gwadar port of pakistan

Written by Kinza Shah and Mehwish Kayani 11:47 am

The Gwadar Port of Pakistan vs the Chabahar Port of Iran: Analyzing the Changing Dynamics

China has exhibited a deep interest in developing the Gwadar Port of Pakistan, under the China–Pakistan Economic Corridor (CPEC), for the enhancement of its strategic and economic benefits, while India is investing in the Chabahar Port under the tripartite Preferential Trade Agreement (PTA) with Iran and Afghanistan, with the drive to counter China’s growing presence in the region. Both ports are situated at the international energy trading route and provide connectivity to different regions of the world including Central Asia, the Middle East, Africa and Europe. Such equalizing behavior of both states is not just causing problems for them but also for the neighboring states such as Afghanistan, Iran, and Pakistan, in this regard, which are the key stakeholders in the construction of these ports. The authors, Ms. Kinza Shah and Mehwish Kayani, look into the geostrategic and geo-economic importance of both ports. This paper also explores the stances given by the major states of the world over the construction of Chabahar and Gwadar ports in accordance with their national interests and ties with the major stakeholders of both the ports i.e. India. Iran, China and Pakistan.

About the Author(s)

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Kinza shah is a public policy lecturer at National Defense University, Islamabad. She has done her Bachelors in Public Administration from NUST, Islamabad. Later on she went to study governance and public policy at the National Defense University, Islamabad. Her research interests include democratic governance, citizen participation, youth policy, and career counselling. She tweets at @kenzashah

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Mehwish Kayani has a bachelor's degree in International Relations from National Defense University, Islamabad. She has a keen interest in media and international relations which led her to intern at Inter-Services Public Relations(ISPR) for three months.

Introduction

Pakistan and China are energetically cooperating on the development of Gwadar Port and Chabahar port because it has enormous significance for China to satisfy its economic and strategic objectives. China’s important interests in the establishment of Gwadar Port are to strengthen its relationship with Pakistan, diversify and secure its crude oil import routes which are the Hormuz Strait, the Malacca Strait, the Strait of Gibraltar, among others (Wang and Lu 2015).

As per the Energy Information Administration estimations, more than 76% of the crude oil, which is transported by different states all over the world, goes to Asian markets of which China, India, Japan, South Korea, and Singapore are the major states for receiving crude oil transported through the Strait of Hormuz to Asia, accounting for 65% of all Hormuz crude oil. This indicates that by the formation of Gwadar, China can easily receive its crude oil imports via the above-mentioned routes (Barden 2019).

The port will also empower China to maintain a strict watch on India’s growing presence in the Indian Ocean, the Arabian Sea, and the Persian Gulf. Correspondingly, India has also invested a huge amount of money in Iran’s Chabahar Port which gives India easy access to Central Asia via Afghanistan and direct access to the Arabian Sea which would provide India with a strategic advantage.

Moreover, India also seeks to secure its energy routes and to counter the growing Chinese presence in the region. For this purpose, India brought Iran and Afghanistan into an economic and strategic alliance. The development of both ports by major regional powers will either result in open rivalry and competition between the two countries or raised contention for the economic and natural resources of Central Asia.

Literature Review

The article titled “The Increasing Role of Geoeconomics: Competition between the Chabahar and the Gwadar Ports” written by “Kürșad Aslan and  Yasir Rashid”  talks about the contemporary global competition for acquiring both political and economic power. This article puts an emphasis upon the channels through which commodities are transported all over the world. The authors say that maritime shipping is the most important means through which goods are transported and a secure maritime organization is essential for global trade.

In regard to this, both the Chabahar and the Gwadar Ports offer economic and strategic significance. The Chabahar Port presents many economic as well as strategic prospects for the Iranian, Indian and Afghani national economies stretching from trade to tourism. The Chabahar Port is expected to link with various maritime and landlines (railways and highways) and is intended at delivering a significant increase in the field of international trade for the key contributors.

The development and extension of the Chabahar Port are projected to carry out many projects, such as the Chabahar-Muscat shipping line (Oman-Iran) and other maritime contracts between Iran and India. It also gives an entry to the International North-South Transport Corridor (INSTC) project under Russia’s supervision, which combines 7,200 km of length railways and highways through the 5-way crossroads project (Aslan and Rashid, 2020).

