Introduction

GEOSTRATEGIC IMPERATIVES OF THE GWADAR PORT

1. China is helping Pakistan to build this port as well as a host of associated projects such as railroad links, industrial complexes etc. India and Iran are raising eyebrows over the increased Chinese presence, which is also attracting the attention of the United States. Regionally, India and Pakistan are involved in an intense security dilemma and Iran is struggling to assert its influence as a regional power broker. Natural resources of Central Asia can only find their way to the Gwadar port through Afghanistan, which is in a state of persistent instability since many decades ago. An environment of suspicion has already started fermenting in policy making circles of all the concerned states due to increased Chinese presence in the Indian Ocean, and it could particularly blow out of proportion if it turns out to be a prelude to a military presence.

2. In the aftermath of the Global War on Terrorism (GWOT), stemming from September 11 incidents involving a majority of the terrorists from Middle Eastern countries and their heavy crackdown, American support is dwindling in the Middle Eastern countries. The United States, due to its strategic interests in the area, is maintaining a heavy military presence in the area. The requirement of a base in close proximity of the Persian Gulf may arise if the United States decided to pull out its forces from the Middle East. In this context, one would not rule out the United States’ desire to have military basing rights at the Gwadar port, as there are abundant occasions of extending such facilities by Islamabad in the past. This would, however, surely trigger uproar in Chinese circles and Pakistan’s time tested entente cordiale and strategic partnership could be put to an extreme test. Additionally, such an eventuality will put Pakistan in a very odd situation vis-à-vis Middle Eastern countries.

3. What policies should Pakistan formulate to attract the cooperation of competing nations and dispel notions of strategic mistrust amongst these nations? Success of the port project is essential for the growth of Pakistan’s economy. The GWOT, lack of thaw between India and Pakistan, and Pakistan’s delicate internal political situation are some of the facets affecting the Gwadar port, and they demand careful handling by Pakistan.

4. This article argues that “reassurance” measures are required to defuse suspicions about the perceived long-term political, military and economic objectives of all concerned states, particularly the United States and China.1 India and Pakistan are engraved in an intense “security dilemma” and to normalize relations Pakistan needs to tailor “influence” strategies and initiate positive engagement.2 Afghanistan is a landlocked country and heavily depends on Pakistan for its economic revival. Pakistan, despite estranged relations, will have to evolve “positive incentives” to keep Kabul “engaged” in order to ensure the safe passage of natural resources of Central Asian States. Relations with Iran also dictate similar strategies.3

5. Pakistan is in middle of a complex strategic and security situation; only appropriate policies can ensure the success of the port project, which is not only vital for Pakistan’s economic prosperity, but also for security. The chapter will, therefore, be structured to evaluate the strategic environment surrounding Pakistan, highlighting interests of various regional and global players concerned with the port project. In the conclusion, this thesis will draw common points evolved from the discussion of interests of these states in order to recommend policy options for Islamabad.

Strategic Situation of Pakistan

6. President Clinton, during his trip to the region in the year 2000, explained the strategic situation of South Asia by declaring it as “the most dangerous place on earth,”4 and the world witnessed two nuclear states, India and Pakistan, eyeball-to-eyeball with military machines ready to pull triggers during 2002. Historian Daniel Moran suggested that South Asia would see more than their share of irredentist and secessionist wars, arising in part from conditions that European imperialism created and left unresolved; and India and Pakistan have already fought three wars.5 Throughout South Asia, the search for prosperity is too often overshadowed by the specter of war.6 The situation on the western side, though less grave, is no different than the east. Pakistan’s desire to maintain safe borders in the west have often been met by a checkered response by Afghanistan in the name of the Durand Line controversy and Pushtoonistan issues, and by Iran due to

1 2 3 4 5 6

Pakistan’s relations with the United States and Middle Eastern countries. Pakistan’s role in the recent Global War on Terrorism (GWOT) has made these relations more precarious.

7. Additionally, the perception of an increased Chinese presence due to the Gwadar port has added a new dimension to the complexity of the security situation for Islamabad. Not to exclude prospects of the United States, dismayed from increasingly uncomfortable presence in the Middle East, requesting basing rights from its present “front line state” (which has historically provided such facilities to the United States) at the port; inviting uproar within Chinese circles as well as putting Islamabad in very odd situation vis-à-vis Middle Eastern countries. Conversely, the Chinese decision to increase military presence to safeguard its interests in the area could trigger an unending spiral of security issues, replicating a Cold War situation.

