A visit to the only dry port of Nepal will immediately captivate busy scenes with hundreds of trucks, some railway carriages and huge Maersk containers at play. Trains from the Port of Kolkata in India carry tons of Nepal’s exports every week. Every year, Nepal is fined millions of rupees for overstaying its containers at the designated dock in Haldiya Port of Kolkata. Nepal pays for spaces inside Indian ships to carry out its exports via the sea. This is the closest Nepal has come in exploiting economic opportunities through sea waters. Prime Minister KP Oli went one step further and presented an idea of steering Nepal’s own fleets in the vast international sea space. While his idea of Nepal affording its own ship was mocked; on the contrary, he was right. The idea is practical but herculean.
To start with, Nepal has a landlocked right to use international waters via a third country for economic purposes only. Law of the Sea conferences held during the 80’s, guarantees Nepal’s right to use the exclusive economic zone all around the globe. Article 69 of the Law of the Sea convention states that Nepal could both use sea as a trading route and exploit the exclusive economic zone of its sea facing neighbors. Nepal’s closest neighbor, India has a wide exclusive economic zone which consists of 7500 km long coastline. The article also allows landlocked nations to use docking facilities of the nearest coastal nation to run its fleets. An exclusive economic zone in sea waters is designated after a coastal nation’s eleven mile parallel water boundary ends; which is also a part of the coastal nations territory. Simply put, Nepali fleets can dock at India’s port, sail eleven miles further into international waters-carry out fishing and other activities, sail back to the Indian coast and transfer its catches back to Nepal.
Before ships can carry the triangular flag into sea waters, Nepal will need treaties in place to use coastal nation’s water to take off and build shipment facilities. Law of the Sea convention clearly mentions that the right to use another nation’s coast will depend solely on the will of the hosting coastal nation. Does Nepal have the political will to communicate and forge a comprehensive sea transit agreement with its coastal neighbors? Nepal’s chance of securing fleets in and around the Indian Ocean will depend on whether it can convince nations like India of mutual benefits and cancel any apprehension regarding its security that might be compromised via Nepal’s sea activity. The convention itself is one among the most controversial international agreements where deteriorating marine ecosystems, sovereignty issues and maritime crimes are at its core. Majority of global and environmental problems persist in the high seas; ranging from territorial acquisitions to resource drilling offences. Nepal is welcome into the high seas, but does it comprehend the sensitivity that clouts sea horizons? Nepal needs a diplomatic strategy, but lacking experience, Nepal will need to develop institutional capacities to materialize the oceanic dream. Secondly, the cost of operating such a national project will be dreadfully expensive. Does the Nepali treasury boast finances for a leapfrogging adventure?
How is it possible?
The good news is that many landlocked nations operate in international waters. Switzerland, as an example might not assure the Nepali case, but Ethiopia exercising its sea rights via Djibouti’s port could be inspiring. Before Nepal can start ordering its fleets, it will need to design its own political and diplomatic strategy. Nepal’s best rationale would lie in working together with its neighbors. The South Asian network of nations could finally come into use. Along with Nepal, Bhutan is another landlocked nation where possible alliances await. If India’s coasts are unapproachable, Nepal and Bhutan could vie for Bangladeshi coastlines to experience sea trading. Maldivian and Pakistani waters are geographically and economically inaccessible but Sri Lanka lies deep down the South Asian continent. If Nepal and Bhutan can satisfy Sri Lankan interests, the landlocked union could not only skim through thousands of nautical miles around the Bay of Bengal without entering Indian water space; but also neutralize the hegemonic status of India in the region. If such a multinational agreement can be sought; SAARC- the passive regional body will not only gain political prowess but other areas of regional development will also kickstart.