A five-way crossroad project connects India, Russia, Iran, Europe and Central Asia together for the exchange of cultural, and trade purposes (Chatterjee, 2018). In the article, “New Opening to The Old Gateway: Chabahar Seaport and The Economic and Strategic Benefits to The Region” written by “Saber Salem”, it is said that the authorization of the Chabahar Port Deal between India, Iran and Afghanistan is exactly living up to its name, Chabahar which means four springs in Persian.

It has headed to flourish fresh hopes for the regional economic affluence, peace and greater friendship and cultural ties because it will become a gateway from the Gulf of Oman directly to the Indian Ocean and to the landlocked states of the Central Asian region. This port will greatly aid India to have direct access to all the natural resources of the region.

Chahbahar port will also allow India to physical bypass its major rival Pakistan to get access to Afghanistan. Chabahar will also facilitate India to thwart China’s increasing presence in the Arabian Sea. For the landlocked Central Asian region, the agreement involves wider market availability for their natural resources and produce as well as a chance to be an equal partner in globalization (Salem, 2017).

The article “The Sino-Indian Geo-Strategic Rivalry: A Comparative Study of Gwadar and Chabahar Ports” is mainly about the geostrategic rivalry between both ports. This is because both ports have a similar agenda and interests in the region. The Sino-Indian enmity, which arose because of their territorial disputes, is converting into a larger geostrategic and geo-economic contest.

The  Chinese economic power requires energy security and a secure and economical trade route to guarantee its sustainable economic development, fulfil its economic requirements, and link China with the rest of the world. On the other hand, India, being the strategic foe of China, is contemplating the Chinese strategic and economic dynamics as a danger to the Indian strategic and economic designs in the region.

Another article highlights the fact that both ports will compete because they are being developed by the two strategic rivals of the region with similar agendas and with the motive of counterbalancing each other in the same region. It might be expected that cooperation might occur between them but for only a short period of time because such cooperation is difficult to create between regional players that are at odds with each other. For any such cooperation, Pakistan and Iran must play a significant role and have to develop bilateral relations among them (Khetran, 2021).

Mohammadi explains how the construction and development of Gwadar port make Pakistan the sole supplier of commodities to Central Asia, neglecting Afghanistan and India to a large extent. However, with the signing of the Chahbahar port agreement, Afghan and Indian analysts view this port as an alternative to the Gwadar Port.

The current trade rate of India’s total exports (Merchandise and Services) in April-March 2019-20 were are USD 528.45 billion, demonstrating a negative growth of (-)1.36%, whereas the total imports were USD 598.61 billion, demonstrating a negative growth of (-)6.33%. However, the bilateral trade between India and Iran is slightly over US $17.03 billion, while the same between India and Afghanistan was US$1.5 billion in the fiscal year of 2019-220.

India seeks to increase its bilateral trade with Iran up to US $30 billion with the completion of Chahbahar port and far beyond the current figure with Afghanistan in the following years (“INDIA’S FOREIGN TRADE: March2020” 2020). Zeb (2003) explores the fact that if both ports tried to undercut each other, then these ventures could turn into a never-ending regional tussle. The only option for both key stakeholders of these projects is to find mutual gains.

Geostrategic Significance of the Gwadar Port

Gwadar is a deep seaport located in the Balochistan province of the Islamic Republic of Pakistan at the junction of the Arabian sea, approximately 460km west of Karachi, 75 km east of Pakistan’s border with Iran, and 400 km from the Strait of Hormoz (Shaikh, Ji and Fan, 2016). Gwadar legitimately joined Pakistan in 1958, when it was a small fishing village with a couple of population.

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In 1977, Bhutto’s government assimilated Gwadar into the Balochistan province of Pakistan. However, in 1993, the PML-N government officially decided to make Gwadar a major commercial city with a deep-sea port. It took almost eight long years to implement this plan and on 22nd March, 2002, the Government of Pakistan formally initiated working on the development of Gwadar Port.

The development of Gwadar port took place in two segments with the help of technological and economic support of China. The first segment included the construction of three versatile ship berths, while the second segment involved the creation of further nine ship berths, along with one bulk cargo terminal, one-grain terminal, and two oil terminals. The approximate amount that was utilized for the developmental work of Gwadar port in the second segment was about $600 million (Shahid, 2018).

