1 SHANGHAI COOPERATION ORGANIZATION Introduction 1. In 1996, China founded a little-known international alliance known as the "Shanghai Five.

The Shanghai Cooperation Organization is an intergovernmental organization, which was officially re-named in Shanghai on June 15, 2001, by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Its member states cover an area of over 30 million square kilometers, with a population of 1.455 billion. Its working languages are Chinese and Russian It was primarily established to settle frontier problems between China and its post-Soviet neighbours - Russia, Kazakhstan, Kyrgyz tan, and Tajikistan - the SCO expanded three years later to include Uzbekistan, which does not share common borders with China or Russia, the two countries at the core of the SCO. The group specifically focused on battling the terrorist threats emanating from Afghanistan and ensuring regional stability. Therefore, SCO has developed it self as an organization concerned with regional security, thus focusing on counter-terrorism, defense, and energy cooperation. SCO accorded observer status to India, Iran and Pakistan, at the same time it rejected a similar request from the United States. Genesis of the Organization 2. Many western observers proclaim SCO as a dead organisation especially after September 11, these predictions have turned out to be false. On the contrary SCO has an accelerated process of institutionalisation since 2002. And we can interpret the SCO summit in Shanghai this year as the end of one important phase in the SCOs development. Its Secretariat is in Beijing and the Regional Anti-terrorism Structure (RATS) in Tashkent, the phase of consolidation of the SCO is now completed. The question now is whether the SCO can live up to its ambitious agenda and deliver on its promises. 3. We will discuss two aspects of the SCO, one as a regional organization furthering cooperation in the fields of security and economy. Second American designs and terrorist activities. So far, the Shanghai-Five (S-5) and its successor organization, the SCO, have devoted most of their efforts to the first field, that is regional security and enhancing economic cooperation among member states has

2 been on the agenda ever since 1997, but it has not been the major focus of this organization. 4. It is clear that border security was the initial motivation for establishing this mechanism between China and those republics of the former Soviet Union that shared a common border with China. To negotiate conflicting claims on the borders and to reduce the costs for securing the borders agreements between China and the former Soviet states have been negotiated and signed over the years after 1992. The approach to solving conflicts over border delimitation between China and the states of the former Soviet Union could indeed be considered as a model for other states. Even if no solution was found for the entire border, agreements were signed for those sections where consensus could be reached. The solution for problematic sections was left to later negotiations. In sum, this piecemeal approach to solving border problems was rather successful. 5. The two agreements that were signed during the first and second summits in Shanghai and Moscow and which marked the real beginning of what was called Shanghai-Five at the time concerning confidence building measures in 1996 and concerning troop reductions and disarmament along the common borders in 1997 were quite important: Not only did they intend to reduce tension in the border areas, but they were also declared by all sides involved a model for the wider Asian region and a modern form of a security arrangement which no longer followed the pattern of the Cold War. It was at the time presented by the S5 as a counter-model to NATOs eastward expansion and to the renewal of the US-Japanese security alliance which were going on at roughly the same time. Maybe we could say that plans for NATO expansion acted as an external catalyst that accelerated the preparations of these two agreements of the S-5. For implementing the second agreement, a control mechanism was put into place. 6. However, one central weakness of these two basic agreements: They do only apply to the border area between China and its direct former Soviet neighbors, but they have no effect on the borders between the Central Asian Republics or between Central Asia and Russia. For Uzbekistan, which joined the SCO on the 6th summit in Shanghai, for example, this implies that it committed itself to two agreements which have no consequences at all for Uzbekistan. Issues

3 of border security should be addressed in a cooperative way. It would be a positive development if Central Asian states started to address their border issues by enhancing cooperation along their common borders in a comprehensive way. This could be done within the SCO framework or at least in the "Spirit of Shanghai". 7. The three perceived forces i.e. terrorism, separatism and religious extremism have been on the agenda of the S-5 since the summit meeting in Bishkek in 1999. Afghanistan was identified as a major external source of instability in the region at an early date long before the terrorist attacks of September 11 in New York and Washington drew the attention of the rest of the world to the situation in Afghanistan. But despite this fact, the S-5/SCO was in a way caught unprepared by the events of September 11. With none of the planned SCO structures in place, it was not capable to play a decisive role in guaranteeing regional security. External events as a catalyst that sped up the process of institutionalisation of the SCO: If China and Russia did not want to lose the initiative to the United States; more concrete steps to enhance regional security cooperation had to be taken fast. Joint military maneuvers started on a bilateral level 2001 with Kyrgyz and Chinese participation. In August 2003, the first crossborder exercises in Kazakhstan and Xingjian with broader SCO participation took place. This was the first time for foreign troops to be invited to participate in exercises on Chinese territory. Although these exercises were considered a success, there were contradictory statements from commentators from Russia and from other SCO-countries as for the future of these joint maneuvers. Military exercises of the SCO as well as those of the Collective Security Treaty Organization (CSTO) have targeted at large-scale terrorist incursions. But if tactics of the terrorists change to small-scale attacks on buildings and suicide attacks, exercises of military and security forces have to be adapted to the new situation. The RATS (Regional Anti-terrorist Structure), which had been originally planned to be located in Bishkek, was officially opened earlier this year in Tashkent. It remains to be seen whether it can develop into an efficient instrument to address the security challenges in the region.

