Pakistan: A country surrounded by danger of continued uncertainty
By Farhan Bokhari , Special to Gulf News
Islamabad: Pakistan's decision to finally award the contract for the management of its Gwadar port near the Iranian border, marks an important step for the country's ambitious plans for future growth.
Gwadar, Pakistan's third largest deep water port, is just 70 kilometres short of the Iranian border and located strategically overseeing the mouth of the Arabian Gulf.
It is located in an area which is close to the venue for Pakistan's future plans to build an ambitious new gas pipeline which is meant to transport gas from Iran, as well as being near a venue for laying down a new network of railroads reaching out to landlocked central Asia.
All in oil, the choice of a venue for a new port development could not have been better placed than Gwadar. For Pakistan's financial markets, the successful completion of a contract for management of Gwadar, essentially pulls together important elements of the Pakistani government's plans to consolidate the country's economic recovery of recent years.
But as the Pakistani government-backed contract for Gwadar gets underway, the savviest analysts would be looking at important milestones along the way to be convinced of long term success.
One element on this road would indeed be the extent to which Chinese companies would eventually come in large droves to join the network of new business developments around Gwadar.
The Chinese government has made a substantial contribution towards this end, having provided almost 80 per cent of the financing for Gwadar's total investment of about $250 million.
Ultimately, if Chinese companies indeed come up to Pakistan's expectation and sign up to establish a large network of warehouses around the Gwadar port, for stepping up supplies of goods to and from the Middle Eastern region, the long term prospects would indeed appear promising.
But much depends on the ways in which at least three key parameters come together.
First, Pakistan has to move ahead decisively for a quick resolution of the state of tumultuous politics in Baluchistan province, where an insurgency led by tribal separatists has made the headlines in the past few years. Dissident groups from that province continue to demand more economic rights for Baluchistan. As long as this dispute festers away without a full resolution, the future of Gwadar would remain surrounded with uncertainty, as the danger of periodic unrest would prevail.
Second, Pakistan has to continue pressing ahead with its economic reforms so as to attract new investments. So far, the south Asian country has had some success towards this end, following the economic recovery which is now in its third year. But that recovery would remain incomplete as long as reforms which tackle the remaining challenges, are not put in motion.
For many prospective investors coming to Pakistan, issues ranging from periodic energy shortages to the gaps in the working of the tax collection system, remain formidable issues.
While some of these areas may have undergone relative improvement by comparison to a few years ago, that improvement nevertheless is relative. For world class investors, there is no compulsion to necessarily commit themselves to one country. Across Asia, there are a number of destinations for investors which offer much more promise than Pakistan for prospective investors.
Finally, Pakistan may have come a long way in its reform plan and yet it remains a country surrounded by the danger of continued uncertainty.
The biggest challenges linked to such uncertainty, remain the gaps surrounding Pakistan's politics and the unresolved challenge of the military's role in running the country.
However, the refusal by General Pervez Musharraf, Pakistan's military ruler, to step down from the powerful position of the chief of military staff and continue only as a civilian ruler, has not only aggravated Pakistan's political crisis.
But such questions do reveal the gaps surrounding Pakistan's future which simply can not be filled even with a successful event as large as the story of Gwadar.
- The writer is a journalist based in Pakistan.