China is aiming to turn Gwadar into an energy transport hub through the development of oil pipelines from Gwadar to Xinjiang. This intended pipeline structure will carry crude oil from Arab and African states via Gwadar to the Xinjiang province of China. The existence of the United States in the Gulf region poses greater threats to Chinese interests.

China is concerned that the US would stop the delivery of oil and energy resources to China in case rivalry over Taiwan increases. As a result of which China would need an alternative route for the fulfilment of all its energy demands. Under several memoranda of understanding (MoUs) signed between Pakistan and China, China is committed to initiating a 90km highway, which will connect the Chinese side of the Karakoram highway to the Russian built highway network.

This highway link will immediately link up Gwadar to Xinjiang and the landlocked Central Asian Republics (CARs). This advancement of the Karakoram highway would give China a direct and shortest possible route to the middle eastern region via Gwadar port. As per President Musharraf, “the completion of Karakoram Highway will be the eighth wonder of the World” (“Interpreting China’s Grand Strategy At Gwadar” 2006)

Pakistan

Gwadar gives Pakistan strategic depth in the Arabian Sea as it provides an idyllic place for Pak-China naval cooperation to visualize the Indian growing presence in the Arabian Sea and the Persian Gulf. Gwadar port is also of immense importance for Pakistan because it would help the Central Asian States to take part in launching new trade routes via Pakistan, which ultimately will strengthen Pakistan’s geostrategic position.

The construction of Gwadar port has greatly reduced the distance between Pakistan and the Central Asian region. This opportunity has been depicted in the Central Asia South Asia power project (CASA) offers the way out to energy famished states in the region, including Pakistan. Similarly, the long-lasting undeveloped project of 1,400 kilometres Trans-Afghan Gas Pipeline (TAP) extending from Turkmenistan to Gwadar and other parts of Pakistan aims to bring Turkmen natural gas to global markets after the completion of the Gwadar port project (Hassan, 2005).

Once operational, Gwadar port would benefit both China and Pakistan in fostering trade with the Gulf States as these states acquire 25 per cent of total world oil crude exports and hold 17 per cent of world proven gas reserves (M. TAHA, 2012). A quadrilateral freight railroad from Xinjiang through Tajikistan, Afghanistan to Pakistan is also aimed, where Gwadar Port would help in bringing in Gulf energy supplies (Roy, 2011).

Political Implications and Economic Benefits of Chabahar Port

Chahbahar port is located in the southeastern region of Iran in the Gulf of Oman. The strategic location of the Chabahar Port, which is exactly outside the Strait of Hormuz, gives India, Iran and Afghanistan faster transportation because it is free from the narrow strait. This port provides easy access to Iran and India to the energy-rich Persian Gulf by physically surpassing Pakistan.

Chahbahar port will link three different nations, Iran, Afghanistan and India, to the Central Asian region, Russia, and other parts of Eurasia, boosting political and economic convergence. It is estimated that Chahbahar port will be 15 million rials ($375) cheaper than Iran’s contemporary Shahid Rajaee Port for each 20-foot container.

In addition to this, the costs of merchandise will also be lowered to $1,000 for each 20-foot container if transported through Chabahar port to Afghanistan compared with the Pakistan route from Karachi to Afghanistan via Tohram/Chaman (Kaushik 2018).

Geostrategic Significance of the Chahbahar Port

India

In the 1990s, India signed an agreement named the Ashgabat agreement under which it partially built the port with the sole intention of having access to the Central Asian region and Afghanistan bypassing its all-time rival Pakistan. Chabahar port is valuable for India to counter the growing Chinese presence in the Arabian Sea and the Indian Ocean via Gwadar port.

Chabahar could be used by India in case China chooses to activate its naval power by locating ships in Gwadar port to exhibit its upper hand in the Indian Ocean, the Persian Gulf, and the Middle East. There would also be a decline in the cost of oil and energy products for India that are imported from the middle eastern states.

