On Wednesday, the Pakistan cabinet, in one of its last decisions, transferred the operations responsibility of the Gwadar port from Singapore's PSA (Port of Singapore Authority) International to China's Overseas Port Holdings. This had been agreed some time ago as PSA International and Pakistani navy fell out over land transfers, security issues and lack of infrastructure. PSA had asked to withdraw from the contract and Pakistan had agreed.
In 2011, the Pakistani defence minister had announced in Beijing that Islamabad would transfer ownership to a Chinese company. China had demurred then, but despite the worsening security situation in Balochistan, the Chinese have apparently agreed to take it over.
China has already encountered opposition from Baloch people, who have objected to the Chinese taking over their traditional lands. And as the transition in Afghanistan draws near, that region, specially Quetta, which apparently houses top Taliban leaders, is likely to see more violence.
Gwadar was built by China but during its operation by PSA, it barely attracted any commercial traffic. There is also a lot of port development that remains to be built. Pakistan expects China to complete that construction in record time, given its past performance.
More than that, Pakistan expects China to turn Gwadar into a naval base. However, China has its work cut out. A container terminal, rail and road links from the port across Balochistan would need to be built, before China can take advantage of the port itself.
For China, Gwadar could also be a conduit for energy flows into northwestern China, by transporting oil and gas from the port through pipelines that traverse Balochistan and the federal agencies to feed into China's Xinjiang province. As China's oil imports increase, it would prefer to insulate its energy flows from the turbulent waters of the Straits of Malacca and the South China Sea.
Indian ships among others patrol the former as an anti-piracy measure. In the latter, China is involved in a territorial dispute with Vietnam and Philippines among others. In a conflict, it would be easy to shut off China's energy supplies. But not if they can be routed through Gwadar where Pakistan Navy can also add to the security.
According to recent figures, over 60% of China's imported oil travels through the Straits of Hormuz. Having Gwadar under its command would change the security dynamics for China.
As China moves into the Indian Ocean, Gwadar port would be ideal as a staging ground for Chinese ships. China already has a steady presence in Sri Lanka's Hambantota port, it is wooing Maldives, though no port presence is planned yet. China is also building a port in Chittagong, Bangladesh, as well as Sonadiya, near Cox's Bazar.
From the security point of view, India could find itself considerably constrained. It's not for nothing that India has ramped up its relations with Oman, though there is no security presence there yet. India has been pushing to develop the Iranian port of Chahbahar, but that remains a long-term project.
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