4 8. One important issue for the future fate of the SCO will be how this organization relates to other powers present in the region, most notably the United States, and how it will shape its relations with other regional and international organizations like the CSTO, NATO or the EU. Observers in the U.S. have usually interpreted the S-5 and the SCO as an effort to counter U.S. influence in Central Asia and in general as an organization with an anti-American stance. And if we look at earlier summit declarations, we can indeed find statements directed at the United States, even if they were not mentioned explicitly: A passage against hegemony and power politics was usually included and depending on actual developments there were also critical remarks concerning NATOs eastward expansion, the unilateral abolishment of the ABM Treaty by the United States or Missile Defence. 9. Among Chinese scholars, however, anti-American attitudes have not disappeared. At least, some still interpret the U.S. strategy in Central Asia as an effort to control the region and its energy resources in particular. The U.S. might withdraw from Central Asia after the end of the military campaign in Afghanistan, but Russia and China will remain its two big neighbors. In addition to that, international organizations are present in some form or other in the region. Therefore, one question to be raised is how these different organizations interrelate and what the role of the SCO will be within this web of sometimes alternative or even competing organizations. For example: What will be the SCOs relation with NATO? All member countries of SCO except China are in the NATO Partnership for Peace. The Collective Security Treaty Organization CSTO of the CIS seeks a partnership with NATO, while there have been only cautious first contacts between NATO and China. CSTO, in which Uzbekistan does not take part, has a vastly overlapping agenda with the SCO with an anti-terrorism centre in Bishkek and a Rapid Deployment Force in the making. All Central Asian states as well as Russia are members of the OSCE, while China is not. How should all these organizations interact in order to enhance the security situation and stability in the region? But the most decisive factor will be whether the involved parties see it in their interest to overcome mistrust, to address conflicts in a peaceful way and to develop a common vision for the regions future development.

5 Aim and Object 10. The SCO is the successor to the Shanghai Five, which arose on the basis of two innovative agreements for the Asian continent confidence building measures in the military field and the reduction of arms. The SCO has been established with a view to strengthening among the member states the following-: a. b. c. d. e. 11. Mutual trust, friendship and good-neighborliness, Enhancing all-round coordination in the maintenance and strengthening of peace, security and stability in the region, Jointly countering new challenges and threats, Encouraging effective and mutually beneficial cooperation in various fields, Assisting the economic growth and social and cultural development of the member states of the Organization. The SCO is based on the principles of mutual respect for sovereignty, independence, territorial integrity and inviolability of borders, noninterference in internal affairs, the non-use of force or the threat of force, and the equality of all the member states. New Opportunities for Pakistan 12. Members of Shanghai Cooperation Organization (SCO) gathered in Shanghai on June 15th, they reiterated earlier pledges to expand economic ties in Central Eurasia. The meeting also confirmed the SCO's ambitious goal of becoming a major global player. Prime ministers from member states Russia, China, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan, as well as top officials from observer states, including Pakistani President Gen. Pervez Musharraf and Afghan President Hamid Karzai, attended the SCO meeting. 13. Meanwhile, bilateral economic ties between Russia and China are emerging as the core of a future SCO development. Russian President Vladimir Putin and Chinese Prime Minister Wen Jiabao agreed that bilateral trade turnover might exceed $28 billion this year. Furthermore, Wen suggested boosting ties with the SCO and another Russia-dominated post-Soviet grouping, the Eurasian Economic Community (EEC). He also pledged to further expand China's program of export loans to SCO states, which is currently estimated at $900 million. However, the

