Impact of Gwadar Port on Pakistan’s economy by

involvement of China

Research Paper

Final Project

Subject:

International Relations

Omair Azmat Chaudhry

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Contents
Introduction and Background of Gwadar: ................................................................................. 3
Research and Analysis: .............................................................................................................. 5
Research Questions: ............................................................................................................... 5
What is the need of additional port? .................................................................................. 5
Competition among ports:.................................................................................................. 5
Role of Gwadar on Pakistan’s economy: ........................................................................... 6
China’s impact on Gwadar and Pakistan: .......................................................................... 7
Trade expectations of Gwadar Port: .................................................................................. 7
Strategic location of Pakistan: ........................................................................................... 8
Challenges: ............................................................................................................................. 8
Conclusion: ................................................................................................................................ 9
References: ............................................................................................................................... 10
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Introduction and Background of Gwadar:

Gwadar is a district along the sea in south of the Makran. The coastline of Gwadar District is
about 600 Kilometers long. Gwadar was notified as a District in July, 1977 with it’s
headquarter at Gwadar Town. Previously it used to be a part of Makran District.1
Gwadar district is located from 25`-01` to 25`-45` North latitudes and from 61`-37` to 65`-15`
east longitudes. It is bounded on the North by Kech and Awaran District. On the East by
Lasbela District, on the south by the Arabia Sea and on the West by Iran. Total area of the
district is 12,637 square kilometers. 2 1
This was just the main introduction of the Gwadar District and now we will talk about the
facilities and the purpose of Gwadar Pakistan. Pakistan lies in between a region where there
is a connection of to many countries which are famous and good for trading. The central
Asian countries consist of Afghanistan, Turkmenistan and Kazakhistan etc. So these
countries are land locked countries which have no sea connecting them. In this way they want
to take some route for the trade purpose, mostly they use Pakistan, Iran and India.
In this way Pakistan is almost the hub of the trading sector China the one of the largest
country and a second super power country of the world also uses the route of Pakistan for the
trading purpose. Some of the Background of the Gwadar is Pakistan’s dream of having a deep

Figure 1. Geography of Gwadar Port

water port at Gwadar is nearly as old as its existence. It started with the recommendation of
Worth Condrick who was deputed by the US for survey of the Balochistan coast in 1954.
Realizing importance of Gwadar, Pakistan paid £3 million (some say half that sum) in
September 1958 to buy back the enclave from the Sultanate of Oman ending over 200 years
of Omani control. Since then the history of the decision making process for its development
has been that of studying, planning, shelving, restudying, re-planning and waiting and hoping
for some outside aid agency to finance the project.3

1
Gwadar Port’s Gwadar Development Authority (GDA)
http://www.gda.gov.pk/
2
Gwadar Port’s Gwadar Development Authority (GDA)
http://www.gda.gov.pk/
3
Gwadar Port, Google Earth Explorer, Retrieved on 28 July2010,
<http://explorer.altopix.com/map/1ahjlb/403/210/Gwadar_Port.htm?order=date/>.
 4

Then in October 2003 Gwadar Development Authority was established in to

improve/Implement the Master Plan, which initially suggested only the land use. After the
establishment of the Authority, Internal Road Network, Land Zoning and Vision for future
Gwadar were developed. The same time the Gwadar Town Planning Regulations were

G.D.A. is a legislative body. The Chief Minister Balochistan is the Chairman of the
Governing Body of the G.D.A.
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Research and Analysis:

Research Questions:
1. What will be the impact of Gwadar on Pakistan’s economy after its completion?
2. By involvement of China what will be the improvement in Pakistan?
3. Gwadar Port a hub for Central Asia, China South, Asia and Middle East what will
be the consequences?

What is the need of additional port?

Now the question arises that what should be the use or need of an additional port in Pakistan
after having Karachi and Bin Qasim Port? The answer of this question is that it has so many
reasons the main three are:

1. Domestic
2. Strategic
3. Regional

As we know that just because of maritime trade the GDP of Pakistan was $27.8 billion in
1983 and $70 billion in 2003 it is about increase of 95%.4 So domestically it will be in the
benefit for Pakistan. In 2000 the trade of maritime was 42 million tons, and by 2015 the trade
forecast will be 78 million tons.5

Strategically the impact will be very good because Pakistan can make their Naval force
Strong by building naval base in Gwadar. In 1971 when India had attacked on Karachi so
there was no other port of Pakistan.

In region it will be useful not just for Pakistan but also for the Central Asian States and
China, they will be having facility for trade purpose and China’s strategically to.

