Balochistan’s Gwadar port has officially started taking cargo under the Afghanistan-Pakistan Transit Trade Agreement. By this agreement, Afghanistan can import and export goods via Pakistani land routes. The first consignment unloaded at Gwadar port couple of months ago, contained chemical fertilizers, which were transported to Afghanistan in trucks at the Chaman border crossing in Balochistan province. This marks the first operational use of Gwadar port for major trade activity, a success for both Pakistan and China. The port is providing the shortest land route for sea access to Western China, as well as an alternative shipping route to the Malacca Strait, Gwadar port is the centerpiece of CPEC without the port, there would have been no CPEC.
There are three main reasons Afghan trade is significant for the Gwadar port project. Firstly, it means that the project has finally started to pay off for its Chinese sponsor. China spent $250 million directly on construction of the port in 2002, just 600 kilometres from the Strait of Hormuz. COPHC gets 91% of revenue from Gwadar for the next 40 years, according to the agreement with Pakistan. The revenue from Gwadar port now coming in was only made possible by the Afghan transit trade. Secondly, the use of the Gwadar port was made possible only after China lobbied for it with the Afghan government. Over the last four years, China has shown a growing interest in the Afghanistan situation, including inviting Taliban leadership to Beijing for negotiations to broker a settlement. If a peace deal were reached in Afghanistan, then it would result in an increase in the volume of Afghan transit trade. China will likely take more interest in seeing an Afghan peace deal with the Taliban when it can also potentially benefit from increased activity at Gwadar port for Afghan transit trade.
Thirdly, the recent success of Gwadar port has effectively put the brakes on the Indian-aided venture of Shahid Beheshti port as a competitor to Gwadar port, 175 kilometres to the west in Chabahar, Iran. India invested $100 million in the development of the port, as a counter to the China-Pakistan partnership at Gwadar. It also invested in building infrastructure connecting Chabahar with Afghanistan. In October 2018, the first shipment of goods was exported by India to Afghanistan through Chabahar port. US sanctions on Iran, however, later made India reluctant to aggressively develop Chabahar port. And with Afghanistan now appearing to prefer Gwadar over Chabahar, India’s scheme is sunk a geostrategic victory for Pakistan and China.
Surprisingly, Gwadar failed to achieve economic success in the last 5 years. As a result of armed attacks on Chinese, bureaucratic red tape, and poor governance in Pakistan, even the supporting infrastructure in Gwadar has not been fully built, and experts had ruled out the prospect of Gwadar succeeding anytime soon. Its use in the Afghan transit trade is therefore seen as the beginning of the economic revival of the project. Afghanistan has over 16 natural border points with Pakistan where goods from the Gwadar port into the Afghan land and from central Asian countries including Russia can easily be shipped to Middle East and Europe but as due to tension and fencing on Durand line, the Pakistan-Afghanistan border, the these natural routes cannot be utilized. The government should open these all routs this will not only facilitate the Pak-Afghan transit but will open new opportunities for the people across the border.
Afghan transit cargo can be a major source of revenue, but it’s not enough on its own to pay back the huge investment China has made in the project or to sustain the success of Gwadar port. Therefore, it’s crucial that Pakistan and China attract more economic activity for Gwadar port, in the model of a mini-Dubai or a mini–Hong Kong. Afghan transit is only a beginning. The question now is whether Pakistan and China can build on this success.