8. In this complex geostrategic situation there is optimism for the port’s success. This article argues that it was basically the logic of economic interests that brought the international community into broad-based, deep and mutually beneficial relationships at the dawn of the new millennium. In the twenty-first century, the International institutions have the capacity to enhance the prospects for cooperation among states and even hard core realist Mearsheimer admitted that the prospects for cooperation are abundant in this promising new world.7 And major sea powers, capable of disrupting the Sea Lanes of Communication (SLOCs), have agreed that the Indian Ocean should remain peaceful.8 It is, therefore, hoped that the military de-globalization brought about by the end of the Cold War will help defuse the volatile situation surrounding a project which not only can benefit Pakistan, but the whole world.

9. Intra-regional disputes, the arms race and the absence of spirit of mutual coexistence among the littoral states have encouraged the outside powers to manipulate the littoral weaknesses and create dissention in their ranks. Big powers have always tried to maximize their influence in the littoral states by applying the tactics of diplomacy, maritime bases and naval forces to make use of vast concentration of resources. In this perspective it will be prudent to analyze the regional politico-economic interest of regional and extra regional powers. General interests of concerned countries will precede their points of contention in order to evaluate if the Gwadar port can help convert contentions into cooperation and help Pakistan evolve a strategy to foster this cooperation.

7 8

Interests, Interrelation and Conflicts of Regional and Extra Regional Powers

10.

9 10 11 12 13 14

Pakistan’s Interests in the Region

a. Pakistan has a strategic location in the Indian Ocean region. On the west is Iran, which has traditionally been a close ally. On the east is India, which is seen as a potential adversary. In the north is China, which has been a close friend, and to the northwest is Afghanistan, which is likely to remain friendly towards Pakistan because of her geo – economic compulsions. On the other hand, Pakistan is also located strategically in the vicinity of the Persian Gulf and acquires a special significance as nearly 17 million barrels of oil passes through the Strait of Hormuz daily.9 About 90 % of Pakistan’s trade is sea- borne and its SLOCs are passing through the Indian Ocean.10 Development of a commercial port at Gwadar on the northern extremities is another important factor for Pakistan’s interest in the region.

b. Economic dependence of Pakistan on sea routes for trade and commerce is of cardinal importance for the country’s survival as an independent sovereign nation. The importance of the coast of Balochistan (where the Gwadar port is being made) was realized by the CIA in the 1980s citing “its strategic location near oil routes from the Persian Gulf.”11 Soviets, prior to breakup, for a long time, had desired expansion towards the warm waters of the Arabian Sea.12 Pakistan and Iran had also long believed that the USSR hoped to gain warm water ports and the same is manifested in assessments of the CIA.13 A time has come where chairman of the Gwadar Port Authority, Rear Admiral Sarfraz Khan, said, “It was a long-standing desire of these states to reach warm waters and now we have ourselves offered this opportunity to them.”14

c. In the aftermath of the Gulf War and the fall of the Taliban in Afghanistan, the political map of the region is being reshaped and new political trends are emerging. The United States, China and India are flexing their muscles to

enhance their influence in the area. The United States and Pakistan’s relationship has been like a roller-coaster ride, marked by alliance and close partnership during the Eisenhower, Nixon and Reagan Administrations and cool or tense relations when Kennedy, Johnson, Carter and Clinton occupied the White House.15 This long and checkered relationship has its roots in the Cold War and South Asian regional politics of the 1950s.16 Present dictates of the GWOT have once again brought Pakistan back in the camp of the United States.

d. China’s relations with Pakistan are the strongest in the Indian Ocean region. And from Pakistan’s side President Musharraf reiterated the historical bond by saying that “China has been our most consistent ally over the past 30 years,” adding “Washington’s interest is likely to diminish.”17 Pakistan, with antagonistic relations with India, actually sought a powerful ally to keep Indian attempts of regional hegemony at bay.

e. In the recent past, India and Pakistan have entered into a “composite dialogue” and there is a reasonable optimism that even if longstanding disputes like Kashmir and Siachen are not resolved, a working relationship could be established for the collective good of the people. Iran, India and Pakistan are working closely to strike a deal over a gas and oil pipeline from Iran to India through Pakistan. Indian and Pakistani authorities are also endeavoring to materialize Turkmenistan-Afghanistan-Pakistan (TAP), which would terminate in India and would go even beyond.

f. Optimism thus exists to foster economic cooperation amongst all concerned states and the Gwadar port can provide common ground in this regard. Interest and response of the United States’ in the port project will have far reaching affects in both its operationalization as well as the stabilization of the strategic situation in the area, which are discussed in ensuing paragraphs.