Recently, India has boosted its crude imports from Iran after the US ban on Iran was lifted. In the year 2018-2019, India was Iran’s top oil buyer with an import of 23.5 million tonnes (Kumar and Chari 2019). In November 2017, the first-ever Indian consignment carrying 700,000 tons of wheat was sent to Afghanistan via Chabahar. Afghan President, Ashraf Ghani, launched the first Afghan cargo destined for the Chahbahar port carrying 570 tons of goods in 2019.

The second consignment of 80 tons of Afghan dry fruits was dispatched to India in 2019. The current exports value of Afghanistan is about $1 billion. Afghan officials are of the view that with the final operationalization of Chabahar port, the trade will increase to $2 billion in the next year (Omid Farooq, 2019).

During the pandemic last year , via Chahbahar port India had dispatched about 75000 tons of wheat as humanitarian assistance to Afghanistan and 25 tons of the pesticide malathion to Iran to limit the consequences of locuts invasion. (“Mar 06, 2021 | India Likely To Start Full Operations At Chabahar Port By End Of May” 2021) Chabahar port is only 170 km away from Gwadar port managed by China in Pakistan, consequently this port would be of strategic importance to the Indian Navy and defense establishment. (“GDPR” 2021)

Afghanistan

Chabahar port will also guarantee the formation of politically viable connectivity between India and Afghanistan, ultimately resulting in better economic ties between the two countries. With the Chabahar port, the current Iranian road network could be connected to Zaranj in Afghanistan, which is approximately  883 km from the port.

The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan: Herat, Kandahar, Kabul and Mazar-e-Sharif (“7 Reasons Why Iran’s Chabahar Port Is Crucial To India” 2017) .

Iran

Chahbahar Port is also of great importance for Iran because it is the only oceanic gateway for Iranian products to be transported to international markets. The construction of Chabahar port will reduce Iran’s dependence on United Arab Emirates’ ports for international trade because it has a cargo capacity of 1.35-million tons and a berthing opportunity of four ships of 45,000-tons at the same time.

Before the construction of Chabahar port, Iran’s Bandar Abbas port, which constitutes 85% of Iranian seaborne trade, received only 100,000-ton cargo ships. As a result of which cargoes were first dispatched in the United Arab Emirates and then forwarded on smaller ships that can dock in Iran.

Additionally, Chabahar port, in contrast to Bandar Abbas, is situated outside the troubled region of the Persian Gulf and out of the reach of Iran’s regional and global enemies. This port would enable Iran to have immediate access to the Indian Ocean. (“Chabahar Port’S Place In Iran’S “Looking To The East” Policy | Hellenic Shipping News Worldwide” 2020). Realization of the Chabahar agreement would make the region a transit hub, as key economic corridors like the INSTC (International North-South Transport Corridor) can also pass through it.

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It would further expand Iran’s economic engagements and would reduce the quasi-monopoly of Chinese and Russian firms on crucial sectors like crude oil and petrochemical products. The Chabahar agreement has the potential to offset the bottlenecks in the Iranian economy and restore it to the pre-sanction level (Ratna 2017).

Challenges

The Gwadar Port

Various_extremist groups such as the East Turkestan Islamic Movement (ETIM), Tehreek-e-Taliban Pakistan (TTP), Lashkar e-Tayyiba, Lashkar e-Jhangvi, Daesh, Balochistan Liberation Front, and the militant wings of some political parties are attempting to impede the China-Pakistan Economic Corridor project. The United States of America cautioned Pakistan that it would face long-term economic damage with little return if China continued pursuing its giant infrastructure project.

The multibillion-dollar program with China is propelled by non-concessionary loans, with Chinese companies utilizing their own labor and material in the face of a growing toll on the Pakistan economy. This is going to be intensified when the volume of payments come due. (Ahmad, Mi and Fernald 2020)

The Chabahar Port

The bitter relations between Iran and the US continue to undermine the development of the Chabahar port. Moreover, India would not compromise its relations with the United States because of Iran if the US were to again reinforce the sanctions on Iran. In such a situation, the development of Chabahar port could be stalled yet again.

