China’s Long-Term Indian Ocean Presence Strategy – III
by Ramtanu Maitra on 11 Jan 2019 0 Comment

Securing the Indian Ocean Passageway: Hambantota

Developing the Hambantota port had been under discussion in Sri Lanka for decades, but the location was not considered suitable until Sri Lanka elected a president who came from that area. Soon after he took power in 2005, President Mahinda Rajapaksa became keen to develop the port along with an international airport, a new town, a convention center and a highway extension. He brought in Chinese investment, and the first phase of the port was developed through a $ 307 million loan from the Export-Import Bank of China at a 6.3% interest rate. Despite the fact that failure was written all over the project from the beginning, more borrowed money from China was sunk into this destined-to-fail port.

 

One year after it opened in 2010, a huge rock in the seabed was still blocking vessels from entering. Even after the rock was blasted away at great expense, the port attracted only 34 ships in 2012. Still, Chinese investment continued to pour in during the following four years, as further loan agreements were signed and the cost of the project sky rocketed, according to the Sri Lankan Ministry of Finance’s annual reports. (The story of Hambantota Port: a flunking token of political corruption: Eva Grey: Ship Technology: Sept 18 2018) In 2017, according to Sri Lanka’s Ministry of Shipping and Ports, 183 ships arrived, of which 175 were cargo ships.

 

The weak economic rationale behind building the port which resulted in steady operating losses, coupled with payment of loans to China, brought Colombo to its knees. In December 2017, the government of Sri Lanka formally handed over the strategic port of Hambantota to China, which will take control of the facility on a 99-year lease under what is called the Concession Agreement. Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS), two new companies set up by the China Merchants Port Holdings Company will manage operations in Hambantota Port. Reportedly, China Merchants Port Holdings Company agreed to pay $1.12 billion for an 85 percent share in Hambantota.

           

Gwadar

 

Located at the southern tip of Pakistan on the Makran Coast on the Arabian Sea and close to the Iranian border, Gwadar was once a small fishing village. Now, part of China’s alleged $60 billion investment in infrastructure in Pakistan to link up China’s western Xinjiang province to the Arabian Sea, east of the Strait of Hormuz, Gwadar Port has become a very important nodal point for China to secure the passageway to the Persian Gulf.

 

Gwadar port is located close to the mouth of the Persian Gulf just below the Straits of Hormuz. Gwadar port is being built in phases. When completed, it will have three 200-meter-long berths and one Ro-Ro (roll on-roll off) facility. At present the port has the capacity to handle 50,000 deadweight tonnage (DWT) bulk carriers drawing up to 12.5 meters. (Pakistan’s Gwadar Port: A New Naval Base in China’s String of Pearls in the Indo-Pacific: CSIS Briefs: April 2, 2018) The port is being developed by the China Overseas Port Holding Company (COPHC), to which it was leased by the Pakistan government for 40 years in April 2017. The final expansion of the port and ancillary systems will be undertaken by the Chinese.

 

In addition to developing the port, the China-Pak Investment Corporation has bought the 3.6-million square foot “International Port City” to house the Chinese workforce, and will establish a financial district and build a gated community for the anticipated 5,00,000 Chinese professionals who will be located there by 2022, according to a report in The Economic Times.

 

It is evident from these reports that Pakistan has allowed China to establish a massive presence at a highly commercially strategic location. However, reports indicate that such presence also has a strong military element. Last January, The Washington Times reported that China is constructing a military base in Pakistan as part of greater power projection in the Indian Ocean. The facility will be built at Jiwani, a port close to the Iranian border on the Gulf of Oman and a short distance up the coast from Gwadar. Plans call for the Jiwani base to be a joint naval and air facility for Chinese forces. (China building military base in Pakistan: The Washington Times: Bill Gertz: Jan 3, 2018)

 

Djibouti

 

Last July, China opened its first foreign military base at Djibouti. The base includes a naval port, large helicopter base, and accommodation for 10,000 troops. Establishment of the base was a big step for Beijing, which had long decried foreign bases as the domain of Western imperialists. (China’s new network of Indian Ocean bases: David Brewster: Lowy Institute: 30 January 2018)

 

In May 2017, the $590 million Doraleh Multipurpose Port project, started in 2015 and jointly financed by Djibouti Ports and Free Zones Authority (DPFZA) and China Merchant Holding (CMHC), was inaugurated. The port is one of four new ports in the Horn of Africa nation co-funded by China to establish Africa’s largest free-trade zone that can handle $7 billion worth of goods every year, a statement by the port authority said. The bulk terminal at the Doraleh port can handle 2 million tons of cargo a year and offers space to store 100,000 tons of fertilizer, and grains and warehouses for other goods.