United States Interests

15 16 17

11. Can the Gwadar port project harness enough United States attention to stimulate its interest in keeping the region stable? Substantially improved capacity of the United States to project power confirms her intentions to take a more active role in the affairs of this region. Although the termination of the Cold War ended a pretext of heavy U.S. naval presence in the Indian Ocean, American policy makers were still “preparing for two major theater wars (MTWs) in Northeast Asia and the Persian Gulf.”18 That is why, in May 1997, in the Quadrennial Defense Review (QDR), the Navy retained its 12 Carrier Battle Groups and 12 Amphibious Ready Groups (ARGs). U.S. academia has its own ambitions, Koburger, Jr., in his book Sea Power in the Twenty-First Century, projected that by 2021, and the U.S. Navy should have 7 super carriers plus reserves and a sealift capability of 12 Marine Expeditionary Units.19 The United States has an interest in keeping the oceans open to all, which is evident from the presence of, at the minimum, U.S. Middle East Force in the Persian Gulf since 1949.20

12. In 1992, the Pentagon drafted a new grand strategy designed to preserve unipolarity by preventing the emergence of a global rival.21 Although the strategy never saw approval at the time due to severe internal resistance, it did generate discussions across the board by academia as well as different states. The focus being, is the unipolar world stable?22 Interest in this discussion is to elucidate the United States’ role in the Indian Ocean. Charles Krauthammer argued that unipolarity is durable and peaceful, but the chief threat is the United States’ failure to do enough.23 What is the United States required to do in this area and why? It is talked about more often than not that China and the United States are destined to be adversaries as China’s power grows.24 Both states so far, however, have shown restraint and avoided situations that can destabilize the area.

13. In the Middle East, the United States’ main ally, Saudi Arabia, has 261 billion barrels of proven oil reserves (more than one-fourth of the world total) and up to 1 trillion barrels of

18 19 20 21 22 23 24

ultimately recoverable oil.25 Shortly after the Arab oil embargo in 1973-74, the United States (and other Western countries) created the Strategic Petroleum Reserves (SPR) as the nation’s first line of defense in case of an oil crisis. In November 2001, President Bush made an unprecedented decision to fill the SPR to its full capacity of 700 million barrels.26 And in 2001, the United States imported 54 percent of its oil requirements, out of which 30 percent came from the Persian Gulf region.27 The United States economic prosperity and strategic security, therefore, depends on an uninterrupted supply of oil.

14. The September 11 terrorist attacks against the United States by militant Muslims, predominantly Saudis, have created a significant challenge to the long-term partnership between Washington and Riyadh.28 Trickling control over the Middle Eastern region would also mean loosening its grip over the dynamics of the region. For this reason, the United States desires a strategic alternative of Middle Eastern oil, and natural resources of CARs( Central Asian Republics) are bound to become a strategic alternate of the U.S. oil supply. Pakistan’s Gwadar port is one of the probable sites to provide an outlet to CARs natural resources, via Afghanistan. Only a few days before the September 11 attack, the U.S. Energy Information Administration documented Afghanistan’s strategic “geographical position as a potential transit route for oil and natural gas exports from Central Asia to the Arabian Sea.29 American intervention into Afghanistan in pursuit of suspected terrorists has only further complicated an already delicate regional balance. Hopes of keeping economic interests alive nevertheless remained alive even after U.S. operations in Afghanistan, as the New York Times reported on December 15, 2002 that, “The State Department is exploring the potential for post-Taliban energy projects in the region.”30 The future of Afghanistan will determine the future of United States influence over the routing of CAR resources through this area. Circumstances after the unfortunate September 11 attacks not only brought an ‘old ally’ (Pakistan) back into its camp, but also suited its alternate strategic oil supply plans. Although a reasonable portion of U.S. oil tycoons support CARs