6 SCO is understood to be mulling ambitious global goals, well beyond plans for expanding economic ties. "The SCO has gone beyond the framework of its initially stated goals. Therefore, the SCO leaders are in a unique position to work out decisions that affect the majority of the global population. Pakistan's president Gen Musharraf revealed plans for his country to join the SCO. Pakistan prioritizes economic and anti-terrorism cooperation within the SCO, reflecting the SCO's global ambitions, the Shanghai summit also dealt with issues of Eurasian stability and security. Kazakhstan is particularly interested in the SCO's foreign policy priorities, Implication for Pakistan 14. Its support for coalition military operations in Afghanistan, China also sees potential longer-term risks to its political and security interests in U.S. leadership of the terror war and Washingtons burgeoning military presence in Central Asia. The major breakthroughs in U.S.-Russian relations prompted by 11 September have sharply reduced the possibilities of a Chinese-Russian coalition to constrain U.S. strategic dominance. Increased U.S. political and economic support for Pakistan suggests that the United States will increasingly serve as Islamabads primary international benefactor. Though China has long seen Pakistan's viability as pivotal to South and Central Asian security, a disproportionate U.S. role could diminish China's standing and stature in Islamabad. In addition, the prospect of a substantial, open-ended U.S. military presence in areas contiguous to Chinas western borders, including new U.S. security commitments to the ex-Soviet states of Central Asia, clearly increases U.S. political-military advantage at Chinas expense, and among states that China had assiduously cultivated over the past half decade. A major Chinese diplomatic initiative toward Central Asia, the Shanghai Cooperation Organization, has been all but eclipsed by U.S. actions in the present crisis. Option for Pakistan 15. The latest US-India defence pact, situation of Iran, wave of new terrorism in south Asia have far-reaching adverse implications for Pakistans security and for peace and stability not only in South Asia but also in Asia and the world. It poses formidable challenges to Pakistans policymakers in the diplomatic, political and

7 security fields in maintaining the balance of power in the region. The pact confirms that the US has decided to accord higher priority and greater importance to its fast growing relations with India to have a say in SCO. It also needs to be seen in the context of the declaration by the United States in March 2005 to help India become a major world power in the 21st century which would enable India to project its power in its neighbourhood and beyond with the apparent strategic aim of countering the growing weight of a rising China in Asia. The US also disregards the fact that India along with Iran and Pakistan are seeking membership in the Shanghai Cooperation Organization headed by Russia and China which rejects attempts at monopoly and domination in international affairs and calls for a new security architecture of equal security for all countries 16. Pakistan, therefore, must remain vigilant in the face of this ominous development that would adversely affect Pakistans nuclear capacity by antiballistic missile systems to intercept short and medium-range missiles carrying nuclear weapons and come to grips with the diplomatic, political, military and strategic challenges to its national security. American Worries 17. The rising importance and coherence of the SCO worries Washington - as well as its closest Asian ally, Japan. "The SCO is becoming a rival block to the US alliance While it has been repeatedly emphasized by member states that the SCO does not target any particular country or regional body, speculation regarding the impact of SCO on NATO generally and the US in particular has been rife. The recently concluded summit provides some reason to suggest that such fears are plausible. The most important aspect of the SCO summit was the participation of Iran as an observer state. Russia and China have been vocal in their support for resolving the Iranian nuclear crisis through dialogue and have consistently opposed any imposition of UNSC sanctions against Iran. Iran's participation was thus a clear political statement assuring it of continued support in future. The SCO may also evolve a common position on the Iran issue, which will inevitably be shaped by its two prominent members. This poses a serious setback for the US in bringing international pressure to bear upon Iran. The recently concluded summit provides some reason to suggest that such fears are

8 plausible. The most important aspect of the SCO summit was the participation of Iran as an observer state. Russia and China have been vocal in their support for resolving the Iranian nuclear crisis through dialogue and have consistently opposed any imposition of UNSC sanctions against Iran. Iran's participation was thus a clear political statement assuring it of continued support in future. The SCO may also evolve a common position on the Iran issue, which will inevitably be shaped by its two prominent members. This poses a serious setback for the US in bringing international pressure to bear upon Iran. 18. American foreign policy in Central Asia, geared towards securing access to oil and gas from the region, has not been very successful. Its hopes to expand physical control over Kazakhstan's oil reserves have not borne fruit at a time when the China National Petroleum Corporation (CNPC) has taken over PetroKazakhstan for $4.2 billion. An oil pipeline from Kazakhstan to China became functional in May 2006. A subsidiary of CNPC has also won the rights for oil and gas exploration in Uzbekistan and plans to spend $210 million over the next five years. Trans-continental pipelines for oil and gas from Russia to China are in the process of construction. An energy grid seems to be emerging in the region with formal SCO support, which hopes for greater "cooperation in the oil sector", but could well ensure American exclusion Is American Strategic Presence Declining? 19. As SCO structures in the region are strengthening there appears to be a simultaneous decline in the American strategic presence. The US lost its KarshiKhanabad base in Uzbekistan late last year, and the future of the Manas Air Base in Kyrgyzstan is uncertain as the Kyrgyz have demanded a hundred per cent increase in rent for continued lease of the base. SCO statements regarding the need to realise "democracy in international relations" echo what Iran has been saying over the last few months about "making the world more fair". The implications of such statements are anyone's guess. It is intriguing that the US thought it prudent to apply for observer status (a request that was refused last June) even though it has maintained a studied nonchalance towards the activities of the SCO. The fact remains that the SCO has become increasingly vocal on strategic and political issues in the region. In the past it has called for NATO

