Gawadar: A Strategic Partnership

Gwadar, as a seaport platform, was first recognized in 1964 yet it received serious attention in 2001 when China also condescendingly nodded yes to participate in the construction and development of the deep-sea port.

Gwadar, a fishing village of Baluchistan, is situated on the Arabian Sea coast, just 72 kilometers away from the Iranian border. Its proximity with the Persian Gulf and particularly Strait of Hormuz is way off 400 km that highlights its strategic significance. Strait of Hormuz is recognized as a principal water channel for worldwide oil transportation.

The role of China in Gwadar project is substantial and hypostatic. From the total cost of the project as US$1.16 billion, China has committed to contribute near enough $198 million for the first phase. This contribution is somewhere around four times over and above from what Pakistan is flinging around for this phase. This phase comprises construction of three multi-purpose ship berths. China has additionally drizzled $200 million for the construction of a highway networking Gwadar Port with Karachi. The financial aid of China has been supplemented by technical assistance that includes deployment of some 450 engineers and experts.

The second phase of Gawadar Project comprises nine more berths, an approach channel and storage terminals. China will also put up the money in this phase.

Once completed, both Pakistan and China visualize grandiose economic returns from Gwadar port. Project’s contribution to regional peace and stability will also be tremendous. First and foremost benefit, which Gwadar port will spur, to be gleaned by the under-developed Baluchistan. Augmented by infrastructure development in Baluchistan, the Gwadar project will transform it into an attractive investment hub.

Owing to its proximity with Strait of Hurmuz, through which 40% of the world's oil passes, Pakistan looks out for high economic returns from Gwadar port. This is going to be a key shipping point, bringing much-needed income for Pakistan. Once Pakistan completes the networking of its communication system with Afghanistan and CARs, this region will reverberate as a trade hub. Gwadar would provide landlocked Afghanistan and the Central Asian republics direct approach to the sea. These regional countries will thus be able to ship merchandise, oil and gas reserves to world markets through Gwadar port. Gwadar port may be designated as a free trade zone and an export-processing zone, simultaneously.

Gwadar provides China a transit terminal for crude oil imports from Iran and Africa to China’s Xinjiang region. Pakistan’s road and rail links to Afghanistan and CARs will also provide access to China to these markets.


Gwadar port, therefore, attaches great significance for both China and Pakistan. This will de-escalate the pressure on Karachi Port Trust in addition to lending a strategic advantage—India blocked Karachi in 1971 war causing negative bearings on Pakistan’s economy. In 1999 also when Kargil episode came about, India threatened to blockade Karachi port. Gwadar will make 725km far off from India and thus less vulnerable to Indian designs.

Owing to its propinquity to the Strait of Hormuz, Gwadar also promises many strategic prerogatives to China. Some 60% of China's energy supplies come from the Middle East. US that have significant presence in the region threaten these supplies.

From Gwadar, China can also monitor US naval activity in the Persian Gulf, as well as, Indian activity in the Arabian Sea and future US-India naval cooperation in the Indian Ocean.

India keeps in perspective China-Pakistan partnership at Gwadar and China's presence in the Arabian Sea apprehends fencing round by China from all sides. Iran also perceives the development of Gwadar port in its neighborhood as probable erosion of the impact of its ports, particularly Chabahar port that was built with India’s help.

Gwadar port symbolizes the story of two regional neighbors collectively, harmoniously and unanimously working to serve their corresponding strategic, economic and political considerations. Asif J. Mir, Organizational Transformation

Making a Dead Set at Corruption

Corruption is an insidious plague that has a wide range of corrosive effects on society. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes quality of life, and allows organized crime, terrorism and other threats to human society to flourish. As defined by Transparency International: “Corruption is the abuse of entrusted power for private gain.” According to Kofi Annan, “Corruption hurts the poor disproportionately—by diverting funds intended for development, undermining a government’s ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid.”

The good news is that future of corruption is not so bright it will not entirely finish though.

No country is entirely free of corruption. Efforts to fight corruption encourage transparency and accountability, thanks to an increased understanding of corruption's social and economic costs. There is the need for expanding the econometric framework, as well as to more general future research directions and policy implications in the field of governance.