Pakistan is in a stage where there is inflation; economic crises, unemployment and this type
of problems are being faced by Pakistan now days. So there should be a need of foreign
investment and foreign trade to increase the economy of country. Due to the involvement of
China with Pakistan from 2003 they had made Phase: 1 and some of Phase: 2 of Gwadar Port,
so in 2007 Pakistan had made a contract with Singaporean Port Authority to run the GP for
40 years now in 2012 this contract has been finished by Pakistan with Singapore and had
made contract with China to run the Port for next remaining years.

Competition among ports:

Besides competing for container traffic, Gwadar port is also being built to handle natural
resources of Central Asia, for which the ports of Bandar Abbas and Chahbahar of Iran are
possible competitors and therefore are also analyzed to draw similar parameters. In addition

4
Ministry of Finance, Government of Pakistan, Economic Survey 2003-04,
Hhttp://www.finance.gov.pk/survey/chapters/09-trade.pdfH
5
Environment Division, Government of Pakistan, “Pakistan’s Response to Objectives of Agenda 21,”
Hhttp://www.pakistan.gov.pk/divisions/environment-division/media/wssd-chp1.pdfH
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to external ports, Gwadar port is required to compete with domestic ports of Karachi and
Qasim.

There is the comparison of Ports:

Table 1. Statistical Comparison of Ports

Feature Dubai Ports Salalah Bandar Chah-bahar Karachi Qasim Gwadar(after

Authority Abbas Phase-II)
Rashid
Jebel Ali
No. of
Berths
35 71 33 24 4 30 10 12

Channel
Length
0 15 0 6.4 1 12 45 4.5
(Km)

Channel
Depth (m)
3 17 16 13 0 3 12 20

Traffic
Handled (in
5.1 2 1 - .8 0.42 ??
Million
TEUs)
Vessels
Called
13232 1184 -- - 393 806 ??

Role of Gwadar on Pakistan’s economy:

The whole research is based on these articles and these articles have shown that what will be
the impact of Gwadar on Pakistan’s economy, trade, relationship with foreign countries etc.

During the tenure when the Gwadar Port is operational 1007 ton of Urea and 63,000 tons of
wheat has been imported to Pakistan. The cost which will be regulated on Gwadar Port is 248
million dollars and it will be completed on 2015.6

The estimated local people who are working in Gwadar present are 89% local so this is a
good sign for the betterment of the Pakistan’s economy. There where will be attraction of
trade in free trade zone and the land locked countries will attract towards Gwadar Port. From
this there will be a competition among the local ports as we that Karachi is the biggest port of
Pakistan and it is also the busiest port of Asia so from the completion of Gwadar port there
will be less burden and the trade from Middle East countries will be increased. Not only the
trading will increase but people can also go from cruise ships to European and Middle East
countries. It is further contended that the bigger the economy the more likely they are to
generate the trade; and Pakistan, with GNP over $60 Billion and trade volume forecast of 78
million tons, has embarked upon a maritime venture of building a port at Gwadar.

6
Chairman Gwadar Port Authority, Rear Admiral (Rtd) Ehsan Saeed reported on Jan 18 2009
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China’s impact on Gwadar and Pakistan:

It has been confirmed that the Chinese government is taking over Gwadar and SPA
(Singapore Port Authority) is leaving the Gwadar Port, because the Pakistani government and
GDA (Gwadar Port Development Authority) had made contract with the SPA for 40years to
run the port for the running, mentainance and repairing program. But there was a conflict in
this just because of the Pakistan Navy. They wanted the land for some purpose and that land
was equipped by Navy so they didn’t gave that land and in response SPA was not feeling
good with this.

Due to the recent Kamra Base attack the Navy is more concerned about their land and
security. But the Chairman committee Fateh Muhammad said that it is very shameful that
foreign investors are leaving the Port because the Chinese government had made fraud in
Saindak Copper-Gold project after involvement of two officials. Then the committee asked
the navy, Baluchistan government and shipping and ports ministry to hand over 350 acres to
navy and rest of land should be given to Gwadar Port otherwise the land will be captured by
Land Revenue Act to the provincial government.7

Gwadar is going to China means that Gwadar is being run by the Chinese government. From
this our trade will be increased and foreign relations will be strong. Employment will increase
in the Balochistan sector there will be chance for the people of the Balochistani to work there
and to generate their income and the revenue of the country. As we know that Pakistan is in a
situation that it has economic crises so they need help in some things. The Beijing
government will operate the Gwadar port and they are taking responsibility for maintenance
and operating the port.8

