By: Inam Ul Haque: The much-discussed trade potential of Central Asia has been widely debated, especially in the context of its links with Pakistan. This analysis looks at the trade infrastructure and real potential of the region, particularly through Gwadar Port (GP) and Chabahar Port (CPP).
Gwadar Port, designed to handle up to 400 million metric tons (mmt) of cargo annually by 2045, boasts a natural depth that allows it to accommodate the world’s largest vessels, including 200,000 DWT supertankers. The deepwater port, which is currently operational, is backed by significant developments under the China-Pakistan Economic Corridor (CPEC), including an international airport and enhanced infrastructure.
In contrast, Chabahar Port, located in Iran and a competitor to Gwadar, has a significantly lower capacity and faces challenges like limited depth, narrow access, and extensive dredging needs. Despite its strategic importance to Iran and India, particularly for trade with Afghanistan and Central Asia, its higher operational costs make it less competitive compared to Gwadar.
Pakistan’s trade with Central Asian Republics (CARs) is currently modest, hovering around $400 to $500 million annually, with individual countries like Uzbekistan and Kazakhstan accounting for small but growing volumes. However, the trade potential with these countries could rise to over $5 billion in the coming years if the necessary infrastructure, transportation networks, and regulations are improved. Challenges such as border issues, security concerns, and complex trade regulations still hinder further growth.
Central Asia’s regional trade, which totaled $10 billion in 2022, has grown steadily over the past decade, with Kazakhstan emerging as the lead partner. This trade pales in comparison to Pakistan’s trade with other global partners, such as China ($17.8 billion) and the US ($6.1 billion). The Central Asian market is limited by the region’s smaller population, underdeveloped industrial output, and historic reliance on Russia and Turkey for trade.
Energy projects like the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and the CASA-1000 electricity transmission project offer some promise, but these initiatives face significant geopolitical and economic obstacles. Additionally, Pakistan’s current energy production capacity exceeds demand, with solar power expected to increase significantly by 2030. This offers potential alternatives to relying on energy imports from Central Asia.
While expanding ties with Central Asia is valuable, expectations should align with the region’s realities. The trade potential is not as lucrative as often portrayed, and any geopolitical maneuvering, such as India’s investments in Chabahar or China’s in Gwadar, is driven more by strategic concerns than purely economic ones. Ultimately, while engagement with CARs is important, Pakistan must focus on addressing its own infrastructure and energy needs to better capitalize on its position as a trade hub.