Corruption is principally a governance issue, a failure of institutions and a lack of capacity to manage society by means of a framework of social, judicial, political and economic checks and balances. Good governance and globalization (at both the country as well as at the city level) do matter for performance in terms of access and quality of delivery of infrastructure services.

Corruption is deeply embedded in the political culture and poverty of Pakistan. Regulatory bodies are particularly vulnerable to corruption as they have the power to make key decisions on profit-making activities. Corrupt regulatory bodies can thus dangerously impede economic development.

Discretion creates more opportunities for corruption than where regulatory requirements are laid out through clear, precise and formal rules. Debate about corruption tends to focus almost exclusively on the receivers of corruption, rather than the purveyors. Corruption is alive and well and living in myriads of places. Bribery is simply the way business is done in Pakistan.

Within Pakistan's political dynamics, corruption figures as a very critical element. Prevalence of corruption in various political regimes has been the main cause of their downfall. The incumbents have placed accountability and the anti-corruption drive very high on its agenda in form of NAB its operational approach is rather controversial.

Corruption increases the number of capital projects undertaken and tends to enlarge their size and complexity. The result is that, paradoxically, some public investment can end up reducing a country’s growth because, even though the share of public investment in gross domestic product (the total of all goods and services produced in a country in a given year) may have risen, the average productivity of that investment is dropped.

For a private enterprise, getting a contract to execute a project, especially a large one, can be very profitable. Therefore, managers of these enterprises may be willing to offer commission to politicians who help them win the contract. Conversely, in many cases the act of bribery may not start with the enterprise but with the officials who control the decisions. It is apparently impossible to win a government contract in Pakistan without first paying a bribe. Interestingly, the laws of certain major industrial countries regard commissions paid by domestic enterprises to foreign politicians as not only legal but also tax deductible.

In some of these phases, a strategically placed high-level official or elected leader can manipulate the process to select a particular project. He can also tailor the specifications of the design to favor a given enterprise by, for example, providing inside information to that enterprise at the time of issuance of tender.

The enterprise that pays the commission rarely suffers from the payment of the bribe, since it is fairly simple to recover that cost. First, if corrupt officials of winning the bidding competition assure it, the enterprise can include the cost of the commission in its bid. Second, it can reach an understanding with the influential official that the initial low bid can be adjusted upward along the way, presumably to reflect modifications to the basic design. Third, it can reduce its spending on the project by the amount of the bribe by skimping on the quality of the work performed and the materials used. Fourth, if the contract is stipulated in a cost-plus fashion, the enterprise can recover the cost of the commission by overpricing.

The first step towards tackling corruption is preventing it. In attempting to prevent the laundering of proceeds of corruption mechanisms need to set up to review suspicious transactions, and analyze financial information.

Transparency and accountability in matters of public finance must also be promoted, and specific requirements established for the prevention of corruption, in particularly critical areas of the public sector, such as public procurement.

Citizens have the right to expect a high standard of conduct from their public servants. They also have to participate in preventing public corruption. For these reasons there is a need to actively encourage and promote the involvement of non-governmental and community based organizations, as well as, other elements of civil society, and to raise public awareness of corruption and what can be done about it.

There is a requirement for the prevention of corruption in the judiciary. Decision-making should be entrusted to committees rather than individuals. Although this adds to the cost of regulation, it may eventually save money by facilitating mutual monitoring and accountability.

New attitudes, better financial systems, prosecution of the guilty, better management of diamonds and real accountability to the people … this is the agenda for change. In taking it forward, the leading role must obviously be taken by the people and Government. But tackling corruption effectively requires a real focus, coordinated action and shared responsibility. Everyone’s energies must be thrown behind this anti-corruption strategy. It is the key to a better future for the people of Pakistan. (www.asifjmir.com)

Desperate need for apt policy planning

The stump oratory must have reached people about sharpshooter or inept public managers’ actions, GDP growth rate is declining; foreign exchange reserves are depleting fast, record downfall in exports and of foreign investment. Ipso facto, no previous government in past decades confronted issues like these when financial stability has become a forgotten song, it has miserably. Yes, the government has completely failed in efficient service delivery to the poor. Consequently, it has contributed sweet nothing in reducing poverty and hunger that goes on to sustain stark national inequalities in wealth, assets, incomes and opportunities.