Most importantly, a transit route (such as the Rohanpur-Singhdabad transit route) from Bangladesh to Nepal and Bhutan will need to be constructed well before ships start running in the Indian Ocean. In doing so, Nepal will not only tranquilize Nepal-Bhutan relations but also exercise leadership role in South Asia. A regional agreement will flourish trade but will also make landlocked Nepal’s agenda of sailing through other regions of international sea strong and plausible. A landlocked union with Bhutan will trim the costs than that of which Nepal will be spending alone. Such regional compliance would also encourage international financial institutions to fund Nepal’s sea project. Apart from political leverages, Nepal’s economy would scale new heights with decreasing price of paramount goods and services. Flourishing exports and increased tourism opportunities would be Nepal’s grandiloquence. Nepal’s main challenge lies in assuring its neighbors on how its idea would be mutually beneficial. Nepal’s work starts here. Nepal needs to put together a cunning diplomatic show.
India’s Military Spending and South Asian Security
Over the past several years, unprecedented military modernization in Pakistan’s immediate neighbour, India, has worsened South Asia’s security environment. India’s heavy military spending and its unstoppable quest for the acquisition of sophisticated weapons have threatened regional stability. Indian desire to acquire global power status through military means has further been intensified as a result of US assistance particularly in former’s defence sector. Within quick span of time, defence trade between India and the US has shot from $1 billion to over $15 billion leaving other regional powers in the state of security consciousness.
India’s obsession with its military build-up doesn’t end here. According to the Stockholm International peace Research Institute (SIPRI) a prestigious international institute dedicated to research into conflict, armaments, arms control and disarmament, India, once again tops the list as world’s largest weapons importer. This is not a new development as previously, India also topped the list for the same reason.
As per SIPRI estimates, Russia remains top arms supplier to India. However, surprisingly arms deliveries from the US increased more than six-fold in the five-year period to the India. This trend in long run will definitely reduce market space for Russian arms and ammunition to India.
Despite the fact that, India’s unbridled military modernization is the primary impetus behind South Asian instability, global power’s economic expediencies in South Asia also undermines delicate conventional parity between India and Pakistan. For instance, Indo-US strategic partnership, which apparently touted as US’ China containment policy, seems more of a Pakistan containment policy. Much of the US provided weapon-tech to India is more useful against Pakistan in a conventional warfare. Almost 70% of Indian military troops and weapon system are deployed against Line of Control, (LOC). Interestingly, peaceful settlement of Docklam issue between China and India as well as sky-rocketing bilateral trade between both countries, which has reached to $84.44 billion last year, makes prospects of conflict almost impossible.
However, in contrast to aforementioned facts, the influx of massive military hardware from western capitals to India continues and in certain cases the flow of arms has gained momentum. There are two primary motives behind India’s overwhelming spending in defence industry.
First, India aspires for greater role in global environment and in certain ways it has been demonstrating its will and capability to influence global dynamics. India’s successful test of Agni-5, a long-range ballistic missile, capable of carrying nuclear weapons with a strike range of more than 3,000 miles, is a practical demonstration of its military capabilities to influence other powers around the globe. For hawkish policy makers in New Delhi, a strong military power can extend India’s global influence.
Secondly, India is following a policy of coercion at regional level primarily, against Pakistan which shares history of hostility and violence due to longstanding territorial disputes such as Kashmir. There is growing perception in New Delhi that militarily strong India can dictate South Asian affairs. That’s why India has been consistently opposing diplomacy and dialogue for peaceful resolution of disputes. Therefore, to meet its foreign policy goals, which are based on coercion and usage of hard power, India spends massive in military build-up.
Ironically, South Asia is called as nuclear flashpoint due to history of animosity and violent conflicts between India and Pakistan. With its mighty military power, India has emerged as the most potent threat for not just Pakistan but also a security challenge for other powers in the region.
Given the advantage it has in terms of nuclear missiles, military hardware and submarine fleet, India has been trying to create an environment conducive to wage limited war against Pakistan. For that, India has not just developed its military doctrine, Cold Start Doctrine, but also initiated and sponsored sub conventional war in Pakistan’s chaotic province, Balochistan.
