Iran to Broker Multibillion $ Pipeline: The Progress of Pipeline Politics Continues to Be the Focus of International Speculation Which Is Hardly Surprising Given the Massive Investment Such Projects Demand

By Blanche, Ed | The Middle East, December 2004 | Go to article overview

Iran to Broker Multibillion $ Pipeline: The Progress of Pipeline Politics Continues to Be the Focus of International Speculation Which Is Hardly Surprising Given the Massive Investment Such Projects Demand


Blanche, Ed, The Middle East


THE AMERICANS' AMBIVALENT dealings with India and Pakistan, nuclear-armed enemies that until 9/11 were largely shunned by Washington for one reason or another, are underpinned by efforts to get the two Asian rivals to bury the hatchet.

Both have become key allies in the war against terrorism and have thus benefited from US largesse. But much to the Bush administration's chagrin, the one who may break the logjam of more than half a century of religious enmity is none other than Iran, a member of President George W. Bush's "axis of evil", which, according to recent US allegations, has received help on its nuclear and missile programmes from Indian as well as Pakistani scientists and stands accused of stirring up trouble for the Americans in Iraq.

How is Tehran to achieve this breakthrough? A $3.5bn, 2,670km pipeline to carry natural gas from Iran to India--across Pakistan; and not just that, but across unruly tribal areas like Baluchistan, Pakistan's "wild east" where Islamabad's rule is, to say the least, remote.

The proposed pipeline would run from Asaluyeh on Iran's Gulf coast, the terminal for the rich offshore South Pars and Salman gas fields, into northwest India.

Iran has the world's second largest gas reserves after Russia and sorely needs to secure the markets the Americans seek to deny the Islamic Republic.

India imports 70% of its energy needs and the pipeline would help New Delhi overcome its energy deficit. Iran, desperate to break out of its international isolation, has offered to pay for 60% of the proposed pipeline. Pakistan produces about 70 million cubic metres of gas a day, but needs 96 million cubic metres and could face a shortfall of 8.5 million cubic metres a day by 2010.

The pipeline project was first mooted way back in 1989 but because of tensions between the two South Asian neighbours it pretty much languished until post-9/11, when the Bush administration nursemaided them back to the negotiating table and set in motion a peace process in April 2003. At that time, India's then prime minister, Atal Bahari Vajpayee, extended a "hand of friendship" to Pakistan during a visit to the Indian zone of disputed Kashmir. Vajpayee's Hindu nationalist government fell during general elections in Spring 2004, but the process has continued under the new Congress-led government in New Delhi. The pipeline was one of the main items on the agenda when Pakistan's foreign minister, Khursheed Mehmood, met Indian Oil Minister Mani Shankar Aiyar during a three-day visit to New Delhi in September.

India's security concerns have been the main stumbling block. New Delhi fears a pipeline running through Pakistan could be sabotaged, or used as a political weapon by Islamabad. As the two countries have fought three wars and come close a couple of other times since independence from Britain in 1947, New Delhi has a point. But the Pakistanis, who would also like access to Iranian energy, have now said they would guarantee India a secure supply. That may be easier said than done. Baluchistan is facing growing unrest. The little-known Baluchistan Liberation Army is waging an increasingly violent insurgency demanding more control over the region's natural resources as well as greater political and economic rights. That could endanger the proposed pipeline if no political settlement is reached in Baluchistan, or if Al Qaeda extends its tentacles into the unruly region.

"If our security concerns are adequately addressed, this project could turn out to be the economic bedrock which could buttress many more economic proposals," a senior Indian Foreign Ministry official noted. "The economic gains for Pakistan, estimated at $600m to $800m annually in transit fees alone, are a reasonable guarantee against sabotage."

The project has been given greater urgency as oil prices have gone through the roof because of expectations the turmoil in Iraq will get worse and the threat of terrorist attacks on the energy industry and disruptions in production in Nigeria and elsewhere increase. …

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