Both Iran and Pakistan have developed strategies to create strong economic and transport ties with Central Asia and beyond. Anchoring these strategies are two new seaports: Gwadar in Pakistan and Chabahar in Iran. Spreading out from these ports are existing or planned transportation infrastructure that leads into their respective country’s economic center and importantly for Central Asia, northwards. Both ports are well towards becoming fully operable and are offering generous incentives for companies and governments to do business in their ports. However, serious political, economic and logistical problems remain. For Central Asia one of these two ports, or indeed both, will likely become important links to world markets.
Tip: look way down into the bottom left-hand corner to see the ports.
The problems with Karachi and Bandar Abbas
Karachi is already overburdened with severe congestion from commercial, fishing and military shipping. And from a strategic vantage point it is quite problematic. The Indian Navy targeted the port in 1971 and any blockade in the future would devastate Pakistan since that country has an overreliance on the port of Karachi. The port of Qasim, built in the 1970s was to relive some of that burden and the port of Gwadar is expected to further reduce the reliance on Karachi.
Bandar Abbas is of enormous strategic significance to Iran as it is located on the Strait of Hormuz leading into the Persian Gulf. But that is also a problem for Iran. The area is already burdened with high traffic and of course, the U.S. Navy. Iran wishes to have another port that is more conducive to trade and further growth.
Gwadar, being much further away from India than Karachi, makes obvious strategic sense. But it is its commercial potential that will provide the most benefits. Gwadar is not some long-term project. Its first phase, with 75% of the costs covered by the Chinese government, is already completed. The existing docks, built by the Chinese Harbor Engineering Company, are now being operated by Port of Singapore. Port of Singapore won the contract over Dubai Ports World, the company that was forced out of America by opportunistic xenophobes in both political parties there. Phase two will be completed by 2010, adding even more capacity. Ziad Haider, a researcher at the South Asia Program at the Henry L. Stimson Center, noted that 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 Baluchis near Gwadar, who have already carried out deadly attacks on Chinese engineers.
The problem with Gwadar, wrote Ammad Hassan in his thesis for the US Naval Postgraduate School, is that while the port has been built, “the supporting infrastructure of railroad link, industrial capacity, and civic structures at Gwadar is almost non-existent.” And of course, all analysts mention Pakistan’s extremely problematic relations with the ethnic Baluch in the area who, in addition to having been in a low-grade insurgency for some time, are not at all supportive of the port. And to understate another issue, southern Afghanistan is not quite ready to be a reliable transport corridor for Pakistan to access Central Asia, despite the Afghan government’s voiced support for the project. Nevertheless, the idea of further integrating Central Asian and Russian resources southward with the Asian and Middle Eastern market has others optimistic about the long-term prospects. The Asian Development Bank is somewhat cautious though, noting that initially the port will be significant only to Uzbekistan, Turkmenistan and Tajikistan.
Gwadar’s competition for trade and transport will come from Chabahar, the new Indian-financed port in Iran. A port outside of the Persian Gulf makes sense from a strategic and logistical viewpoint for Iran. The port of Chabahar was 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. Iranian officials state that they wish to have Bandar Abbas remain as the port for Russian and European trade and have Chabahar become the port for trade with Afghanistan and Central Asia. Iran already has good relations with everybody along the route leading north (including the local “warlords”) 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 U.S. constructed a bridge over the Amu Darya that fits in nicely with the Chabahar to Khojent route.
Prospects for economic integration of Central Asia with the South
For energy and mineral resources to be sent south from Central Asia a much more expensive transport infrastructure will be required than what is being built at the moment. Another limitation is the lack of a business friendly environment in most Central Asian states. And consumer goods are already entering Central Asia from Russia and China. What more is there a demand for? Furthermore, many Central Asian leaders are obsessed over local issues and haven’t been overly enthusiastic about regional integration (with Uzbekistan being the worst offender).
What is a long-term prospect is Central Asia being a transport route from the ports to Xinjiang, Russia and Kazakhstan, all of them important markets. The routes to Gwadar and Chabahar cut off thousands of kilometers for certain trade routes.
Any transportation or military problems in the Straits of Malacca, the Straits of Hormuz, the Suez or anywhere along Asia’s southern coastline will further boost the importance of Central Asia as a transport and trade corridor. Beyond 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. Iran’s considerations are boosting trade, having secure borders, and avoiding “encirclement” by American proxies (no matter how much a figment of the Iranian government’s imagination). As for Pakistan, the governments there has hoped for better relations with Central Asia. However, their Afghanistan policy always got in the way. Now they hope to move away from that era.
The countries of Central Asia will likely benefit from both Chabahar and Gwadar. Diversifying its import and export routes is a logical economic and political step. Although one should not exaggerate the economic benefits to be reaped. As for the competition between the two ports, it will not be a “winner take all” outcome but rather one port earning the greater share of trade. And the “winner” in this respect will likely be Chabahar, at least in the short term. Iran is more stable than Pakistan, it has better relations with Afghanistan and the Central Asian states, and unlike the Gwadar route its proposed route goes through relatively stable parts of Afghanistan. As long as Iran avoids outright conflict with the United States or any sort of domestic turmoil it should come out of this competition with an advantage.