Security threats to India: How Chinese Developments in Gwadar and investments in Chabahar Port can jeopardize India’s security in the region?

The IYEA
The Agenda (IYEA)
Published in
19 min readApr 12, 2021
Image Courtesy: New Indian Express

Introduction

This paper explores the security implications of developments in Gwadar Port under the China-Pakistan Economic Corridor (CPEC). According to foreign policy experts, Chinese investments in CPEC appear to be financially unviable[1], and hence the reasons behind these investments are more likely to be strategic than economic. The paper elaborates upon discrepancies involved in developing the Gwadar port which has a huge strategic element for China as well and the reasons for which Iran and UAE are keen on keeping Gwadar port out of competition as it serves as a gateway to the Strait of Hormuz[2]. It looks into China’s debt diplomacy strategy through the examples of Hambantota port and the port in Djibouti to discuss the implications of Chinese developments in Gwadar port.

The paper discusses the swift entry of Chinese investments into the Chabahar port amidst India’s exit from the railway project in Chabahar. It looks into how China could gain a lucrative trade, as well as a military advantage over India since Indian development plans in the Chabahar Port, have been halted due to obstacles in investments[3]. Further, it discusses why this is a matter of concern since the Chabahar port was supposed to act as a strategic point for India to counter Chinese advancements in the Arabian Sea.

India’s exit from the Chabahar railway project and China’s rapid advancements in the Chabahar Port along with developments in the China-Pakistan Economic Corridor (CPEC) could threaten India’s security in the South Asian region. Considering Chinese intentions of building a global trade network, i.e., Belt and Road Initiative, it could be possible that China’s entry into Chabahar port could be a strategic move to incorporate it in the CPEC[4] and this paper would argue how this plan would most likely jeopardize India’s security amid rising tensions over border conflicts with Beijing.

As China increases its defense expenditure by 6.8% in 2021 to more than $200 Billion amidst military standoffs with India in eastern Ladakh and growing political and military tensions with United States[5], Beijing’s military ambitions become congruent with their expenditure pattern. This is to counter any obstacles that come in between their strategy of dominance in the Indian Ocean Region (IOR). China and Pakistan have valued each other for a long time as a hedge against India to assert their dominance[6]. Geoeconomics has become a key component of China’s military strategy since Chinese leads appreciated that if China is to expand its influence vis-à-vis India or Pakistan without escalating military tensions or regional rivalries, they had to accomplish the task of geoeconomics in nature[7].

India’s bid to develop the Chabahar-Zahedan Railway project[8] was considered as a major win for New Delhi. A huge pool of investment was made in the Chabahar port by India to safeguard its interests in the Gulf of Oman[9] because of the rising Chinese threat owing to their developments in Gwadar port under the CPEC[10]. Gwadar port’s development is most likely to threaten India’s maritime security in the Arabian sea and a major chunk of energy and oil import which comes through the Gulf of Oman. With fears of US sanctions leading to companies backing out of the Indian sponsored construction project[12], China’s secret entry into the Chabahar port with an investment of $400 billion for 25 years[13]-creates a major scare for New Delhi since Beijing now has easy access to the Gulf of Oman and the Arabian sea.

In the China-India-Pakistan axis, China’s dealings with both the countries is also motivated by a static party in the region: the United States[14].China’s foreign policy choices with respect to Pakistan are drawn heavily on the fact that the former is a serious challenge for US foreign policy[15] and China uses it as a leverage against US as well. However, China needs Pakistan more than the opposite to hedge against India and the US in South and West Asia and as long as Pakistan remains to be an obstacle for US and India, Beijing’s leverage would stay intact[16]. The China-Pakistan Economic Corridor marks an ambitious attempt by Beijing to keep Islamabad under its influence at all times. As the deal stipulates, Beijing is set to enhance transportation and trade by constructing an airport at Chinese managed Gwadar port[17] along with renewing roads between Lahore and Karachi and upgrading region’s rail system[18].