9 withdrawal from Central Asia and, more recently, accused the US of "double standards" in the fight against terror, while asking for the extradition to China of five ethnic Uyghurs released from the US military prison in Guantanamo Bay. As the US battles to win its war on terror and keep its allies in Central Asia, the extension of full membership to the present observer states of SCO would lead to encirclement of NATO in Afghanistan, seriously curtailing NATO activities New Dimensions 20. As discussed earlier the purpose of establishing the SCO was to fight three evils i.e. terrorism ,separatism and extremism. During the recent summit an agreement on joint anti-terrorist operations including cutting off the infiltration channels of terrorists, separatists and extremists was also signed. The main thrust of changing Shanghai-5 to SCO is to collectively fight out elements which promote instability, violence, terrorism separatism and religious extremism among the member countries. But the key factor is that China and Russia plan to monitor and resist American hegemonic designs in Central Asia. 21. Just after 9/11episode SCO supported American drive to remove Taliban regime from power and destroy the terrorist network of Al- Qaeda in Afghanistan. But the last summits of SCO which was held in Astana , Kazakhstan, witnessed China and Russia were out spoken in asking the US led coalition in Afghanistan to set a time line for the withdrawal of its military contingents from the SCO member countries. Because SCO members now feel that there is no need to allow American forces to use their bases on Central Asia in order to conduct military operations in Afghanistan. 22. In Nov 2005 Russia and Uzbekistan signed a military treaty to allow the use of military installations in their countries to each other and to provide military aid to each other in the event of aggression. The treaty is a caution to US not to meddle in the internal affairs of Uzbekistan. In the new great game in Central Asia, Russia, China and USA are key competitors as far as the controlling of the energy resources of the region is concerned. After the demise of Soviet Union and emergence of CARs United States pursuing an aggressive strategy of establishing a foot hold in Central Asia by following a policy of trade, aid, technology and supporting the process of democratization in the region.

10 23. Russia and China agreed to normalize their relations and adopted a cooperated approach. For them the real came from the Islamic extremist groups based in Afghanistan and other regional countries. This is evident from the continuing rebellion by Chechen Muslim groups against Russia and an Islamic movement is threatening Chinese authority in the western province of Xinjian. Therefore, the Conference on Interaction and Confidence building measures in Asia (CICA) in its Almaty Summit called for greater cooperation in combating terrorism, separatism, organized crimes and drug trafficking. Factors Led to Active Coordination 24. Two factors led to SCOs drive for active coordination in among the member a. Concern shared by China, Russia and also by the Central Asian regimes that pursuing western style democracy may be tantamount to losing control over incumbents. b. Russia and China are able to re-assure the insecure regimes of Central Asia that they do not need to look to the west, particularly to the US, for aid and assistance, as they are in a position to provide substantial economic and technological assistance to them. Institutional Measures to Combat Terrorism 25. In order to combat the threat of extremism and separatism several Shanghai institutional measures have been taken by the SCO. It signed countries:-

Convention on Combat Terrorism, Separatism and Extremism on 15 June 2001 to share practical assistance to suppress terrorist activities. In 2002 the SCO established Regional Anti-Terrorist Structure (RATS) with its headquarters in Tashkent. It started functioning in June 2004 with a mission to augment coordination between SCO member states to combat the three evil forces. Wests Concern 26. As days are passing by SCO is getting more strength with in its structure and beyond, which is disturbing the Americans and West alike. Western media now raising questions for human rights violations, which are being committed especially by China and Russia in Xingjian and Chechnya respectively. Similarly government of Uzbekistan is also involved in

