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Pakistan and Oman conclude bilateral naval exercise
The Pakistan Navy and Royal Navy of Oman concluded the bilateral naval exercise – ‘Thamar al Tayyib-16’ – which had taken place in the North Arabian Sea from 13-15 December.
As per Inter Services Public Relations (ISPR), the Royal Oman Navy Task Group comprised of the patrol vessels RNOV al-Sadh and the RNOV al-Bushra.
Alongside various Pakistan Navy units, including the F-22P frigate PNS Zulfiqar, the two undertook a “range of advanced operational exercises encompassing major facets of maritime warfare … [such as] counter-terrorism, counter-piracy, [and] anti-surface [warfare.”
Notes & Comments:
Including Thamar al Tayyib-16, the Pakistan Navy has conducted at least four bilateral naval exercises (with each of China, Turkey, and Russia) during the final quarter of 2016.
20 Comments
by GhalibKabir
completely unrelated question, how are the competing ports in Dubai and Oman reacting to the development of Gwadar? Gwadar is such a good deep water port if the Chinese build it to 50-100 berth capacity it will give competing GCC and Iranian port stiff competition.. I see Najam Sethi making claims on Muneeb’s show that some mumaliks have fired stuff at Gwadar in the past…is it true?
by Bilal Khan
I don’t think Gwadar is a factor for them at the moment. The port is predominately being used by Chinese industries to push goods to places such as the Arabian Gulf, meaning, those ports will be (or should be) getting shipments from Gwadar (and to Gwadar). If anything, one would imagine some of Karachi’s load ending up a Gwadar (i.e. intra-Pakistan competition). Otherwise, the UAE and Arabian Gulf at large might find accessing Gwadar to be more preferable than having to route ships eastward in order to access China.
Unless British, Americans and/or Western European companies decide to move their business from UAE to Pakistan (quite unlikely), I can’t see the UAE being particularly concerned about Gwadar. Iran though might have a problem if the Russians earnestly decide to link themselves to Gwadar, which is a true wild card scenario at the moment.
by Smoking a Tejas
Western businesses may not move services sector companies but they’ll be mighty interested in moving high quantity high value manufactured goods for the Chinese mainland though a shorter access. But that’s a way off while the infrastructure develops.
by Abdul Rashid
Good point. What is shorter route one way is equally shorter the other way. How far away, in your opinion, is the development of Gwadar infrastructure to the point where Western businesses take an equal interest in it as the Chinese?
I recently made a tiny investment in Gwadar real estate. Just a little dabble to see what comes of it without risking an arm and a leg.
by Steve
Concerning Gwadar, for port facilities and transit trade the business has to be either to Western China for which this project is predominantly built, or Afghanistan/Central Asia which will require Afghan transit permission (competition is Chabahar). Given that Afghans use Karachi anyway and need transit from us that should not be a problem. They will also earn transit fees. As far as free trade zones and relocation to tax free zones is concerned (where the competition is Dubai/Gulf) for other foreign businesses, there has to be a peace and security, a lot more infrastructural facilities, air connectivity, entertainment (of the unIslamic kind lol), a pool of highly trained manpower to hire locally, and major tax incentives. Also there should be local businesses with Pakistan economy takeoff, and a general feel good factor about the country. That’s a few years in the future.
by MT
Mind u knowing abt tariff rates for sea which are 10,times lower than road.
Give you an estimate: it’s cheaper to import goods from Shanghai to Chennai than Bombay to Chennai.
China does nt hv single need of industrial complex n West China as their economy in xinxiang region is barely 150bill$ nd hv no population center to support
by Farooq Hussain Toor
Mr Mt I I’ll say simply if you understand and if your blind patriotism alowes you to understand that gwadar is Chinese answer to India and America trying to corner China in south China see China opened an other route for its trade and you guys now mourning now
by GhalibKabir
I see Bilal. knowledgeable Pakistanis kindly indulge me here, I have wondered about the economics of CPEC because seeing from a neutral perspective, I see the following points
1. China: As a strategic naval gambit I can understand. But Western China’s economic development through CPEC as a conduit makes for difficult understanding. The terrain, the weather, the relative lack of population (250 mil not so well off or educated) etc makes me think.. how will China make money? (I know China does miracles..the proof is there but this one is hard to play by numbers), Also exports to Africa and Middle East does not make much sense either esp. considering then the Pakistani landmass is just a giant pipe for the most part with little accompanying economic trickle downs…
We are not even touching the surface on how China is already using too much debt to deliver that extra 1% GDP or about how the sea route to East China is still the more economic one (Chinese nonsense about an imaginary Indian chokehold on Malacca etc.. not withstanding..) or how OBOR costs of US$ 1-2 trillion could be very hard given the low room for movement ‘inverted balance sheet’ economy of China.
