The race for domination
Syed Fazl-e-Haider | Opinion | From the Newspaper
Jan 23rd 2012

WITH Iran’s threat to close the Strait of Hormuz in response to economic sanctions by the West, the new ‘great game’ has come into play.

Whereas, the closure of the Strait of Hormuz — the crucial energy conduit through which about one-fifth of the world’s oil passes — could cause a big jolt in global oil markets, it could also engage America, China, Iran, India and Pakistan. Gwadar port in Balochistan is likely to emerge as the key node in this.

The strait is one of the most strategically important chokepoints through which some 14 tankers loaded with 15.5 million barrels of crude pass in one day. The US that maintains a naval presence in the Gulf is currently trying to contain Iran’s influence in the strategically important chokepoint, while Iran is fully prepared to defy the US.

On the other hand, China over the past one decade has been silently struggling to enhance its influence around the Strait of Hormuz by increasing its presence in Pakistan’s prize port at Gwadar in Balochistan. India has a presence in Iran’s Chahbahar port, which is likely to emerge as a tough competitor to the Chinese-built Gwadar port.

Iran’s First Vice President Mohammad-Reza Rahimi recently warned that even a “single drop of oil cannot flow from the Strait of Hormuz if the US imposes sanctions on Iran’s oil exports”.

Merely a threat from Iran has sent a ripple of anxiety across world financial markets raising investors’ concerns over the possible consequences of a likely confrontation in the Persian Gulf.

The US sanctions could reduce Iran’s oil revenue to deter its nuclear ambitions, but Iran’s retaliatory move is likely to cause confrontation in the Persian Gulf that could lead to disruption of oil flows and a spike in global oil prices. Arguably, the West’s sanctions will hurt Iran, but the latter’s response could inflict a heavy cost on the global economy — including the US and its trading partners.

With tensions between Washington and Tehran simmering, oil market traders are carefully watching developments in and around the Strait of Hormuz. It is the only sea passage in the Persian Gulf leading to the open ocean for oil export.

Oil tankers have to pass through the territorial waters of Iran under the transit passage provisions of the UN Convention on the Law of the Sea. Controlling and monitoring chokepoints for energy shipments from the Persian Gulf could be the name of the new great game.

At present, China is the biggest investor in Gwadar, which is strategically located at a distance of 624 nautical kilometres to the east of the Strait of Hormuz. China built the port and bore 80 per cent of the initial $248m development costs.

Chinese engineers have completed a feasibility study for the building of a railroad and an oil pipeline to link Kashi in Xinjiang and Gwadar in Balochistan. It will provide China with the shortest possible route to the oil-rich Middle East, replacing the dangerous maritime route through the South China Sea, East China Sea and the Yellow Sea.

With the construction of the Kashi-Gwadar railroad and oil pipeline, Gwadar port will handle most of the oil tankers to China.
At present, 60 per cent of China’s imported oil comes from the Middle East and 80 per cent of that is transported to China through the unsafe Straits of Malacca.China also reportedly plans to have a naval presence in Gwadar. The announcement regarding plans of a Chinese naval base from Pakistan’s defence minister came a day after Pakistan’s Prime Minister Yusuf Raza Gilani returned from a visit to China in May 2011. Beijing, however, denied such a plan, probably to avoid indulging in any controversy for the time being. A naval base in Gwadar could enable China to monitor naval patrols by the US.

India, which wants to dominate the Indian Ocean, is upset by China’s growing stakes in Gwadar from where the Chinese would not only frustrate India’s domination of regional waterways but also enable China to expand its influence across the region.

The development of the Gwadar port is seen by many as part of China’s strategy of building a ‘string-of-pearls’ presence on the Indian Ocean rim. What sends ripples of anxiety through Washington and New Delhi is the Chinese naval presence near the Strait of Hormuz.

New Delhi feels that the Gwadar port would have serious strategic implications for India. The Indian naval chief in 2008 said that the Gwadar port would empower Pakistan to control strategically important energy sea-lanes on the Persian Gulf.
Geographically, India controls no chokepoint on the subcontinental coast through which international shipping must pass.

India is developing Iran’s Chahbahar port, which is strategically located in southwestern Iran off the Oman Sea. Chahbahar is the closest Iranian port to the Indian Ocean, and provides direct access to Turkmenistan and other Central Asian republics.

The idea of its encirclement by China continuously haunts India. India’s stake in Chahbahar is aimed at gaining access to landlocked Afghanistan and Central Asia and bypassing Pakistan in transit trade with Iran and other countries.

The Balochistan government has gone to the country’s apex court to scrap the deal under which Pervez Musharraf’s government gave management and operational control of the deep-sea port to the Port of Singapore Authority (PSA) in February 2007 for 40 years.

Pakistan’s Supreme Court has issued a stay order against the Gwadar port contract barring the PSA from transferring immovable property of the Gwadar Port Authority to any private party and allowed the government of Balochistan to be a party to the case.

If the port operation deal with PSA is cancelled by the court, China would replace the Singapore to run the port on the country’s southwest coast. After taking control, China would simultaneously become the builder and operator of the Gwadar port located 70km east of the Iranian border.

The writer the author of The Economic Development of Balochistan.