11 human rights violation by justifying the imprisonment Muslims. The government of Kazakhstan of thousands of also used drive against

terrorism and extremism to launch a crackdown on a major opposition party. It seems a uniform pattern is followed by the majority of the SCO member countries to deal with their internal sources of instability through counter terrorism measures instead of introducing meaningful reforms for improving the socio-economic and political conditions for their people 27. The issues of terrorism, separatism and extremism are a major destabilizing factor in Central Asia and also to a large extent in some parts of China and Russia and SCO needs to look into the causes which promote insecurity, instability and violence. RATS which is used by the SCO to deal with the threat of instability in the member countries can only provide a temporary solution to the problems which are basically of political nature. The SCO has really emerged as a powerful regional organization which is capable of counter the American designs, therefore, these human riots violations need to be addressed in a political way. So that the SCO members can avoid unnecessary American and Western criticism. Conclusion 28. The Shanghai Cooperation Organization, and by extension the economic and political evolution of Central Asia, reflects three different dynamics SinoRussian relations, the new US presence, and the continued threat of Islamist violence. Moscow and Beijing wish to expand and strengthen the group in order to control the course of the regions political and economic evolution; their attempts have been bolstered by the shared, perceived threat of Islamist violence and terrorism. The new US presence, however, has underscored the SCOs weakness by drawing the Central Asian states away from Moscow and Beijing, who themselves are continuing a tight relationship with each other despite the diplomatic detente of Russia to the West. How the SCO and its member countries navigate these conflicting trajectories is a litmus test for the geopolitical direction of Central Asia.

12 GWADAR PORTs RICH POTENTIAL AND PAKISTANS ECONOMY Introduction 1. The phenomenon of Globalization illustrates the strengths and the

potentials, weaknesses and dangers, of our escalating reliance upon the new scenarios, threat perceptions, and communication and information technologies, upon one another, operating on a global scale. It is the phenomenon of globalization, which has introduced us to the unprecedented events of the present times like friendship between India and China, Pakistan and India etc. Globalization is invigorating interactions in knowledge, goods and allows freedom of movement. Globalization also facilitates mutual reliance. As the magnitude of interaction of goods, services and that of information increases the result is an increasing interdependence between countries and people as they come to rely on various imported products services and cultural influx. 2. It is a net result of globalization that on 1st July 2006 first ever train from

Beijing departed for the worlds highest point in Tibet. This railway line has the potential to significantly alter the Chinas trading and military relationship with south Asia. China has also announced its plans to extend the track from Lhasa to the edge of South Asia, the strategically important town of Yadong near the Indian border. Yadong is known as Chomo in Tibet and Yatung in India. It is 315 km southwest of Lhasa,100 km from Bhutanese capital of Thimpu and 450 km from Dhaka. At the same time China and India also re-opened the Nathu La Himalayan Pass, part of the famous Silk route which had been closed since the border clash of 1962. 3. Nepal sees this project as a very rosy prospect through which Nepal will be

able to reduce its trade dependence with India. However India considers it as a military threat for two reasons, firstly, China will be able to intensify military pressure by rapidly mobilizing up to 12 Divisions; secondly the new railway facilitates the easy transport of intermediate range missiles and would also allow China to rail-base in Tibet, some of its intercontinental ballistic missiles. China has

13 developed its latest ICBMs the DF 31A, as a rail mobile weapon. China is also Havalian. After the completion of this trying to link Sinkiang through rail with Middle East. 4. In the era of globalisation Gwadar presents a good opportunity for

project China will have two direct and cheapest accesses with South Asia and

fostering good neighbourly relations between Pakistan and the region to its immediate northwest. Governments plan to set up an export processing zone in Gwadar with a 15 years tax holiday as an incentive for potential investors is a step in right direction. After becoming operational, the port will become a corridor of international trade. This will also serve as the shortest route to sea for the land locked countries of CARs. And will also commerce in the region. 5. Sea ports play a vital role in providing a country an access to the outer world. These ports can become a main hub of commercial activity and can give an extensive growth to the economic outlook of the country. While it is important to have adequate number of ports to meet the trade requirements, it is equally important that these ports are strategically located to attract international economic activities. 6. Situated at the mouth of the Persian Gulf, with a population of less than 50,000, Gwadar has colossal Geo-strategic significance on many accounts. As a full fledged deep sea port, Gwadar has the potential to acquire the status of a regional nucleus, an alternative to Gulf ports and also a vital link to Central Asian Republics (CARs) and China. Gwadar is now destined to be the most important upcoming coastal town located on the interjection of the three most strategically and economically important regions of the world. Owing to its strategic location, the port has enormous potentials to act as a doorway to the Indian Ocean and provide a warm water access to the entire region. This project is intended to bring an economic and social upheaval in Balochistan and will bring economic prosperity to the country. Aim get the status of hub for trade and

