Debt-Driven Depths: The Hangor-Class Submarines Tell a Cautionary Tale

New Delhi: Pakistan’s deep-sea, blue water ambitions are inseparable from its debt to China, and that includes its submarines. The eight-boat Hangor deal, with an approximate value of $4-5 billion, is reportedly financed by Chinese loans, to the tune of about 80%. In practical terms, each submarine carries hidden leverage and possibly kill switches.

Islamabad isn’t just buying vessels; it is taking on a multi-billion-dollar mortgage from Beijing. This is a financial anchor, transforming every material replacement, from the engine to the hull, and software updates into a geopolitical question.

Rather than saying no, Beijing may simply let billing schedules and repair queues stretch, effectively holding a $5 billion fleet at arm’s length by nothing more than bureaucratic inertia. 

The danger is vividly illustrated by Thailand’s S26T submarine saga. The Royal Thai Navy suffered a three-year delay in integrating Chinese CHD-620 engines after Germany vetoed the MTU units. That delay, caused by Beijing’s insistence on extensive local testing and contractual wrangling, underlines how Chinese terms can reshape project timelines without an explicit refusal. The Hangors are using those same CHD-620 engines, which means that Pakistan could face identical headaches.

Indeed, Thailand had to negotiate hefty compensation and extended warranties from China to resume construction. In short, Pakistan has entered the same murky waters as Thailand, with a submarine fleet that can do nothing but rust, running solely on Chinese goodwill for spares and know-how. When the heart of a submarine is tied to a single vendor’s spares, autonomy becomes a slogan rather than a readiness state.

This debt nexus is what experts call embedded leverage. Pakistan’s share of Chinese arms exports is enormous; over 63% by value in the years 2020–24, amounting to approximately $5.28 billion.

Loan repayments come due even as revenue shrinks, tying Pakistan into a classic creditor-debtor relationship.

Already, Islamabad faces ‘foreign exchange shortages and spiralling external debt’ that have caused repeated construction delays at Karachi Shipyard. China, like the US, plays on its own terms, and in a crisis, may just throttle the logistics needed for engine work, and will hold the upper hand in making the fleet water-bound.

The strategic takeaway is grim. China’s banks effectively hold Pakistan’s naval firepower hostage. To regain autonomy, Pakistan must ultimately rethink these financial terms. 

For now, every contract signed and every engine swapped deepens Pakistan’s ever-increasing underwater debt, reminding national security planners that every nautical mile gained comes with an interest payment to Beijing. Whilst debt does not steer a submarine, it may definitely steer policy.

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