Secondly, India also enjoys close relations with Saudi Arabia because it is the biggest crude oil supplier and India is the fourth biggest trading partner amounting to approximately US $40 billion in bilateral trade. However, In the wake of the Saudi–Iran controversial relationship,  the close ties between India and Saudi Arabia could result in crushing the Chabahar port deal. (“Relations With Iran Difficult Because Of Its Policies, Saudi Minister” 2016)

India also enjoys close relations with the state of Israel, a state which Iran denies recognizing. In 2008, Israel appeared as India’s major arms supplier surpassing the $1 billion mark in defence contracts. The combined amount of defence trade between India and Israel from 2000- 2010 was likely to be $10 billion (Cheema 2012).

The third major risk to the completion of Chahbahar port is the Taliban government in Afghanistan. Taliban are of the view that India has always followed a negative policy inside Afghanistan (Shukla 2020). Lastly, the major challenge to the Chahbahar port is the hostile relationship between India and Pakistan.

The Politics of Ports

The US’s Position

The United States National Security Strategy report of 2017 claimed that China sought to displace the United States in the Indo-Pacific region (Markey, 2020). For this reason, the United States wants to restrict and counter China’s expansion. The US desires for Afghanistan to join hands with India in the construction and development of Chabahar port.

Gulf Countries’ Position

It is predicted that most of the Gulf states would rely on transporting their goods through Gwadar port. However, the development of the Chabahar port will not directly affect the Gulf states and their commercial infrastructure as these states have their own active ports. Each Gulf state is expected to cultivate its trade relations with China and India based on their bilateral relations and their national interests. (ASLAN and RASHID, 2020)

Russia’s Position

In this competitive world, particularly in the Asian region, Russia’s interests usually do not unite with China’s interests, regardless of their mutual stance against the United States. Russia exhibits dissatisfaction towards most of the Chinese programs including the Belt and Road initiative (BRI) and especially on China’s growing economic penetration into the Central Asian region.

Russia does not like to be sidestepped in energy transportation activities. The total trade capacity of China with Central Asian states surpassed $46 billion in 2012, which was an extraordinary increase since these states gained independence from the Soviet Union. (Andrijauskas, 2013).

China’s Position

China is highly dependent on the Gulf states, as about 60% of energy products for fulfilling its energy needs come from there (Downs, 2013). The String of Pearls strategy depicts China’s political and economic methodology which intends to safeguard all its weaknesses in obtaining its energy needs. In this regard, the South China Sea, the Indian Ocean, the Straits of Mandeb, Malacca, Lombok and Hormuz are of immense importance.

However, Gwadar is the most important component of China’s String of Pearls strategy because it is aiming to build strategic airports and seaports along the Arabian Sea and the Indian Ocean. This Gwadar port project would also aim to give China access to export its energy and raw material products. Generally, the major goal of China in the development of the Gwadar port project is to stimulate the growth and advancement of the backward western Chinese provinces.

Another important goal of China is to lessen its reliance on sea-based energy transportation routes that run through vulnerable choke points such as the Strait of Malacca because, in the surroundings of these Straits, India, the United States, and Japan are instigating strategic tension.

India’s Position

In spite of the partnership in BRICS and the bilateral trade, both China and India are strategic competitors. To counter China in the region, India has also extended its efforts on the ‘Act East’ policy which is a diplomatic step taken by India to stimulate its economic, strategic and cultural ties with the vast Asia Pacific region (Singh 2020).

Some of the major achievements gained through this policy include linking up of Northeast Indian states with the ASEAN region via the construction of physical infrastructure (airport, road, power, telecommunication) including the Kaladan Multi-Modal Transit Transport Project, the India-Myanmar-Thailand Trilateral Highway Project, Border Haats and Rhi-Tiddim Road Project.

Moreover, India is also strengthening the quadrilateral strategic alliance (QUAD) that is between India, Japan, Australia and the US. Similarly, defense agreements with Singapore and Turkmenistan are also seen as critical examples of countering China in the region (ZHANG, 2021) (“Joint Statement Between Turkmenistan And India During The Prime Minister’s Visit To Turkmenistan” 2015).

Cooperation or Competition

Concerning the competition between the two ports, it would not be the case where one winner brings home all the glory, rather it would be a scenario where one port gets more share of trade. Also, the “victor“ in the current circumstances is probably going to be Chahbahar because Iran is more stable than Pakistan and it has better relations with the Central Asian states and Afghanistan.

