Ports and Portals

            On 18 February 2019 Saudi Crown Prince arrived to Islamabad as the first step in tour, also visiting India and China. Malaysia and Indonesia, which were also originally in the plan canceled their meeting with Saudi de facto ruler amidst international criticism over the Hašoqğī case, the Yemeni war, and the scandals of Gulf states behavior in the Warsaw summit. That, however, might not even really bother Muḥammad ibn Salmān, as anyways these three countries are the most import for him now. Not only for bettering somewhat his already tarnished international reputation, but because of fundamental economic and strategic considerations. The visit to Pakistan already on its own had huge economic and military implications, but the whole tour focuses on a race between two rival plans. None of them would include Saudi Arabia, but to one project Riyadh might still hop on. Or at least, that is the idea. Both plans have, in their current forms, detrimental affects of the Arabian monarchy, helping one of the two current Saudi enemies. Qatar, Iran, or possibly both. That rivalry is around two cities, Gwadar in Pakistan, and Čābahār in Iran, but behind them there is a race between China and India. By now, the case created a whole web involving most regional states, further complicating the already complex equations.

A tale of two cities

           What are these two cities, and what is their significance? The more famous one is Gwadar, a former Omani dominion, which Pakistan purchased in 1954. The city lies in Pakistan’s Baluchistan province, an area full of unexploited mineral riches, poverty and militant activity. Though still relatively small and seemingly unimportant, it is Pakistan’s best location for a safe deep-water port, an exit route to the Omani and Persian Gulfs, which can have both trade and military significance. By now it seems, however, ever more as a Chinese possession. Beijing had an eye on the port at least since the ‘80s, when it was investing heavily in Pakistan’s industry and military. The two countries have a long understanding, partly fueled by the common animosity towards India. In the last decade, however, Chinese economic presence in Pakistan grew significantly. In 2013 the Chinese government launched the Belt and Road Initiative, a series of massive trade and infrastructure projects connecting China to the West and Russia via a series of corridors. Pakistan is very significant partner in project.

        The Pakistan-China Economic Corridor (PCEC) is one of the most significant, and so far more tangible part of the overall project, which connects the Chinese province of Xinjiang to the Indian Ocean. That practically transforms Pakistan into a huge highway, while Beijing finances a set of infrastructural development programs from highways to railway track, and even the Lahore metro. But a large part of it will aim to boost Pakistan’s energy sector, which is necessary to keep the corridor functional, while at the same time Islamabad benefits greatly. Just to measure the scale, the PCEC’s total worth only by 2017 reached some 62 $billion, which probably grew since then. And the gemstone of this huge endeavor is the port of Gwadar, the future gateway of all products pouring down from inner China. In November 2015 the two government made a deal of a 43 years lease of the port to China Overseas Port Holding Company, where it will create a special economic zone, a tax-exempted area for Chinese activity. And one remembers Hong Kong and Macau understands, what a long term lease really means. That deal alone practically handed over Gwadar to Chinese control. From here the main track of commerce 

will head to the Persian Gulf, right down to Doha. That further exacerbates the struggle between the Emirates and Qatar, which goes on for some time, since Dubai – the economic hearth of the Emirates – is already in recession, while Doha is slowly taking its place. It is easy to see why Saudi Arabia and the Emirates are worried now, but so far Riyadh – relying so heavily of friendship with Pakistan – did not dare to say thing. The other path of the massive Chinese trade route will go through, naturally the Suez Canal. Just how important this route is for Beijing is obvious by the fact, that in August 2017 it opened a naval military base in Djibouti, right at the southern exit of the Red Sea. From here it can oversee both paths of the route and cover it from piracy in the Indian Ocean. And that is China’s only external military base in the whole world, at least officially. 

