Pakistan wanted Gwadar to be the next Singapore. China’s role didn’t help

For the past month, protesters have filled the streets of the Pakistani city of Gwadar—home to a Chinese-operated port—chanting "Gwadar ko haq do!" ("Give Gwadar rights!") Among their many demands: an end to the illegal trawling devastating the livelihoods of local fishermen, the relaxation of restrictions on trade with nearby Iran, and the easing of security checkpoints in the city.

Locals in Gwadar have taken collective action before. But protests of this size, duration, and diversity—they're led by a moderate Islamist politician in an area dominated by secular ethnic nationalists and include large numbers of women and children—are unprecedented in the city.

Situated in Pakistan's Balochistan province along the Arabian Sea—outside the Strait of Hormuz and a few dozen miles from Iran—Gwadar has been pitched as a key node of the Belt and Road-linked China-Pakistan Economic Corridor (CPEC). Pakistani officials have claimed that Gwadar and CPEC will transform the region's economic geography by providing China's landlocked Xinjiang region with an outlet to the Indian Ocean. But in discussions on Gwadar's future, the city's indigenous ethnic Baloch population has largely been invisible.

A general view of Pakistan's Gwadar deep-sea port on the Arabian Sea. Photo: Reuters

The people of Gwadar, however, are now making themselves heard.

On Dec. 12, Pakistani Prime Minister Imran Khan tweeted that he has "taken notice of the very legitimate demands of the hardworking fishermen of Gwadar" and pledged to take "strong action against illegal fishing by trawlers." Yet Khan's tweet will do little to mollify the people of Gwadar. For decades, they've heard big promises by federal and provincial politicians, local bureaucrats, and powerful army commanders. Today, they demand action, not mere words.

Yet the ongoing protests in Gwadar indicate more than just residents' mounting frustration and fear that their livelihoods face existential threats from predatory economic forces, both Pakistani and Chinese. They also demonstrate the failure of the Pakistani government's top-down development model for Gwadar and its hopes that China would magically transform this small, backwater fishing city into a linchpin of regional connectivity.

In the decades since its purchase of Gwadar from Oman in 1958, Pakistan has sought a foreign partner to develop a commercial port or naval base in this remote region far from its population centres. Islamabad first contacted Moscow and then Washington. It found no takers until 2001 when Beijing—according to a retired senior Pakistani diplomat I spoke to—agreed to finance the port's initial development as a "favour" to then-military ruler Gen. Pervez Musharraf.

The Pakistani state dithers on any sort of policy reform. In the case of Gwadar, it took years for Islamabad to simply pass into law tax exemptions for the port and free zone that are key to attracting foreign direct investment there.

Pakistani officials at the time boasted that Gwadar would become the region's next Dubai or Singapore. But the Singaporean PSA International—the port's first operator—failed at making that transformation. In 2013, a state-owned Chinese company took the reins. Soon, Pakistani officials began to speak of replicating the "port-park-city" model of the Chinese city Shenzhen.

Eight years later, Gwadar is nowhere near realizing its purported promise. During this period, Chinese state-owned companies have transformed or helped transform ports like Piraeus in Greece and Khalifa in the United Arab Emirates. Gwadar, in contrast, has seen very modest advances: the installation of new cranes and the construction of a business centre and other facilities at the port. A bypass connecting the port directly to the national highway network, delayed by many years, is expected to be completed sometime in 2022.

Importantly, Gwadar's most vital indicators are poor. Shipping and industrial activity at the port are negligible. And for the vast majority of Gwadar's residents, conditions are unchanged or worse. Potable water remains scarce. Electric power supply—imported from Iran—is inadequate and unreliable, particularly in the summer. And the mainstays of Gwadar's economy remain the same: fishing, smuggling of diesel fuel from Iran, and drug trafficking.

Rather than transforming this isolated Pakistani city, China's Belt and Road Initiative has only created great expectations and even greater disappointment. Ultimately, the responsibility for this failure lies on the Pakistani state, which adopted a fundamentally flawed strategy ill-suited for Gwadar, built on a series of assumptions that have been proven to be incorrect.

For starters, Pakistan assumed that Gwadar was absolutely vital to Chinese interests, especially in helping Beijing overcome its reliance on energy imported via the Malacca Strait. But as a  2020 U.S. Naval War College study makes clear, Chinese analysts generally see a Pakistan-based overland energy pipeline to Xinjiang as economically unviable. And there is even some pushback in China's strategic community on whether it really faces a "Malacca dilemma."

These perspectives rarely make it into Pakistan's domestic discourse on China. One reason for this is that Pakistan lacks independent China experts, despite its close strategic partnership with China. Most Pakistani commentators—some of whom are paid by Beijing—stick to the official script. It's no wonder Pakistani officials are then left blindsided when Beijing's policy priorities and risk appetite shift.

A second reason: Pakistan—like Djibouti, Kenya, and Sri Lanka—assumed that China's Shenzhen or Shekou model is not only replicable but also plug and play. This discounts the fundamentally different natures of the Chinese and Pakistani states. China is an authoritarian, hierarchical, developmental state. Pakistan is a semi-democratic, disaggregated rentier state marred by criminality and incompetence from the top down.

The Pakistani state simply lacks the will to create value in the global economy. It is largely focused on extracting from its populace and foreign donors. And it dithers on any sort of policy reform. In the case of Gwadar, it took years for Islamabad to simply pass into law tax exemptions for the port and free zone that are key to attracting foreign direct investment there.