The Asian Development Bank estimates that 40 million people in Pakistan live below the poverty line. In its stated bid to ensure national security, Pakistan is spending more on arms and defense, and less on social security and protection, public distribution systems and welfare programs.

In the direst situations suicide rates among the poor are on the rise. Ironically, while national level defaulters on debt benefit from enhanced facilities to restructure debt and continue borrowing, the overwhelming burden of national debt is borne by the poor.

Lacking job opportunities in rural areas cause migration to urban cities. This takes the form of low quality jobs in the informal economy, or in the case of women and girls, prostitution or domestic service. Migration under conditions of economic stress exacerbates food insecurity. Owing to weak economic and social profile of the country, the adult population could not be gainfully employed, resulting in an 8.3 per cent current unemployment rate (more than 10 per cent in urban areas), plus substantial under-employment. Today, of the current workforce of some 48.40 million- as many as 8 million- are unemployed.

More and more workers, especially women, are being forced from the relatively protected formal sector to the unprotected informal sector. This is accompanied by concentration of assets and resources in the hands of the rich and newly prosperous, who have been able to take advantage of the economic opportunities offered by modernization and globalization.

Graft and corruption in government are a significant cause of continuing poverty and hunger. Despite NAB being there, corruption is on the increase and being accentuated by the companies of the developed countries through their underhand dealings with the national officials.

Sitting in luxurious offices the economic managers of Pakistan juggle with statistics rather than conducting surveys. This is often done to draw statistics acceptable to donors or financial institutions. To duck the WB in 2001, for instance, it drafted the poverty reduction strategy, just about the time when the WB initiated a new line of credit (PRGF) for countries that were equipped with such a strategy.

The increase in the tax-GDP ratio is apparently marginal but in the numerical terms, bulk of the burden has been shifted from direct to the indirect taxes and the share of the regressive sales tax being recovered at the highest rate over the globe has sharply gone up. It is affecting the whole population. The sales tax formed over 44 per cent of the total tax collection during the fiscal 2002-03. The result is that quantum of sales tax has grown from 27.11 in 1998-99 to 42.33 per cent during July 2004-January, 2005.

The Oil Companies' Advisory Committee fixes the prices of various products on fortnightly basis. It is claimed that the committee fixes the prices in a very transparent manner keeping in view the international prices. But the transparent formula was never made public either by the government or the committee. Oil companies have thus been licensed to plunder the poor.

Pakistan currently has about 74 percent of the population living on $1 per day and 86 percent living on $2 per day, implying that one out of every three households going to sleep hungry every day.

The narrow focus on economic growth has not only failed to eliminate poverty, it has also resulted in policies that have created new forms of, or aggravated existing conditions of poverty and hunger. Shaukat Aziz institutionalized policies that opened up economy and shrunk government’s direct responsibility for redistribution of assets and benefits. Public support and subsidies were systematically torn down, and market based price systems were made the primary determinant of allocation and distribution. With privatization and withdrawal of government subsidies for domestic industry, a significant proportion of the work force was shunted into the informal sector. By and large, previous government achieved economic growth at the cost of well being of workers, small-scale agricultural producers and consumers. The greatest beneficiaries of PM Shaukat Aziz’ adjustment programs were the rich, large private producers, distributors, traders, and MNCs.

Poverty and hunger are violations of human rights. They result in exclusion and feelings of hopelessness and helplessness. The human rights of people to housing, water, and sanitation—guaranteed under international law and commitments of development targets made at global summits, including the Millennium Summit and the World Summit on Sustainable Development—drag on to erode. By ratifying a number of international human rights instruments, such as, the International Covenant on Economic, Social and Cultural Rights, Pakistan has voluntarily accepted the obligations to progressively realize human rights to food, health, adequate housing, water and sanitation, which are essential for the well being of its citizens.

Pakistan needs policies that protect the rights of people to water, land, forests, other natural resources, biodiversity and indigenous knowledge. Policies are also needed that ensure people’s access to a services essential to their development especially among the poor and historically marginalized, this includes education, social security, healthcare and information, etc. Access must be equitable and the quality of services must not vary according to socio-economic or gender backgrounds. (www.asifjmir.com)