           The other city in our tale here is Čābahār in Iran. This is a port just as ideal for major maritime activity as Gwadar, and in fact it is not even far from it in Iranian Balochistan. This city is also a matter of great interest, but has almost nothing to do with China. In 2016 India agreed with Iran to develop the port, create the Čābahār Special Economic Zone – much like that of Gwadar – which should serve as the main hub of Indian trade in the region. This 8 $billion project was finished in late 2017, and though still in constant development, it is operated jointly by India Ports Global Private Limited (IPGPL) and Aryā Bandar, an Iranian firm. Ownership, however, stayed in Iranian hand, therefore it is a smaller level of foreign exploration, than that of Gwadar. India has a short and a long term strategy here. The shorter one has Afghanistan in the crosshair. In 2016 India, Iran and Afghanistan signed a memorandum to connect Čābahār of the Afghan region of Ḥāğīgak by railway, where India already acquired huge mining concessions. The area is full of crucial minerals from iron to lithium, and this massive, altogether 21 $billion project is so important, that the US even excepted investments in the project from sanctions. This way New-Delhi could 

access Afghanistan bypassing Pakistan, and could have more influence there once the Americans withdrew. Therefore it now gives huge infrastructural loans to Iran and Afghanistan. The long term goal, however, is even much bigger than that. The International North-South Transport Corridor (NSTC), a major trade route project would eventually connect Mumbai to Moscow, and was originally agreed upon in 2000 by Russia, Iran and India. Once finished, it would connect the partners by a series of railway and maritime routes, mostly sponsored by Russia and India – with significant local investments -, providing India with materials and energy sources, while Russia with new markets, and would connect the mineral rich Central Asia to massive trade hubs. The project has several well developed segments by now, and 14 member states like Bulgaria, Syria, Oman and as a centerpiece, Azerbaijan.

            Now as for Iran, Čābahār also has a dual importance. The biggest Iranian port now for centuries is Bandar ‘Abbās, but that is not a deep water harbor and cannot be developed to be such. Therefore all major trade now goes to Dubai. It is also in the Persian Gulf, which is a liability, since Iran’s major card in threats between them, the Gulf countries and the US is that Tehran in any confrontation would close the Straits of Hormuz. But that would cripple their economy as well. Čābahār, however, is a deep water harbor outside of the Persian Gulf, free of such hazards. On the other hand, the city lays in Balochistan, a volatile area even in the otherwise very safe Iran, which is a security liability. There border clashes between Iranian forces and terrorist cells operating from Pakistan are frequent. The most notorious of them is Ğays al-‘Adl (Army of Justice), a group loosely connected to Saudi Arabia. By major infrastructure and economic projects Tehran aims to connect the region much better to the Iranian heartland, while with growing living standards boost security along the Pakistani border. The similar attempt in the last decades proved extremely successful in Iran’s Kurdish and Qashqai regions, where the reduce in nomadism enhanced stability.

           The bigger picture is, that by attracting foreign capital, Iran could improve its infrastructure and derail trade from the volatile Gulf area. Connecting itself to Russian in one hand, and to India on the other, which is jut the best possible way for Tehran to secure itself from American sanctions. Once having a major deep water port outside of the Gulf, consequently out of immediate American threat, Iran would have a safe trade access to the world. India is the prominent partner in this thinking, since New-Delhi even in the worst pre-JCPOA times was willing to trade with Tehran, being one of the biggest source of foreign currency. India rushed to calm Iran, that regardless what happens to the JCPOA, New-Delhi will continue to trade and further boost bilateral ties. So while Iran could get a safe harbor connecting itself to a stabile trade partner and even gain foreign capital to it, India via Čābahār could get access to Central Asia and Russia. A typical win-win case. And just how far plannings are going, since 2010 the old Irānrūd idea came up again. A plan to connect the Caspian Sea to the Indian Ocean by a huge channel. That might sound far fetched, almost impossible, but if ever happens, it would be a major game changer.

            There are analysts how like to compare the two projects, and point out, that the Indian one is way smaller in scale and way more unrealistic. There are even talks of competition between the two. India, understandably might see Chinese-Pakistani relations with envy, but real beauty of the story is, that the two projects don’t cross each other in any ways. They don’t contradict, therefore there is no tension. The tale of the Balochi cities might just turn out great for both. So where is the catch, could we ask. Apparently, there is no catch, only a massively restructuring global trade. 

