NEED OF EFFICIENT PORTS AND LOGISTICS

PAKISTAN HAS ALL THE POTENTIAL TO BECOME TRADE CORRIDOR.

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
Mar 7 - 13, 20
11

Pakistan's geographical location makes it a natural trade corridor. On one side located are energy starved and the other side energy rich countries. On one side are warm waters and on other side landlocked countries. Though India is making attempts to undermine importance of Pakistan by constructing Chabahar port in Iran and rail and road links up to Central Asian countries, Pakistan still offers the most efficient and cost effective transit facilities to Afghanistan and Central Asian countries as well as China. To achieve the objective, Pakistan will have to focus on constructing most efficient ports capable of handing all sorts of cargo, bulk, break-bulk and containerized cargo, bulk liquid and grain as well as cement handling facilities. Along with this, modern railways and road networks have to be constructed to minimize the transit time.

Both Iran and Pakistan aim at creating strong economic and transport ties with Central Asia and beyond and have constructed two new seaports, Gwadar in Pakistan and Chabahar in Iran. Spreading out from these ports are existing or planned transportation infrastructure that lead into their respective country's economic center and importantly for Central Asia, northwards. Both the ports are likely to offer generous incentives to companies and governments who wish to utilize these ports. However, serious political, economic, and logistical problems remain. For Central Asia one of these two ports, or indeed both, have the potential to become important links to global markets.

Karachi port is overburdened with severe congestion from commercial, fishing, and military shipping and from a strategic point it is quite problematic, not because of inadequate handling facilities but goods passing through congested roads. The Indian Navy targeted the port in 1971 and any blockade in the future could cripple trade activities if Pakistan continues overreliance on Karachi port.

Port of Qasim, built in the 1970s has eased some pressure and construction of Gwadar is expected to further reduce the reliance on Karachi port. Gwadar has strategic importance but a lot depends on exploiting its commercial potential. Its first phase, with 75 per cent of the costs covered by the Chinese government, has been completed. The existing docks are now operated by Port of Singapore. Pakistan can make the project succeed if it maintains the financial and political support of China for the project and if it makes some concessions to the Balochs near Gwadar, who have already carried out deadly attacks on Chinese engineers.

While Gwadar port has been built, the supporting infrastructure of railroad link, industrial capacity, and civic structures are yet to become fully functional. The real issue is that Southern Afghanistan is not likely to be a reliable transport corridor for Pakistan to access Central Asia. Nevertheless, the idea of further integrating Central Asian and Russian resources southward with the Asian and Middle Eastern market has raised cautious optimism about the long-term advantages of the port. Some experts are little cautious because they consider initially the port will be significant for Uzbekistan, Turkmenistan and Tajikistan only.

Gwadar is likely to face enormous competition from Chabahar. A port outside of the Persian Gulf makes sense from a strategic and logistical viewpoint for Iran. The port of Chabahar is part of a plan to develop transportation infrastructure in Iran's east for many years. Initially put in hold in 1984, it was revived in 2002 with Indian help. And, the financing and engineering assistance from India is not limited to the port. India, wishing to bypass Pakistan, is also cooperating on a highway system that leads from the port into Afghanistan as well as a planned railroad to Afghanistan.

Iran aims at confining Bandar Abbas to cater to Russian and European trade and Chabahar to handle trade with Afghanistan and Central Asia. Iran already has good relations with everybody along the route leading north into Tajikistan. And, significantly, it is in Tajikistan where Iran has already been financing several transport projects including the Anzob tunnel. And, luckily for the Iranians, the US constructed a bridge over the Amu Darya that fits in nicely with the Chabahar to Khojent route.

Any transportation or military problems in Straits of Malacca, Straits of Hormuz, Suez or anywhere along Asia's southern coastline will further boost the importance of Central Asia as a transport and trade corridor. Besides Pakistan and Iran, both China and India are seeking closer relations with Afghanistan and Central Asia. The planned transport and trade routes will have the obvious effect of building solid ties.

The countries of Central Asia will benefit from both Chabahar and Gwadar ports. Constructing new import and export routes is a logical economic and political step. Although, one should not exaggerate the economic benefits, the competition between the two ports, will not be 'winner takes all' but one port earning trade for the other. Gwadar seems to enjoy edge over Chabahar because of offering a shorter and safe passage to Afghanistan and the Central Asian states.

By virtue of its excellent location, Gwadar port is also visualized to become a regional hub serving incoming and outgoing commercial traffic of the Middle Eastern and Gulf countries, the Xinjiang province of China, Iran in the west and Sri Lanka and Bangladesh in the south and east. Its location at the mouth of the Gulf and at the opposite end of the strategic choke points of Straits of Hormuz and the Gulf of Oman enhances its strategic importance. Its development could favorably influence the geostrategic environment of the region and have an overall beneficial impact on Pakistan.

Additionally, the port should facilitate efficient exploitation of the exclusive economic zone of Pakistan, which so far has remained largely unexplored. The area is rich in fisheries and if the 600-kilometre long coastal line is fully exploited it could give a big boost to fish and crab exports and promote food-processing industries. Lying in the vicinity of oil-rich Gulf states, Gwadar could also be a potential source of offshore gas and oil exploration.

The existing highways on the Afghan border, connecting the border towns of Chaman and Torkham provide the shortest all-weather road and rail links to Gwadar. These will have to be brought up to international standards if the port's potential of becoming a major economic and commercial centre is to be realized.

Pakistan is already developing the road and highway network connecting Gwadar with its own major cities and ports through the 700-mile Mekran Coastal Highway.