- The Washington Times - Friday, May 25, 2007

GWADAR, Pakistan — By the waters of the Arabian Sea, a remote Pakistani fishing town is being transformed into a massive deep-sea port to cash in on the inexorable rise of the Chinese economy.

Gwadar port, a $250 million project that is 80 percent Chinese funded, is expected to start operations later this year to capitalize on its strategic location amid South Asia, Central Asia and the Middle East. The port lies near the Straits of Hormuz, through which about 20 percent of the world’s oil is transported.

Pakistani Prime Minister Shaukat Aziz recently said Gwadar could “change the map of shipping in the world” and serve as a regional energy hub for shipping and refining oil from the Persian Gulf.

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But the development of this barren peninsula has received a hostile response from impoverished tribesmen who say it is depriving them of fishing waters and bringing no economic benefit to locals.

Tribal insurgents are suspected in the killings of six Chinese workers in the Baluchistan province since the project got under way five years ago — including a May 2004 bombing that killed three Chinese engineers.

China’s interest is driven by concerns about energy security. It is seeking a place to anchor pipelines to secure oil and gas supplies from the Gulf. Beijing also believes that helping Pakistan develop will boost economic activity in its far western province of Xinjiang and dampen a simmering, low-intensity rebellion.

“It will greatly benefit China’s trade to Europe, Africa and Middle East,” said Moonis Ahmer, an international affairs professor at the University of Karachi. “It will also give a boost to the economy in southwestern Pakistan.”

Some international security specialists speculate that the Chinese navy may use Gwadar for port calls, though current arrangements do not explicitly provide for that.

“You can never rule out the strategic use of the port if China has sufficient economic interests in the region that it wants to protect,” said Ayesha Siddiqa Agha, a Pakistani defense analyst. “But that would provoke India, which it does not want to do.”

China-India ties have improved lately, but are still strained because the two sides fought a war in 1962 over their border.

China, which has long-standing ties with Pakistan, has financed $198 million of the total cost of $248 million to build the port, with the rest covered by the Pakistani government.

State-owned China Harbor Engineering Company did most of the port construction, bringing in 350 Chinese engineers, technicians and other skilled workers. With most of the port construction complete, only a few Chinese workers now remain in Gwadar.

Much of the transportation infrastructure needed to link Gwadar with Pakistan’s northern neighbor is yet to be built, but potentially it will nearly halve the overland distance from China’s landlocked western provinces to the sea: from about 2,500 miles to China’s east coast, to just 1,250 miles south to Gwadar.

The first stage of a 280-mile road is under construction that would eventually link this southwestern tip of Pakistan with the country’s north-south Indus Highway, facilitating overland transportation from Gwadar toward China.

The link road should be complete within five years, says Ahmed Baksh Lahri, chief of the Gwadar Development Authority.

It will still be a tough drive: Passing along the Karakorum Highway that winds through the rugged mountains of northern Pakistan and crossing into Xinjiang province via a border crossing point at 15,397 feet. The route is often blocked by snow in winter.

Longer-term plans also call for road and rail links from Gwadar that would pass through strife-torn Afghanistan to Central Asian states.

In March, President Pervez Musharraf presided over the ceremonial inauguration of the port, although officials say it will be several more months before the three shipping berths open for business.

Singapore’s PSA International Pte Ltd. last year won a bid to operate the port for 40 years, and the government has exempted it from corporate tax and all import duties on equipment and machinery. China did not bid to operate the port.

Khurram Abbas, the chief of PSA’s operation in Gwadar, said PSA plans to invest between $5 billion to $8 billion over the 40-year period. He forecast the port would generate revenue of between $17 billion and $31 billion during that time.

That should transform the local economy beyond recognition, but Gwadar’s 70,000 residents are skeptical. Fishermen — the main vocation here — complain they have already lost out.

“The port area was our prime fishing area and we used to make thousands [of rupees] every day, but not now,” said Lal Bakhsh, a fisherman in his 40s, explaining they now had to cast their nets farther afield in the Arabian Sea.

Currently it appears the chief beneficiaries of the Gwadar’s boom are outsiders.

Qasim Khan, who comes from northwestern Pakistan, runs a prosperous real estate business. He said investors from big cities like Lahore and Karachi were buying tracts of land in Gwadar, anticipating values will appreciate sharply.

That is a source of resentment among ethnic Baluchis. Militant tribesmen in the province, Pakistan’s poorest, are already waging a low-level insurgency, accusing the central government of pocketing too much revenue from Baluchistan’s natural gas reserves.

“In the name of so-called development, the land of the people of Gwadar is being taken away,” said Hasil Baloch, secretary-general of Baluchistan National Party. Mr. Baloch also claimed that skilled laborers from outside were getting all the jobs in the port’s construction.

Authorities deny any locals have been forcibly evicted from their land. But town Mayor Abdul Ghafoor Kalmati said the government has failed to build a vocational college that was promised five years ago that could have alleviated the shortage of local skilled labor.

“Gwadar has been a neglected town of deprived people,” he said. “They deserve much more.”

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