The great visit

            Having all these aspects in mind, it is hard to underestimate the scale of Ibn Salmān’s visit right to these three countries, starting with Pakistan. Mostly, because for the Saudis this stop is the most important, and the one which promises the most possible tangible results. It is very likely that the Crown Prince after all his personal scandals, especially now, that in 13 February the EU added Saudi Arabia to the blacklist of terror financing countries, wants to improve his image as a global player. An important person, who holds talks with the most important economic leaders, and not an international pariah, as many times described. But the issue is way bigger than that, and involves both the mentioned projects.

            What is Pakistan for Saudi Arabia, and what is Saudi Arabia for Pakistan? They are two loose historic allies, who now desperately need each other. The Gulf monarchy is legendarily rich and has a huge regional appetite, but despite all its huge military spendings, it is relatively weak. The war in Yemen is a prime testimony to that. As we discussed last week, Pakistan supports the Saudi anti-terror coalition, it is a recruiting pool of militants, and eventually a nuclear power, giving weight to Riyadh if needed. On the other hand, Pakistan with its roughly 200 million Muslim population not only sees a moral supporter in Saudi Arabia, but also a major financial donor amidst its current crisis. As Pakistan is on the verge of bankruptcy, while its government is still new in office. Riyadh already lended a 6 $billion bailout in exchange of Islamabad’s further military support, but this visit had even more to offer.

            Saudi Arabia announced its intention to invest 20 $billion in Gwadar, mostly on the oil sector. So altogether Islamabad now gains 26 $billion fresh capital from Riyadh in exchange of military and diplomatic support and access to a port, which is – at least in practical terms – no longer in its own hands anymore. Now wonder the Pakistani government gave Ibn Salmān a lavish welcome amidst unprecedented security measures, while the Iranian and Qatari media joyfully mocked the visit. It should also be mentioned, that the government of ‘Imrān Hān only came to office in August 2018, after the military sidelined his predecessor, and he himself is not far from suffering the same faith. With this move, he could improve his internal standing, thought the economy in a very bad shape and regardless the huge investments massive austerity measures are on the horizon. In this light Islamabad simply just couldn’t refuse the gesture.

            Leaving Pakistan, Ibn Salmān arrived to New Delhi on the 20 February 2019 as the second stop in the tour. While some sources say, that the main focus of discussions was joint effort against terrorism with no financial accords to be signed, other sources point out there are discussions of some 100 $billion Saudi investments in India to be materialized in the next two years. As part of the image boosting campaign here Ibn Salmān can appear as a peace broker calming tensions between Islamabad and New Delhi. Since relations are generally bad between the two neighboring, but after a major terrorist attack in Kashmir last week relations reached a long time unseen low. If we are to accept the scale of Saudi investments, a size bigger than all what China poured into Pakistan, we can understand that India is ready to listen. Especially since general elections are coming up in the spring. But it is more probable, that the real Saudi intention is convince India to abandon, or at least greatly tone down the Čābahār project in a move to isolate Iran. Having cut this road, Riyadh could deliver a major blow to Iran, and given the relatively low paste of the works, there might just be second thought in New Delhi. Yet, seeing the scale and the horizons of the NSTC, it is rather doubtful how much India could be persuaded. Nonetheless, with such grand statements Saudis can at least frustrate Tehran. 

            The last stop in the tour will be China, which will probably focus on the Gwadar investments. Since that port being in Chinese hands by now, such move would needs a blessing in Beijing. Now given the fact, that China is in firm control on Gwadar and day by day Pakistan as whole, Beijing might just give that consent. But for sure won’t allow a major role to Riyadh.

