facilitate Indo-Afghan trade through Chabahar has added to the speculation. It is thus important to analyse such conjectures before they fully embed themselves  in our collective consciousness and thereby mislead the country into a knee jerk response with potentially disastrous consequences.

That this particular MOU, in which India has reportedly pledged up to $ 500 million for ‘constructing’ the port of Chabahar, is part of an international conspiracy to derail the Gwadar-CPEC projects, has gained broad acceptance. The simple fact however is that Chabahar existed as a port long before Gwadar was even conceived. Originally planned in the early 1970s as a naval base, the twin port complex gained prominence during the Iran-Iraq war due to its strategic location, having direct access to the Indian Ocean and being away from the war zone. It’s last and largest berth, 265 meters in length, was constructed in 2004, giving it an annual cargo handling capacity of 2.5 million tons overall. The only reason Iran hasn’t upgraded the port’s infrastructure further is because the need didn’t exist. Bandar Abbas and the adjoining container port of Raja’ie possessed ample capacity to cater to the trade needs of the country as well as handle the transit trade of CAS and Afghanistan. In the post sanctions scenario however, Iran is feeling confident enough to seek investment for a new port at Qeshm Island which would be capable of handling the largest container ships in the world.

Iran however eyes the ports of Chabahar along with its adjoining free zone as the key to the opening up of its underdeveloped eastern province, more or less like China considers Gwadar as vital to the development of its western region. The port holds special significance for India owing to its proximity to western Afghanistan, and through it to Uzbekistan and beyond.

A plausible and perhaps more coherent explanation about the alleged conspiracy is that it is simply a commercial arrangement made possible by a convergence of interests, as well as the lifting of UN sanctions on Iran. Just as Pakistan is seeking investment in Gwadar port and its adjoining Free Zone, Iran is doing the same in Chabahar. And just as Pakistan won’t brook any external interference in its pet CPEC-Gwadar project, Iran, also a sovereign country, may not take too kindly to any unwanted intrusion in its domain either.

In fact, Indo-Afghan interest in Chabahar was a foregone conclusion after Pakistan had turned down Afghanistan’s request to permit access to Pakistani territory for its trade with India. Moreover, bureaucratic bottlenecks have already forced Afghanistan to reroute the bulk of its transit trade through the Iranian port of Bandar Abbas. India’s interest in using the port of Chabahar was no secret, but it had to bide it’s time till Iran was rid of international sanctions. While preparing for this eventuality, India busied itself in laying an extensive road network within Afghanistan, from the border crossing at Zaranj to Delaram in the province of Nimruz, thus linking it with the main east-west highway between Herat and Kandahar. Iran is also constructing a rail line to link Chabahar with the main Iranian rail network, while India is planning to take it forward from the Iran-Afghan border through Mazar Sharif to Termez in Uzbekistan. India is believed to have significant mining interests in Hajirak, and is thus keen on transporting the iron ore via rail to Iran, for meeting its needs prior exporting the surplus from Chabahar.

Another fallacy doing the rounds is that battle lines have been drawn on either side of the Gwadar-CPEC project: China-Pakistan on one side, the rest of the world arrayed on another. Truth be told, Gwadar-CPEC may mean the world to us, but for China, it’s just another cog  in a broader One Belt One Road initiative, which also includes a maritime global silk route. China has been investing heavily in Africa and even Latin America, and OBOR would provide the much needed connectivity. China has even evinced interest in a new canal through the Kra Isthmus as an alternate to the congested and vulnerable Malacca Straits as well as in a new artificial canal, parallel to Panama, through Nicaragua. China has also heavily invested in deepwater ports at Hambantota on the southernmost extremity of Sri Lanka, as well as at Kyauk Phru in Myanmar, which will be capable of handling the world’s largest container ships, and can provide direct access to China’s central regions. China’s vision is thus more rounded than we imagine it to be, and since she is putting up the money, things will happen as per her wishes and as per her timeline till all loose ends are tied up in accordance with the OBOR initiative.