2. Pakistan:
A. As I understand, human capital to leverage manufacturing and services that a CPEC could spawn seems to me the most important bottleneck. … and for the real manufacturing like Solar Panels or Steel or parts making…
B. Surplus dumping from China: the Chinese seem bent on exporting their surplus production to overseas to keep their ‘stability’. I don’t see them making big factories in pak at least not before 2020.
The biggest danger I see here is all those coal plants, highways etc could become an economic albatross in the absence of massive technical training skills program to make young people employable, could make for ‘crimped’ gains from CPEC at best. (fayde definitely honge… atleast bhijli wise)
by GhalibKabir
Bilal, Russia is becoming a wild card. I see it as an interesting 4 player Chess analogy (old Indian chess), Russia plays 2 players. China and India the rest. Russia Player 1 sees convergence on a global scale with China while Russia Player 2 worries about their land/border issues and tries to keep Indian relation as a option (the nuclear reactor design help for Indian subs or Brahmos range doubling etc are their hedge against Player 1 China tango).
This is where Trump screws things up for India as he is likely to be not so ‘keen’ on helping Indian technological base grow. At best he might be neutral and not interfere in stuff like the 22 nm-90 nm chip factory in Andhra Pradesh or the F-16, Apache and Chinook factories that might come up in Nagpur.
India faces its toughest foreign policy challenge ever in the next few years. I will go one step further to say NSG membership bhulna padega as there will many more places China will make India’s life miserable. just being realistic
All said and done…hard to see Russikies getting any advantage out of Gwadar… saala Russia toh kuch aaj kal banata bhi nahin hain….the reason for support lies elsewhere… as a tactical move on the geopolitical board.
by Smoking a Tejas
That’s simply because previously there were no alternatives to sea routes which are notoriously difficult to secure. And the situation may be very different once the infrastructure especially rail is in place. And the concept for Chinese development is East to West with no area left undeveloped. Very different to India which can be described as an Island of prosperity in a sea of Poverty.
by Smoking a Tejas
It’ll take at least a decade and a half because the interest will be in a restive region with mature transport infrastructure especially rail to keep cost including insurance in check. Road networks in my opinion are good for intra regional transportation and trade over shorter distances or for dispersion to and from shipping and storage/supply hubs. Pakistan is notoriously badly equipped with rail access at the moment in addition to the underdeveloped road network but that’s coming up quick.
by MT
Railways is 5time costlier than sea transport.
Gwadar port is not even going to overtake karachi port in next 2decades. Given that karachi port is operational at 45% of strength and 55% is something which itself will take a decade to fulfil given the stagnant trade in pak
To external observers, china is simply lending money to buy a military port which may be back up incase malacca is blocked
For pakistan, its all abt short term money flow but FDI from cpec is 10% of total CPEC given other 90% cpec money is used to buy cheeni equipment,materials and labor services.
The long term prospect for pakistan economy from CPEC is bleak as avg power prices from harvest projects have profit ROI of 20% over most of imported equipment for power reactors from china
Avg power cost in pak is 50% time more than India and 25% more than bangaldesh.
There are atleast dozen countries on verge of debt defaul t e.g srilnka,venezuela,ecudador . all of these countries took cheap loan from china to build costly infrastructure but the loan was mostly used to buy cheeni machineries and hire cheeni labor with similar Return over investment.
Local economy and local manufacturing-services are the only core constructs of growth. total trade via gwadar wont cross 1 bill $ in 2020 so you should keep the nos in account. For pakistan to service CPEC debt it will need atleast 10-20bill $yearly trade from gwadar in 2020.
by MT
This article covers all details of CPEC
Our acquaintance with Sri Lanka has more to do with cricket than its history or geography. But recently, two avenues of further commonality have emerged in unexpected ways.
The first common feature arises in the form of Sri Lanka’s total debt, especially its external one. As usual, the government’s figures tend to be on the lower side while independent estimates are on the higher side. The second common feature comes in the form of Sri Lanka’s dream to establish a port like Gwadar (Hambantota) and an arrangement like the CPEC with the help of China. Its present predicament, however, offers an interesting insight into public policy and economic management.
Sri Lanka’s external debt, as per independent reports, is around $58 billion, and its debt payments are more than 90 percent of its total income from taxes. A major part of this colossal debt can be attributed to Sri Lanka’s dream of moving forward through large infrastructure investments, one of which is Hambantota. Between 2008 and 2014, its domestic debt tripled and foreign debt doubled (sounds familiar, does it not?). Its prime minister recently admitted in parliament that the government does not have an exact figure for its total debt. Earlier this month, a few government departments in Pakistan were also asked to get together in order to come up with a single figure on its total debt.