25 26 27 28 29 30

oil supply through Iran, the policy goals oppose the building of a pipeline that transits “energy competitor” Iran, or otherwise gives it undue influence over the region.31

15. Desire for a strategic alternate of oil aside, the indications of wearing American commitment in the Middle East does not necessarily indicate lowering of its resolve in the area as the Pentagon is becoming increasingly interested in the concept of mobile offshore bases for deployment in the Persian Gulf, to ensure the U.S. military access to critical regions in the future.32 Persian Gulf and Indian Ocean areas are, therefore, likely to remain the priority of United States policy makers for the foreseeable future. Naval presence is likely to increase even further due to increased discontentment in Middle Eastern countries and declining acceptance of U.S. ground forces. This presence will have a direct bearing on the Gwadar port project, and it ought to have positive effects.

16. In the same context, one would not rule out the United States’ desire to have military basing rights at the Gwadar port, as there are abundant occasions of extending such facilities by Islamabad. This would, however, surely trigger uproar in Chinese circles and Pakistan’s time tested entente cordiale and strategic partnership could be put to an extreme test. Additionally, such an eventuality will put Pakistan in very odd situation vis-à- vis Middle Eastern countries. Chinese probable response to such a request will be discussed in subsequent paragraphs under the heading of Chinese interest in the area.

17. Next, one would discuss Washington’s potential response if China increases its military presence in the Indian Ocean. The United States’ view of the threat and the stakes in the India Ocean, particularly the Persian Gulf, has its source in misunderstandings of the events of the 1970s; that of a severe oil supply crisis in the 1990s – and probably beyond. President Carter’s statement in his 1980 State of the Union address, subsequently labeled as the “Carter Doctrine,” that “Any attempt by any outside force to gain control of the Persian Gulf Region will be regarded as an assault on the vital interests of the United States of America and such assault will be repelled by any means necessary including military force.”33

18. As far as the United States is concerned, China has not replaced Russia as a significant global threat. China, nonetheless, is likely to be a major American foreign policy problem of the twenty-first century and the evidence suggests that China will probably be

31 32 33

powerful enough to challenge America’s preferred order in Asia and may, indeed, wish to do so. A serious security situation may arise if China chooses to increase its military presence on the pretext of protecting its interests linked with the port project. Pakistan, being the country housing this port, will have to convey the port’s “utility” terms in the most explicit way to dispel port’s military usage by any of the states.

19. The Indian Ocean region has remained and will be an area of interest for the American policy makers. It is, however, a well recognized fact that the United States helps to “shape the environment” (in the words of the Pentagon’s quadrennial defense review) in various regions.34 Pakistan does need that help to ensure success of its port project. Notwithstanding internal dynamics, which are pushing policies, overall economic and strategic interests ought to drive the United States to foster cooperation amongst states of the region. The United States “assured” stabilization in the area will guarantee success of the Gwadar port project, and Islamabad needs to formulate policies that can attract such “assurance.” China, being an emerging power and largest stakeholder in the port project, has an equally important role; Chinese interests and intentions are therefore discussed in ensuing paragraphs.

Chinese Interests

20. China is an emerging global player with significant influence in the area as it is the only great power that is contiguous to South Asia. One estimate suggests that, with the present remarkable growth rate, it is expected to reach to the level of world’s largest economy of the United States by 2020.35 China’s desire to play an important role in the Indian Ocean stems from its historical association with the region and the presence of her vital sea trade routes in the area. Its long-term interests in the Indian Ocean are both economic and politico-strategic. Chinese government concerns about energy security in an oil import era, however, continue to dominate its strategic thinking.36

21. According to Mearchiemer, if China becomes an economic powerhouse it will almost certainly translate its economic might into military might. Thus, Chinese military power will appear more dangerous to its neighbors and complicating America’s commitments in the region.37 As part of China’s revised doctrine of waging “modern

34 35 36 37

warfare under high technology conditions on the high seas,” the People’s Liberation Army Navy (PLAN) is developing a blue-water capability by 2015-20, centered on at least two aircraft carrier battle groups for the Indian and Pacific Oceans.38 The July 1992 report of the General Logistics Department of the People’s Liberation Army outlined the plans for the expansion of Chinese naval capabilities through construction of three large bases by 1998, and called for stepped-up naval visits in the Indian Ocean and more frequent port calls to foreign countries in the region.39

