Gwadar and Dubai: complementary or competitive?

By Ayaz Ahmed

The changing dynamics of the world’s economy have made the burgeoning seaborne trade highly important for all countries, including  for the landlocked. In this relatively safer and less expensive trade, Pakistan’s Gwadar Port and Dubai Ports International carry vital significance on account of their geo-economic position at the mouth of the Strait of Hormuz.

The emergence of Gwadar port has led some port experts to speculate whether Gwadar city will be complementary or competitive to that of Dubai in terms of regional trade in future.

It took some decades and relentless endeavours to develop a desert-covered place into today’s bustling Dubai. After the fateful discovery of oil in 1966, Dubai’s erstwhile ruler Rashid al Maktoum capitalised on the oil wealth to transform the backward city into a vibrant, advanced and business-centered city in the Gulf. In partnership with the British, he built vital infrastructure and expanded the city of Dubai to the maximum.

After his father’s death in 1990, Sheikh Maktoum bin Rashid Al Maktoum became the new ruler. He strove day and night to further transform Dubai into today’s advanced and modernised form. In developing Dubai, the Dubai Ports International has played a pivotal role since its foundation in 1999. All this has been achieved by sheer hard work, unwavering commitment and good governance.

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A glimpse of Today,s Dubai

The emergence of Gwadar Port will not only be complementary to the Dubai Ports international, it will be moderately competitive to the latter as well. After its completion, CPEC will greatly shorten the long, expensive and risky Sea Lines of Communications (SLOCs) from 10,000 km to 3201 km for Chinese products to reach gulf countries. Shorter and safer transit route will immensely help both China and the UAE to augment the current bilateral trade of $54.8 billion to approximately $ 100 billion in the next decade.

China is already Dubai’s biggest non-oil trade partner with around $50 billion annual trade. This might increase significantly if foreign direct investments (FDI) are made by UAE-based companies in Gwadar’s Free Trade Zones (FTZ), thus economically benefiting both Dubai and China in the near future.

The UAE’s position at the crossroads between Asia, Europe and Africa has made it extremely important to China. The UAE is a 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 Gulf. In this context, Gwadar Port will tremendously incentivize China to bolster economic cooperation with all the members of UAE.

Nonetheless, Gwadar’s relatively more significant geographical location will soon turn the projected connectivity and cooperation into a moderate competition. Once Gwadar Port is fully operational, it will connect energy-rich Central Asia, resource-rich Afghanistan and western China to the rest of the world, hence becoming the centre of Chinese, Central Asian and South Asian trade. Therefore, it will attract a raft of Dubai-based investors towards its untapped and potential trading zones.

Gwadar’s FTZ will create a marvellous opportunity for Gulf-based investors to diversify their assets, seize the opportunity and invest in the FTZ.  Presumably, the ongoing wave of militancy in the turmoil-stricken Middle East will compel a large number of Dubai-based investors to flock to the emerging city of Gwadar for new opportunities.

The question is: will Gwadar really acquire the wherewithal to transform into a mega city so as to benefit from its competitive edge vis-a-vis Dubai? 

When Dubai was being massively developed by a dynamic leader along with an efficient and effective administrative setup, there was almost no case of obstructive procrastination, corruption, cronyism and bad governance. Even today, incumbent ruler Sheikh Maktoum bin Rashid spends much of his time in crafting new development policies with relevant experts, personally monitoring development works and ensuring all employees to discharge responsibilities within the parameters of good governance.

On the other side, Gwadar is plagued by bad governance, the politicization of almost all major projects, procrastination, corruption, nepotism and bad governance. Presently, a large number of employees at the Gwadar Development Authority (GDA) are political appointees without prerequisite qualifications and experience. Due to massive political and bureaucratic corruption, the dilapidated city does not have functional and effectual local bodies. If all this continues unchecked, it will make Gwadar another Karachi rather than a mega city like Dubai and Hong Kong.

Though Dubai was constantly at odds with Abu Dhabi from 1947 to 1979 on land dispute, its former rulers persistently continued to embark upon project after project to develop and expand the city. Moreover, Dubai provided military aid to the coalition during the Gulf War of 1990 and refuelling bases to the allied forces during the 2003 invasion of Iraq. After such bold steps, the leadership of Dubai adroitly managed the fallout of such policies to protect the city from regional proxy wars.

 At present, despite much of the Middle East being hit by insidious militancy, Dubai is safe from such terror due to its state-of-the-art security system manned by well-trained and well-equipped police and intelligence forces.

While Balochistan has been reeling from a low-intensity insurgency, resurgent terrorism, sectarianism and militancy. More alarmingly, some regional powers are bent upon abetting and arming anti-state actors inside in the province calculated to maximise their grandiose and nefarious objectives.  Much of provincial littoral areas are being used for oil and drug smuggling with impunity. To complicate this convoluted security situation, the Islamic State is also busy striking its terror roots in the resource-rich province.

 It is welcoming that the army has recently raised a Special Security Division (SSD) for the foolproof protection of Gwadar and CPEC. But how can it be possible to make Gwadar a regional trade hub like Dubai without discreetly reforming the politicised and ineffective provincial police force and politically resolving the regionally-funded insurgency?

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A street in a residential area in Gwadar.

Economic factor will also determine the effectiveness of emerging Gwadar. Unlike Pakistan, Dubai is economically independent of the obstructive conditionality of the IMF and the WB. Its vast industrial zones churn out enough productions for exports to maintain the balance of trade and attract more investments. The city’s stable security system, good governance and the rule of law are the driving force behind attracting investors toward it.

Whereas Pakistan is heavily dependent on international financial organisations for timely bailouts to cushion the faltering economy. Balochistan’s bureaucracy and politicians are involved in embezzling development funds and dwindling resources of the province. The federal government had provided Rs15 billion grants for the development of Balochistan, but the provincial government failed to utilise the amount and sent it back to the federal government in the financial year 2014-15. All this makes it crystal clear that Balochistan is lacking a competent, efficient and honest economic team.

There is no shortcut to developing Gwadar into a mega city. Arguably, Gwadar cannot even be a city with the current democratic dispensation and administrative setup. If the government wishes to reap rich economic dividends from Gwadar Port, it should ensure good governance, security and employ far-sighted diplomacy.

The writer is editor of The Asia Watch.

 

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