The Iran-Pakistan Gas Pipeline Gets Bogged Down With International Politics

Pakistani Foreign Minister Hina Rabbani Khar earlier this month said that the Iran-Pakistan (IP) gas pipeline project is economically viable and Islamabad is facing no problems funding it. Moreover, she rejected any foreign pressure against the Iran-Pakistan gas pipeline project.

However, it is impossible to make this project successful without the support of United States, and it is also difficult for investors to support the project without considering the sanction of U.S. On the other hand Pakistan is the country who doesn’t have any clear policy on this issue.

However, new sanctions imposed by Washington consider penalties for countries buying oil from Iran or dealing with its central bank. Washington has frequently indicated its resentment of the Iran-Pakistan gas pipeline project. An article published by the International Herald Tribune, said Washington is trying to lure Islamabad away from the Iran-Pakistan gas pipeline project by offering cheaper gas to the country.

While the state-owned Industrial and Commercial Bank of China (ICBC) and Pakistan's Habib Bank Limited had jointly agreed to help finance the Pakistani section of the pipeline, neither banks seem to be interested in the project anymore.

The project, Iran-Pakistan-India (IPI) gas pipeline — which is now also called a” peace pipeline” — was first put forward in the early 1990s. Since then there have been several rounds of talks on the feasibility of the project. The project aims at constructing a 2,700 km long gas pipeline from South Pars to Karachi and then to New Delhi. But trilateral talks have been boycotted by India since 2007. Therefore, Pakistan and Iran have been pursuing the project bilaterally. In January 2010, the United States asked Pakistan to abandon the pipeline project. However, at the moment, the U.S. is in favor of a joint Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project, while Russia and China are pushing the IP project off until 2011 India is in a “wait and see” mode and Pakistan seems to be running with the hare and hunting with the hounds.

Secretary of State, Hillary Clinton, was quite explicit in her warning before the House Appropriations Subcommittee on State and Foreign Operations last week that the implementation of the Iran-Pakistan gas pipeline project would trigger the U.S. sanctions under the Iran Sanctions Act. This Act imposes certain specified sanctions against any foreign (non-U.S.) company, which invests more than $20 million in the oil and gas sector in Iran. This warning must be seen in the context of the current animosity between Iran and the U.S., and Washington’s growing pressure on Tehran because of its nuclear program. On the other hand, Pakistani Foreign Minister Hina Rabbani Khar said it was in Pakistan’s national interest to acquire energy from wherever it was available. “We cannot afford to be selective,” the foreign minister further added that no decision in this regard would be taken against the national interests. The South Pars gas field in Iran is the largest in the world, meaning that its production costs for Iran are significantly cheaper than those for gas extracted from smaller fields in Central Asia, including the Caspian Sea fields to which Turkmenistan has access.

The U.S. wants to isolate the IP project and asked Pakistan to withdraw from project. Israel too is against the Iran-Pakistan pipeline project. Recently, Sweden has also opposed Pakistan cooperation with Iran and said that first Iran should address to the concerns of international community about its nuclear program. Now, neither China nor Russia is in favor of IP project because of U.S. sanction. Now, the role of Pakistan in this whole scenario is very important. Pakistan also has good relation with U.S. but on the other hand he has to fulfill his requirement. This project has huge significance in the region. The political controversy on pipeline had begun in all over the world. Now let’s see how Pakistan will make it possible without consideration of U.S.