New Maritime Facilities in the Indian Ocean

Issues Details: 
Vol 11 Issue 1 Mar - Apr 2017
Page No.: 
Sub Title: 
China’s aims at spreading its tentacles ostensibly for economic reasons Geo Strategy
Dr Vijay Sakhuja
Wednesday, March 15, 2017

China’s relentless efforts to augment the 21st century Maritime Silk Road initiative and its investments in Hambantota and Colombo port projects in Sri Lanka and the Gwadar port in Pakistan have attracted international attention. Last year, it announced the intention to finance and develop jointly with the host nation companies’ two commercial ports in the Indian Ocean - the Maleka Gateway in Malaysia and Dqum port in Oman. No doubt these projects have immense economic significance and can also be seen as part of the wider economic relations between China and the host nations to increase investments and bilateral trade. These also help China to boost shipping along the Maritime Silk Road. It is argued that these projects import immense strategic and naval value.

Melaka Gateway, Malaysia

The Melaka Gateway is located on the west coast of peninsular Malaysia overlooking the Indian Ocean. The project is valued at RM 30 billion and is being developed through a joint venture agreement between KAJ Developments-PowerChina International under which it is planned to reclaim three islands off Malacca coast. Apparently the project is being developed on a fast-track basis and the construction of the deep sea port is expected to be completed by 2019. The other connected facilities i.e. greater Melaka Gateway development project is expected to be completed in 2025.

There are at least two important issues which appear to have perplexed analysts about the Maleka Gateway joint venture. First, it is noted that Malaysia has been overly “generous” towards China and is likely to give the port area on a “freehold status”and grant 99-year concession. Second, the economic competitiveness of the Maleka Gateway has been questioned given that it lies between the two established major and thriving maritime transshipment hubs of Port Kelang and Singapore. Even the World Bank study commissioned by Malaysia had question the efficacy of the new port project because “existing facilities had not reached capacity”. However, the Malaysian government has defended the decision and argued that “Melaka Gateway was needed because Port Klang will be full in 2020”. Even logistic specialists have cast doubts about the economic viability of the port project stating that “there seems to be no logic to the Melaka deal, many are questioning if this has more to do with military rather than commercial interests,”

It has also been observed that “There is the strategic element of the Malacca Strait. It always starts with an economic presence, which can develop into a naval one, because China will be obliged to ensure the safe passage of its commercial ships”. Geographically, Melaka Gateway lies astride the international sea lane and overlooks the shipping entering or exiting the Straits of Malacca. It is therefore strategically important for China which has interest in the safety and security of its flagged vessels which carry commodities such as oil and gas and large volume of containers.

Dqum, Oman

Dqum is essentially a small fishing harbour and the connected township hasfew thousand people who belong to the Bedouin tribe. The Omani government has plans to develop the harbour into a major port and turn the township into an industrial city with a Special Economic Zone. Dqumwould supplement the other Omani ports of Fujairah and Salalah which lie astride the 2,000 kilometers coastline overlooking the Indian Ocean. The port would have a large dry dock, receive vessels of up to 180,000 dwt, and is suitable for a variety of cargoes such as containers, dry and liquid bulk and other cargo.

In May 2016, China and Oman signed an agreement to build an industrial park on a stretch of barren coast adjacent to Duqm. The project involves developing light and heavy industry, hotel, hospital and a school.  It is also planned to build an oil refinery, a cement plant, automobile assembly plant, and a 1-gigawatt solar power generation facility. According to Omani State officials involved in the Dqum project “The Chinese companies will be responsible for building the infrastructure, and then will be allowed to lease the land to Chinese investors. Almost all the projects will be financed by Chinese banks,”

The strategic and geopolitical importance of Dqum port has been acknowledged by the Government of Sultanate of Oman and it has been stated that it is “far removed from Strait of Hormuz and the Arabian Gulf” and a “safe, stable and business-friendly destination for industrial and economic investment” which the government wants to leverage drawing from the “country’s international reputation as an oasis of tranquility and standard-bearer of regional peace and reconciliation”.

