Case Study: The China-US grappling over Gwadar port

This is an excellent summary of the events relating to the strategic asset that is the Gwadar port that sits on the choke point of the Straits of Hormuz. Within this story lies a plethora of lessons about the world we live in and how it is changing.

Here is the original Breaking Points video link here, but the transcript with some context for those interested in geopolitics is below.

This piece is interesting as Breaking Points are an independent media organisation, and so their piece is more frank than any you may find elsewhere - it also has wonderful context to understand history, politics and economics. Let's get stuck in.

The extracts from Breaking Points are in italics.

So over at DropSite News, my colleague Murtaza Hussain and I have a fascinating news story on the way that Pakistan is stuck in the middle of the superpower struggle between China and the United States. If we can put this element up on the screen—headline over there, "Pakistan Promises China a New Militarized Naval Base," leaked documents reveal.

Author's note: This is a big deal. It is a port that China has wanted for decades, going back to the 1990s, and based on these reports an agreement has been reached. It provides a militarised base on the mouth of one of the busiest trading routes in the world, and more importantly one that ships a lot of oil.

I want to unpack what's going on here, but let’s roll back a little bit. One of the best examples of the United States shooting itself in the foot geopolitically came in 1953 through 1979. In 1953, the US and the British went in and overthrew the Iranian Prime Minister. The Iranian Prime Minister had been saying, "Hey, wait, we’ve got all this oil. Shouldn’t this oil be benefiting the Iranian people, not just Western companies like British Petroleum?" And we said, "No, in fact, it should be benefiting Western countries." So we overthrew him and installed an autocratic regime—the Shah. We all know how that ended.

By 1979, you get the Iranian Revolution, which has created an enemy in the region ever since, for really no reason. So, in other words, not only did we betray our democratic values, we didn’t even get the thing that we wanted, which was a pliant regime that is friendly to Western interests. Roosevelt’s best efforts, there are so many examples of this throughout American history.

Authors note: This of course is important contemporary history. In the aftermath of World War II various imperial holdings became independent, and with that came a wave of nationalisations - legal, but unpopular with wealthy owners in those old empires. In Egypt and Iran that led to interventions. In Egypt it was Britain, France and Israel, and the US and USSR would stop that intervention - it was known in as the Suez Crisis.

In Iran it was the US, but that led to the 1979 revolution and the Islamic regime of today. It looks remarkably similar to the 2000s, when we seem to have embarked on the MIdde East wars for the Neo-Cons and aligned corporate interests, that once again have not been in the US or the West's national interest. Rather it has been an intervention on behalf of vested interests. With hindsight that CIA coup in Iran is seen as a blunder. So too are the Iraq Wars. The question is why does a superpower like the US keep making blunders, that benefit a minority of vested interests.

Today’s story brings it up to the present because now you have the United States intervening in Pakistan to oust Imran Khan to bring in what a military regime, which we expect to be more sympathetic to our interests. Instead, despite all of our support for the democratic backsliding in Pakistan, we now have documents showing that a desparate Pakistani government has now granted China one of its longstanding demands, which is to build a militarised Naval port in Gwadar.

In Pakistan the kind of prime minister has had influence over domestic policy whereas the military traditionally managed foreign affairs. Here in the United States you know the civilians are supposed to manage everything. Like that's how it ought to work. That the compromise that was that the military allowed and in Pakistan we'll let the Prime Minister do a few things internally.

Imran Khan did things like um brought about like a version of Medicare for all like expanded healthare to people they're like all right you don't do that as long as we can still have our graft and we still control foreign policy fine but then Imran Khan started getting involved in foreign affairs. He had a good relationship with the Trump administration, interestingly, given that the Trump administration was in the middle of enacting a Muslim ban. But the two of them got along well. The Biden administration and Imran Khan? Not so much. He famously tried to get a call from Biden after Biden was elected but couldn't do it. There was something about that relationship where the Biden administration wanted distance.

Then, in June 2021, Imran Khan sat down with Jonathan Swan of Axios, and Swan asked, "If the Taliban takes over in Afghanistan, will you allow drone flights out of Pakistan?" That was a key element of the Biden administration’s so-called "over-the-horizon" approach. They said, "We’re going to project power over the horizon. We don’t need to occupy Afghanistan because our over-the-horizon capacity is unparalleled." Key to that over-the-horizon capacity was being able to operate out of Pakistan. Imran Khan said, "Absolutely not. I’m not doing that."