Hambantota was a sleepy port town with little noticeable economic activity till Mahinda Rajapaksa was elected as Sri Lanka’s president. Hambantota was his home town and he envisioned grand plans for it. These plans included a deep sea port, an airport of international standard, a cricket stadium, an LNG plant, tourist resorts and an industrial zone. But financing these grandiose plans was a problem. In came China with a promise of $8 billion in soft loans and a chance to expand on its ‘one road, one belt’ policy. And so development of infrastructure in this area began.
Today, the Mattala airport in Hambantota is sitting idle – hardly two flights a day are scheduled. Cricket stadium and conference centres are rarely used, brand new roads are almost empty, business at the port is sparse and the industrial state has yet to take shape. Everything is in place – except users. This also means there’s little revenue for the government which still has to bear the heavy maintenance expenditure of these facilities.
The government’s estimates, as is usually the case, turned out to be overoptimistic. And guess who’s footing the bill for these monuments of little use? The Sri Lankan taxpayers, of course, who were not even part of the decision to initiate these grandiose ventures. It has been reported that the present government wanted to sell the various infrastructure facilities to lenders but it was more interested in getting its money back rather than operating a loss-making venture.
What went wrong? For a start, the plans for Hambantota were based on political considerations rather than economic necessity. It was Rajapaksa’s home constituency and he wanted to take as much political mileage out of his position as possible. His idea of doing that came in the form of building a concrete city, despite the place being a rural outpost known more for migrating elephants than its business potential. But Rajapaksa aimed to turn logic on its head with the help of Chinese money. Unfortunately, his plans for squeezing political eminence turned to dust as he lost the elections.
Gwadar and the CPEC represent some interesting comparisons. Gwadar is an outpost in the middle of nowhere – a rural setting which lacks modern facilities. It is located in a province which is almost half the size of Pakistan but is sparsely populated. It is from this province that the main arteries of the CPEC will pass and it is in Gilgit-Baltistan where they will ultimately end. But both provinces lack the population density to initiate or sustain a business surge. Simply put, there are not enough customers or producers to make it a business metropolis which can attract business and freight transport from all around the world. While all this is clear to most analysts, infrastructure of every kind is still emerging and more grandiose plans are in the offing.
As in Rajapaksa’s case, our leadership is making a very concerted effort to take political mileage out of this by terming the CPEC a victory of their ‘vision’. That is, of course, not true since if it were not for China, nobody had any interest in Gwadar and the Pakistani state by no means has any capacity to undertake such an extensive venture. And like Hambantota, the CPEC dreams are built upon Chinese loans (which mind you, will have to be paid back). The recent celebrations surrounding the first CPEC trade convoy are a bit far-fetched since the event cost us heavily. What makes our policymakers and leaders so sure that trade and related activities will blossom to an extent that we will not only pay back the loans but that the infrastructure projects will pay for themselves in the future?
Building the infrastructure of the CPEC or Hambantota is a major long-term venture which requires technical and administrative competence, patience and continuous cash flows. Pakistan’s government machinery possesses none of these attributes. But, undeterred by its poor capacity and ability to undertake these projects, we still latch on to infrastructure projects as our saviours. The new planned motorways (financed by loans) and projects like the Metro-Bus project (running in losses) are a recent, poignant reminder.
An important lesson that policymakers in Pakistan can learn is that copying other countries in how they run their economy is not necessarily a recipe for success. I have observed people from all walks of life in Pakistan, including economists, making allusions to the Chinese state’s large footprint in its economy in order to advocate the same case for Pakistan. But they rarely realise that the Chinese state has enough fiscal space to sustain such an undertaking. Whether it’s uninhabited ghost cities or the danger of lower growth rates, the Chinese government has enough fiscal muscle to prevent these kinds of instances from turning into failures. We, on the other hand, are living on borrowed money.
With our fingers crossed, we will wait for all the wonderful dreams shown to us to come to fruition in reality. We will hope that the CPEC doesn’t turn into a Hambantota-like disaster. Otherwise, guess who’s going to foot the bill?
by MT
Rail networks are 5-6 times costlier than sea transport.
Most of the world railway systems are being subsidised.transport of goods via rail is only suitable for small sizes countries & thin EU where 1500 KM is the sufficient to reach norway from italy.
Even the most efficient freight corridor are nowhere close to river-sea transport rates.
China will use gwadar to import goods for local usage in xixiang province whose economy is less than 150bill$.