In such circumstances, Pakistan needs to maintain delicate conventional military balance vis-à-vis India. Despite the fact, Pakistan has been facing number of issues at national, regional and international levels which include on-going military operation in tribal areas to hostile border skirmishes; a robust military modernization plan has become inevitable. A militarily strong Pakistan will be able to maintain its territorial integrity against aggressive yet militarily mighty India.
It’s an open fact that Pakistan has consistently called for peaceful resolution of all outstanding disputes and it has offered to resume diplomacy and dialogue over Kashmir dispute. Unfortunately, India’s cold response has not only restricted Pakistan’s peaceful overtures but also refused to accept third-party mediation in peaceful settlement of Kashmir issue. This clearly shows that, current ruling regime in India is not serious for peaceful settlement, rather more inclined to use of force and coercion. Under such circumstances, Pakistan needs to strengthen its force posture to pre-empt any kind of misadventure from its adversary. However, Pakistan, as it has done in past, must embrace peaceful overtures to bring stability in the region.
US Call for a New Relationship
‘Trust, but verify’ an Old Russian proverb that President Reagan liked to repeat often. Trump is neither the first President nor he is going to be the last to criticize Pakistan of deceit and threaten to cut off American assistance. Notwithstanding, the last six decades of the US support, the US has failed completely in cultivating an ally in Pakistan nor has it meaningfully changed the nature of its relationship with Pakistan, which can be best described as ‘transactional’. A quid-pro-quo relationship between the two has never been established with regards to the assistance they both offered to each other. In truth, United States has never really trusted Pakistan.
President Trump avowed in his New Afghan Strategy that the US has been paying Pakistan ‘billions of billions of dollars at the same time they are housing the very terrorists that we are fighting for’ but the mantra should be put to a halt. Likewise, the US must be conveyed boldly to stop continuing its false claims that Pakistan shelters the ‘agents of chaos’ and be reminded that friends don’t put each other on notices.
Similarly, statements and avowals that India now is a strongest ally to the US, disturbs Pakistan, chiefly because of the irony at Trump administration’s part which only sees the glittering Indian market but pay no heed to the growing Indian cease fire violations across the LoC and the atrocities India commits against the unarmed civilians of the Indian held Kashmir.
The recent visits and statements however by the senior US officials and Trump’s aides reflect the US call for a new relationship between the US and Pakistan, which once used to be close allies in the US led ‘Global War on Terror’.
Pakistan’s foreign policy makers at this point in time must be mindful of the fact that the US is a major trading partner and should adhere to a relationship more than ‘transactional’. Moreover, the risks and fears at the US part of ‘rampant destabilization and civil war in Afghanistan’ increments further the region already devoid of trust. For, nobody actually knows whether the US will stay or eventually leave Afghanistan.
The Afghan war has now become a war of logistics, in words of Sun Tzu ‘the line between order and disorder lies in logistics’, Pakistani supply lines thus provide Islamabad with a leverage in absence of shorter, cheaper and acceptable alternative routes. Given these circumstances, Pakistan should make best use of the US call towards a more robust bilateral relationship.
The move for a ‘new relationship’ and improved ties began last week with senior Trump aide’s visit to Islamabad to hold talks with Pakistani leaders. Earlier also the impressions that Pakistan and the US were on a collision course were dispelled by a top US general. Likewise, US department’s acting Assistant Secretary for South and Central Asia Alice Wells asserted that the US was not thinking of cutting its ties rather assured that the US still cogitate Pakistan indispensable to the resolve in Afghanistan.
The aforesaid developments clearly indicate that the strained US-Pakistan relations would improve soon and that the suspension in the military aid is also not permanent.
To conclude, achieving long term stability and defeating the insurgency in the region will be difficult without Pakistan’s support and assistance.
