An IDC Analysis


New Delhi, 30 May 2006


UK's economy is doing well but the Iraq and Afghanistan misadventures are now worrying the common man. On the political and social front UK is in a state of rethink on all issues and there is disillusionment with the Government and with PM Tony Blair. Blair has been promising to step down in favour of Chancellor Brown but keeps hedging and is a shifty man and Labour is full of corruption tales, sleaze and overconfidence.

The Tories under Cameron have increased their ratings and Tony Blair in USA in his first personal meeting with President Bush admitted the forays into Iraq were mistakes but the path had to be stayed. We predict that the people will demand that British troops get out of Iraq much faster than the 3/4 years that PM Blair predicts and so a return home for the troops could be next year.

Iran is soon going to let loose its radicals in Iraq and Afghanistan as the fervour of hate against USA is rising –– more and more Jehadis are volunteering to help their Shia brothers in Iraq. India must see the writing on the wall and see how our few million working in the Middle East do not get disturbed. Anyway London was the venue of a meeting between FM Shyam Saran and Under Sec Nicholas Burns.

We attended a lecture given by Saran to a very learned and inquisitive audience who asked many questions which India's Foreign Secretary answered brilliantly in good English style without giving away any policy.

London was the venue of a frank assessment of the Indo–US nuclear agreement, and it was a shaky Foreign Secretary who asserted that even if the deal does not go through, there will be other elements of the bilateral relationship with USA which will move forward because there is a certain logic behind it. "If you look at the Indo–US Joint Statement, there is of course focus on the civil nuclear deal. There are many other very important bilateral initiatives such as knowledge initiative, initiative on agriculture, science and technology cooperation. So there are a number of very important elements in the emerging Indo–US relations," he said. "But the fact is that the Indo–US Nuclear agreement deals with an issue which is very sensitive in nature and attracts a great deal of attention and therefore, whether it goes through or not, will have an impact, at least, on our abilities to take forward many other aspects of the Indo–US relations," he said addressing the International Institute for Strategic Studies on "India and the Emerging World Order".

The issue of Pakistan came up and we add a piece written by B Raman to say nobody is discussing China's role in the area of India and Pakistan but it is making inroads. China has made no official statement on India's nuclear deal with USA except noises and it knows India has an uphill task but its presence in the South China Seas, Myanmar, Bangladesh, Africa and Gwadar port and oil deals with Iran are part of its ‘String of Pearls’ encirclement of India's strategic space. For the first time Shyam Saran said India was increasing its strategic space and one questioner at his lecture at IISS asked ‘does it mean what China is doing’ and he was at a loss for words.

Chinese Presence In Balochistan and Northern Areas

By B. Raman

In my paper of May 17, 2006, titled "Baloch Freedom Fighters Attack Nuclear Establishment" (, I had reported as follows: "The BLA (Baluchistan Liberation Army) and other Baloch nationalist elements have also stepped up their campaign against the Chinese engineers and security officials posted in Gwadar in connection with the project for the construction of the Gwadar port. A team of Chinese engineers recently visited Balochistan amidst tight security to carry out a preliminary study on the possibility of the construction of a road linking Gwadar with the Karakoram Highway in the Northern Areas, which is being upgraded, and an oil/gas pipeline connecting Gwadar with Xinjiang. The idea is that the Chinese tankers bringing oil from Saudi Arabia and Iran would download them at Gwadar and from there the energy supplies would be moved by a pipeline to Xinjiang. This would reduce the Chinese dependence on the Malacca Straits for the transport of their energy supplies."

2. This information was confirmed by Mr. Shaukat Aziz, Pakistan's Prime Minister, on May 23, 2006, while speaking at a seminar organized by the Institute of Strategic Studies of Islamabad to mark 55 years of Sino-Pakistani relations. The "Daily Times" of Lahore, in its edition of May 24, 2006, has reported as follows on the speech delivered by Mr. Aziz: "Pakistan and China are considering a feasibility study for an oil pipeline from Gwadar port to Western China to transport China's oil imports from the Gulf, Prime Minister Shaukat Aziz said on Tuesday. The Gwadar and Karachi ports offer the shortest access to the Arabian Sea for Western China, as well as Central Asia, Aziz said at a seminar on 55 years of Pakistan-China relations, organised by the Institute of Strategic Studies. An oil pipeline from Gwadar to Western China would greatly reduce the time and distance for oil transport from the Gulf to China, he said. A major oil refinery at Gwadar would further facilitate China's oil imports. Pakistan is now in a position to exploit its strategic location at the crossroads of South Asia, Central Asia and West Asia to promote "corridors of cooperation" including oil and gas pipelines, electricity grids, and transit trade, the Prime Minister said. He said the Karakorum Highway would soon be upgraded so it could remain open all year round. The Prime Minister said the two countries were also expanding cooperation in nuclear energy and space technology. "A significant area of cooperation between Pakistan and China has been the harnessing of nuclear technology for peaceful purposes under international safeguards – for the production of electricity," Aziz said. "The two countries are working towards further expanding cooperation in this area."