Xixiang is self sufficient in gas,oil ;china makes all cheap chemicals,electronics; they might import some food from pak, small value raw materials are also probably
by Smoking a Tejas
Ooohhhh I smell a little burn here. Infrastructure investments pay off over time and last time I checked, South America wasn’t in the chinese backyard. As far as debt servicing is concerned, that needs to be managed but considering the level of investment, I’m sure neither pakistan not China are going to see it go to waste. The real issue for the neighbors is the lack of a similar initiative. india doesn’t have the historical imperative, the market nor the pockets to invest in something similar and its level of concern of economic integration is well founded. Its sitting on the sidelines hoping the Iranians and the afghans can step up to the plate but for whom?
by Smoking a Tejas
Well there problem appears to be Sri lankan trust in the Bunya. The poor Sri lankans do not have access nor linkages to the largest regional market; China (India can keep dreaming)and that little song and dance of courting lala didn’t go well with the Chinese. And costs aside, You’ve already alluded to Sea routes being very easy to interdict, not so with land routes so Chinese investments in Gwadar make sense both strategically and historically.
by MT
Article written by pakistanI
Lankan port is more strategic as its barely 50km frm india.
I understand the strategic nature of gwadar but debt nd ita feasibility r big concerns for pak.
I only see pak becoming cheeni colony n next decade.
China only loves money. .w all knw there ll b no wars so pak ll hv to pay back debt as long as china buys peace with india which is very likely.
by Steve
It is good to see that Indians are really worried about CPEC. Their unremitting enmity for Pakistan compels them. Of course China may be interested in a naval base on the Indian Ocean within spitting distance of the Middle East and Mumbai, and that’s good for them and Pakistan, as we will have additional protection. With us effectively crushing the paid terrorists in Baluchistan, our neighbours’ designs are checkmated or so it seems. China who is far ahead of India in everything, and Pakistan also, think this is a good idea economically and will pay its way eventually, but a few frustrated Indians try their best to negate the whole concept by using silly arguments about irrelevant, geographically distant countries. Russia, Central Asia, and even Iran have shown interest in CPEC and that’s giving Indians sleepless nights! So much for ‘isolating’ Pakistan. That’s good!
by Steve
MT you’re barking up the wrong tree and spreading misinformation. It’s understandable as CPEC is scaring India to death. However in your enthusiasm to downplay Gwader and CPEC you are forgetting that goods need to get from China’s eastern ports like Shanghai to western cities like Kashgar, once ships deposit goods in Shanghai. That road and rail transport is more expensive than CPEC, plus thousand of sea and land kilometres longer. There is also a additional strategic value in offering landlocked Nepal a way out from under the Indian boot and threat of blockages by offering an alternate route to the sea, via CPEC and Kodari. Look at the map, it makes sense! We should aggressively advocate Nepal joining CPEC.
by MT
0. Your have awesome logic. Almost everything industrially produced is made in eastern china..So you expect china to send goods from shanghai to gwadar & back to western china??
Chinese are not going to relocate industries to these non han chinese ethnic provinces..Otherwise there are many countries such as vietnam, thailand, India, bangladesh who are marginally behind
china in Global competitive index with high FDI inflow to replace those chinese goods manufactured in eastern china. FDI to India is touching 60 bill$ in 2016. The eastern chinese provinces have highly subsidized exporting SEZ zones with ecosystems of all components in vicinity. Its almost impossible to manufacture anything in western china without the presence of ecosytems,vendors
1. Industrial capability of chins is focused entirely in eastern areas.almost 80% of china economy is near the ports–so trade to western china is very very limited
2. Do you expect china to import chemical,machineries,electronics, oil from cpec routes. Western china is self sufficient in oil & gas with oil pipeline from cen asia to china via the same route. Rest all of it are made in eastern ports
3. I dont believe in flmsy stuffs. The nos speak for itself.
China just cant build industries in those hill areas. They will never be feasible as compared to building industrial plants near sea ports.
so I repeat the focus on CPEC is military and some of it is to supply raw materials/food to western china whose economy is less than 150bil$
4. World trade is contracting as we speak. Pak trade have contracted by 30% in last 3yrs
Central asia economy is less than 500 bill $. Afghan is trapped under your strategic taliban puppets
CPEC is insignificant to india. The only indian objection is about Pak administered Kashmir and chinese military presence in disputed areas
5. How a landlocked nation like Nepal join CPEC which is 2000 Km far from its borders.
Nepal tried to trade oil via Tibet & they turned out to be 30-40%costlier than Indian sales price. So they gave up. Even with the cheapest railway it will nt be able to compete with indian price
Nepal to Indian sea port in west bengal,orissa is 1000 KM as compared to 4000 Km via tibet
zest of matter is that Pak is going to face sever debt problems. The last quarter of this year took 66% of pak budget in debt servicing. The jobs created in CPEC routes are directly proportional to trade via gwadar. Apply any regressive analysis and see it yourself, CPEC trade via gwadar is not exceeding 1 bill$ in 2020..At present its less than 20-40 mill$
Trade of 1 bill$ means inflow of 2-3% profit(30 mill$) which is peanut given the high cost of maintaininng the infrastructure, water problems and costly ROI over the loans & profit corrupt chinese companies are making from it