On February 18, the Pakistani government transferred operational control of its strategically-located deep-sea port at Gwadar in, Balochistan province to its ‘all-weather friend’, China. India has expressed concerns over the deal. So did the US.

Gwadar is situated on the Arabian Sea, just 180 nautical miles (330 kilometres) from the Strait of Hormuz, through which a third of the world’s oil supply passes. It offers a prime location to monitor ships passing through the Strait of Hormuz from the Persian Gulf, as well as access to cheap land routes or West Asia trade through Pakistan into western China and Central Asia.

The agreement to transfer the port to the state-owned China Overseas Port Holding Company was signed in a ceremony attended by Pakistani President Asif Ali Zardari, several ministers, and Chinese Ambassador Liu Jian. The previous operator, the Port of Singapore Authority (PSA), withdrew after Islamabad refused to provide large land for development work around the port.

On February 6, after Pakistan announced its decision to hand over the control of the port to China, Indian Defence Minister A.K. Antony, expressed “serious concerns” over the deal. “In one sentence, I can say that it’s a matter of concern to us,” Antony said at a news conference.

India’s External Affairs Minister Salman Khurshid said that India should not “overreact” to the agreement. However, Khurshid indicated what is at stake: “There is a delicate balance in the entire region and I think none of us should be doing something which will upset that balance.”

While officially the US is silent on Gwadar’s transfer to Chinese, some American strategists have described it as the westernmost link in the ‘string of pearls,’ a line of China-friendly ports stretching from mainland China to the Persian Gulf, that could ultimately ease expansion by the Chinese Navy in the region. Chittagong in Bangladesh and Hambantota in Sri Lanka are amongst the other Chinese pearls.

The US “pivot” presents Pakistan with a geo-political dilemma: it has depended on the US and China since the mid-1960s. Pakistan responded to the strengthening of India’s ties with the US by strengthening its ties with China.  

Interestingly, in 2007, then Pak dictator, Pervez Musharraf, opted for the Singapore company not to upset Washington. He did this even though China provided 75 percent of the $US250 million cost of construction.

The Pakistan People’s Party-led government signed the Gwadar agreement with China even though Pakistan’s former military dictator, Pervez Musharraf, opted in 2007 for the PSA not to upset Washington. Musharraf did this even though China provided 75 percent of the $US250 million cost of construction.

Soon after the US raid killing Osama Bin Laden in the garrison city of Abbottabad, Pakistan offered the port to China in May, 2011. Though China reportedly turned down the offer, then-Defence Minister Ahmad Mukhtar also offered to build a naval base in Gwadar for the Chinese.

For China, the port agreement provides vast potential benefits. Lin Boqiang, director of Energy Economics Research centre at Xiamen University, explained: “I do believe China will build the port at the astonishing ‘Chinese speed’ to materialise the port’s strategic values.” Gwadar offers a shorter route to western China—via the recently expanded Karakoram highway across Gilgit-Baltistan in northern Pakistan—and an alternative route to vulnerable sea lanes through the Strait of Malacca.

Sixty percent of oil imports to China come from the Persian Gulf while 80 percent of total oil imports have to cross the Strait of Malacca before reaching the mainland—putting China, the world’s biggest energy consumer, in significant jeopardy from the threat of a US Navy blockade of the Strait of Malacca.

Gwadar is located in politically volatile Baluchistan Province, which has poor infrastructure and is gripped with the insurgency of separatist Balochi nationalist groups. These groups are fighting the Pakistani military and demanding autonomy. Some have appealed to Washington for support and have opposed China’s building of the port at Gwadar.

The US has refused Pakistani requests for the Balochi armed groups to be placed on a list of terrorist organizations.  Sections of the US political establishment have even raised the possibility of supporting “Balochi self-determination” to warn Islamabad not to tie itself too closely to Beijing.