22. For China, South Asia, West Asia, Africa and even Europe through the Indian Ocean is closer than the U.S. West coast across the Pacific.40 At present, China is not in a position to interfere effectively in the Indian Ocean, yet owing to her growing navy and her interests she can exercise considerable influence in the region. In the present unipolar environment, China wants to take the role of a major participant in the establishment of a new type of world order. This cannot be achieved with having the Indian Ocean region out of her influence.41 Similarly, China also resents the hegemonic designs of India towards the Indian Ocean and has always exhibited her opposition to such Indian attempts. China also suspects India of supporting superpower presence in the Indian Ocean as a means of countering China. The most serious challenge is that the U.S. military presence in Central, South and South-East Asia may undermine Chinese influence in these regions and make it more difficult for China to achieve its security, economic and energy objectives in the future.42

23. The Chinese are well aware of the geostrategic realities and have been engaged in diplomatic, economic and military activities to build a maritime infrastructure to safeguard their maritime interests.43 Present Chinese commitment to build-up infrastructure is impressive as it is probably the start of long-term Chinese intent in the Indian Ocean. The same is also evident from her assistance for construction of the Gwadar Port at the northern most tip of the Indian Ocean. It would not be long before the Chinese Navy would make its presence felt in the Indian Ocean in support of its economic and maritime interests. China has already consolidated its access to the Indian Ocean through the

38 39 40 41 42 43

Karakoram Highway and Karachi and Gwadar ports, through the China-Burma road to Burmese ports, and through the Malacca Straits. For China, the second stake holder in the Gwadar port project, the port offers a strategic toehold in the energy rich region of CARs and provides an alternative trade link to its western provinces. Xinjiang Province lies 4,500 kilometers from China’s east coast but just 2,500 kilometers from Gwadar. This will make it possible for China to route some of its external trade through the Gwadar port.

24. China’s growing military strength vis-à-vis her central geographic location and her desire to become a pre-eminent power in the region suggest that China has to play an important role in the future conflicts of the region. The regional balance and stability in South Asia and Pakistan’s healthy development are two major interests for China in addition to safeguarding her own interests. Chinese desire for an increased role in the area could seriously jeopardize if Islamabad chooses to consider any United State request for Maritime bases, particularly at Gwadar.

25. International relations theorists suggest that as a nation becomes more prosperous and more integrated into the world economy, it will become more democratized and more anxious to preserve the world order that has made its prosperity possible. It is therefore envisaged that the Chinese would not venture into military presence on the name of safe guarding interests at the Gwadar Port and stir up a never-ending spiral of seriously destabilizing events. Pakistan will have to ensure appropriate policies to dispel any such contemplation by Beijing.

26. Having discussed interests of both the United States and China, capable of stirring complexity of the strategic situation, this article will now turn to Iran, a probable economic competitor with regards to Gwadar Port, which has long been waiting opportunities to establish its dominant role in the region.

Iranian Interests

27. The Persian Gulf is an important trade route in the strategic northern reaches of the Indian Ocean. Some 80 % of the world’s oil tankers leave the shores of the Persian Gulf destined to other parts of the world.44 Geopolitical location of Iran within the Persian Gulf region is such that the northern shores of this Gulf belong entirely to Iran, which enables her to control the Strait of Hormuz. Passage through Hormuz is an issue of concern several times a year when Iran holds its war games at the mouth of Gulf.45 Iran regards her

44 45

role in the Indian Ocean as an extension of her interests in the Gulf due to important geographical location at the mouth of Persian Gulf.

28. Iran, too, is concerned with her economic interests associated with the Indian Ocean. Supply of natural gas to India, via a pipeline through the Indian Ocean, is one of Iran’s mega projects. Additionally, the Iranian port of Chahbahar, located on the mouth of Gulf, could become the hub of commercial activities if the natural resources of CAR find the way to rest of the world through this port. Iran’s situation with respect to its influence on the CARs and its desire to mend fences with the West suffers many impediments.

29. Turkmenistan sees Iran as one of the export routes for both oil and gas; even many of the oil tycoons see it as a viable option but the United States is pushing hard for alternative routes.46 Washington advocates the construction of pipelines in several directions from the Caspian Region, explicitly excluding Iran.47 Although Iran has seen some investment from the EU (particularly France) and India, it largely remains isolated from the international monetary system. Its isolation thus enhances prospects of Gwadar port success.

