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Deep seaport dilemma in Bangladesh

  • Published at 05:46 pm June 8th, 2016
  • Last updated at 12:12 am June 15th, 2016
Deep seaport dilemma in Bangladesh
For a nation whose economy is considered to be on a rapid rise in the world, known as the second most powerful textile industry, listed in Goldman Sach's “Next 11” and expected to advance at 7.1% this year, Bangladesh still lacks a deep sea port. A new port has not been built in the 45-year-old country which sees $60 billion worth of yearly trade throughout Chittagong and Mongla, the two existing seaports that happen to be too shallow for substantial containers. This results in the pricey transfer of goods to smaller ships to move the freight which hikes up the daily cost by an added $15,000, reports The Diplomat. Resolving this issue has not exactly been an easy task for Bangladesh, but not due to a lack of choices, international backing or a shortage of investors. The problem is the exact opposite. Numerous plans are being pushed by powerful contenders which have left Bangladesh in a frozen state, unsure about which direction to take. Many deals have been made and broken in the process. Due to these complications, China, Japan and India are competing to construct the first deep seaport in Bangladesh. Bangladesh may be a small country, but it is strategically located being surrounded by India and right on the Indian Ocean. The Indian Ocean region consists of 25% of the world's land, a third of global population and 40% of oil and gas reserves. It also serves as the host of one of the most crowded and significant shipping lanes where East Asia is supplied with its major supply of crude oil from the Middle East. Dhaka, the capital city of Bangladesh, is viewed as pliable economically and politically and has caught the interest of both the east and west. Being a core part of the region, Bangladesh is balancing the competing influences of India, China, the United States and Japan. Bangladesh plays a major role in China's plan for reinforcing their trade routes, the Belt and Road initiative. A network of ports has been established by China, called the 21st Century Maritime Silk Road that extends from Chinese coasts through Southeast Asia, the Indian Ocean, the east coast of Africa and through the Mediterranean to Greece. Intended as commercial, this project has provoked apprehension in other parts of South Asia, who view it as potentially having militaristic ramifications — or at least leveraging this reasoning to push their own competing agendas. This consternation was brought up by Booz Allen Hamilton, a consulting firm in a 2005 internal report prepared for the US Department of Defence. The idea was referred to as the “String of Pearls”, a label that has since been used to criticise China's ambitions on South Asian waters. The competition has risen to an apex when it comes to the location and the financier of Bangladesh’s first deep seaport, with some powers making great financial and political steps to work in their advantage. Currently, there are four likely sites for the new port:

Chittagong

Located on the northeast curve of the Bay of Bengal, Chittagong has always been the largest and most important seaport in Bangladesh. Once a major hub on the ancient Maritime Silk Road, Chittagong has a rich history. Its position is just as relevant today. “We handle 98% of the country’s container cargo, 92% of the total cargo volume,” a port development administrator explained. “So you can imagine how important this port is to Bangladesh. If Chittagong port collapses, the whole economy will collapse.” The dilemma is that the current maximum draft of the port is just 9.2 metres, which is not deep enough for many container ships. A proposal to remedy this problem is the construction of a new port on a 1,200-acre island in the Bay of Bengal off the coast of Patenga. “The Bay Terminal” would technically not be a deep seaport – as its maximum draft would be up to 13 or 14 metres, rather than the 15 needed to be granted the title, but larger vessels would be able to get into the port directly. “It will be a great achievement if China agrees to use Chittagong port, which we want to develop into a regional commercial hub by building a deep seaport in the Bay of Bengal,” Bangladesh Foreign Minister Dipu Moni told Reuters. This plan would fare well with China’s broader ambitions of building an overland corridor from Yunnan province to a port on the Bay of Bengal. The plan would essentially provide China with a link to the sea that, aside from transiting Myanmar, could bypass Southeast Asia. After international commentators branded the Chittagong deep seaport proposal as one of China's “pearls”, Bangladesh was put in a risky geopolitical position. This led to Indian ships being granted permission to use the Chittagong port.

Sonadia

Acknowledging that Chittagong may fall through, China had a plan for another deep sea port. Sonadia, an island near Cox’s Bazar, was deemed as a suitable location following a Japanese survey in 2009, which China is eager to finance. China Harbour Engineering Company, a subsidiary of the state-owned China Communications Construction Company – which happens to be blacklisted by the World Bank on allegations of corruption – was chosen as the developer. It was assumed that Bangladesh had given China the green light after Prime Minister Sheikh Hasina’s visit in 2014, but it was not. Since China was already constructing ports in Sri Lanka, Pakistan, the Maldives and Myanmar, Bangladesh was the last remaining link that would leave India completely surrounded. “India is not very happy that China and Pakistan are holding a strategic and economic relationship, and part of their objection is the One Belt, One Road and the Pakistan-China economic corridor,” said Shahid Islam, a research fellow at the Brac Institute of Governance and Development. In 2016, a formal announcement was made that the plan had been dismissed.

Matarbari

Bangladesh consented to a contract for Japan to build a deep seaport in Matarbari, just 25km away from Sonadia. This is a potential cause for the dismissal of Sonadia port. Japan International Cooperation Agency is to construct the port, as well as a liquefied natural gas terminal and a series of four 600MW coal-fed power plants – in addition to rail lines, roadways and electrical systems – as part of a monumental deal. The master plan is that the port would be used to receive coal, which could power an entire new industrial zone in the far southeast of the country.

Payra

Not to be mistaken for a condolence prize for China, who was beaten by Japan for a port in the south, the construction of a deep seaport was proposed at Payra, located on the northwestern coast of the Bay of Bengal. Financed on a public-private partnership platform, the building of this port was originally granted to a Chinese company until India, Japan and the United States raised their heads. India stated that they wanted to be one of the key investors. The Payra deep seaport was then reconfigured as a cooperative port that many different countries could invest and operate terminals in. Reports say that 10 countries have considered taken the plunge investing upto $15.5 billion. “Bangladesh politics are driven by India, and the US to some extent,” Shahid Islam explained. “Bangladesh cannot move ahead with China in terms of big collaborations, in terms of making the Silk Route or One Belt, One Road or an economic corridor.”

This article by Wade Shepard originally appeared in thediplomat.com