Special Economic Zones and CPEC
Economic Expansion, high prices and inflation are the issues on which one can talk for hours. The scarcity of resources, energy crises and lack of industrial modernization are the challenges which Pakistan has been facing for past many decades. Despite the advantages of geographical setting, the country could not sufficiently expand its economy until 20thcentury. However, the China-Pakistan Economic Corridor (CPEC) has brought with it various infrastructural, energy, and industrial projects that show smooth progress in these sectors. One of the most significant developments is the establishment of Special Economic Zones (SEZs) under the Long Term Plan (LTP) of CPEC.SEZ is a physically protected area with definite geographic boundaries under which the investors and the developers enjoy duty free benefits and streamlined procedures, set up by the government. After the successful completion of the Early Harvest Program (EHP), the governments of China and Pakistan aspire to complete the Long Term Plan (LTP) of CPEC. As a key route to success, the LTP has been divided into three phases and the work on the first phase has already started. SEZs are on the first priority list of the first Phase of LTP. While utilizing the strategic location of Pakistan and the rich resources, the SEZ will contribute a framework for Pakistan’s domestic industries, and local economy.
The government has planned to establish nine Special Economic Zones (SEZs) in all the four provinces, federal areas and Gilgit-Baltistan under the framework of CPEC, which would be completed in a period of three years. Pakistan has conducted feasibilities of 5 SEZs which focuses only on the infrastructure. The three prioritized SEZs to be completed in the first phase of LTP are M3 Industrial City in Faisalabad, Punjab, Chinese SEZ Dhabeji, Sindh and Hattar SEZ in KP province. While the remaining six sites include Rashakai Economic Zone, M-1 Noshera, Bostan Industrial Zone District Pishin, AllamaIqbal Industrial City, Moqpondass SEZ in Gilgit-Baltistan, ICT Model Industrial Zone Islamabad, Development of Industrial Park on Pakistan Steel Mills Land at port Qasim near Karachi, Special Economic Zone at Mirpur AJK, Mohmand Marble city.
Although, there are general misunderstandings regarding the industrial ramifications of the SEZ’s under CPEC due to large number of Chinese firms and the exemption in the tax rates offered to them. However, the LTP of CPEC shows that these SEZ’s will offer the country with a great opportunity to accelerate industrialization because they are beneficial for all the international and domestic investors. So far in the history, SEZs have been the reason of economic boost in countries around the globe. Now this is a matter of concern that either these SEZs will make Pakistan a center of economic modernization and trade ventures or not. The economist and financial experts are optimistic about Pakistan’s emergence as one of the fast growing and promising global economy.
While stepping towards the era of industrialization, Pakistan faces a number of issues that have so far refrain the industries to understand their growth potential. Some of the chief hindrances to investment in Pakistan include poor security; non-availability of infrastructure and power crises, rent-seeking regulators, and cumbersome tax administration, etc. among many others.
Likewise the entrepreneurs in Pakistan have certain reservation with the incentives proposed by the government and SEZs for the investors and enterprises including ten-year exemption from all taxes on imported capital goods and exemption from tax on income accruable from development and operations in SEZs for a period of ten years. Although these incentives will be beneficial for the foreign investors at large but at the same time it will provide Pakistani enterprises with the opportunity to collaborate with the Chinese firms and launch joint ventures of mutual interests and benefits. This will be further beneficial for the annual Gross Domestic Product (GDP) growth of Pakistan. Moreover it will bring Foreign Direct Investment (FDI) in the country thus generating the foreign revenue.
Subsequently it is significant to keep in mind that in Pakistan there are certain security and political factors due to which the SEZ’s may face challenges. Hence forth to conquer these challenges provincial harmony among all the provinces and mutual consensus between the public sector and private sector is needed. SEZs under CPEC will be a life-time opportunity for Pakistani companies to work together with Chinese companies for the development of export-oriented manufacturing industries. Therefore, Pakistan should increase its products in the Chinese market and raise the ratio of its export while decreasing the trade deficit by lowering the imports.
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