Third, Pakistan's trickle-down strategy for Gwadar is inappropriate for Balochistan. To begin with, there's been little economic growth in Gwadar to actually trickle down to locals. And the province, which is Pakistan's poorest but also home to its oldest and largest natural gas field, has been hit by multiple secessionist insurgencies since Pakistan's founding, driven in part by resource nationalism. Separatist terrorist groups have also targeted Pakistani nationals from other provinces, including teachers, deemed as "settlers."

But insensitive claims of an imminent influx of Chinese nationals, including by a luxury real estate developer in 2017, intensified Baloch fears they would be displaced by outside capital and labour in Gwadar. Those specific fears may be unfounded. But instead of an influx of foreign residents, Gwadar is seeing a surge in fishing trawlers from the neighbouring Sindh province and China, whose massive hauls are destroying local incomes.

The original plan for Gwadar under CPEC did contain some admirable social sector projects. For example, China has funded the expansion of a middle school and established an emergency medical centre in Gwadar. But these are just drops in the bucket for an area with a population close to 100,000 in 2017. Major projects—including a vocational training centre, medical hospital, and desalination plant—have either been delayed, scaled-down, or dropped. Given Balochistan's fraught history with Pakistan's central government, Islamabad should have frontloaded projects that would have provided basic services, especially clean water.

Fourth, Islamabad structured its plans for Gwadar based on an incorrect assessment of the city's natural advantages. It has envisioned Gwadar as a "gateway port" serving the hinterland of Pakistan, Afghanistan, other countries in Central Asia, and Xinjiang. But given its isolated location, Gwadar stacks up poorly in terms of cost and efficiency when compared to regional competitors, including Pakistan's own Karachi and Qasim ports.

The Gwadar port, however, can be dredged to a depth of 20 meters, making it a potentially viable location for transshipment—allowing very large, cost-efficient vessels to offload cargo to be loaded onto smaller ships servicing shallower regional ports. Indeed, the consulting firm that developed the original master plan for the port assessed that transit trade with the Central Asian republics via Gwadar had "little potential" but that there were decent prospects in the longer term for transshipment.

Finally, Pakistan's top-down political model in Gwadar doesn't work. Protests in 2018 by fishermen against an expressway that cut off their access to the sea made clear that locals were afterthoughts in the design of key infrastructure projects. Gwadar's fishermen once again taking to the streets indicates a failure of the political process to address their needs. They simply do not trust the government.

Last week, in a Twitter Spaces discussion, Balochistan Provincial Minister Zahoor Buledi noted that he had held five or six meetings with protest leader Maulana Hidayat ur Rehman Baloch of the Jamaat-e-Islami party. But the maulana (an honorific given to Islamic clerics) and other participants in the session felt promises made to them would not be fulfilled once the protests stopped and media cameras went away and suggested that some corrupt officials were acting in connivance with various "mafias."

The reflex of the Pakistani state—particularly in Balochistan, where enforced disappearances by security forces are rampant—is to respond to large-scale protests and unrest with intimidation and, sometimes, violent coercion. Given New Delhi's hand in the Baloch insurgency, which has conducted high-profile attacks in Gwadar in recent years, the opportunistic, heavy coverage of the protests by state-aligned "private" Indian news outlets also triggers the anxieties of the Pakistani security services. But these protests are simply an organic reaction by Gwadar's people to the endangerment of their livelihoods and the failure of their own state to respond to their basic needs.

The cries of Gwadar protestors should serve as a wake-up call for Islamabad. While terrorist attacks, including a 2019 assault on Gwadar's only major hotel, serve to deter foreign investment, a heavy security crackdown will only further alienate locals and compound the problem. Islamabad needs to break out of the cycle of violence by developing a new strategy to win the peace in Balochistan.

That strategy should include several specific elements. For one, Islamabad and the Balochistan provincial government need to develop a political framework to include locals in the developmental design process, city governance, and security services. They should also fast-track large-scale desalination projects to better address local water demand. The current water strategy centres on dams—an unreliable source of water for an area hit by drought.

To counter Baloch fears of resource plundering, CPEC needs a strong redistributive policy for southern Balochistan. Islamabad and the provincial Balochistan government in Quetta city should create a wealth fund for natives of Gwadar and the Makran coastal region, providing them with an annual basic income sourced from royalties on energy and mining industries and taxes on luxury real estate and tourism.

To counter fears of being outnumbered and erased by "settlers," Gwadar's indigenous population should also be given a privileged status similar to that afforded to Gulf Arabs in their own respective countries. And to demonstrate respect for the Baloch culture and as part of a jobs-generating cultural tourism strategy, Pakistan should consider developing in Gwadar an anchor destination—consisting of a museum, performance hall, and grand bazaar celebrating local Baloch culture and its linkages with East Africa and Oman, as well as the broader Silk Road and Indian Ocean region.

Finally, the economic plan for Gwadar needs to be reassessed in light of the city's actual natural advantages and emerging opportunities. Gwadar possesses a virgin coastline with scenic beaches, a deep harbour, cheap land, and substantial solar irradiation and wind power potential. A sustainable, 21st-century plan for Gwadar would include positioning it as a transshipment hub instead of a gateway port, as a domestic tourism destination, and as a producer of green hydrogen that could fuel Pakistan's railways and reduce the country's dependence on imported energy.

Above all, any path to success for Gwadar requires Pakistani leadership to understand that success cannot be achieved without centring the city's native population.

Arif Rafiq is the president of Vizier Consulting, a political risk advisory firm focused on the Middle East and South Asia.

Disclaimer: This opinion first appeared on Foreign Policy, and is published by special syndication arrangement.