3. Though Mr. Aziz did not mention this, it has since been confirmed that President General Pervez Musharraf intends visiting China next month to attend a meeting of the Shanghai Co-operation Organisation (SCO). Pakistan, which presently enjoys only an observer status in the SCO (like India), has mounted a campaign to secure full membership, towhich China is favourable, but Russia is opposed. During his visit, plans for further Chinese assistance for the construction of more nuclear power stations in Pakistan, including one in Balochistan, are expected to be discussed, if not finalised.

4. The upgradation of the Karakoram Highway for which China has already agreed to give a sum of US $350 million and the construction of the pipeline, if it is found feasible, are expected to take at least about seven to eight years, if not longer. In the meanwhile, China has started exploring other options if energy supplies from Iran by sea are interrupted in the eventuality of a US/Israeli military strike on Iranian nuclear establishments. One of the options being considered is to move energy supplies from Iran to Xinjiang by road via Pakistan. It is not clear by which route the proposed energy convoys from Iran would move to Xinjiang. A team of Chinese officials has just completed preliminary talks in Islamabad on this road option. Their meetings were also attended by officials of the Iranian Embassy in Islamabad.

5. The idea is that the energy convoys from Iran would cross over into Balochistan and from there go to Xinjiang. The Chinese plans to take their energy supplies to Xinjiang, either by a pipeline as a long-term measure or by road as an emergent measure in the event of a military conflict between Iran and the US, are likely to face difficulties because of the quake-prone terrain in Balochistan and the opposition of the Baloch nationalists to the project.

6. The Baloch freedom-fighters are already opposed to the proposed Iran–Pakistan–India gas pipeline unless they also participate in the talks on the project as the interested fourth party. They are also opposed to all Chinese-aided projects in Balochistan. Under these circumstances, it is doubtful whether they would allow the construction of any Chinese pipeline in their territory. They may not also allow the road movement of energy supplies as an emergent


7. Musharraf is keen for increased Chinese involvement in the economic development of Balochistan, the Northern Areas (Gilgit and Baltistan) and the Federally Administered Tribal Areas (FATA). The Chinese already have a number of on-going projects in Balochistan such as the Gwadar port construction, the construction of the Mekran Coastal highway connecting Karachi and the development of the copper mines of the province.

8. They have now agreed to get involved in the development of the Northern Areas too. The talks for the upgradation of the Karakoram Highway were initiated during the second tenure of Mrs.Benazir Bhutto as the Prime Minister (1993-96). The Chinese were till now not keen over the project due to concerns over its likely implications for the internal security situation in the Muslim (Uighurs) majority Xinjiang region. Now, their fears of likely disruptions of energy supplies via the Malacca Straits have made them overlook their earlier concerns and agree to the upgradation.

9. Under an agreement signed at Islamabad on May 23,2006,Pakistan and China have decided to start buse services from Gilgit to Kasghar and Sust to Tashurgan from June 15, 2006. The bus service from Gilgit to Kasghar will run on a daily basis, while Sust to Tashurgan thrice a week. In two days of talks on this subject, Pakistan was represented by Firdaus Alam, Joint Secretary, Ministry of Communications, and China by the Deputy Director-General of the Xinjiang Autonomous Region Communication Department. A proposal to extend the Islamabad-Kashgar route up to Urumqui was also discussed. Musharraf has also requested Beijing to help in the construction of the controversial Basha dam on the Indus river in the Northern Areas. When constructed, this dam is expected to provide water and electricity to the North-West Frontier Province (NWFP) and Punjab. The proposal for the dam, which would be detrimental to the people of the Northern Areas, has been strongly opposed by the Gilgitis and Baltistanis, who have threatened to start an agitation on the issue, in emulation of the agitation in Balochistan against the Gwadar project.

10. While the Chinese have thus responded positively to all requests from Gen. Musharraf for their involvement in Balochistan and the Northern Areas, they have shown considerable reluctance to assist projects in the FATA. A private Chinese company was assisting in the construction of a minor irrigation project in this area, but it has suspended its work for more than a year following the kidnapping of one of its engineers by Uighurs associated with the International Islamic Front (IIF) of Osama bin Laden. The engineer was killed when the Pakistani security forces mishandled an attempt to rescue him.

11. Al Qaeda and the Uighur elements in the IIF have also started sending out warnings to Beijing not to get involved in the FATA, where their sanctuaries are located. Their recent propaganda has been replete with references to the conspiracy of the Buddhist pagans against the Muslims, possibly a reference to China and Japan.

12. Apprehending a possible attack on the Chinese engineers working in Balochistan and in the construction of the Chashma II nuclear power station on the eve of or during the forthcoming visit of Musharraf to China, the Pakistani authorities have ordered a strengthening of physical security at all projects in which Chinese personnel are working. The security for the Chinese Embassy in

Islamabad has also been strengthened.

(The writer is the Director, Institute for Topical Studies, Chennai .He retired as Additional Secretary, in the Cabinet Secretariat, Government of India. He may be contacted at

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