Pakistan allows transfer of strategic port to China

Source: Gulf News

Islamabad: Pakistan will allow Singapore’s PSA International Pte to transfer control of a strategically important port to a Chinese company, a switch that may spark concerns in the US over China’s naval expansion plans.

The Gwadar port in Pakistan’s western province of Baluchistan was built in 2007 with funding from the government in Beijing, and is envisioned as the Arabian Gulf terminus of a transport corridor that would carry Middle Eastern oil and other goods to western China.

“We have given PSA a no-objection certificate to sell its shares,” Babar Khan Ghauri, federal minister for ports and shipping, said in a phone interview from Karachi. “They are in discussions with a Chinese company. I hope this transfer of operations will be good for the development of this port,” Ghauri said without giving further details. “This is just a commercial decision, and we don’t have any role in it.”

The takeover of the port by a company from China may raise concerns in the US which sees China’s increasing naval capability in the Indian Ocean as potentially destabilizing. China must be “open and transparent” about its plans for Gwadar, Michael Schiffer, the then US Deputy Assistant Secretary of Defense for East Asia, told a congressional commission in 2009, adding that China may view the port as an anchor for its own naval expansion into the Indian Ocean.

Chinese engineers have carried out a feasibility study for a railroad and pipeline from Gwadar to the western Chinese city of Kashgar. It would follow the route of the China-built Karakoram Highway, a Chinese specialist on Pakistan, Li Xiguang, wrote in December 2010 in the Global Times, an English-language website controlled by the ruling Communist Party’s official newspaper.

A transport corridor to Gwadar “will provide China with the shortest possible route to the oil-rich Middle East, replacing the dangerous maritime route” around Southeast Asia, Li wrote.

Pakistan has in the past suggested the port could be upgraded to a naval base for Chinese use, Harsh Pant, an international relations specialist at King’s College in London, said in a report this year. China rejected the offer as it was unwilling to antagonize the US and India, Pant said.

The Singapore-based company in 2007 agreed to operate the container terminal at Gwadar for 40 years.

Pakistan’s failure to build a modern road network linking the port with other parts of the country and to secure the transfer of land owned by the country’s navy to the port led PSA International Pte Ltd. to seek another operator, Pakistan’s Dawn newspaper reported on August 29, citing Ghauri.

Baluch Separatists

Kurram Abbas, managing director of PSA International’s Pakistan unit, declined to comment in an emailed message.

Gwadar is currently connected to the business hub of Karachi and the rest of Pakistan by a 450km road, most of it two lanes, that has suffered repeated flood damage in recent years.

Political parties in Baluchistan, where local tribes have fought a six-decade battle for autonomy or independence, regularly object to foreign investment in the province.

The regional government is in international arbitration with a joint venture of Antofagasta Plc and Barrick Gold Corp. over a $3.4 billion proposal to mine copper and gold in Baluchistan. The administration has denied the venture, known as Tethyan Copper Co, a mining lease for the desert site at Reko Diq, threatening an investment of $500 million in the project.

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