That was seen by the United States as a major affront. Then, in February of 2022, Imran Khan had a long-planned state visit to Moscow, which coincided with Russia’s invasion of Ukraine. The US tried to put pressure on him to cancel the trip or, at minimum, denounce the Russian invasion. Imran Khan refused. At a rally, he said, "Are we your slaves, that we’re going to just do what you tell us? We’re going to remain neutral. We are friends with Ukraine. We are friends with Russia. This is a war between them." Pakistan desperately needs grain and energy from both Russia and Ukraine, so it wasn’t in their interest to get involved.

Around this time, a State Department official, Donald Lu, met with Pakistan's ambassador and said, "We are very bothered by this aggressive neutrality that Imran Khan is taking between Ukraine and Russia. But we believe this is a policy of the Prime Minister alone, not the policy of the Pakistani government more broadly. If Imran Khan is removed in a no-confidence vote, all will be forgiven." Just days later, weeks later, the Army Chief gave a televised address where he denounced the Russian invasion of Ukraine, breaking with the Prime Minister. The Army then orchestrated the no-confidence vote that the US had said it wanted to see happen.

The military put pressure on several of Imran Khan’s party officials who had links to the military and could be compromised. They flipped their votes, ousted Imran Khan, and began shifting back towards the United States. If you remember, in August-September of 2022, Nancy Pelosi traveled to Taiwan. This was after they had ousted Imran Khan, and China went to all its allies, seeking a full-throated denunciation of Pelosi’s visit to Taiwan. Pakistan’s response was a mild statement, which infuriated the Chinese. They were like, "You're not going to stand with us? We have what we call an 'iron brotherhood' between Pakistan and China."

The entire Imran Khan affair is something else we have seen through the decades. Khan and his wife are today in prison, but once again this propensity to overthrow elected leaders isn't something new. Iran's coup in the 50s did something similar, but there are numerous examples through out history. Khan's position of 'aggressive neutrality' is the same as India's, though Pakistan being an ally of the US is more dependent. With friends like this who needs enemies.

In October of that year, as we reported in the article, Bajwa, the military chief, finally got what he had been begging from the United States: a state visit to the US. While in Washington, he met with top officials. At the Pakistani ambassador’s residence, he met with foreign policy heads in Washington, telling them he didn’t really like the Chinese and had always loved the United States. He said two things that raised eyebrows. He said he loves American sitcoms from the 1990s, especially "Married with Children." And he added that he doesn’t even like Chinese food.

This information, of course, leaked out to the Chinese. Back in New York, the Pakistani representative to the UN was chided by the Chinese representative with sarcastic comments like, "Oh, so your best friends are now the US? What happened to us?" Meanwhile, China kept telling Pakistan, "We don’t see ourselves in a Cold War with the United States. It’s okay if you have good relations with the US. That doesn’t mean you have to have bad relations with us." But our reporting shows that Pakistan understands that the US sees it as a zero-sum game. They know they have to pick one side or the other.

So, this whole time, Pakistan has been trying to balance a very difficult relationship. They eventually chose the US, figuring that it was the way to go. Initially, it started to pay off. As we also reported, Pakistan stopped being neutral and began producing 155 mm shells for Ukraine. They’re very good at making these low-grade, cheap shells, which are crucial in this stalemated war in Ukraine, where both sides are just lobbing endless munitions at each other.

This became a boost to the Pakistani economy. The US secretly agreed to let Pakistan use this clandestine weapons program as collateral for an IMF loan. The loan was supposed to help stabilize things, but because Pakistan’s economy is such a basket case and because it isn’t following through on its commitments to reform, the loan didn’t fully come through. The economy continued to collapse, and Pakistan had to return to China for help.

Author's note: And so from a US policy perspective the change of regime worked out. That in turn greased the wheels with the IMF and more funds flowed to Pakistan - this is the Rules Based Order in action. Money linked to policy and strategic interest.

That’s where our story comes in. Pakistan went back to China, trying to renegotiate loans that were coming due, asking for refinancing. China agreed, but only on the condition that Pakistan give them access to the port in Gwadar and protect Chinese citizens working on the Belt and Road construction projects. Pakistan hadn’t been doing this effectively, and Chinese workers had been targeted by terrorist attacks. Initially, the Chinese thought Pakistan was telling them where their workers would be to ensure security, but then those same places were attacked, making them suspicious that information was being leaked.

China demanded private security, wanting joint security forces because they no longer trusted the Pakistani authorities to protect their workers. This was a huge affront to Pakistani sovereignty, as it implied Pakistan couldn’t protect Chinese civilians within its borders and would have to allow a foreign government to bring in its own security forces.

