China-Pak Economic Corridor: Why Gwadar Is An Overrated Port

gwadar port2

Having served in the Merchant Navy before joining the IAS, I can claim to have visited almost all the ports in the Persian Gulf, specially the oil terminals. At the height of Iran-Iraq conflict, we were picking up crude from Kharg, an Iranian island in the upper reaches of the Gulf, which is its major oil export point, just as Ras Tanura is for Saudi Arabia. So I claim an expertise in the area of analysing ports, specially from the point of view of logistics, and through my present calling, I can also now lay claim to understanding a bit of the strategic compass.

With that caveat, let us have a closer look at the frenzy which has gripped Pakistan. CPEC (China-Pakistan Economic Corridor) to them, is the panacea for all their economic ills and Gwadar is the best port in the world.

The frenzy is such that a even a reasonably sober twitter handle, @karachipost, came up with this:

Similarly, I read a piece today in The Diplomat by Muhammad Daim Fazil giving five ridiculous reasons for the supposed superiority of Gwadar over Chabahar.

Let’s find a framework for this. What are the qualities a port needs to become a great one?

As per the Gwadar port website, it has 3 berths at present with a plan to add 3 more (a multipurpose, a grain, and an oil berth). Its projected draught is 12.5 metres with which it claims it will be able to handle 50,000 DWT (Dead Weight Tonnes, which denotes carrying capacity) vessels.

Chabahar has 10 berths already, and is expanding to include a deep water berth which would be able to handle VLCCs (Very Large Crude Carriers) of 22 m draught or more.

Let’s look at some of the other ports. Mumbai port has 26 cargo/container berths and 6 POL/chemical berths; Karachi has 12; Nhava Sheva has more than 10, and Dubai (Jebel Ali and Port Rashid), which Gwadar is supposed to be threatening commercially, has 102 berths, with VLCC POL supply terminals as well.

So we can quite clearly see that logistically, Gwadar is just a little dot.

Let’s now see the hinterland that the two ports would serve. Gwadar can have cargo headed for either Xinjiang, or for Pakistan’s internal consumption. The back of the beyond location of this port means that for a private business to switch from Karachi to Gwadar, comparable stevedoring and clearing agencies would be required along with a reliable rail link. That’s not happening any time soon. Even if the infrastructure is complete, the soft support system in a hostile terrain would remain hobbled for a long tie to come.

Comparison with Chabahar is not even warranted, as Chabahar is coming up as a transit port for all of Central Asia and Afghanistan. Muhammad Daim Fazil posits it as a port for India to access Afghanistan and Central Asia through Afghanistan. Only if he had looked at maps.

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The route to Central Asia from Chabahar doesn’t have to go through Afghanistan at all. Moreover, it gives India an alternative route to Russia and the republics to its east, as well as to the 5 ex-Soviet nations. After Ukraine became independent, Odessa has come to be used less and less. Crossing the Suez has its own costs. So, the Iranian north-south corridor would be very useful for India and most south-east Asian countries. As a post on Quora said (Joseph Boyle):

“Gwadar is simply unlikely to ever be profitable. It means going an unnecessarily long, long way over the world’s highest mountains and through rebels to get to nothing – after all that you’re still separated by water. If you look at a globe and great circle routes instead of the deceptive Mercator projection, you see a direct, low, feasible route between China and the Middle East is going directly through Central Asia to Iran. Turkmenistan already has pipelines selling large volumes of gas to China, and is right next to Iran.”
Joseph Boyle On Quora

Singapore PSA found Gwadar unviable in the long run and left. China stepped in not because it found Gwadar viable, but because it looked at Pakistan as a client state and it was sure it would make Pakistan dance to its tunes. China does not even have much of a use for operating this kind of port because it is already operating a ten times larger terminal in Fujairah, UAE, just across the Gulf of Oman. China will use it only to exercise its hegemony over its willing client state.

I do not foresee a gas or oil pipeline from Gwadar to Xinjiang as a part of the CPEC, at least not yet. China is concentrating on pipelines from Kazakhastan. Its principal silk route runs via Urumqi-Kashgar-Almaty-Tashkent-Ashkabad-Tehran. From Ashkabad, Chabahar is directly connected.

So, Chabahar connects everybody to everybody. That’s the reason Iran offered a connectivity to Pakistan as well, which I am sure Pakistan would find offensive. Gwadar by comparison is just a provincial port for Pakistan over high mountains which even China would not find viable.

Another oft-repeated argument in favour of the CPEC is that it is a good strategy by China to bye-pass the Malacca choke. This makes no sense either, as China’s consumption areas lie nearly 6,000 kilometres to the east from Kashgar, the northern point of CPEC. In the event of a war, both China and Pakistan would do well to remember that Malacca straits at its narrowest choke point below Car Nicobar is 200 km wide, but the CPEC is just 75 kms away from north Kashmir – well within the range of BVR missiles, Prithvis and Brahmos. Gwadar lies directly in the line of Indian Navy, and would be the second one to be blockaded – After Karachi that is.

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China would definitely factor that in its strategic calculations. The CPEC infrastructure is passing through a territory which legally belongs to India, and it would be easy for India to blockade Gwadar.

Now, let’s discuss CPEC’s economic calculations. China plans to put in $46 billion over 10 years. $34 billion would build up a power capacity of around 17,000 MW (though I have also heard figures of 7 and 10K MWs). The agreements are not on the table (so much for transparency). We don’t know whether there is any element of a grant involved. From whatever sketchy information is available, it looks like a combination of loans for road and rail infra, and power plants to be built by the Chinese for which Pakistan has given a sovereign guarantee to buy all the power produced at a fantastic rate of PKR 18 per unit (INR equivalent 11.53). Even the power plants which are going to be all thermal variety are going to be put up at a minimum of $2 billion per GW (1 GW=1000 MW).

India routinely builds its thermal power plants at less than $ 1 billion per GW. The average rate per unit on the India power trading exchange has been INR 2.50 for over a year. Bangladesh is buying 1100 MW from India at INR 6 per unit. This is a classical colony-making exercise by China, which Pakistan establishment and the Army is quite excited with.

So, it looks to me as if the CPEC is purely a marketing exercise by China to rip off some good money from Pakistan for its thermal power companies which have to dismantle their old plants in the mainland to meet the emission norms agreed to by China at the Paris meet. It gives an excuse to the Pakistan Army to rip off more money from the exchequer in the name of providing security and strengthening its occupation of Balochistan. It has got an 11 percent raise in its budget in a year in which GDP grew by 4.7 percent.

India need not even discuss this. The CPEC route passes through a treacherous terrain prone to landslides. All India needs to do is to target its missiles on N35 of Pakistan, otherwise better known as the Karakoram Highway.

So my advice to my Pakistani friends is – please don’t parade the CPEC and Gwadar to the world. It’s not your salvation, it’s your cross.

This piece was first published on Sanjat Dixit’s blog

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