In the aftermath of the Saudi bailout package, according to media reports, connecting Gwadar with Oman through a bridge or under sea tunnel could be a future multi-billion dollar mega infrastructure project. Some analysts view the project as a Saudi version of ‘One Belt One Road’ because the project is likely to connect Gwadar with Saudi Arabia’s Jizan city, some 2463 kilometre from Muscat via road. It is because the Saudi government, as reflected in their official documents such as Vision 2030, is increasingly focusing on non-oil economic growth prospects as a long term strategy. For this purpose, they are also focusing on multi-route trade by acting as an economic hub among Europe, Africa and Asia. According to a research paper titled ‘Vision 2030 and Saudi Arabia’s Social Contract: Austerity and Transformation’, the Saudi government is now increasingly focusing on boosting investment in the private sector thus placing lesser reliance on oil dependent economic growth.
The idea appears to be influenced by the ‘peak oil hypothesis’, put forward by the petroleum geologist King Hubbert back in 1956, suggesting a terminal decline in oil production after experiencing maximum rate of extraction. The future expansion of Gwadar can, therefore, primarily benefit those partner countries having more advances on the fronts of innovation and entrepreneurship as drivers of economic growth. In this long term strategy, Pakistan’s Gwadar port can act as a gateway for connecting Saudi Arabia with Pakistan, Central Asia, China, and beyond. In this perspective, it is necessary to underline some factors that can right align this future multi-billion dollar investment with Pakistan’s strategic economic interests in the region. Furthermore, it is also pivotal to highlight the lessons that Pakistan learnt from the Chinese investment in the China-Pakistan Economic Corridor (CPEC) projects.
As far as expansion beyond Gwadar is concerned, it is paramount to realize that the planning and administrative psychology of mega projects is very different from small or medium scale projects. It is because mega projects require huge funds, longer time periods, greater interplay between multiple power relations, complex political interfaces, overreliance on technology, exaggeration of future benefits, and underestimation of actual costs. These factors inherently carry a number of avenues that can be right aligned with a view to optimizing the economic benefits of megaprojects such as Gwadar-Oman under sea tunnel/bridge. According to the research conducted at Oxford University’s Saïd Business School, megaprojects are generally risky, for the countries making investments, because of four major reasons — called sublimes — revolving around technological, political, economic and aesthetic factors.
Any expansion beyond Gwadar, if done through Saudi funding, can decisively be helpful for Pakistan in drastically boosting its economic growth prospects provided smart interventions could be made on the technological, political, economic, and aesthetic fronts. Pakistan may not face any risks in advancing trade route infrastructure beyond Gwadar, because it is not investing hard cash in the project. Therefore, Pakistan’s strategic economic priorities should primarily focus on identifying the areas of innovation, entrepreneurship and industrialization on the fronts before signing any agreements with the Saudi government for connecting Gwadar with Oman.
On the technological side, the proposed Gwadar-Oman under-sea tunnel/bridge can be a great opportunity for Pakistani engineers, planners, technocrats, industrialists, architects, and technicians for gaining innovative expertise through ‘learning by doing’. For this purpose, the government should attempt to get maximum construction contracts for Pakistani companies. These companies should also employ maximum Pakistani technicians and engineers in practically executing the associated construction projects. This dimension will drastically enhance the experience, learning and exposure of Pakistani construction companies towards such rare opportunities as building an under-sea tunnel or bridge. In this regard, Pakistan can learn lessons from the capacity building and practical learning of the Chinese companies and technicians in the aftermath of the recently opened Hong Kong-Zhuhai-Macau Bridge.
The future expansion of Gwadar can, therefore, primarily benefit those partner countries having more advances on the fronts of innovation and entrepreneurship as drivers of economic growth. In this long term strategy, Pakistan’s Gwadar port can act as a gateway for connecting Saudi Arabia with Pakistan, Central Asia, China, and beyond
On the political front, there should not be any issue if the inauguration of the Gwadar-Oman under-sea tunnel/bridge is done by the Saudi royals. Pakistan should be very flexible in favour of Saudi Arabia on such issues as formal ribbon cutting of the project, coverage of the project in media, political projection of the project in Oman and Saudi Arabia, political campaigns by the Saudi government, and other similar activities. These favours should be extended to Saudi Arabia as being the sole financer of the project. The monumentality and visibility factors of the megaproject may attract many Saudi royals to come forward politically. They should be welcome as Pakistan does not have any direct investment risk in this regard.
On the aesthetic front, the project can be a win-win situation for Pakistan as the entire investment has to be made by the Saudi government as part of their long term plan focusing on non-oil economic growth prospects through greater regional connectivity. In this regard, Pakistan can advertise the proposed state-of-the-art Gwadar-Oman under-sea tunnel/bridge as an aesthetic icon of trust for foreign investors. In this perspective, a media campaign may be launched rightly projecting Pakistan as a land of opportunities connecting three continents, Europe, Africa and Asia, in line with the Saudi Vision 2030. These aesthetic perceptions will attract more foreign direct investments alongside boosting Pakistan modern economic image in the Gulf region and the world.
The influx of dollars into Pakistan through the Gwadar-Oman connection project should not be received as ‘readily available cash’; it should indeed focus on introducing a culture of earning profits by carrying out business, learning by doing, practically involving in executing the projects, getting maximum contracts, employing maximum workforce from Pakistan, engaging Pakistani construction companies, and, providing financing opportunities to Pakistani banks and financial institutions. The case of Gwadar-Oman connection project will be different from CPEC. In CPEC, the above mentioned factors are predominantly in favour of China. It is because China is way ahead of Pakistan in executing such projects. In case of Saudi investment, Pakistan will have the advantage to engage maximum of its work force and construction companies as Saudi Arabia, unlike China, may lack necessary expertise. These steps will indeed pave way for increasing Pakistan’s long term economic growth prospects through indigenous innovation, expertise and entrepreneurship.
The writer is Additional Commissioner, FBR, holding PhD in Economic Planning from Massey University, New Zealand. The views expressed are his own. He can be reached at [email protected]
Published in Daily Times, November 1st 2018.