China has contributed $198 million for the first phase and they have contributed another $200
million for the Highway for the connection of Karachi and Gwadar. In recent years, bilateral
trade has steadily increased between China and Pakistan, with a 35% rise to $2.4 billion in
2004, half the trade volume registered between China and India. The balance of trade remains
overwhelmingly in China's favor, whose exports amounted to $1.8 billion compared with
Pakistan's $575 million. Both Pakistan and China have highlighted the immense economic
returns that development of the Gwadar port holds out for the two countries, as well as others
in the region.9

Trade expectations of Gwadar Port:

Pakistan lies in a region in which it is almost the hub or the centre of the Asia so it has three
ports two running and one in developing stage so after the completion of this port the
countries which are land locked like Afghanistan, Turkmenistan, and Tajikistan, etc. So they
can make their markets there and they can do trade easily from this there will be a huge

7
Singapore allowed to quit port contract
From the Newspaper | Khaleeq Kiani | 29th August, 2012
8
Gwadar goes to China
Published in The Express Tribune, September 1st, 2012.
9
China's pearl in Pakistan's waters
By Sudha Ramachandran in Asia Times March 4, 2005
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impact on Pakistan’s economy. Then afterwards there will be introduction of new technology
and involvement of local people and there will be no discrimination.10

Strategic location of Pakistan:

USA, India and Israel are the major competitors and against the China we can also say them
enemy. So in this way India and Israel are the enemies of Pakistan to. The outcome of this
Port will be that Pakistan has confirmed that China will build naval base in Gwadar along
with Pakistan navy so they are giving JF-17 aircrafts to Pakistan in advance and they will
make a huge defense system there. The impact will be that India is saying that China will use
this route to attack us and USA is also stressing upon this thing that why China is making
naval base there because they will be strong after that the west side of the China is safe with
Pakistan so on this way they are making this more strong. After the war of 1971 Pakistan
Navy is stressing upon the improvement of defense system of navy so now Pakistan navy is
operating in Karachi Bin Qasim and Gwadar.11

Challenges:
Now every work has its positive and negative aspects so there will be some difficulties in
creating the Gwadar Port but we have to work for the betterment of our country. Although
there is an enormous quantum of trade that could flow through the Gwadar port, it is also
faced with the tough and challenging task of competing with developed ports of the region.
Concerted efforts are required for creating a conducive environment for industrialization of
this region based on strategies, program and scientific approach, and efficient directions to
make it a comprehensive and competitive project. If there is no broad based cooperation
amongst regional and extra regional powers, there will be no security.

10
Gwadar: An emerging gateway Port to Central Asia & West China
By: Syed Fazl-e-Haider, the Development Analyst
11
Beijing to operate Gwadar Port: Pak Defense Minister
Source: ANI
Mon, May 23, 2011
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Conclusion:
Regional combination of physical infrastructure between South and Central Asia is underway
and in this context Pakistan`s location highlights its geostrategic importance. Its borders
touch two most populous countries of the world that is China and India. The integration will
boost regional economic development. The construction of Gwadar deep sea port is an
important part of the regional infrastructural integration. Gwadar deep sea port has the
potential to provide Central Asia and Afghanistan access to Indian Ocean and an opportunity
to export their natural resources through southern routes. Economy is an essential element of
national power and is fundamental to the strength and stability of a country. The Gwadar port
will attract investors, create job opportunities, and open up new vistas of economic
development in the coastal region and add significant revenues in national economy. The port
also comes as a much-needed national requirement in the wake of the rise in cargo traffic at
existing ports. More importantly, other development projects, for example, the Makran
coastal highway, industrial estates in the region, and the Saindak project, are a few of the
welcome spin offs of the Gwadar project. Besides the economic gains, substantial political
benefits can be accrued from providing seaport facilities to the regional countries, especially
land locked states.
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References:
1. http://www.gda.gov.pk/pages/gwadar.html
2. http://www.gda.gov.pk/pages/aboutgda.html
3. http://www.indianexpress.com/news/china-set-to-take-over-reins-of-strategic-gwadar-
port-in-pakistan/994810/0
4. http://tribune.com.pk/story/429152/gwadar-goes-to-china/
5. http://dawn.com/2012/08/29/singapore-allowed-to-quit-port-contract/
6. http://www.syedfazlehaider.com/ gwadar: an-emerging-gateway-port-to-central-asia-&-
west-china/html
7. http://www.sify.com/news/beijing-to-operate-gwadar-port-pak-defence-minister-news-
international-lfxp4hghfjf.html
8. http://www.dailytimes.com.pk/default.asp?page=2009%5C09%5C05%5Cstory_5-9-
2009_pg5_2
9. http://pakinews299.blogspot.com/2009/01/gwadar-port-to-be-fully-completed-by.html