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24x7Report > Blog > Finance > Turkmenistan Eyes Pakistan’s Gwadar Port for Trade Expansion
Finance

Turkmenistan Eyes Pakistan’s Gwadar Port for Trade Expansion

Last updated: 2024/09/30 at 3:34 PM
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Turkmenistan Eyes Pakistan’s Gwadar Port for Trade Expansion
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Turkmenistan is poised to sign a memorandum of understanding (MoU) with Pakistan on accessing Gwadar Port in southwestern Balochistan province. The deal marks a major step for Turkmenistan, making it the first Central Asian country to hunt entry to the strategically situated Gwadar Port.

Financial motivations underlie the choices of Pakistan and Turkmenistan to finalize the deal. It’s anticipated to open up a number of layers of alternatives for each international locations. Nonetheless, it’s beset with challenges.

Part of the China-Pakistan Financial Hall (CPEC), Gwadar Port is beneath the operational management of the China Abroad Port Holding Firm. Pakistan will probably be hoping that the Pakistan-Turkmenistan deal will increase enterprise at Gwadar.

A landlocked nation, Turkmenistan has lengthy sought entry to warm-water ports to extend its alternate options to entry global markets. Traditionally, it has relied on routes by way of Iran, Afghanistan, different Central Asian international locations, Russia and the Caspian Sea, which can also be landlocked. The initiative to hyperlink up with Gwadar Port presents Turkmenistan with a key outlet to the Arabian Sea and finally to a number of the most vital worldwide transport routes.

As one of many world’s largest gas producers, Turkmenistan’s economic system is primarily depending on gasoline exports. It has lengthy hunted for diversified transit routes to broaden its attain into markets in South Asia, Southeast Asia and even Africa.

In July this 12 months, Turkmenistan signed a landmark settlement with Kazakhstan, Russia, and Iran to develop the North-South Transit Corridor. Equally, Ashgabat signed one other such partnership with Georgia, Azerbaijan, and Romania to ascertain the “Caspian Sea–Black Sea Corridor to broaden its hyperlinks with Europe,

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Turkmenistan will not be the primary Central Asian nation to indicate curiosity in Pakistani ports. In 2021, Pakistan prolonged an offer to all Central Asian states to entry Gwadar Port. At the moment Pakistan and Uzbekistan signed bilateral agreements on preferential commerce transit, customs procedures, and visa facilitation, whereas additionally proposing a significant railway hall by way of Afghanistan — an formidable mission but to be realized.

Turkmenistan’s curiosity in Gwadar Port aligns with its broader push to cut back dependency on Russian and Iranian transit routes, particularly in mild of ongoing geopolitical instability and sanctions.

If the plan succeeds, Turkmenistan’s use of Gwadar Port for worldwide shipments will streamline logistical operations from Central Asia by way of Pakistan to worldwide markets. However the viability of this formidable plan stays unsure.

An important a part of the initiative is the event of multimodal transport routes, which should move by way of Afghanistan. Nonetheless, relations between Pakistan and Afghanistan have soured for the reason that Taliban got here to energy in Afghanistan in August 2021, primarily due to cross-border violence and Pakistan’s push to repatriate Afghan refugees. Tensions have additional escalated over Pakistan’s building of border fencing alongside the Durand Line.

In addition to, the potential of Gwadar Port, which has lengthy been envisioned as a world hub for maritime shipments in addition to overland commerce, is but to be realized, even twenty years after completion of the port’s building. Political instability, logistical bottlenecks, and safety challenges in Balochistan have hindered the port’s full operational capability. The port presently requires vital upgrades to deal with elevated site visitors. At current, the port has solely three berth amenities, and lacks operational Liquified Pure Fuel (LNG) terminals, though such terminals are a part of the port’s future plans. The port additionally completely depends on street transport.

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A core plan beneath CPEC was to construct street and railway connections throughout Pakistan, linking Gwadar Port to main Pakistani cities after which into China’s western Xinjiang area. At present, the pre-CPEC Makran coastal freeway accomplished in 2004, connects Gwadar with Karachi. Nonetheless, the $10 billion ML-1 railway stretching 2,600 kilometers from Karachi to Peshawar, which is a crucial part of the plan to improve Pakistan’s major railway route,  has seen restricted progress, though it’s round 9 years for the reason that mission was first conceived.

For Pakistan, the ML-1 railway and realizing Gwadar’s potential might set up the port as an vital transit hub for Central Asia, and produce financial advantages together with elevated movement of international trade and job alternatives. Given Pakistan’s present financial disaster, rising debt, and ongoing negotiations with the IMF, with a current $7 billion loan, the monetary good points from elevated transit commerce and port actions by way of Gwadar have grow to be extra important than ever.

Nonetheless, considerations persist over connectivity infrastructure and the continuing safety state of affairs in Balochistan, which has been suffering from insurgencies and violence. It might make Turkmenistan, recognized for its cautious foreign policy, assume twice. Turkmenistan could also be hesitant to totally spend money on the mission till it sees indicators of enchancment in Pakistan-Afghanistan relations, regional safety, port capability and transport infrastructure.

Whereas Turkmenistan’s potential partnership with Pakistan to entry Gwadar Port presents a win-win deal for each international locations, the trail to realizing these advantages is fraught with challenges. With out critical efforts to deal with the advanced safety state of affairs, strained diplomatic relations within the area, and underdeveloped infrastructure the feasibility of this mission will stay in query.

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TAGGED: expansion, Eyes, Gwadar, Pakistans, port, trade, Turkmenistan

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