14 7. To analyse the Gwadar,s rich potentials and its economic importance with a view to recommend measures to optimize the benefits accrued from its strategic location. Synopsis of The Project 8. Ever since the creation of Pakistan Karachi has been the main stay of Pakistans sea trade. Keeping in view the geo-strategic challenges there is a recognition that Pakistan should start developing few other ports besides Karachi, due to following reasons :1. 2. 3. a. b. c. To reduce the transshipment load at the Karachi port. Being a single port complex, near to Indian naval base Dawarka All our sea lines of communications, to and from Gulf, Far East

it is vulnerable to air, and naval threat. and Mediterranean converge at a single location of Karachi, which can easily be blockade by our potential adversary. 9. East Pakistan crisis provided an eye opener to our policy makers and after years of thorough consideration at highest level and underpinning, Gwadar was chosen as the most suitable site amongst eight potential locations while going from east to west on our coastline i,e Keti Bandar, Sonmiani, Hingol, Ormara, Khor Kalmat, Pasni, Gwadar, and Jiwani. Gwadar was preferred because :5. 6. 7. 8. 9. a. b. c. d. e. To capitalize on opportunities for trade with landlocked CARs Promote trade and transportation with Gulf States. To have an eye on Persian Gulf. To ensure uninterrupted supply of oil from Persian Gulf. Trans-shipment essentially of containerized cargo. Diversion of influx of human resources from up country to Socio economic uplift of the province of Balochistan and to and Afghanistan.

10. f.Unlock the development potential of hinterland. 11. g. 12. h. Gwadar instead of Karachi. establish export processing and Industrial Zones.

15 13. j. Serve as an alternative port to handle Pakistani trade in case of blockade of existing ports and reduce congestion & dependency on existing ports complex at Karachi. Strategic Significance of Gwadar 10. Situated at the gateway of the Persian Gulf and about 460 kilo meters from Karachi, Gwadar has tremendous Geo-strategic significance. The strategic significance of the port is that it can sustain Indian and other naval threats at the same time it provides us an opportunity to exploit the regional scenario and become a need of SCO especially of China and Russia. Chinese Concern/Opportunities 11. China has an increasing economy with a growth rate of about 9% per annum. With such a fast growth rate, China is going to be one of the strongest economies in the world. Presently it ranks fourth largest economy of the world. Thus, her growing economic needs are re-shaping its financial policies in extending cooperation to many countries for sustainable development and creating potential buyers for her cheap goods. Being a member of WTO, the Chinese policies are more credible and long lasting. Opting for creation of regional economic groups and large-scale investment in the regional countries reflect Chinese desire to play a pivotal role in the times to come. Chinese government appears to be passive but determined player in world affairs after collapse of USSR. The recent rapprochement with India and Russia, China wants to have easy access to Middle East, South Asia and beyond which should also be cost effective and secure that is why China is keen in Gwadars progress. 12. a. There are numerous strategic/economic aspects of Chinese interest in this project. Some of which are:To Stop Pol/Eco Unrest in the Western Province (XinJiang). The as much shorter distance between Gwadar and this part (2500 km) of China

compared to its other seaports (4500 km) makes it a very important project, which can be used for enhancing the economic activity in this region that has suffered from separatist movement.

16 c. Forward Naval Base. The port of Gwadar could provide the Chinese a forward base to monitor US naval activity in the Persian Gulf region and the Indian naval activity in the Arabian Sea as well. d. Strategic Dimensions. In strategic terms, Gwadar can help China to monitor the sea-lanes from the Persian Gulf as about sixty percent of Chinese energy requirements come from the Persian Gulf and transit along this sea-lane. e. Denial of Strategic Space to India . China has always resented the growing Indian naval activity in the region. In early 1993, Zhao Nanqi, director of the General Staff Logistics Department of the Chinese Navy, issued a top-secret memorandum that explained in great detail the People Liberation Army (PLA) strategic plans to consolidate control over the South China Sea and the Indian Ocean under the new doctrine of "high-sea defence." Zhao stated that In "We can no longer accept the Indian Ocean as only an ocean of the Indians." A naval base at the mouth of the Indian Ocean will help china in lessening the Indian hegemonic designs in the region. f. g. Proximity to the Gulf States. The Gwadar port will be able to Quest for Oil. Balochistan and its coast are rich in minerals, provide China the shortest access to the markets of the Gulf Region. which are largely untapped and unexplored. It is believed that Balochistan coasts have about 6 billion barrels of oil and 9 billion cubic feet gas reservoir. The minerals, range from gold to copper and many other kinds. China will also be looking forward to explore these resources. Openings for CARs 13. Uzbekistan, Kazakhstan, Tajikistan, Turkmenistan, Kyrgyzstan, and the energy-rich Caspian Sea, is a important region because of its vast economic potential and Geo-strategic location. The economic potential and the significant location together with related political events have brought the region center stage in world political scenario. The enormous hydrocarbon reserves of the region have tempted both neighboring and