China’s stakes in Pakistan shows how the former uses geoeconomics as a leverage against supposed colonies of its expansionist policies. As built by China, the Gwadar port is believed to be the nexus between Pakistan, Iran, China and Central Asian states, which is under Chinese Overseas Port Holding Company’s control, establishes that the expansive port development projects will be under China’s influence and control[19]. China’s strategy to exert geopolitical influence through its domestic market has been successful beyond what its reasonable market value suggests[20]. In comparison to Western markets, Beijing exercises relatively tight control over entrance into its domestic market. As most western markets screen would be narrow investments on national security grounds, China exerts a higher-degree of control[21]. It decides each investment on a case-by-case basis, closing off entire sectors to foreign investment, and at times attaching a price of entry in other sectors like forced joined ventures, state-owned enterprises, technology transfers, etc.[22]

China boasts on its geoeconomic muscle both positively and negatively, and mostly it succeeds in advancing its geopolitical interests, at least to some degree[23]. By exercising control, China has managed to deter arms sales to Tapei and reduce the number of countries to recognize Taiwan[24], curtailed activities of Dalai Lama[25], deterred countries from political showings of support of human rights issue[26]. As per recent historical standards, the incidence of such overt geoeconomics efforts seem to be growing, namely, threats to shut off gas pipelines in dead of winter, disengagement with major oil producers, investment deals being openly predicted on disavowal of Taiwan, explicit stipulations in aid agreements requiring a leader to step down at the end of their term, or prohibitions on purchases from a firm in a third country[27]. China’s role in the Sierra Leone elections adds a string to the use of geoeconomic muscle by Beijing to assert itself in low-income countries (LIC). China’s predatory loan practices in the region amidst Sierra Leone’s recovering stage from the Ebola virus outbreak has been sharply criticised by the IMF and World Bank as well[28]. These investment strategies have accrued political gains for China in the country with APC (All People’s Congress) being backed by Beijing to form the government[29]. With evidence stirring up showing ethnically Chinese men rallying alongside APC workers in full party uniform, speculations have been made of a direct partisan involvement by Beijing in the Sierra Leone elections[30].

This paper will conclude with arguments that help anticipate whether Gwadar port could be China’s next military standpoint that could threaten India’s security in the Arabian sea and south Asian region. It will also discuss the potential threats that could be posed by China’s entry into Chabahar port and how this will widen CPEC’s scope of operation making it harder for India to counter.

CPEC: Strategy behind the Economics

Chinese Overseas Port Holding Company (COPHC) is set to invest billions of dollars in Gwadar port over seven years under the China-Pakistan Economic Corridor (CPEC)[31]. This comes after the Pakistan government granted a 23-year income tax holiday and exemption from sales tax and customs duties.

The inference of the push from the National Development Council of Pakistan[32]to set up Gwadar free zones and encourage Chinese businesses to come shows the rapid developments made by a Chinese firm in Gwadar port[33]. Although it’s meant to encourage Pakistan’s economic revival, the relation between the amount of investment and the topography of the region doesn’t suggest that Gwadar Port and the region in itself would be used just for a commercial boost[34]. The dual purpose of ports in which China has invested isn’t unprecedented, as statistics from 2015–16 show that Chinese FDI in Europe increased by 77%, from 23Bn Euros to 35Bn Euros[35]. China has also been investing in key ports across the Mediterranean as a means of creating new trade routes into Europe and to gain influence with important European Union states[36].

China’s investments in Greece’s Piraeus port have helped it become a significant hub for maritime transport in the region. Such investments are not only economical but it also comes with political dimensions[37]. To contextualize this claim, a study proves that in 2017, Greece had stopped the EU from criticizing China’s human rights record at UN meetings and earlier Greece and Hungary had prevented a joint EU declaration[38] in support of an international tribunal ruling that found China’s territorial claims in the South China Sea illegal.

Similarly, a port development project in the Hambantota port undertaken by China pushed Sri Lanka into a debt trap which forced it to give controlling equity and a 99-year lease of the port to China[39]. Through this, Beijing made its intentions clear about the methods it would resort to if corridor economies aren’t able to repay the loans[40]. The economic rationale behind the Hambantota port isn’t at par with the ambitions of BRI since the port was acquired at a high interest rate (6.3%) with no competing offers suggesting other competitors didn’t see any substantial returns[41]. In 2014, a Chinese submarine had docked at the Colombo port which is in the capital city of Sri Lanka[42]. Since the Hambantota port is much more isolated, it is most likely to give greater independence and hold to Chinese vessels because of its strategic location and proximity to Djibouti which became a Chinese naval base recently (Wingo 2020) giving Beijing an added advantage in the IOR.

China’s strategy in the Indo Pacific draws heavily on Alfred T Mahan’s theory of maritime dominance which put forth the hypothesis that whoever controls the Indian Ocean Region (IOR) will most likely dominate the whole of Asia[43]. After acquiring ports in Myanmar, Sri Lanka, and Maldives[44], China’s attempt to deploy PLA Navy on Gwadar port[45] sparked some anticipation towards using it for military purposes to choke Indian maritime defenses in the IOR. While Islamabad suggests that the Chinese navy is being deployed to safeguard the port under CPEC[46], policymakers in India think that it is most likely meant to intercept India’s energy and oil trade with the Gulf due to Pakistani and Chinese naval presence in the Arabian sea, which threatens India’s security along with other military frontiers[47].