30. Historically, Iran had warm relations with Pakistan more often than not. Both countries being candidates of a transit route for CAR natural resources, as well as trade, may well eventually end up on an adversarial path. Additionally, increased Indian influence in Iran is considered an attempt of “encircling” Pakistan. In this situation, Pakistan needs to initiate “positive engagement” with Iran to safeguard its interests in the area.

46 47

31. Discussion of an economic competitor now leads to evaluating interests and intentions of India, another emerging power with growing economic interests and with whom Pakistan’s relations have mostly remained of animosity: India.

Indian Interests

32. India is perhaps the only country on the Indian Ocean that has the economic potential, military strength and the political will to dominate this vast expanse of water.48 Indian leaders and strategists have traditionally viewed the Indian Ocean region as a sort of Indian security zone, very loosely akin to the way Americans have viewed Central America and the Caribbean; or the way Russians have viewed Poland; or the way Chinese have viewed Korea. Although Indian leaders have not explicitly laid out such a regional doctrine, Indian behavior in the Indian Ocean has generally conformed to such an implicit doctrine.49

33. India’s dominant physical features and geographical location in the Indian Ocean indicate its dependence on the sea for both prosperity and security. India does not have any significant land access to the rest of world. Hostility with Pakistan and a difficult geography that separates India from China and Burma dictates that over 97 % of India’s trade is done through the Indian Ocean; therefore, India has critical interests in maintaining the seas, be open. India depends, to a large extent, on the import of crude oil and petroleum products for meeting its energy requirements from the Persian Gulf region. India’s production from existing oil fields has been declining over the time, increasing its dependence on the import of oil.50 And imported oil meets about 60 % of the Indian petroleum requirements.51 India’s Ministry of Petroleum and Natural Gas predicts the country’s demand for petroleum products will jump to 155.3 million metric tons/year (3.106 million barrels per day) by fiscal year 2006-07.52 To meet additional energy requirements, India seeks to develop economic relation with CARs in collaboration with Iran and desires to have access in this market. For this reason, since the 1990s, Central Asia has come to represent India’s extended neighborhood. For India, Caspian energy supplies have a

48 49 50 51 52

critical strategic drawback in that they must transit Pakistan, with whom relations are continually strained over the disputed territory of Kashmir.53

34. Indian strategic doctrine revolves around the protection of its maritime resources/assets, such as offshore oil platforms/rigs and sea-lanes of communication, to ensure smooth flow of trade.54 There are up to 30 Indian ships at sea in Indian waters at any given time and a much larger number of ships of other nations engaged in trade to and from Indian ports,55 in addition to 8-10 tankers carrying crude oil to India daily.56 India is working on the strategy of building up a viable maritime force to deter any potential aggressor and to protect her SLOCs. Joseph S. Nye, Jr., in his book “The Paradox of American Power”, writes that India’s military capabilities are impressive in South Asia but not in the larger Asian context.57 However, its strategic interests extend way beyond that and tend to enter the domain of regional hegemony, which dictates her relations with other countries.

35. India’s relations with other countries have so far been driven by security dictates more than economic compulsions. Its historically estranged relations with Pakistan do not require much discussion, as both countries already have fought three wars and more than half a dozen incidents short of war. The regional power balance vis-à-vis Pakistan has largely determined India’s relations with Afghanistan since 1979. Broadly, India has two principle foreign policy objectives when dealing with Afghanistan: to counter Pakistani expansion into West Asia, and use Afghanistan as an access route to Central Asia.58

36. In the late 1990s, the United States began to tilt toward India, as Washington and New Delhi turned from ‘estranged democracies’ of the Cold War to ‘engaged democracies’ in the post-Cold War era.59 U.S. officials consider strategically engaging India as a “future investment,” particularly since the Middle East could become hostile and dangerous to continuing U.S. military presence in the region. If Washington’s relationships with its

53 54 55 56 57 58 59

traditional allies – Japan, South Korea and Saudi Arabia – become more fragile, India will emerge as a critical component of U.S. strategy. 37. When its relations with China come up, the Indian security community feels that extension of Chinese interests to the South Asian portion of the Indian Ocean is potentially harmful for India.60 India even attributed 1998 nuclear explosions towards its security concern from China. Defense economists, however, estimate that if India continues to spend 4 % of GNP on defense, in fifteen years its military capital stock would reach $314 billion, or 62 % of China’s (compared with 48 percent today).61 These figures indicate maintenance of parity amongst both countries, leaving Pakistan and other Indian neighbors to deal with Indian military might, if they choose to “catch up” to China. There are, however, reasons to be optimistic since Indian policy seems to be shifting from pure security orientation to economic concerns. Even this shift has the potential to prove a significant factor for resolving outstanding issues with neighboring countries. Pakistan needs to seize this opportunity to normalize its relations with India and reasonable progress is already underway in shape of “composite dialogue.”

