A Port Rush: Competition for Control of Trade Routes

August 9, 2019


Yoel Guzansky, Gil Hurvitz, INSS

With permission, read full article at INSS.

In the Arabian Sea, competition has been building for the past few years over control of the strategic ports adjacent to major trade routes. Power struggles have developed in the context of China’s efforts to consolidate its hold on key ports in the Indian Ocean, Arabian Sea, and Red Sea, as part of the Belt and Road Initiative (BRI). Chinese penetration of this arena has both increased the Indians’ sense of a direct threat and sharpened the United States understanding that it must increase its strategic focus on this region. In tandem, there are heightened efforts by Arab Gulf states to increase their strategic-military stability and secure their energy export and food import channels, while reducing their dependence on the Strait of Hormuz. From the international angle, therefore, port development in this region is an integral piece in the competing geo-economic plans of China (BRI) and India (Look West) to develop new trade routes to markets in West Asia and Africa. From the strategic angle, the US (in collaboration with India and the UK) is trying to obstruct China’s march forward. From the regional angle, the Gulf states are developing their ports with an emphasis on industrial zones, refineries and petrochemical facilities, storage facilities, export facilities, and free trade zones. From Israel’s perspective, the competition over the Red Sea shipping lane allows the consolidation of the presence of different actors along the southern access routes to the Gulf of Eilat and to the Suez Canal, creating a new space of challenges, and maybe also opportunities for (low profile) Israeli involvement in some of the initiatives.

In the Arabian Sea, in the area that stretches from the western shores of the Indian subcontinent to the Gulf of Aden and the Bab-el-Mandeb strait, competition has been building for the past few years over control of the strategic ports adjacent to major trade routes. Power struggles have developed in the context of China’s efforts to consolidate its hold on key ports in the Indian Ocean, Arabian Sea, and Red Sea, as part of the Belt and Road Initiative (BRI). Chinese penetration of this arena has both increased the Indians’ sense of a direct threat and sharpened the United States understanding that it must increase its strategic focus on this region. The port rush underway by China and India, both rising powers, joins the heightened efforts by Arab Gulf states to increase their strategic-military stability and secure their energy export and food import channels, while reducing their dependence on the Strait of Hormuz. In part in response to this challenge, the Gulf states have invested resources over the past few years in the development of ports in East Africa and the Horn of Africa.

Between Djibouti and Gwadar: Chinese Contiguity

In 2017 China opened its first overseas military base in Djibouti, including a dock that is apparently undergoing an expansion to facilitate large vessels. The Chinese base is located adjacent to the opening of the Bab-el-Mandeb strait and across from the military bases of the United States, France, and Japan (prompting anger among these countries at the government of Djbouti). As such, China has acquired a foothold in one of the bottlenecks of global trade.

Simultaneously, since 2013 China has invested heavily in developing a deep water port in Gwadar, Pakistan. Located a few hundred kilometers from the opening of the Persian Gulf, the port was leased to China from Pakistan; in exchange for the expansion, China was granted the right to operate the port until 2059. The Gwadar project includes the development of a surrounding network of highways and transit routes, a power station, an airport, and an economic zone, all supported by Chinese investment. Officially, the Gwadar port is supposed to connect China to its land trade route through Pakistan, but it is widely assumed that China intends to use the port to expand its military presence in the densest energy junction in the world. It was also reported that China is considering establishing a second maritime base in Jiwani, Pakistan, even closer to the Strait of Hormuz.

As part of its efforts to acquire a civil and military presence and political influence by investing in seaports beyond its borders, China has also invested significant capital in the establishment of a deepwater port in Duqm, Oman, adjacent to the Nine Degree Channel, one of the busiest trade routes in the world. A consortium of Chinese firms with government backing purchased land in the project’s Special Economic Zone, with the aim of establishing a Chinese-Omani city (including a refinery and methanol plant, industrial factories, a facility for producing solar energy, a tourism zone, and residential complexes).

Between Duqm and Chabahar: American Wedge, Indian Contiguity

In March 2019, the United States signed an agreement with Oman to expand the existing security arrangement between them, and it will now extend to the new port in Duqm and the southern port of Salalah. India and the United Kingdom also signed security agreements with Oman this past year, which include docking access and use of military and civilian vessels in the Duqm port.

