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Regional economic prospects through Gwadar and Chabahar ports

Pakistan’s signing of China Pakistan Economic Corridor (CPEC) with China is a landmark of economic cooperation between the two countries. It is expected that this Corridor would boost Pakistan’s sick economy in the years to come.

Gwadar is a warm water deep sea port located on the southwestern coast of Pakistan in the Balochistan province. The strategic location of Gwadar is located at the junction of the Arabian Sea. It is located about 700 km from Karachi and about 75 km from Iranian port Chabahar. It is connected to Chinese city of Kashgar with land distance of about 2000 km through the Karakorum Highway in Pakistan.

China is heavily dependent on Gulf oil. About 60 percent of the oil comes from the Gulf for which the ships have to traverse a distance of about 16000 km to her ondly commercial port, Chinghai. Gwadar, besides providing an opportunity to China significantly reduce the time and distance to transport oil from the Persian Gulf to China by road. It would also facilitate China to use the route other way round by exporting her goods to the Middle Eastern countries and the rest of the world as part of her ‘21st Century Silk Road Initiative’. Primarily for this reason China is providing about 80 percent of the cost of the port at Gwadar.

Chabahar is the Iran’s southern port city on the Gulf of Oman, which is the best access point to the Indian Ocean. It is part of the Iranian Sistan-Balochistan province, bordering Pakistani Balochistan.

Iran is planning to use this port for transshipment to Afghanistan and Central Asia. It desires to keep the port of Bandar Abbas exclusive for trade with Europe and Russia as a major hub. Chabahar port is connected to Iran’s national highways network and a railway track is also being laid. Iran, with the help of the Chabahar agreement with India is facilitating Indian access to the gas and oil resources of Iran and Central Asia.

India is helping Iran with an amount of $85 million to develop Chabahar to connect Afghanistan with Central Asia and the Middle East. This way India would be able to bypass Pakistan, which provides a much shorter route for the Asian Development Bank’s proposed project TAPI.

Gwadar has an advantage over Chabahar for its utility and geographic location. It has proximity with China due to the road link. Chabahar is not located in the Indian Ocean region where India’s other functional ports like; Mumbai, Kolkata and Goa are located. The proximity of Gwadar to Chabahar is only 72 kms.

Afghanistan is a partner in the Indian trade agreement of Chabahar. It does not exercise its command and control over a large portion of Afghanistan, particularly the Afghan Mujahideen-controlled southern Afghanistan region.

Pakistan has a longstanding tested relationship with China. The two countries have already worked jointly on economic, social, military and other projects.

Iran is not expected to not disappoint more than 25 percent of the population of Pakistan who hold Iran in very high esteem and respect. Iran supports its neighbor Pakistan on Gwadar. India can undoubtedly benefit from the shortest route to Central Asia through Pakistan. Pakistan must make an effort to remove her hurdles with Pakistan by resolving the Kashmir problem. Iranian President Hassan Rouhani said he looked forward to “more engagement and unity” in the region. Iran has tried to indicate that the two new ports will be complementary to each other.

Iran has plans to export electricity to Gwadar and even has a memorandum of understanding with Pakistan. Gwadar Port is India’s main goal. It lies less than 100 nautical miles from Chabahar, and India has plans to invest $500 million in the project and secure two berths there as well as develop economic zones later on.

 

Iran increased port capacity to 8 million metric tons of cargo from just 2.5 million tons a year. The new harbor extension is all set to facilitate the International North-South Transport Corridor (INSTC) to Russia as well.

Iran sees Chabahar as complementing Gwadar, not competing with it. It has been expressing the wish to join the CPEC. China is interested and it calls for connection between Pakistan’s Gwadar and Iran’s Chabahar. Iran says it has received a request from China to establish a connection between Pakistan’s Gwadar ports.

China had informed Iran that it was interested in using Chabahar to transit goods from Gwadar to regional and extra-regional destination points. The advantages of Chabahar were better than Gwadar in terms of road and rail connection facilities to key transportation points in regions as far as Central Asia and Europe. Iran started a project to develop Chabahar port in 2007 through an investment that officials previously said already amounted to $1 billion. The annual cargo tonnage of the port has almost tripled to reach as high as 8.5 million tonnes. It can also accommodate 100,000 tonne ships. It can help promote the country’s international trade activities.

The overall development project is planned in four phases. It is expected to bring the port’s total annual cargo capacity to 82 million tonnes. The country has committed $500 million to Chabahar which lies on the Gulf of Oman, aiming to join an increasingly important transport corridor to the resource-rich regional countries.

Massive investment plans are already there, with India’s offering to build a sprawling artery of roads and railways, which is estimated to cost $15 billion.

Chabahar port will supplement Gwadar to boost regional trade. Gwadar is a deep-sea port and Chabahar has the potential to be sister-ports, as part of the Belt & Road initiative of President Xi Jinping.

In the near future, Chabahar would supplement Gwadar port in terms of regional and global trade. Gwadar port alone may not be able to meet the trade volume of the region in the near future. Therefore, Chabahar would supplement Gwadar port. About 95 countries of the Asia Pacific are developing countries and only five per cent countries are developed nations. Those 95 percent countries are not fully developed and they need certain imports.

China, the fastest developing nation, has energy needs which could be met through the energy from the Middle East. Therefore Gwadar and Chabahar would be used for these energy needs.

China and other Asia Pacific countries would be importing oil and gas from Iran, Saudi Arabia, Qatar, Kuwait and other Middle East nations through Gwadar and Chabahar. Developed countries in the West do not require energy from the Middle East.

US does not have energy demands like China, South Korea, Japan and India, which are giving attention to these ports to meet their energy needs. While China keeps developing its infrastructure besides expanding its exports across the globe, Pakistan, India, Bangladesh, Sri Lanka and other regional economies are looking for energy proceeds through Gwadar and Chabahar ports.

Indian trade through Chabahar is nothing else. Afghanistan’s economy is much smaller in its volume. In regional terms, it is not even a market.

Iran wants its presence in Afghanistan felt. It wants to have cordial ties with India, Pakistan and Afghanistan. India and US are confronting its influence. Pakistan will continue to work with Iran for deepening connectivity between the two ports.

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