In 2016, a high level Chinese delegation led by Wang Yong, a member of the China State Council had visited Oman. According to the chairman of the Omani state authority developing Duqm, the Chinese side would build an industrial park and invest US $10 billion by 2022. Further, The Chinese companies will be “allowed to lease the land to Chinese investors”.

Dqum first appeared on the naval strategic map in 2014 when a US military delegation visited Oman to make an assessment of the port as part of their  Afghanistan exit strategy. In March 2014, sixteen warships from the Gulf Cooperation Council’s (GCC) member navies were sighted in the port preparing for joint naval exercises in the Arabian Sea. Currently, Dqum does not have any military infrastructure, but the Royal Navy of Oman (RMO) plans to establish a naval base. In May 2016, it was reported that the new port was already being regularly used by foreign naval vessels and according to the harbour master, the port “received 30 navy ships so far from America, Germany, Turkey, Greece, Netherlands, France, UK, and GCC countries…We have plenty of space to offer for the navy ships. We provide them with fresh water”.

Perhaps the British Royal Navy’s interest in Dqum merits enquiry. In 2010, HMS Enterprise undertook hydrographic survey of approaches to the Dqum harbour, and HMS Echo carried out logistic assessments of the port for future visits by Royal Navy ships. In 2016, the United Kingdom concluded an agreement with Oman to establish a permanent naval base near the Duqm port and British Defence Minister Michael Fallon commented that the base will help establish “a per¬manent training hub” in addition to a key military logistics center that “will bring British engineering expertise to help develop Duqm as a strategic port for the Middle East on the Indian Ocean, benefiting the Royal Navy and others”. Interestingly, the United Kingdom is already engaged in Bahrain where work on the first British permanent naval base in the Middle East has begun.There are clear and growing signs that Duqmis fast gaining importance as a strategic naval outpost in the Indian Ocean.

Dqum has figured in India’s strategic calculations too. At the commercial level, New Delhi sees the new port project as an opportunity for industrial investment, connectivity and as an energy corridor. It is keen to set up a fertilizer plant and is exploring India-Oman joint venture projects in Iran’s infrastructure and energy sectors. It is useful to mention that India had to shelve the Iran-Pakistan-India (IPI) pipeline project and in 2003, a pipeline project to transport gas from Iran to India was explored but did not fructify due to high construction and transportation costs.  The focus then shifted to the Oman-India Pipeline (OIP) to run below the sea across the Arabian Sea.

At the strategic-naval level, an Indian warship called at Dqum port in 2016 while engaged in anti-piracy operations in the Gulf of Aden. Later, in September, the Indian defence minister Manohar Parrikar too had conveyed to his Omani hosts that India was keen on “boosting defense, crime prevention at sea, maritime issues and a flight safety information exchange” including sale of military hardware and setting up defense production facilities in Oman.

Concluding Thoughts

Three important issues emerge from the above analysis. First, it is fair to debunk the belief that commercial port infrastructure is purely for economic purposes and there are no strategic-military undertones. In fact, maritime infrastructure is inherently dual in nature and flexible to serve a number of purposes. Second, States are driven by national interest and are willing to welcome different stakeholders to develop maritime infrastructure that can be used for both commercial and military purposes. Third, China will continue to explore new destinations to ensure that its Maritime Silk Road initiative reaches fruition and would be keen on seeking long term lease for its investments. This is quite evident from its port development agreement with Malaysia and Oman. However, it is conscious of the fact that its investments may run into jeopardy due to domestic opposition as was seen in Sri Lanka where the Hambantota deep sea port and the land for the industrial zone was to be leased to China for 99 years in “exchange for US $1.1 billion in debt relief”.

Notwithstanding these risks, China will pursue an aggressive strategy to build maritime infrastructure overseas for not only investment purposes but also to support Chinese Navy’s operations in the Indian Ocean.