 

A few minutes’ drive away from the commercial port at Doraleh, China has built a military facility for its People’s Liberation Army Navy (PLAN). “From this new vantage point, the PLAN is able to overlook one of the most important maritime chokepoints in the world­: the Gulf of Aden, specifically the Bab-el-Mandeb Strait, through which an estimated 12.5 to 20 percent of global trade passes every year. (The narrowest part of Bab-el-Mandeb is only 18-miles wide.) The proximity between port and base reflects the integration of Chinese commercial and military interests as part of a strategy to project power abroad, even while Beijing maintains the guise of non-interference.” (China’s Strategy in Djibouti: Mixing Commercial and Military Interests: Blog Post by Guest Blogger for Elizabeth C. Economy: April 13, 2018)

 

Beyond these locations where China’s presence has emerged in a significant way, Beijing has also cast its shadow over the Republic of Maldives. One likely reason why China is keen to bring Maldives under its wing is because the archipelago, about 1,000 km southwest of Sri Lanka in the Indian Oceans, sits at one of the key points for sea routes that extend from Asia to the Middle East and Africa.

 

Until 2011, Maldives was not a priority in China’s foreign policy; Beijing did not even have an embassy in Male. But following Chinese President Xi Jinping’s visit in September 2014, the relationship grew fast. China’s presence, especially in Maldives’ tourism sector and infrastructure building, has expanded. It has replaced Europe as Maldives’ largest source of tourists. China is funding and building mega infrastructure projects, including the Friendship Bridge linking Male to Hulhule Island and a 1,000-apartment housing project on Hulhumale, a suburb built on reclaimed land. (The China-Maldives Connection: Sudha Ramachandran: The Diplomat: Jan 25, 2018) President Xi also assured the Maldives president that China would support the development of the Youth City in Hulhule and development of the Ibrahim Nasir International Airport (INIA). President Xi, in his remarks, noted that China wishes to establish a “Future-Oriented All-Round Friendly and Cooperative Partnership” with the Maldives.

 

Recently, the new political leadership in Maldives has questioned Chinese generosity, claiming that Beijing was in reality laying a debt trap for the Maldives that would lead to China having a major say in its internal affairs. This is not altogether unlike to what happened in Sri Lanka.

 

Conclusion

 

Despite the ebb and flow in China’s bilateral relations with the Indian Ocean littoral states, it is a foregone conclusion that over the coming years, as China’s economic and military muscle gets stronger and its trade volume rises, China will continue to take measures to ensure the smooth flow of its trade. That will inevitably mean projection, but not necessarily execution, of naval power in the Indian Ocean region.

 

In addition to Djibouti and Jiwani, China may choose to establish full-fledged naval bases, or even bases from where submarines could operate. China is a huge economic power and while its military muscle may not be comparable to that of the United States or Russia, it can overwhelm most of the littoral states. It is fair to assume that with its zeal to grow aided by its economic and military muscle, China will be able to set up major bases along the Indian Ocean coastal areas.

 

There are some tell-tale signs that such a plan is already in the works. An Asahi Shimbun article in January 2018 pointed out that China is waging a submarine sales offensive to nations with Indian Ocean coastlines. It noted that Bangladesh, Pakistan and Thailand have either purchased or have agreed to acquire Chinese submarines. The article said China is reportedly offering these submarines at a bargain price, enticing the nations to buy.

 

Bangladesh was first to take advantage of the cut-price submarines by acquiring two used Ming-class diesel-powered vessels in 2013. Bangladesh began operating them in March 2017. One local military source put the cost of each submarine at $100 million, or one-tenth the price of a new European submarine. In April 2017, Thailand agreed to purchase two newly constructed subs in the Yuan class, two classes more advanced than the Ming sub. A Thai government source said each sub will cost about 13.5 billion baht (47 billion yen, or $424 million). Defense Minister Gen. Prawit Wongsuwan said it is far less expensive than submarines of other countries. Bangkok is considering purchasing two more. During Chinese President Xi Jinping's visit to Pakistan in 2015, it was proposed that Islamabad acquire eight Chinese submarines. The next year China confirmed that such a plan existed; they will be Yuan-class subs, four of which will be constructed in Pakistan. (China making new inroads in Indian Ocean with cheap subs: The Asahi Shimbun: Jan 15, 2018)

 

While there is no question that all these coastal nations need submarines to provide security to their coastlines, purchasing Chinese submarines means these nations must also install repair and supply facilities that match specifications required for handling the Chinese vessels. This gives China the option of asking that its submarines be allowed to temporarily berth there for repairs or to acquire weapons. Once a submarine is purchased, the nation in question must rely on Chinese naval officers and technicians for instructions on operating the vessel. Those personnel could also play a key role in gathering vital information, including seabed mapping, as China strives to improve its submarine naval capabilities.

 

(Concluded)

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