And so in this segment we see China's modus operandi. It doesn't have a neo-liberal philosophy. There is no capitalist democratic Pakistan that is needed in China's vision. Rather it is more transactional. You can run the country as you wish, but China want's its labour force doing the work and it wants them protected (which is natural).

So, China would already be doing this with a militarized port in Gwadar. Meanwhile, Pakistan's position is now so weakened that it didn’t even get anything in return for this concession—it’s just a concession. The documents suggest there is no timeline for the execution of this plan, and Pakistan is going to continue saying, "Yes, we’ve agreed in principle, and this is going to happen in due time," as one of the documents says. But that doesn’t necessarily mean tomorrow.

Now that this reporting is out, I’ll be at the State Department later today asking them about this. The US is going to raise significant concerns, but it raises the question: What on Earth is the United States getting out of supporting a military dictatorship that is embarrassing it on the international stage? They’re trying to sanction Venezuela, they’re trying to sanction Georgia for democratic backsliding, while Pakistan is engaged in a complete evisceration of its own democracy, and the US isn’t even getting a military ally out of it. Instead, Pakistan is handing this key port over to China. It's a complete debacle on every level.

Indeed, let's see how this pans out Gwadar port isn't something the US will concede easily. The IMF (a part of the US world order) has now released USD 7 billion of funding (link here). The question is are there any strings attached on the key port. Doubtless we will find out in the coming months.

Question: Now, can you maybe give some context on the state of the Pakistani economy? I think that gets to the motivations of Pakistan in navigating the difficult relationship of balancing US interests, Chinese interests, and its own.

The IMF just announced that within a couple of weeks, they’re going to have their final executive board meeting for a $7 billion bailout, which is what they call an EFF (Extended Fund Facility). Right now, the economy is a complete disaster—rampant inflation, unemployment, blackouts. They recently put in a new firewall to try to censor the media. They banned DropSite News inside Pakistan and slowed the internet to a crawl. There are constant blackouts, and the heat waves there are insane because Pakistan is being hit by climate change worse than most other countries due to its geography and pre-existing climate.

And this is a problem much of the developing world faces. They are simply not competitive enough. And so many countries are back at the bail-out table again and again. Every now and again they reset with a massive devaluation or a debt default, but this is a fundamental issue with the neo-liberal system.

Right now, the military basically controls the entire economy. You have 50% illiteracy and a completely stifled population. It’s very much like Egypt, where you have these military-run corrupt companies that exist just to make the generals richer. The generals then take their money and stash it in London and the US, through properties and other holdings.

Bajwa may like "Married with Children" and may not like Chinese food, but what’s also happening is that their children are being educated here, and their illicit gains are housed here. That means we have leverage. The Russian oligarchs learned this the hard way after Putin’s invasion, as the UK and the US seized a bunch of their property. The Pakistani elites are tethered to US finance and assets in the same way. It may not be in Pakistan’s interest to maintain a close relationship with the US, but it’s in their personal interest, because we can seize their properties and wealth if we want to.

And finally this addresses the policy of elite capture. The West is open but there is a price. If you are caught in the sanctions web, the elites can get into trouble. Further, with the capacity to change governments all leaders need to play their cards carefully - it is like a real life Game of Thrones.

So, it will be difficult for Pakistan to actually execute this promise to China. China knows it. One of the more interesting subplots of the war in Gaza right now is how China has distanced itself from Israel in the aftermath of the October 7th invasion. China is trying to make inroads—literally—with different countries around the world and curry favorability. It has realized that it couldn’t continue having this very public friendship between Netanyahu and Xi Jinping.

Netanyahu had rebuked the United States by turning to China before October 7th, and this was a strategic maneuver he was making. Now, in the context of Gaza, which is very important to countries like Pakistan and to China’s reputation, things are shifting. China wants to side with the global South, and the BRICS countries, who see the rise of China and multipolarity as beneficial to their own agency and nationalism. They see Israel as a bulwark of American hegemony and see siding with the Palestinians as favorable for the rise of multipolarity.

And this is an interesting point. China is rallying the Global South publicly, garnering huge majority votes in the UN, but simultaneously it maintains a rapport with Israel at some level. You could argue this is simply big boy politics. However, on another level, China doesn't lose if the US gets embroiled in Iran, just as China didn't lose as the US got sucked into the Ukraine-Russia war. It is complicated.

This is a fascinating chapter in geopolitics. China has wanted Gwadar port for decades. It is on the cusp of getting it. We see the IMF in play, the politics of the region behind the scenes, the US propensity to change regimes - it is a fantastic case study.