17 distant nations. Now every player is endeavoring to do his utmost to outplay the other. On the one hand, the CARs need to establish their identity, redefine their political standing in international relations and work out their national strategy to tackle their problems through economic development. On the other hand, worlds well-established nations are all set to exploit the compulsions of these fledgling states to their own political and economic advantages. 14. Gwadars importance for CARs is because of following factors:14. a. Shortest Route. Pakistan is situated at the interface of Central Asia and South Asia, and provides these landlocked states with the shortest route to the warm waters i.e. Arabian Sea. 15. b. Absence of Viable Alternate Route. Turkey wanted to act as cultural and economic bridge and India's announcement to construct a railway line connecting Central and South Asia could not materialize for geographical reasons, hence the possibility of any secured transit route gives preference to the routes leading through Pakistan. 16. c. Reduce the Influence of Russia. In order to break the circle of Russian influence and to strengthen their own economy by exporting their abundant mineral and oil wealth, besides the Caspian Sea there are two routes available to these countries, one passing through Iran (Chabahar) and the other leading through Pakistan. The western oil exploring companies are not in favour of the trade route through Iran; hence Gwadar emerges as a viable alternate port. 17. d. Economic Cooperation Organisation (ECO). One of the main focuses of the ECO is to promote trade among member countries. Pakistan and these CARs being part of the organisation have a lot of understandings and can easily exploit each others advantages. 18. e. Chinese Interest in CARs. China wants to exploit the oil and mineral wealth of CARs to meet her own energy requirements; on the other hand Chinas western province of Xingjian is part of Central Asia and is bound to be affected, probably for the worse, whichever direction these nations follow. Hence in addition to the north-south route via Iran, a new

18 road link via Chinese Xingjian and Pakistani Karakoram has been proposed by China. This route will not only assist Pakistan but will help China to meet the energy requirements of her Western provinces. 19. f.Old Trade Route. The Indus Basin, via Afghanistan, had been a warm water sea outlet to adjacent parts of Central Asia under various historical epochs under the Indian, Persian, Turkic, Mughal and British empires. Revival of this old route will help these countries in providing the same old access to the warm waters of Indian Ocean. Opportunities for Afghanistan 15. Afghanistan will be dependant on the imports and the aid from the donor nations through Gwader. What ever the likely imports or the exports would be, Pakistan can benefit from them by providing a safe transit route through Gwadar. 16. Significance of the Gwadar port for Afghanistan is due to following factors:20. a. 21. b. 22. c. Provides the shortest possible access to the Indian Ocean. Construction of Gwadar port complex will help in boosting Gwadar could provide Afghanistan warehousing facilities along

economic rehabilitation of Afghanistan. with transit and possibilities of import of goods. Openings for the Gulf Region. 17. Gulf is the hub of the worlds oil trade, supplying two thirds of globally traded oil. Gulf region has very few exports and is largely dependant on the imports from around the world. Other than these imports the region is now developing in the re-exports, with the main destinations Iran and the Indian sub-continent. The Gwadar port complex is going to provide the facilities of warehousing, trans-shipment, transit and coastal trade, commercial and industrial openings for international export-import trade. Interests of the Western Nations Especially the US 18. The Western Nations are not part of the region, but this port is also strategically important for them due to the following reasons: Western economic bloc led by the USA requires Caspian Basin to be linked and integrated to the international markets via a reliable and safe trade route

19 that avoids its passage through Iranian or Russian territory for energy requirements. Politically desirable and economically preferable route from the perspective of the Western bloc- leads to the Arabian Sea, passing through Afghanistan, on the US Trans shipment Facilities to the South East Asian Region. 19. Due to its strategic location the Gwadar port will be able to provide the trans shipment and ware housing facilities to the South East Asian Countries. Monitoring the Sea Communication Routes. 20. In military strategic terms, Gwadar will help Pakistan to monitor the sea-lanes from the Persian Gulf. Gwadar is of strategic importance, lying astride the sea-lane originating from the strategic choke point of Hormuz. Strategically, from the waters of Gwadar one can control entire Indian Ocean including trade routes of far eastern countries 21. Before giving out the recommendations it is felt the future of this project. Vulnerabilities of the Gwadar Project 22. Before giving out the recommendations it is felt the future of this project. Situation in Afghanistan 23. Afghanistan is the middle ground between the CAS and Pakistan. Any future prospects of trade and economic development between Pakistan and the CAS will largely depend upon the security and the political situation in Afghanistan. Hence it may not be incorrect to say that the future of the Gwadar port may be jeopardized or it may not be able to acquire the max benefits if the situation in Afghanistan remains volatile or hostile. Proximity to Iranian Port of Chabahar 24. Although we should be very optimistic about the prospects of Gwadar. However, it seems that the project might have to face competition from pertinent to high light few vulnerabilities of the project, which if not removed can endanger pertinent to high light few vulnerabilities of the project, which if not removed can endanger

