 "Indo-Pacific port war gains momentum as Russia grabs Dawei")
The Indo-Pacific war of ports has intensified in 2024. In 2023, India’s Adani group had taken custody of the Haifa ports while its share price was under attack by short sellers. It was also the year when India and the United States finally were able to break through to Sri Lanka, Adani obtained the concession for the West Container Terminal in Colombo and it was financed by the US Federal Development and Finance Corporation. In response, China restarted its project in the Bay of Bengal at Kyaukpyu in Myanmar, trying to establish an alternative to its failed Gwadar port in Pakistan.
China’s strategy with Gwadar and the entire China-Pakistan Economic Corridor (CPEC) was to build a port city that mirrored Dubai. The plan was to have crude oil delivered from the Persian Gulf to Gwadar, refined there, and then transported by pipeline to Urumqi, the capital of Xinjiang. However, this strategy has faced several obstacles. First, the development of the announced $10 billion Saudi Aramco refinery is progressing slowly. Second, engineers deemed pumping crude or refined oil over the mountains through Gilgit-Baltistan, particularly during the harsh sub-zero winters, to be an expensive and impractical venture. Additionally, Gwadar’s location in Balochistan, a province facing Baloch independence movements, has created significant security threats for both China and the workers from Punjab that Pakistan brought in as part of its attempt at ethnic replacement.
The CPEC strategy to avoid the Indian Ocean and the Malacca and Sunda Straits for shipping China’s energy needs from the Persian Gulf was a failure. But Gwadar, all by itself, gave China a strong presence in the Indian Ocean, especially as it is a port very close to India and the India-Fujairah shipping route.
But Gwadar has also failed as a commercial port. A recent DW report on Gwadar and China’s Belt and Road Initiative (BRI) port, labels it the most underperforming port in China’s portfolio. It has only managed to log 22 ships in its best year since its completion in 2007. While China will never admit the failure of Gwadar and CPEC, the deserted port and infrastructure raise concerns about their potential use for expanding Chinese military presence and activity in the Indian Ocean.
Impact Shorts
More ShortsGwadar, despite its failure, is a thorn in the Indian side. That is why India’s Minister of Ports, Shipping and Waterways, Sarbananda Sonowal, travelled to Tehran during the busy election period to sign the concession to operate Chabahar port in Iran 160 km east of Gwadar. The concession was granted to India Ports Global Ltd., a Government of India-owned company.
The United States has cautioned India on its Iran deal despite having previously granted India an exemption for Chabahar. Both partners are fully aware that in the war with China in the Indian Ocean, neither can lose Chabahar to the Chinese. If India did not sign the concession, promising over $370 million in investment in exchange for operating the port, China would naturally step in.
Chabahar is the most convenient non-Pakistani port for landlocked Afghanistan. Even the Taliban, once vassals of Pakistan’s intelligence, have now started maintaining distance from their former allies. Chabahar is also a convenient port for the landlocked Central Asian Republics, courted by the US, China, Russia and India. Above all, Chabahar allows India and indirectly the US, to keep China under check at Gwadar. For India, Chabahar is an important port for the International North-South Transit Corridor (INSTC), that connects Russia and India.
From the Indian perspective, the INSTC and the India-Middle East-Europe Economic Corridor (IMEC), announced at the G20 summit in New Delhi in September 2023, create supply chain resilience and future-proof trade routes with its most important allies. While in China, President Putin’s choice to visit Harbin, the provincial capital of Heilongjiang, is significant. China has been marketing the Heilongjiang province extensively as a base for international companies who may choose to manufacture in China for the Russian market, essentially evading sanctions. The city grew in the late 19th century with the influx of Russian engineers constructing the eastern leg of the Trans-Siberian Railroad. The INSTC is India’s connection to maintaining its trade corridor to Russia and keeping its foot in the door with countries such as Russia and Iran which are slowly seeping deep into the sinosphere. A sinosphere which is now a geographic reality, from North Korea to Iran, with Mongolia and the Central Asian states essentially “undecided”, but surrounded by Chinese allies and vassals.
While Russian President Vladimir Putin visits China to increase industrial and military cooperation, Myanmar has chosen Russia to build and operate the strategic Dawei port project. Following the military coup, Myanmar initially favoured China as an infrastructure partner due to Western sanctions. However, Myanmar has recently shifted its stance, awarding the management of the strategically significant Sittwe port, located near India, to India’s state-owned India Global Ports Ltd. Beijing has renewed work on the Kyaukphyu deep-sea port and SEZ just 120 km away from Sittwe.
While China had expressed interest in the Dawei port, by choosing Russia, Myanmar has favoured a third party that India sees favourably. Seeking to bolster its ties with Moscow, Myanmar’s Junta is actively pursuing Russian investment not only for the port project but also for a special economic zone that includes an oil refinery.
The Dawei port is located on Myanmar’s border with Thailand. It is a port on the sea of Andaman and proposed plans for the project entail the construction of a port with a capacity of 10 million tonnes and an oil refinery capable of processing 100,000 barrels per day. However, China is apprehensive that Russia’s involvement in Myanmar’s port sector may undermine its own projects in Kyaukphyu and potentially disrupt global trade dynamics in the region. Both Dawei and Kyaukphyu have the potential to avoid the straits of Malacca and Sunda for China, a strategic advantage.
While the Russian-built and owned refinery does not change the energy dynamic significantly for China, Dawei starts a dangerous precedent of Russia encroaching on strategic assets in Asia, much as it has in Africa. Despite Putin’s successful visit to Beijing, both India and China must be on guard of the expansion of Russian influence in their backyard.
The author is an Indo-Italian entrepreneur and writer, has worked closely and continues to advise various governments in Europe, Middle East and Africa. He is the founder of the Dialogue on Democracy. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.
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