American access to the deep water ports in Duqm will allow the American Fifth Fleet operational flexibility and more secure docking, as part of the preparedness of American vessels vis-à-vis Iran. More important, an American, British, and Indian presence planted in the Duqm port enhances the restraining order banning Chinese military vessels from the port, thus disrupting the strategic contiguity of a Chinese military presence in the ports between Pakistan and Djibouti.

The international competition over the use of the Duqm port appears to be an effective preventive measure by the West and India against Chinese penetration of the maritime space in the Indian Ocean. Oman, in spite of its strong economic and other interests in Beijing, has apparently bowed to heavy American pressure to prevent Chinese military presence in that space.

While entering the Duqm port, India has also advanced the development of Iran’s first deep sea port at Chabahar, relatively close to the Strait of Hormuz. The Indian investment in the infrastructure at Chabahar includes assistance in establishing an industrial zone, funding the paving of a highway, and laying 500 kilomenters of railway track up to Zahedan at the border with Afghanistan. In exchange for these development investments, an Indian government company will receive the license to operate the Chabahar terminal for ten years.

Chabahar is the first port that India will operate outside of its borders. Its importance for India lies in its status as an entry point to the International North-South Transport Corridor (INSTC), a strategic traffic route that will allow a land connection between India and Russia, Afghanistan, and central Asia, will shorten the distance for transportation of goods ,and allow it to acquire essential minerals more easily.

The importance of the port for India and the United States – including regarding the competition with China – can be seen in its exemption from the sanctions imposed on Iran in 2018. The strengthening of ties between India and Iran will allow the Indian leadership to challenge Chinese and Pakistani influence in the region. From the American perspective, increased Indian influence in Afghanistan via the corridor is a key objective toward reducing the US presence there.

From Somalia to Sudan: The Battle over the Red Sea Route

In recent years there has been increased international and regional competition in the Horn of Africa and along the Red Sea to establish strategic footholds that will allow states to secure their freedom of navigation, and project power far from their borders.

Over the last few years, Turkey has been building its largest base outside its borders in Mogadishu, Somalia. In 2018, Turkey and Qatar signed agreements with Khartoum that would allow them to establish a military presence on Suakin Island, in Sudan’s territorial waters, but in light of the military coup and the increase in Saudi and UAE influence in Sudan, it is doubtful that these agreements will be implemented.

Saudi Arabia is also establishing its first base beyond its borders, in Djibouti, close to Bab-el-Mandeb, alongside the existing military presence of the United States, Japan, France, and China. The United Arab Emirates, which in the past leased a base in Djibouti, has a military presence in Eritrea and Somaliland, and controls landing strips and small port terminals on the Yemeni island of Perim and in the Socotra archipelago (as part of their effort to prevent the Iranian and Houthi threat to freedom of navigation and weapons smuggling to Yemen).

The competition between Saudi Arabia, UAE, and Egypt on the one hand, and Qatar and Turkey on the other, which long ago trickled into the Red Sea, threatens to inflame existing tensions and create new ones among them and with East African host states. How the competition over ports and influence in the Bab-el-Mandeb strait will unfold, in light of the UAE intention to draw down their military presence in Yemen and Turkey’s intention to increase its presence in Djibouti and Somalia, remains to be seen.

From the international angle, therefore, port development in this region is an integral piece in the competing geo-economic plans of China (the Belt Road Initiative) and India (SAGAR; Look West) to develop new trade routes to the markets in West Asia and Africa. The two rising superpowers seek control over major trade routes and see ports as potential entry and exit “gates” to zones of control.

From the strategic angle, the United States (in collaboration with India and the United Kingdom) is trying to obstruct China’s march forward. The security agreements that Oman signed with the US, the UK, and India, which include docking permits and military presence at the port, reflect its becoming an arena for superpower competition, and as of now prevent China from creating a contiguous military presence in Pakistan-Oman-Djibouti.

From the regional angle, the Gulf states are developing their ports with an emphasis on industrial zones, refineries and petrochemical facilities, storage facilities, export facilities, and free trade zones. This is part of their plans for diversifying their economies and decreasing dependence on energy, or at least on existing export routes. From Israel’s perspective, the competition over the Red Sea shipping lane allows the consolidation of the presence of different actors along the southern access routes to the Gulf of Eilat and to the Suez Canal, creating a new space of challenges, and maybe also opportunities for (low profile) Israeli involvement in some of the initiatives.

***Dr. Yoel Guzansky is a senior research fellow at INSS. Gil Hurvitz is with the Ministry of Intelligence.