The strategic positioning of Gwadar port puts India’s security in the Arabian sea in jeopardy. China’s control of Gwadar port will put more PLA Navy fleets in the Arabian Sea and the Gulf of Oman. High-security compounds have been developed in Gwadar with an unusual amount of security deployed[48]. While the security needed in this region isn’t surprising because of the Baloch insurgency in the past against CPEC[49], however, the construction of marine facilities is alarming as it is most likely to host Chinese marine corps for port expansion and presence in the Arabian sea. This could limit India’s maritime defense in times of heightened tensions between India and its neighbours even India’s maritime trade and energy supplies from the Gulf could be subjected to interception[50]. This is also evident from the Chinese presence in Djibouti for advancing its maritime interests after brokering a deal which was meant only for logistical support but now witnesses the presence of the People’s Liberation Army and People’s Armed Police[51].PLA’s policy objective includes protection of ‘China’s overseas interests’, and a remarkable policy change in Article 71 of the 2015 Counter terrorism law mentions, the Chinese People’s Liberation Army and Chinese People’s Armed Police forces may assign people to leave the country on counter terrorism missions”[52].

The implications of China’s strategy from precedents in Djibouti, Hambantota port, etc. prove that Chinese developments in Gwadar port under CPECcould be more than commercial interests for China[53].The possibility of a potential naval base to challenge India’s maritime security in a time of a conflict could be the reason why Beijing has shown such profound interest in the Gwadar port. The String of Pearls strategy to gain dominance in the IOR can become a major threat to India if Gwadar port is successfully turned into a PLA Navy base as dam construction in Gilgit-Baltistan has proven that China can deploy huge fleets of PLA[54] to protect its overseas interests.

Chabahar Port: Iran’s Sino-Indian Dilemma

The Chabahar-Zahedan project undertook developments under China’s belt after Iran struck a deal with Beijing for a 25-year, $400 Billion strategic partnership on infrastructure, connectivity, and energy projects[55]. India emphasized the geostrategic importance of the Chabahar port to gain access to Afghanistan, Russia, and Europe[56] (through the railway project) to counter China’s attempts to expand trade in the region[57]. However, as Chinese engagements increase in Pakistan’s Gwadar port under CPEC; its swift entry into Chabahar port will jeopardize Indian interests of producing a counterweight to CPEC.

India’s railway project in Chabahar port being built by Iranian railways and Indian Railways Construction Ltd. (IRCON)[58] was a key move under the trilateral agreement[59] between India, Iran, and Afghanistan to build alternate trade routes to Afghanistan and Central Asia. Chinese strategic interests in Afghanistan are imperative to understand its entry into Iran’s Chabahar port. Beijing values Afghanistan for economic cooperation because of its proximity to Central and South Asia for trade and transit[60] and using this to their advantage to gain a strong influential position in the two regions.

China values the Chabahar-Zahedan rail transit project because of three reasons. First, it can gain greater control over trade under its Belt and Road Initiative (BRI) to establish itself as an economic strongman in the region, especially post US foreign policy failures in Central Asia[61]. The Afghanistan National Railway Plan (ANRP) seeks to establish Kabul as a regional transportation hub under BRI[62]. China and Northern Afghanistan are linked through the Sino-Afghan Special Railway Transportation Project (SARTP), the five nations railway corridor project, and a possible connection to the CPEC[63].India had connected with Afghanistan to have an alternative trade route and to avoid any dialogue for normalization with Pakistan following border insurgencies[64]. However, with China’s entry into the railway project, the only possibility left with India is to either find another alternative or to work with China under the BRI, which seems to be like an unlikely move.

The second reason is more strategic. The possible link of Chinese projects in Afghanistan to CPEC would give Beijing a greater amount of resources and positions to tackle the Baloch insurgents. These insurgents have been fighting against the constructions in Pakistan under CPEC[65], namely in Gilgit-Baltistan and recently against developments in Gwadar. Military troops have been stationed at construction locations of CPEC[66] to counter these insurgents as discussed earlier. Gaining access to Afghanistan via CPEC could give Beijingadded advantage against Indian border security as its border adjoining the Khyber Pass is vulnerable to infiltrations[67].Following tensions with China over Ladakh, these troops could jeopardize border security to a great extent.