38. India’s increasing interest in Afghanistan, however, is raising concerns in Islamabad. When Gwadar port is put in operation, Afghanistan will be one of the direct beneficiaries by accessing it for its trade as well as getting royalties when the gas/oil pipeline is materialized. Afghanistan’s strategic situation and its interests in the area in general and the Gwadar port in particular are discussed below.

Afghanistan’s Interest

39. Afghanistan has historically remained the center of contention between major powers. History knows one such struggle for mastery in Central Asia by Russia and Great Britain resulting in “the Great Game.”62 Russia again ventured into Afghanistan towards last decades of 20th century, attracting U.S. attention that was looking for suitable opportunity to undo some of the unpleasant memories of Vietnam. This Russian venture ended when, at Politburo meeting on November 13, 1986, the Soviet leaders decided to withdraw troops from Afghanistan by the end of 1988,63 resulting in the culmination of the Cold War. Hopes of building war torn Afghanistan faded sooner than expected due to internal strife of warlords. The Taliban then came along to fill the leadership gap; they also could not survive long due to United States outrage over the handover of “so called”

60 61 62 63

terrorists after incident of September 11, 2001. Afghanistan is currently in a state of war and nation building, and it is too soon to foresee how things will settle in the long run.64 40. Afghanistan lacks a functional economy of any significance. Its agrarian based subsistence economy is not even meeting the basic food requirements of Afghans, forcing the population to survive on foreign donated food. The World Bank has estimated that requirement of a fund for addressing basic Afghan problems to be around U.S. $10.2 billion over five years. Based on two years of reconstruction experience, in July 2003, Care International estimated the requirement of funds to be between U.S. $15-30 billion over a five-year period.65 So far only a fraction of funds have actually been made available, but whenever reconstruction activities get momentum, Pakistan, by virtue of its geographical position, will have to play an important role and the Gwadar port stands bright chances of an active role in the entire reconstruction exercise.

41. Amongst other projects, the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline was a hope to help revive the Afghan economy. The TAP pipeline project would have proven to be a jackpot for the people of Afghanistan as the project could bring in over $300 million as royalty to the country.66 The inflow of this cash and foreign investments could help in stabilizing the country’s economy and in reconstructing its infrastructure. It can be argued that a pro-U.S. regime in Afghanistan will be conducive to the involvement of a U.S. firm in the Turkmenistan-Afghanistan-Pakistan pipeline.67 Afghan transit trade was earlier handled through the Karachi port, and after operationalization the Gwadar port will handle it. Afghan Finance Minister Ashraf Ghani also offered his country’s support for development of the Gwadar port, saying it would act as a gateway to prosperity for the entire region.68 Pakistan needs to keep Afghanistan engaged to facilitate the smooth and economical running of the port.

42. Discussion of the interests of various states in the Gwadar port with tremendous economic prospects would not be complete if interests of Japan and the European Union are not evaluated. Although both entities do not have any significant political or security interests in the area, their economic interests demand appropriate mention.

Japanese Interests

64 65 66 67 68

43. The importance of the Indian Ocean to the Japanese cannot be exaggerated; it would not be wrong to state that the Indian Ocean is a lifeline of Japan. Japan averaged 3.9 million bbl/d of net oil imports from the Persian Gulf during 2002.69 The need to protect her economic interest may one day invoke deeper involvement of her “Self Defense Maritime Forces.”70 Japan presently relies on the forces of the United States and other Western powers for her protection. Japan has no worthwhile political goal in this region and, with over dependence on this region for raw material and oil, the Japanese have always desired peace here. Japan’s energy concerns dictate its policies in favor of oil from a Caspian export pipeline terminating at the Indian Ocean.71 Therefore, it is safe to assume that Japan will support the operationalization of the Gwadar port project.