Pakistan however furnishes the most convenient and most direct route from the Indian Ocean to the western reaches of China, currently it’s least developed region, and as such its importance cannot be denied. But this is certainly not the only route. China has committed to invest an equally large amount in post-sanctions Iran and while we were daydreaming, it carried out an experimental train run from Yiwu in Xingiang province to Tehran. After all, the road to Turkey and onward to Europe lies through Tehran. China’s planning is thus dynamic and multi-pronged, not limited to Gwadar/CPEC alone.

Gwadar definitely has bright long-term prospects as a vehicle for the movement of Chinese goods, but has rather limited short to medium term scope. Clues to corroborate this projection are not too hard to find and can be gleaned through a survey of the projects the Chinese are investing in within the country. The main rail line from Karachi to Havelian as well as a motorway along the same route is expected to be completed within two years. The vast bulk of the investment is in fact going into energy projects along the same track. It is thus not too hard to imagine that Karachi-Bin Qasim will be the ports of choice for the transportation of Chinese goods in the foreseeable future at least, till such time a rail line is established on the western CPEC route from Gwadar to Havelian via Quetta and D I Khan, or on the central route through Ratodero till Sukkur.

Resort to conspiracy theories can’t and shouldn’t obfuscate the fact that ports in close proximity are meant to compete with each other; there’s no getting away from it. The only reason Rotterdam has cemented its place as the leading port in Europe, way ahead of its nearest competitors Antwerp and Hamburg, is not by playing a blame game but by diligently improving its efficiency and offering value-added services as well as out-of-the-box customised solutions to each of its prospective clients. This has what has attracted the major shipping lines, multi-modal logistics companies, businesses, maritime clusters, manufacturers, associated industries and warehouse operators into its fold.

But if a relatively new port like Gwadar keeps resting on its laurels more than ten years after its completion and does not even have a credible plan of action to attain commercial viability, it has no one else to blame. If it can’t even compete with a relatively insignificant port like Chabahar, how can it be expected to match the likes of Sohar and Khorfakhan, lying right across the Gulf of Oman, both of which are thriving hub ports, with the latter being rated as arguably the finest transshipment port in the world. Work had commenced in Sohar at about the same time as Gwadar, but while the latter is lying idle, there is no dearth of shipping lines and logistics companies making a beeline for Sohar, and no shortage of investors in its free industrial zone either.

But as far as Gwadar and Chabahar are concerned, the two ports are not in competition as we perceive but are actually complementary in nature, as both Iran and China have taken pains to point out. Our Ministry of Foreign Affairs have apparently accepted this premise as it is believed to be toying with the idea of an MOU to cement the deal. Joining the CPEC western route with the Iranian road and rail network emanating from Chabahar will furnish Pakistan with ready access to Turkey and even beyond to Europe. Iran’s link-up with CPEC will enable direct connectivity with China. Similarly, Gwadar can comfortably provide easy trade access to Eastern Afghanistan, while Chabahar is better poised to cater to the trade needs of the western part of Afghaniatan. But again, Pakistan cannot absolve itself of the blame for letting the Afghan transit trade slip past its fingers through sheer carelessness and lethargy. Teaming up with both Iran and Afghanistan thus makes sense.

For Pakistan, Gwadar does represent a golden opportunity, but what we choose to do with it is up to us. All actions that we have taken or not taken so far amount to frittering away our advantage. The port’s channel is not sufficiently dredged and the absence of any Deepwater berths likewise ensures that it cannot be used for transshipment purposes. And from the look of it, the twin local ports of Karachi and Bin Qasim can be expected to provide a stiffer competition to Gwadar as compared to Chabahar, the reason being that road and rail connectivity to China and even Afghanistan is available and is expected to drastically improve in another two years time after the Gwadar to Havelian motorway is fully commissioned and the main rail line has been suitably upgraded. After all, the Karachi-Bin Qasim ports have plenty of surplus capacity. Another food for thought: will an investor be more likely to invest in the newly-emerging free zones in Punjab where electricity, gas, water and rail access is available or in Gwadar where nothing is available?

 

Note: This article was published in the January 2017 edition of the monthly ‘Global Age’ magazine.

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