Iran Pakistan gas pipeline: Another point of view

I am pleased to place this article published in eurasiareview http://www.eurasiareview.com. Its title is Iran Viewpoint: Washington Angry over Tehran-Islamabad Gas Pipeline Agreement. It has been originally printed in Iran Review, a Tehran-based site that claims to be independent, non-governmental and non-partisan and representing scientific and professional approaches towards Iran’s political, economic, social, religious, and cultural affairs, its foreign policy, and regional and international issues within the framework of analysis and articles.

The final phase of the Iran – Pakistan gas pipeline project, which is to be built on the Pakistani soil, was launched in a ceremony attended by Iran’s President Mahmoud Ahmadinejad and his Pakistani counterpart, Asif Ali Zardari, on Monday, March 11, 2013. The first section of the pipeline, which runs over 900 kilometers from Iran’s Assaluyeh region to the city of Iranshahr in Sistan and Baluchestan Province had been inaugurated about one and a half years ago. Construction of the second section of the pipeline with the total length of 120 km, which runs from the southeastern Iranian city of Iranshahr to Pakistani border, started last year. The last tranche of the pipeline on the Pakistani soil is expected to be finished in the next two years.

This project is of high significance to both countries. Construction of a pipeline for the export of Iran’s natural gas to its eastern neighbor is of special importance to Islamabad because Pakistan is facing serious energy crunch. The problem was even worse during this winter when some Pakistani cities experienced power cuts which at times lasted up to 18-20 hours a day. In addition, many Pakistani plants, especially those related to the country’s textile industry, had to shut down their operations as a result of sever energy shortage. When looked at from this viewpoint, it is clear that the gas pipeline from Iran will be able to guarantee long-term and secure energy flow to Pakistan.

On the other hand, in view of special conditions of Iran and the sanctions which have been imposed against the Islamic Republic during the last year, the country has been facing difficulties for selling its energy resources. As a result, this pipeline will help Tehran to go around sanctions and will be of serious help to Iran under the existing economic conditions.

In addition to long-term economic benefits which Iran is bent on achieving through presence in global energy markets, the pipeline is of high importance to Iran from a political viewpoint as well. The West, especially the United States, has been putting pressure on many countries to dissuade them from concluding oil and gas contracts with Iran. They had also put tremendous pressures on the governments of India and Pakistan to make them abandon the energy deal with Iran.

It was due to the high importance of the project that Iran was even ready to give concessions to Pakistan to go on with the construction of the gas pipeline. As a result, the Islamic Republic accepted to grant 500 million US dollars as credit in loan to Islamabad to be spent on the construction of pipeline by Pakistan. Before that, the two countries had differences over this issue, which were resolved through the final agreement.

Due to the above facts, the pipeline project can get the two neighboring countries engaged in a very important project which will not only serve the interests of both countries, but will also have an obviously positive impact on bilateral relations between Tehran and Islamabad.

Despite all the above facts, the pipeline had been originally designated as the “Peace Pipeline” because it was supposed to be built through cooperation among Iran, Pakistan and India. However, despite extensive plans and a whole decade of negotiations, the project was finally aborted. So, why the project is currently being implemented in the absence of India?

In reality, India initially agreed to the project, but it finally abandoned it for two major reasons. The first reason was that the Indian officials did not want the pipeline to cross through Pakistan soil. The Indian officials were concerned that in case of possible future tension in relations between Islamabad and New Delhi, Pakistan may use the pipeline as a means of putting pressure on India by cutting off the gas flow.

Therefore, India proposed that the pipeline should be built under the sea. Indian officials noted that the pipeline may run on the ground up to the Iranian border with Pakistan in Gwadar region of Iran’s Chabahar city. Thenceforth, the pipeline was supposed to go under the sea and continue toward the Indian city of Mumbai. Implementing the project in that way would have been both too costly, and needed cutting-edge technology which was not available even to India and could be only provided by a few European countries and the United States.

The second reason which dissuaded India from taking part in the project was that New Delhi would have to pay a transit fee of about 350 million dollars per year to Pakistan for the transit of gas while India was by no means willing to boost the economic strength of its rival neighbor. Therefore, India was very hesitant about taking part in the project due to the aforesaid reasons.

Of course, the United States’ opposition and Washington’s pressure on New Delhi to abandon the project also influenced India’s decision. Although this does not mean that India’s decision has been totally influenced by the US pressure, in reality, the contract signed between the United States and India according to which Washington is supposed to build 13 nuclear power plants for India had greatly increased India’s doubt about being part of the Peace Pipeline project.

The Indian officials reached the conclusion – on the basis of a loss and benefit estimate – to give priority to their national interests and go on with the agreement they had already signed with the United States at the cost of withdrawing from the Peace Pipeline project. This, however, does not mean that the issue of the Peace Pipeline has been forgotten for good and ever in India. The Indians look at it as an open case which may be followed up in the future in order to forge a deal with Iran over its natural gas resources. At any rate, it should not be forgotten that as a result of very rapid economic development in India, the country’s demand for energy is very high and that demand is sure to skyrocket in the future.

Therefore, I believe that the Indians will first take that concession from the United States and then they will enter into a deal with Iran on the basis of their national interests. In doing so, they will conclude the pipeline contract with Iran in order to extend the Iran – Pakistan pipeline up to India and take advantage of Iran’s natural gas resources.

Of high importance in this regard is the close rivalry between India and China. It is noteworthy that China has made hefty investment in Gwadar region. Therefore, in case of a good opportunity and if a suitable price is offered for gas and the project’s cost seems feasible, China might be willing for the pipeline to further travel to Tibet by crossing Karakoram Mountains.

This will be a problem for India in the long run as its rival will be able to take advantage of the pipeline. This is especially true as China’s need to energy continues to soar in coming years. Therefore, India is sure to strike a deal with Iran in the long run over the latter country’s gas resources. In the short term, however, India will stay away from the project as long as the United States has not built the aforesaid nuclear power plants for India.