44. In addition to the United States, Japan will be the most worried nation with increased presence of the Chinese at the helm of the routes to her vital energy resources. Recent economic collaboration, though, has helped both nations to leave their bitter past experience behind. Divergence in interest in the Indian Ocean may strain their relationship. Pakistan will have to “reassure” Japan to alleviate any suspicions of port utility harmful to Japanese interests.

European Union Interests

45. Western Europe averaged 2.3 million bbl/d of oil imports from the Persian Gulf during 2002.72 EU members possess only about 0.6 % of the world’s proven reserves of oil and 2% of the world’s natural gas, and it is estimated that two thirds of the EU’s total energy requirements will be imported by 2020.73 The EU is, therefore, heavily dependent on oil transiting through the Indian Ocean. By and large their policy towards the Indian Ocean region has been one of reconciliation and resolution of security issues through the use of “soft power.”74 Their dependence on oil, so called guarded by the U.S., has not encouraged them to seek an active role in problems of either the Middle East or South Asia.

46. Nevertheless, a strong realization exists amongst European nations to have strategic alternate oil resources reducing their vulnerability to a single area source. Like all others, CARs attracted the EU’s attention for which the EU strongly supports an oil and

69 70 71 72 73 74

gas pipeline from CARs to the EU through Turkey. The pipeline route to European markets through Georgia and Turkey faces geopolitical turmoil and tough hurdles in its realization and actual execution. Separatist tensions in Georgia, instability in the Kurdish areas of Turkey, and unrest over Cyprus near the Mediterranean Turkish port of Ceyhan are some of the problems.75 In this scenario, the EU is likely to support a pipeline to the Indian Ocean either through Iran or Pakistan. There is negligible evidence of drags in EU relations with states that matter to the Gwadar port project. The EU and China have developed a stable relationship over the last decade, and so far they do not seem worried about Chinese presence in Indian Ocean.

Conclusion

47. The above discussion clearly manifests that strategic interests of all nations necessarily stem from the economic interests. Gwadar, with potential to act as a hub port, can facilitate convergence of interests of all states, bringing peace and prosperity in the area. Today, the entire globe is focused on the Middle East and Asia with the primary concern of protecting economic interests in the form of a free flow of oil from the Persian Gulf region, as well as tapping the natural resources of the Central Asian Republics. Friedman puts forward “the Golden Arches Theory of Conflict Prevention”, arguing that economic globalization had made interstate war nearly impossible.168 Others admit that in today’s world chances of cooperation through economic integration are more than ever in the history of mankind. But the political, economic and military importance of the Indian Ocean has turned it into a major theatre of rivalries. The power politics of littoral states is, of course, as threatening to peace as coveting influence and protecting interests through power projection capabilities by the external powers.

48. The United States, as a unipolar power, ought to play an important role in keeping the situation stable in the Indian Ocean. One hopes that Krauthammer’s fears on United States failure to do enough resulting in instability of the area do not materialize.76 Though it might also be possible for the United States to do too much and provoke balancing against it, which would also result in instability. Its role in promoting liberalism is also appreciable so far as it is not stigmatized as imperialist. China and the United States may not necessarily be adversaries, but rather once again use Gwadar as a platform to promote economic well being of the area; after all, similar understanding in relations of both nations with respect to Pakistan had worked earlier as well. 77It cannot be overlooked that China

75 76 77

has never lost an opportunity to cultivate U.S. goodwill.78 India’s ambitions of economic prosperity with over a billion people is justifiable, but not for a role as a regional hegemony. 49. South Asia has had enough of its share of turbulence without realizing that respective economies may receive a crippling blow by a serious armed conflict and set the clock back years or even decades.79 Delhi needs to appreciate that United States and Chinese interests in their mutual relationship far outweigh the interests of each vis-à-vis India, and both have high economic stakes in the Indian Ocean.80 The lesson for all nations contiguous to Pakistan (with respect to the Gwadar port) is that unbalanced power, whoever wields it, is a potential danger to others.81 Whereas, the emerging geopolitical environment in the region has led Pakistan to stand again as a strategic front line state for the interests of Extra Regional Powers, safeguarding of its economic interests clearly manifests from present government policies. Pakistan needs to adopt a balanced approach to ensuring stability, security and cooperation rather than conflict and confrontation with its neighbors, as well as the international community.

78 79 80 81