In Pakistan’s case, the relations with the CARs rely on total harmony and soundness in Afghanistan as the planned Gwadar route passes by Afghanistan. So, for Pakistan to make a significant ground towards Central Asia, it must maintain political stability and well-disposed relations with Afghanistan (Matinuddin, 2017).

The most significant feature of these ports is their geostrategic importance, as both these ports are situated at the junction of the energy-exporting route through which 70% of the world’s oil shipment passes. Also, Gwadar and Chabahar are stationed to rich mineral assets in Iran and Balochistan. Lately, the Indian Ocean has become an auditorium for international rivalry on account of the abundant natural resources it holds and in the Arabian Gulf case, it will observe another ‘Incredible Game’ since both China and India are dubious of one another’s intentions (Ahmad, 2015).

Gwadar and Chabahar offer multiple openings for connectivity across the area. If we separate geopolitics from geo-economics, then both ports could give a stimulus to development for the whole region. The US with other western nations has shaped the Trans-Pacific Partnership (TPP) including Japan, India and Australia as its vital entertainers in the area.

China, on the other hand, has started its BRI strategy, of which the CPEC is the lead undertaking and Gwadar is the key part (Fergusson, McMinimy and Williams 2015). In the given setting, Gwadar and Chabahar are right now adjusted in two contending camps. Although Iran and Pakistan have heartfelt relations, geopolitics has intermittently caused a few ramifications for them which turned these relations complex.

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BRI is not just trade and associations; it emphasises cultural collaborations and regional connectivity as opposed to the brief, interest-based agreements of the West. Contrasted with PTA between India, Afghanistan, and Iran, the scale of CPEC is bigger than the three-dimensional economic alliance. Also, both are targeting different markets and cannot be looked at on equivalent standing.

Iran is a sovereign country and has experience of tense relations with the West. It will not leave Chabahar alone utilized for others’ intentions, specifically if they are counter-profitable to its relations with China or Pakistan (Bari, 2016). Likewise, Pakistan will not seek any rivalry with Chabahar. The ports of Gwadar and Chabahar offer a channel to the CARs for exporting their energy. In addition, Pakistan and Iran have notable cultural ties with the CARs.

Even so, Afghanistan is a significant connection in this condition. It has a focal job in a reconstituted Eurasian trading network (Kuchins, Sanderson and Gordon 2010). An advanced ‘silk route,’ with an outlet at Gwadar, would have assisted the US, if not for the withdrawal, with accomplishing its objectives in Afghanistan by giving a drive to development and making an autonomous, viable revenue system.

In Chabahar’s case, the situation is different as Chabahar and Iran are linked by land with the CARs which gives an advantage to Chabahar over Gwadar. On May 27, 2016, the Ambassador of Iran to Pakistan, Mehdi Hoonerdost, while speaking at the Institute of Strategic Studies Islamabad (ISSI) said that Chabahar and Gwadar were not opponents but sister ports (Bari 2016).

Additionally, the previous Advisor to Prime Minister on Foreign Affairs, Sartaj Aziz, said that Pakistan wanted to connect Gwadar with Chabahar through road and rail links. (The Express Tribune, 2016). The above-mentioned statements conclude that Pakistan and Iran want to collaborate and mutually benefit from both ports.

Conclusion

Based on the territorial disputes, the hostility between China and India is now transforming into a bigger geostrategic and geo-economic rivalry, both in water and on land. Energy security along with secure and economic trade routes are required by China for ensuring its sustainable economic development, meeting its strategic and economic demands, and connecting China with the rest of the world.

India, being the competitor of China, is contemplating the Chinese strategic and economic dynamics as a warning to its own strategic and economic designs in the region. Both China and Pakistan guarantee Chinese interests through the Gwadar Port of Pakistan. India, on the other side, is quickly moving to the western side and is strengthening strategic and economic relations with Iran and Afghanistan through the Chabahar port, for compensating the Sino-Pak strategic and economic friendship and for disrupting the Pak-Iran and Pak-Afghan relations.

In recent developments, India is expecting to start its full-scale exercises on Chabahar Port under the Biden administration with a $500 million investment. In addition to this, India has also suggested the attachment of Chabahar port in the International North-South Transport Corridor (INSTC) joining Mumbai with Moscow. In this competitive scenario, both Gwadar and Chabahar ports are referred to as game-changers.

References


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