Dark clouds

            Only few days prior to the journey two major terrorist attacks stirred up tension. The first one was in Irani Balochistan close to the province’s capital, Zāhedān on Wednesday 13 February, killing 27 members of the Iranian Revolutionary Guards. That came only two moths after a similar attack killed 41 people – mostly civilians – in Čābahār, and after a few days of the Warsaw anti-Iran summit and the 40th anniversary of the Islamic Revolution. It is not surprising that the attack hit the Iranians as a symbolic one, and they swiftly promised retaliation. One sees the pictures from the commemoration of the martyrs, and who attended it, can really understand, that this time is more serious than ever. Only a few days later, on 19 February Pāsdarān intelligence already identified the three culprits as Pakistani nationals, apprehending two and still looking for the third. Thought Tehran was understandably angry, it so far only demanded cooperation from Pakistan and wasn’t blaming Islamabad. The finger was pointed at Riyadh and Abu Dhabi, as Ğayš al-‘Adl took responsibility. That counts to be normal in similar cases. What raised eyebrows, however, was the announcement of Pakistani Foreign Minister the very same 19, that Saudi Arabia knows full well, that Iran and Pakistan cannot be turned against each other and the relations are built on trust. What a strange thing to say, when officially Saudi-Pakistani negations focused of economic matters! 

            The other attack – roadside bomb blown up next to a military convoy, just like in Iran – happened in Indian administered Kashmir, killing 41 Indian paramilitaries. New Delhi, naturally pointed the finger on Pakistan and just like Tehran, it was furious. The similarities between the two attack are so big, that is very unlikely that they would be isolated. And it really put Pakistan is an awkward situation, as both neighborhoods are blaming it for terrorism, right at the time, when the already famous Ibn Salmān is about to pay a visit. The Crown Prince has a very unpleasant aura even before he arrived, just like a mocking gesture, that Riyadh can seriously stir up tension here. Whether the Saudis had a role in the bombings or not, that was the appearance. That sort of timing is unfamiliar from the Pakistanis – it was very bad for them -, but very familiar from the Saudis, especially from this leadership to commit something that foolish. 

Good luck!

            Under these circumstances, what could they have expected in Riyadh? It is easy to see, that beyond the PR element, the whole journey revolves around the major trade routes now developing. While both projects involve a huge amount of countries, both left Saudi Arabia and the Emirates out. They are simply not in the game. Now considering, that these two states are so firmly in American hands, that they can hardly move without permission from Washington, while both trade routes are being developed by countries willing to rearrange American economic hegemony that is hardly surprising. But the Saudis, and even more the Emirates can just not sit idle by as the map gets rearranged around them and they are left out. Especially, that one plan aims to greatly improve Iran’s position. So something must be done. Now to the Iranian-Indian project Riyadh cannot join, therefore cannot benefit from it. But if it was really the Saudis behind the bombings in Kashmir and Iran last week, they could unnerve the Indians, that it is either by their way or the high way. Riyadh can in one hand offer huge investments to India – at least can promise that -, but on the other hand it might just proved, that it can destabilize the project. And they can still hop on to the Chinese-Pakistani wagon, and benefit from it. It is easier to convince Islamabad, but we are yet to see how Beijing will welcome it.

            What clearly points into this directions, is that Pakistan hastily wanted to clear, that there is nothing that could severe relations with Iran. In other words, it was not them this time, and regardless of all the gestures to Ibn Salmān, they don’t want to interfere.

            How much the tour will prove successful beyond some positions gained in Pakistan is yet to be seen. But if it was really Riyadh behind both bombings – and those concern will get to the bottom of it -, than it was a very foolish maneuver. Iran will not be deterred, nor India scarred and Riyadh might just got a new enemy. Yet it also had a negative affect on Islamabad, since with this visit they ended up in very unpleasant situation. Even if the Saudis are innocent in the two terrorist attacks, they appear as monsters and problematic neighbors, while they host and internationally condemned leader with a very serious criminal record. While it would be better for Islamabad to slowly lift the blame on the Saudis, they cannot do that. And surely they will not thank Riyadh for putting them into this position. They whole maneuver, at least it would seem, backfired.

          As with cutting a beneficial deal with China, and a foothold in Gwadar, well… Good luck! Because China just announced to the visiting Iranian Speaker of the Parliament, ‘Alī Lārīğānī, that for Beijing Iran is a strategic partner. Right before Ibn Salmān’s arrival.