The ever-increasing seaborne trade is playing a pivotal role in the economic prosperity and military power of nations. Great Britain ruled over vast swathes of colonial lands from America to Australia due to its massive sea trade and preponderant naval power. Similarly, by virtue of its geo-economic, geo-political and geo-strategic importance, Gwadar port is also projected to play a major role in the socio-economic development of Pakistan and the enhancement of regional connectivity. Besides, it would also create some opportunities and challenges for Dubai port and its potential economy.
The strategic importance of Gwadar and Dubai ports is patently clear from the fact that these sea trade centers are located at the cross junction of international sea shipping and oil trade routes. Moreover, both are economically and strategically vital chokepoints which provide unhindered access to the India Ocean where about 100,000 ships traverse yearly and 70 percent of the world’s petroleum trade passes. It is also home to 65 percent of the world’s raw material, 31 percent gas and over half of the world’s oil exports.
According to some geo-strategic analysts, Gwadar port would immensely benefit all the Gulf countries including Dubai. China is rapidly expanding its economic and military relations with all the Gulf monarchies. Therefore, these Arab countries will be the biggest beneficiaries of the China-Pakistan Economic Corridor (CPEC), which links Chinese city of Kashgar to Gwadar Port. The CPEC will shorten the transit distance of Chinese products to gulf countries from 12,000 km to 3,000 km. As a result, Gwadar port could help the Gulf countries in increasing their economic and military ties with the rising China.
The current figure of Sino-UAE bilateral trade stands at around $54.8 billion, but the CPEC would help these countries double this amount. Dubai’s biggest non-oil trade partner is already China with around $50 billion annual trade. This might increase greatly if foreign direct investments are made by UAE-based companies in Gwadar’s Free Trade Zones (FTZ).
The UAE’s position at the crossroads between Asia, Europe and Africa has made it extremely important to China. The UAE is a big and key supporter of Chinese One Belt, One Road strategy. It also became a founding partner of the Asian Investment and Infrastructure Bank (AIIB). The UAE is at the centre of Beijing’s plans for economic expansion and growth, and China has long viewed it as a major partner for cooperation in the Middle East and the Gulf. In this context, Gwadar port will tremendously incentivize China to foster cooperation in energy, finance and investment projects with all the members of UAE.
However, Gwadar could also dwarf and undervalue the importance of Dubai if the government in Pakistan earnestly moves ahead to develop it as a mega city and an advanced deep seaport. The FTZ being developed by the Chinese Over Seas Port Holding Company (COPHC) at Gwadar is a big opportunity for Gulf-based industries to diversify their assets, seize the opportunity and invest in Gwadar’s FTZ. Inevitably, most traders would begin disinvesting their capitals from Dubai aimed at investing in the fresh trading zones of Gwadar. The potential geographical reality that would attract investors from Dubai is the exceptionally important location of Gwadar. Once the port is operational, Gwadar will connect energy-rich Central Asia, resource-rich Afghanistan and western China to the rest of the world. Moreover, international traders would flock to Gwadar due to imminent massive investments by of a range of Chinese companies in Gwadar city.
When compared to Gwadar, Dubai enjoys relatively more benefits. The latter is politically controlled by a powerful and effectual monarchy that rules the city with the help of an efficient, competent and effective administrative setup. The security is not only foolproof, it is also equipped with the most sophisticated technology that has immensely helped Dubai in maintaining law and order to the maximum. Moreover, the prevalence of the rule of law is working as a deterrent against criminal activities. Most importantly, Dubai is not plagued by the disruptive forces of the abortive Arab Spring.
Gwadar, on the other side, is beset by a slew of lingering issues which could well create mounting problems for the city to emerge as a hub of regional trades and businesses. The provincial government in Balochistan is handpicked, and its political, economic and administrative wings are clipped by the dominating federal government. Apart from this, bureaucratic red-tape, uncontrollable corruption and nepotism are rampant in the province. The civilian law enforcement agencies are poorly-equipped and largely incapable of maintaining lasting security in the province. Ominously, the neighboring countries of the province are clandestinely immersed in funding and whipping up the low-intensity insurgency in Balochistan.
After having considered the aforementioned points, it can safely be said that potential investors would continue preferring Dubai to Gwadar for the security of their capitals in future. In Dubai, investors are sure that they would not face political uncertainty, administrative hurdles and insecurity of their capitals.
If the government of Balochistan in particular and that of Pakistan in general wish to make Gwadar the main regional trading hub, they should introduce some needed reforms in all sectors of the province. The ministers, bureaucrats, judges and the police should be made efficient, effective, responsive, accountable and result-oriented. If these very measures are crafted prudently and implemented seriously, it is highly likely that Gwadar would outsmart, outclass and outweigh Dubai in the foreseeable future due to its relatively more important geo-strategic, geo-political and geo-economic location.
The writer is the editor of The Asia Watch.
The article was originally carried out by Balochistan Voices on April 17.