By Syed Fazl-e-Haider QUETTA, Pakistan - Political and administrative reforms recently announced by Pakistan for its Northern Areas, from last week known officially as Gilgit Baltistan, are aimed at providing better security cover for the rapidly growing Chinese interests in the territory, according to analysts. Gilgit, the Northern Areas capital, has acquired the status of a gateway to Central Asia in the wake of a Pakistan-China barter trade agreement and accords with Central Asian states. China has invested heavily in a range of projects in the Northern Areas and is poised to launch several new projects, particularly in power sector, costing billions of dollars.
Last month, during a visit by Pakistani President Asif Ali Zardari to China, the countries signed a memorandum of understanding on construction of a hydro-power station at Bunji, in Gilgit Baltistan. The countries also agreed in June to allow market access for bilateral trade in 11 services sectors and to intensify their efforts to increase border trade, which constitutes merely 5% of their overall trade, and takes place through the Karakoram Highway (KKH), whose repair and upgrade is likely to be completed by 2012. Last week, the Pakistan government announced significant reforms for the Northern Areas, including renaming the area as Gilgit Baltistan through the federal cabinet's approval of the Gilgit Baltistan Empowerment and Self Governance Order, 2009. The area has not been given the status of the country's fifth province, though it will have a legislative assembly, a chief minister and a governor. The people of Gilgit Baltistan had hitherto been denied any clear constitutional status and hence system of governance and the delivery of justice. This in part reflects the Kashmir issue, with India maintaining that the Northern Areas has been illegally occupied by Pakistan. Historically, Gilgit Baltistan was not merged into Pakistan proper due to concern this might undermine the country's claim on Kashmir and it was not merged into Azad Jammu and Kashmir, the southernmost political entity within the Pakistan-controlled part of the former princely state of Jammu and Kashmir, because it could complicate a settlement on the area, said a recent editorial of the Dawn newspaper. If Gilgit Baltistan is made a full-fledged province within the constitutional framework of Pakistan, India could perhaps argue that the state it has carved out of the disputed area, Indian-administered Jammu and Kashmir, is also a legitimate entity and that it is a settled issue, the editorial said. Beijing's profile in the Northern Areas has been rising for the past decade, with investments in a range of infrastructure projects. Important China-funded projects include the construction, maintenance and expansion of the KKH, small hydro-power projects, construction of a dry port at Sost, water-diversion channels, bridges, railway projects and telecommunication facilities. The proposed Bunji dam is estimated to cost up to US$7 billion and will have a capacity to generate 7,000 megawatts of electricity. Under the deal, undertaken on a build-operate-transfer basis, all the investment will be made by Chinese entrepreneurs. China and Pakistan also plan to link the KKH to the southern Pakistani port of Gwadar in southwestern Balochistan province through the Chinese-built Gwadar-Dalbandin railway, which extends up to the Pakistan garrison city of Rawalpindi. The KKH, which connects China's Xinjiang province with the Northern Areas, has a strategic importance as it cuts through the collision zone between the Asian and Indian continents, where China, Tajikistan, Afghanistan, India and Pakistan come within 250 kilometers of each other. It connects the Northern Areas to the ancient Silk Road, which runs about 1,300 kilometers from Kashgar city in Xinjiang region, to Havelian in the Pakistan district of Abottabad. An extension of the highway meets the Grand Trunk road at Hasn Abdal, west of Islamabad. Under a memorandum of understanding signed in June 2006 between China's state-owned Assets Supervision and Administration Commission and the Pakistani Highway Administration, the KKH will be widened from 10 meters to 30 meters, and its capacity will be increased three times. The upgraded road will also be constructed to particularly accommodate heavy-laden vehicles and extreme weather conditions. The dry port at Sost, on the Pakistan-China border, is connected by the KKH to Karimabad, Gilgit and Chilas on the south and the Chinese cities of Tashkurgan, Upal and Kashgar in the north. The port has the potential to act as a conduit of trade for Central Asian states. Islamabad is also poised to undertake the construction of the $12.6 billion Diamer-Bhasha dam, with a capacity to generate 4,500 MW of electricity per day. Work on the dam is to begin this month and is scheduled to be completed in 2016. The project, on the Indus River, is 165km downstream of Gilgit and 40km downstream of Chilas. To support such developments, Pakistan expects an investment of $1.5 billion per year from European, Arab and Chinese companies willing to form a consortium on a build-operate-transfer basis on a "supplier's credit" basis. China has already agreed to extend 10 billion rupees (US$121 million) supplier credit out of a total cost of 12 billion rupees for the construction of the Karakoram Highway to establish links with the Bhasha dam site to help to transport heavy machinery needed in its construction.
Syed Fazl-e-Haider, firstname.lastname@example.org, is a Quetta-based development analyst in Pakistan. He is the author of six books, including The Economic Development of Balochistan (2004). (Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)