Future of Gwadar: Another Dubai…Ever?

Via The Atlantic, an interesting look at the future of Gwadar, a potential deepwater port at the extreme southwestern tip of Pakistan close to the border with Iran.  As the article notes, it is much more a part of the Middle East than of the Indian subcontinent, equipped with a highway, and oil and natural-gas pipelines, extending north all the way through some of the highest mountains in the world, the Karakorams, into China itself, where more roads and pipelines connect the flow of consumer goods and hydrocarbons to China’s burgeoning middle-class markets farther east.  Another branch of this road-and-pipeline network would go north from Gwadar through a stabilized Afghanistan, and on into Iran and Central Asia. Gwadar, in this way, becomes the hub of a new Silk Road, both land and maritime; a gateway to landlocked, hydrocarbon-rich Central Asia; an exotic 21st-century place-name.  However, despite the allure of Gwadar becoming a hub like Dubai, the article below notes the 50 year effort to thus far realize Gwadar’s potential:

“…The highway from Karachi to the Iranian border area is a good one, with only a few broken patches still to be paved. The government operates checkpoints. It is developing major air and naval bases to counter India’s projection of power into the Indian Ocean. And it has high hopes of using new ports on the Makran coast to unlock trade routes to the markets and energy supplies of Central Asia. The Pakistani government might not control the desert and mountain fastnesses of Baluchistan, with their rebellious and smuggling tribes and dacoits, or bandits. But it can be wherever it wants, whenever it wants: to extract minerals, to grab land, to build highways and bases. Think of the Pakistani government’s relationship to its southwestern province of Baluchistan as similar to that of Washington to the American West in the mid-19th century, when the native American Indians still moved freely, though decreasingly so, and the cavalry had strategic outposts.


…During the military rule of Ayub Khan in the 1960s, shortly after Oman ceded the territory to Pakistan in 1958, Gwadar fired the imagination of Pakistani planners. They saw it as an alternative air-and-naval hub to Karachi that, along with the port of Pasni to the east, would make Pakistan a great Indian Ocean power athwart the whole Near East. But the Pakistani state was young, poor, and insecure, with weak infrastructure and institutions. Gwadar remained a dream.

The next people to set their sights on Gwadar were the Russians. Gwadar was the ultimate prize denied them during their decade-long occupation of Afghanistan in the 1980s—the fabled warm-water outlet to the sea that formed the strategic raison d’être for their Afghan adventure in the first place. From Gwadar, the Soviet Union could have exported the hydrocarbon wealth of Central Asia. But Afghanistan proved to be the graveyard of Soviet imperial visions. Gwadar, still just a point on the map, a huddle of fishermen’s stone houses on a spit of sand, was like a poisoned chalice.

Yet the story goes on. In the 1990s, successive democratic Pakistani governments struggled to cope with intensifying social and economic turmoil. Violence was endemic to Karachi and other cities. But even as the Pakistani political elite turned inward, it remained obsessed with the related problems of Afghanistan and energy routes. Anarchy in the wake of the Soviet withdrawal was preventing Pakistan from establishing roads and pipelines to the new oil states of Central Asia—routes that would have helped Islamabad consolidate a vast Muslim rear base for the containment of India. So obsessed was Prime Minister Benazir Bhutto’s government with curbing the chaos in Afghanistan that she and her interior minister, the retired general Naseerullah Babar, conceived of the newly formed Taliban as a solution. But, as Unocal and other oil firms, intrigued by the idea of building energy pipelines from the Caspian Sea across Afghanistan to Indian Ocean energy hubs like Gwadar, eventually found out, the Taliban were hardly an agent of stability.

Then, in October 1999, after years of civilian misrule, General Pervez Musharraf took power in a bloodless coup. In 2000, he asked the Chinese to fund a deepwater port at Gwadar. A few weeks before 9/11, the Chinese agreed, and their commitment to the project intensified after the U.S. invaded Afghanistan. Thus, with little fanfare, Gwadar became an example of how the world changed in the wake of the World Trade Center attacks in ways that many Americans and the Bush administration did not anticipate. The Chinese spent $200 million on the first phase of the port project, which was completed on schedule in 2005. In 2007, Pakistan gave PSA International of Singapore a 40-year contract to run Gwadar port.

So now imagine a bustling deepwater port at the extreme southwestern tip of Pakistan, much more a part of the Middle East than of the Indian subcontinent, equipped with a highway, and oil and natural-gas pipelines, extending north all the way through some of the highest mountains in the world, the Karakorams, into China itself, where more roads and pipelines connect the flow of consumer goods and hydrocarbons to China’s burgeoning middle-class markets farther east. Another branch of this road-and-pipeline network would go north from Gwadar through a stabilized Afghanistan, and on into Iran and Central Asia. Gwadar, in this way, becomes the hub of a new Silk Road, both land and maritime; a gateway to landlocked, hydrocarbon-rich Central Asia; an exotic 21st-century place-name.

…Nearby, the Chinese-built deepwater port, with its neat angles, spanking-new gantry cranes, and other cargo-handling equipment, appeared charged with expectation, even as the complex stood silent and empty against the horizon, waiting for decisions from Islamabad. Just a few miles away, in the desert, a new industrial zone and other development sites had been fenced off, with migrant-labor camps spread alongside, waiting for construction to begin. “Just wait for the new airport,” another businessman from Karachi told me. “During the next building phase of the port complex, you will see the Dubai miracle taking shape.”

But everyone who spoke to me about the port as a business hub to rival Dubai (notwithstanding its current economic troubles) neglected a key fact: the Gulf sheikhdoms, and Dubai in particular, have wise, effective, and wholly legitimate governments.

Whether Gwadar becomes a new silk-route nexus or not is tied to Pakistan’s own struggle against becoming a failed state. Pakistan, with its “Islamic” nuclear bomb, Taliban- and al-Qaeda-infested northwestern borderlands, dysfunctional cities, and territorially based ethnic groups for whom Islam could never provide adequate glue, is commonly referred to as the most dangerous country in the world, a nuclear Yugoslavia-in-the-making. And so Gwadar is a litmus test, not just for roads and energy routes but for the stability of the entire Arabian Sea region. If Gwadar languishes, and remains what to a Western visitor was just a charming fishing port, it will be yet more evidence of Pakistan’s failure as a nation.

“…No matter how hard they try to turn Gwadar into Dubai, it won’t work. There will be resistance. The pipelines going to China will not be safe. They will have to cross through Baluch territory, and if our rights are violated, nothing will be secure.” In 2004, in fact, a car bomb killed three Chinese engineers on their way to Gwadar. Other nationalists have said that Baluch insurgents would eventually kill more Chinese workers, bringing further uncertainty to Gwadar…”



This entry was posted on Wednesday, April 22nd, 2009 at 10:13 am and is filed under China, Pakistan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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