Gwadar, a fishing village on the Arabian Sea coast in Balochistan, was identified in 1964 as a port site, though it was only when China pledged assistance in 2001 that the project got under way. Alarmed by the US arrival in Afghanistan, China obtained sovereign guarantees to the port facilities and contributed $198 million for its first phase, four times the amount contributed by Pakistan. China then invested in a highway connecting Gwadar to Karachi, providing approximately 450 engineers for the project. While China and Pakistan can only benefit from the port, what are the challenges and who are the adversaries of this port?

The port provides China a transit terminal for crude oil imports from Iran and Afghanistan. It allows China to diversify and secure its oil import routes while gaining access to the Persian Gulf. As China receives 60 per cent of its energy supplies from the Middle East, it is concerned about the American presence in the Middle East, which could disrupt energy supplies in a crisis. Hence, Gwadar port, near the Straits of Hormuz, has greater strategic significance. Beijing will also acquire a presence in the Arabian Sea and Indian Ocean to monitor US naval activity and Indo-US maritime cooperation.

The port, however, has offended Washington's geo strategic sensibilities. According to the Pentagon report - Energy Futures in Asia, Washington sees the port as part of China's 'string of pearls' strategy, which seeks to project its power overseas while safeguarding its energy supplies. It is concerned about the strategic leverage that China would gain and suspects that it is perhaps setting up electronic listening posts at Gwadar to monitor ship traffic. Washington fears that China is seeking commercial port facilities around the world to control strategic 'chokepoints' and "create a climate of uncertainty, jeopardizing the safety of all ships at high sea." Further, Gwadar's location at the mouth of the Persian Gulf is worrying in the context of a conflict with Iran. There are also media reports that Washington is pressurizing Pakistan to increase China's financial investment beyond what China is willing to contribute, so as to nudge China away from the project, though such reports have been denied by Pakistan. It has also been suggested that Washington is fuelling the insurgency in Balochistan to hinder progress on the development of Gwadar, though such reports are highly doubtful.

Meanwhile, Iran is concerned that the port could erode the importance of its ports for Central Asia and Afghanistan, especially Chahbahar port, which India is helping to develop as a counter to Gwadar port. Competition between the two ports could increase Pakistan - Iran rivalry where relations between them has been deteriorating since the 1990s. The first signs emerged in 1994 when Pakistan supported the Taliban and subsequently, in 1998, when Pakistan failed to prevent the killing of several Iranian diplomats by the Taliban. Iran is opposed to Pakistan-US entente, especially with Pakistan backing the US war against terror. Iran is wary that Pakistan will compete for trade and energy related trade with Afghanistan, Kazakhstan, Kyrgyzstan, and Tajikistan, although it enjoys warm relations with the Central Asian Republics and Afghanistan, the latter of which gets a substantial discount on port fees. However, the strategic rivalry between Iran and Pakistan regarding the Gwadar port and transit routes need not be viewed solely through a security perspective. Competition between them could stimulate trade and economic cooperation in the region. Iran's decision to temporarily provide electricity for the Gwadar area, as agreed upon at the 15th session of the Pakistan-Iran Joint Economic Commission, is a step in this direction. Further, a thaw in China-Iran relations, given China's interest in acquiring natural gas from Iran and developing its oil fields, could relieve tensions between Iran and Pakistan.

While the port will boost Pakistan's geo-strategic importance and help its economic growth, the greatest peril to the development of Gwadar is from the local Baluchis. They oppose the development of the port as they see it as yet another example of Islamabad siphoning away Balochistan's wealth and resources. Their concerns are not unfounded as Balochistan's Sui gas reserves meet 38 per cent of Pakistan's energy needs but only 6 per cent of Balochistan's six million people have access to it while the royalties received are very low. The murder of 3 Chinese engineers earlier this year, coupled with numerous threats received by workers, highlights this problem, though rumours about an American or Indian hand in provoking the violence continue to be voiced.

Ultimately, the Gwadar port presents Pakistan with an opportunity to capitalise on the Sino-Pak friendship while gaining strategic leverage in its dealings with India and the US. It needs to integrate the alienated Baluchis by providing them a stake in the country's economy, whereby they could only benefit from the development that Gwadar will bring to the region.