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Sea change in shipping

The strategic port of Gwadar in Pakistan may help fuel the sizzling Chinese economy. But local fishermen say it has threatened their livelihood.

Published May 16, 2007


GWADAR, Pakistan

By the waters of the Arabian Sea, a remote Pakistani fishing town is being transformed into a huge deep-sea port to cash in on the inexorable rise of the Chinese economy.

Gwadar port, a $250-million project that is 80 percent Chinese funded, is expected to start operations this year to capitalize on its strategic location between South Asia, Central Asia and the Middle East. The port lies near the Straits of Hormuz, through which about 20 percent of the world's oil is transported.

Pakistani Prime Minister Shaukat Aziz recently claimed Gwadar could "change the map of shipping in the world" and serve as a regional energy hub for shipping and refining oil from the gulf.

But the development of this barren peninsula has received a hostile response from impoverished tribesmen who say it is depriving them of fishing waters and bringing no economic benefit to locals.

China's interest is driven by concerns about energy security. It is seeking a place to anchor pipelines to secure oil and gas supplies from the Persian Gulf. Beijing also thinks that helping Pakistan develop will boost economic activity in its far western province of Xinjiang and dampen a simmering, low-intensity rebellion.

"It will greatly benefit China's trade to Europe, Africa and Middle East, " said Moonis Ahmer, an international affairs professor at the University of Karachi. "It will also give a boost to the economy in southwestern Pakistan."

China, which has long-standing ties with Pakistan, has financed $198-million of the total cost of $248-million to build the port, with the rest covered by the Pakistan government.

State-owned China Harbor Engineering Co. did most of the port construction, bringing in 350 Chinese engineers, technicians and other skilled workers. With most of the port construction complete, only a few Chinese workers remain in Gwadar.

Much of the transport infrastructure needed to link Gwadar with Pakistan's northern neighbor is yet to be built, but potentially, it will nearly halve the overland distance from China's landlocked western provinces to the sea: from about 2, 500 miles to China's east coast, to just 1, 250 miles south to Gwadar.

Singapore's PSA International Pte Ltd. last year won a bid to operate the port for 40 years, and the government has exempted it from corporate tax and all import duties on equipment and machinery. China did not bid to operate the port.

Khurram Abbas, chief of PSA's operation in Gwadar, said PSA plans to invest between $5-billion to $8-billion over the 40-year period. He forecast the port would generate revenue of between $17-billion and $31-billion during that time.

That should transform the local economy beyond recognition, but Gwadar's 70, 000 residents are skeptical. Fishermen - the main vocation here - complain they have lost out.

"The port area was our prime fishing area and we used to make thousands (of rupees) every day, but not now, " said Lal Bakhsh, a fisherman in his 40s, explaining they now had to cast their nets further afield in the Arabian Sea.

[Last modified May 16, 2007, 00:49:05]

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