Reposted from The News | Feb 1, 2013 | Too little too late?: Gwadar port transfer to China wins cabinet nod

By Shahbaz Rana

ISLAMABAD: The federal cabinet used one of its final meetings to make some key decisions with potentially far-reaching implications for Islamabad's ties with Washington.

During the cabinet meeting chaired by Prime Minister Raja Pervaiz Ashraf, the challenging multi-billion dollar Iran-Pakistan gas pipeline was approved, while a deal transferring the management of the Gwadar port from Singapore to China was also given the go-ahead.

"The cabinet today gave approval to transfer Gwadar port operations from Port of Singapore to Chinese Overseas Port Holdings Limited," Information Minister Qamar Zaman Kaira told reporters after the meeting. "Both the companies have settled their deal," he said, without giving a timetable for the transfer, adding that the decision was taken to meet the country's soaring energy requirements.

Kaira said that Singapore's PSA International could not develop or operate Gwadar "as desired" and said he hoped that under the new management the strategically located deep-sea port would soon contribute to Pakistan's flagging economy. "The Chinese will make more investment to make the project operational," Kaira said.

China provided about 75% of the initial $250 million in funding for the construction of the port in Balochistan. It is currently being operated by Singapore's PSA International, but needs further development work to become fully operational. According to PSA's Gwadar website, there has been no ship in the port since November.

According to defence and strategic analysts, China wants to use the port for commercial and defence purposes, which will undermine US influence in the Arabian Sea.

Iran-Pakistan pipeline project

Referring to the Iran-Pakistan pipeline project, Kaira said Iran is an important country for Pakistan while downplaying US pressure on Islamabad to scrap the project. An agreement on government-to-government cooperation on engineering and the procurement and construction of the pipeline on the Pakistani side was also approved.

Kaira said the cabinet has also constituted a four-member committee to finalise modalities for arranging finances for the pipeline. The committee will include the finance minister, petroleum minister, law minister and State Bank governor.

The cabinet also approved an agreement to obtain $250 million in loans from Iran to finance the $1.5 billion project. A petroleum ministry official said the government was also negotiating for another $500 million loan with Iran.

Analysts wary of decisions

A mechanism to enter into a financial agreement with Iran will be tough to manoeuver for Pakistan, since the United States has publicly said the pipeline project would violate US restrictions on major financial deals with Tehran.

Secretary of State Hillary Clinton had earlier called the project "˜inexplicable', adding that it could invoke US sanctions that would further "˜undermine' Pakistan's "already shaky" economy.

Even though the cabinet's decisions seem to have been taken in the national interests, analysts have questioned the timing of the approval.

"An outgoing government has no business to take decisions that have far-reaching implications for the country," said former ambassador and foreign secretary Shamshad Ahmad Khan. Khan said the decision should have been taken five years ago, adding that the timing suggested it was a politically motivated decision.

Ombudsman office

The cabinet also approved the Ombudsman Institutional Reforms Bill 2013, which aims at providing vast powers to the Ombudsman Office for speedy justice.

Kaira said the existing 11 ombudsmen institutions will be unified under the proposed bill. "If Parliament approves the bill, it will empower the toothless tiger," he said referring to the office, adding that there were over 45,000 appeals pending for disposal before the federal ombudsman.

Furthermore, a four-year term has been proposed for the ombudsman, who can only be removed according to the prescribed manner for the removal of a judge of the Supreme Court. All government departments will be obligated to respond to the ombudsman's queries within a fortnight, while the ombudsman will also be bound to dispose appeals within 45 days.

Under the bill, appeals against the ombudsman's decisions can only be filed to the president, who will be bound to dispose of the appeal within 120 days.

Apart from this, the cabinet also approved the Strategic Trade Policy Framework 2012-15.

Published in The Express Tribune, January 31st, 2013.