The third reason is geopolitically important for China. The Chabahar port was important for India to maintain its dominance in the Arabian sea and secure its energy and oil imports from the Gulf Cooperation Council (GCC)[68] through the Gulf of Oman. With China’s entry into the Chabahar port and close connectivity to Gwadar port, Chinese presence in the Arabian sea could be increased exponentially[69]. This could even lead to trade interceptions coming from the Gulf of Oman by China at times of maritime conflict resulting in major obstacles for India to counter in energy and oil imports along with security concerns in the Arabian sea.The only counter measure India could adopt at this point is to create obstacles for China in the Indian ocean parts of which are guarded by the Indian Navy and through the Malaccan straitwhich is responsible for 85% China’s oil imports[70].

Source: The Hindu

In 2018, India got access to the Sabang port in Indonesia[71] and it makes India’s hold on naval matters stronger as this port lies on the entrance of the Malacca Strait through which a major share of trade and crude oil is transported to China. India also received strategic access to Duqm Port of Oman[72] which is imperative for protecting Indian interests in the western theatre of the Indian Ocean Region. These ports were important because of their strategic positioning between two key pearls in China’s string namely Djibouti in Africa and Gwadar Port in Pakistan[73]. This made China’s bid to enter into the Chabahar port and link it to CPEC even more stringent to counter India.

How can China link Chabahar to CPEC considering Pakistani tensions with Iran and Afghanistan? According to the Iranian Foreign Minister Javed Zarif, after India succumbed to US sanctions and stopped buying oil from Iran, Tehran, in 2019, has proposed to link the Chabahar port to the Gwadar port[74]. It increases India’s worries since China now has investments and interests in Chabahar port with a possible linkage to the Gwadar port choking its Arabian Sea dominance strategy. It could possibly hinder New Delhi’s aim to counter developments in Djibouti and Gwadar considering Beijing has an upper hand against India after entering the Chabahar port.

Conclusion

The ambitions behind Gwadar port and Chabahar port were inherently cooperative to boost trade and ease of access to transit passage through Central Asia, Europe, the Middle East, and Africa. India, under the Preferential Trade Agreement (PTA) in 2016, with Iran and Afghanistan took the development of Chabahar port while the Gwadar port being managed by China under CPEC[75]. Both ports have the potential of being a competition with each other owing to the economic costs[76] but the possibility seems less after China getting access to both Chabahar port as well as the Gwadar port.

Indian construction companies under contract to develop the Chabahar-Zahedan Railway plan withdrew from their commitment and put India’s interests in Iran in jeopardy because of US sanctions. Since New Delhi couldn’t find equipment suppliers and partners even after eliminating its oil imports with Iran[77], its strategic response to the China-Pakistan Economic Corridor looks bleak as Beijing looks to expand its scope of operations from Gwadar port to Chabahar port. If China can succeed in its ambition to link the Chabahar and Gwadar port strategically while keeping the economic costs in check, Indian maritime security in the Gulf of Oman and the Arabian sea will be put under pressure from both fronts.

About the Author

Ayush Jha is a second-year undergraduate student pursuing B.A. (Hons.) Political Science Delhi College of Arts and Commerce, University of Delhi. Ayush is a Research Intern at the IYEA, focusing on international strategy and economy.

Citations/References

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[70] T.K. Balasubramaniam, A.K. Murugesan, “China’s rising missile and naval capabilities in the Indo-Pacific Region- Security implications for India and its Allies”, Summer 2020, Journal of Indo-Pacific Affairs

[71]Pramit Pal Chaudhari, “Indonesia gives India access to the strategic port of Sabang”, May 17, 2018, Hindustan Times

[72] Ankit Panda, “India gains access to Oman’s Duqm port, putting Indian ocean geopolitical contest into the spotlight”, February 14, 2018, The Diplomat

[73] Admin, “What is India’s necklace of diamonds strategy?”, March 2019, Kargo. See article:https://kargo.in/discussion/59/what-is-indias-necklace-of-diamonds-strategy

[74] Anirban Bhaumik, “Iran goes to Pakistan with Chabahar link plan”, May 28, 2019, Deccan Herald. See article:https://www.deccanherald.com/national/iran-goes-to-pakistan-with-chabahar-link-plan-736492.html

[75]Khetran, Mir Sherbaz. “Gwadar and Chabahar: Competition or Cooperation.” Strategic Studies 38, no. 2 (2018): 43–55. Accessed October 21, 2020. DOI:10.2307/48539136.

[76] Supra, Note 56

[77] Web Desk, “India dropped from Chabahar rail project amid China-Iran Billion-dollar pact: Report”, The Week, July 14, 2020. See article:https://www.theweek.in/news/biz-tech/2020/07/14/india-dropped-from-chabahar-rail-project-amid-reports-of-china-iran-billion-dollar-pact.html

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