20 the Iranian port at Chabahar which is also currently under construction. Iran, with assistance form India, plans to channel and monopolize trade from Tajikistan, Kyrgyzstan and Kazakhstan destined for the East and the Gulf via Chabahar. This implies that Gwadar will not be able to monopolize on a position as the main route to the sea from Central Asia. US Interest in the Region 25. It is a known fact that in 1973, Prime Minister of Pakistan made an offer to President Nixon to develop Gwadar as a naval base for use by US forces. Instead US National Security Council rejected the proposal by saying, we have no great interest in having a naval facility at Gwadar which would stir up the Soviets, the Indians and the Afghans without greatly contributing to US interests. But the incident of 11September, the abundant natural resources of the CAS, the influence China will be able to exert in the Indian Ocean from the Gwadar Port, has forced US to reconsider its decision. Now some analyst believes that the Pakistan Government is under US pressure to reduce the Chinese influence in the region. Fears of the local Population 26. The local population of Balochistan province which was initially very enthusiastic about the project is now voicing their concerns over the projects. The bomb blast at Gwadar, directed against the Chinese engineers is also considered part of the same episode. If the local population is not supportive of the project it will certainly disturb the economic growth and the security conditions in the area, which is not a good omen. Some of the main concerns of the local population are:a. gas project. b. c. The Baloch Nationalists believe that the USA would use They say that the Government is planning to settle 30,000 the project for military purposes. people from the other provinces. They think that the project is another attempt to grab the mineral and natural resources of Balochistan province after the Sui

21 d. The contractors have been hired from Karachi and Islamabad, so they are bringing employees and labor force from the same areas, not employing the locals. Recommendations. 27. A few recommendations are appended bellow:a. Countering Chabahar. Rather than engaging in a rivalry with each other, the two projects can easily be linked with one another, and server different sectors or markets, reducing competitions but also reducing expensive duplication. The need of the hour is that Pakistan and Iran have a joint approach on these projects instead of competing with each other. Both the countries should formulate a committee which should explore methods to find out mutual advantages, build these ports in conjunction with each other and thus benefiting from each other. b. Building Confidence of the Local Population. It would be mandatory for the success of this project that the people of Balochistan should be taken along and their fears and negative perceptions should be removed. Few steps which would help in this regard could be:(1) the area (2) (3) (4) (6) 23. c. Promote the education facilities and specialized skills in and bring the education level of the area with rest of the There is an immediate need to win the confidence of the Health facilities should be improved in the area. The local administration of the Gwadar area should be Government should develop low cost but decent housing Relations and Trade with Afghanistan.

country, to provide them better job opportunities. local population by providing them with the details of the master plan.

involved in development process. scheme equipped with all basic civic facilities, for the local people. Improving Afghanistan and CAS will play a crucial role for the success of the Gwadar port. Islamabad has to work hard to establish trust and cooperation with

22 Kabul. But for this to eventuate, the political situation in Afghanistan has to normalise soon and the war-wrecked country to return to peace and stability. In order to involve Afghanistan in the project it should be dealt as part of this region and not just for stability. Following steps are recommended:24. 25. (1) Political process in Afghanistan should not be disturbed by Pakistan to its own liking. (2) Pakistan should involve itself actively in the reconstruction of Afghanistan and should try to benefit from this economic process. 26. 27. 28. 29. 30. 31. 32. d. (3) Engage in dialogues with all the factions. (4) Indo-Pakistani rivalry in Afghanistan should be reduced, through the on going peace talks. (6) Improve trade relations with Afghanistan by: (a) (b) (c) Allowing more flights a week from Peshawar and Dropping more items from the negative list under the Smuggling should be curtailed. Islamabad. Afghanistan Transit Trade Agreement (ATTA). Communication Infrastructure. The vision of Gwadar is process

incomplete with out the necessary communication infrastructure, and the government plans are in a very right direction, but there is a need for follow up and to complete these projects quickly, so that they are completed besides the Phase 1 of the project. Following additional steps are recommended :33. (1) In addition to the north-south route via Iran, a new road link via Chinese Xinjiang and Pakistani Karakoram was proposed. The development of this route would be very significant as prospects for a route via Qandahar appear remote in the short term. 34. (2) The existing Kara Khurum Highway should be expanded, up graded, aligned and integrated into the communication infrastructure of Gwadar development project.

23 35. Conclusion 36. 28. Gawadar is a new project of the new century of the new vision. It is an important project not only for Pakistan but also fro the countries of South Asia, South East Asia and Central Asia. With the construction and completion of this project the region will witness a new era of progress and development.