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The cup and the lip

Amidst heightened frenzy of elections approaching in Pakistan, presidents of both the Islamic Republics of Iran and Pakistan jointly laid down the foundation stone of the Iran-Pakistan gas pipeline (IP) on March 11, 2013.

The purpose of this project is to import natural gas from energy-surplus Iran to energy-deficient Pakistan; an economically viable project which also has very good potential to enhance bilateral economic trade partnerships in the region.

Unfortunately, geo-political considerations have caused inordinate delay and made, this otherwise beneficial project, hostage to numerous challenges. It will be, therefore, relevant here to analyse the opportunities, challenges and implications that lay inherent in the execution of the project.

There are no two opinions about the economic advantage of the project for the people of Pakistan. The 2700 km long pipeline, to be built at a total cost of $7.5 billion, will travel from Asalouyeh in Iran through Gwadar to Nawabshah. Pakistan will import 750 mcft of natural gas daily to support the 5000 MW of power generation capacity. This will help in bridging the increasingly widening energy gap at a cost effective rate and will provide the much-needed relief to Pakistan’s economy by kick-starting the stagnant wheel of industry.

With the replacement of imported furnace oil by Iranian gas in heavy industries, it is estimated that it will result in annual savings of billions. As a major portion of the pipeline, almost 1000 km, will run through Balochistan and Sindh, the construction of the pipeline – also termed the “peace pipeline” – is envisaged to create large-scale employment opportunities for local population and usher an era of progress and prosperity in the conflict ridden, backward areas.

From the trade perspective, the IP gas deal is a great infrastructural project that will help expand bilateral trade in invaluable energy resources, obviously of much significance to energy deficient Pakistan. This will, in turn, result in investments in other areas of mutual trade interest and will, hopefully, raise Pakistan’s negligible share of trade volume with Iran, hovering at less than one percent at present. Economic security will certainly pave way for regional security in the long run.

Along with these immense opportunities, there are major challenges ahead as well. First and the most the formidable challenge is countering the US pressure that may lead to economic sanctions in an extreme scenario.

China and India have successfully offset similar international pressures and are now investing in Iran’s oil and gas sector, fearlessly, to their economic advantage. Despite levying sanctions against Iran, the EU itself is its second major trading partner as per IMF statistics. But do we have the similar economic strength, political resolve and bargaining power to pursue our economic interest in teeth of formidable international opposition?

Second is the sincerity and political will of our policy-makers to execute the project in the backdrop of US opposition. The idea of a gas pipeline was originally conceived in 1995, an agreement between Pakistan and Iran was signed in 2010, and the execution of the project was announced in 2013. This enormous delay of eighteen years, with energy crisis going from bad to worse, amply underscore the lack of political resolve. The present government is about to go, and it is not sure whether the caretaker government or the next elected government will execute the pipeline project enthusiastically.

Third is the security situation in Balochistan. The major portion of the pipeline’s length will be passing through Balochistan and thereby, if built, will face major security peril, particularly when insurgency in the province has intensified unabated. Do we have a sound political and security plan to take the Baloch nationalists on board?

Historically, there is a tendency of sabotaging developmental projects if there is a perception that their economic interests have been overlooked.

Therefore, it is obvious that constructive engagement with the US on the issue is crucial for the success of this project. A path of diplomatic reconciliation rather than confrontation should be our focus. The US proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, was not viable due to inherent political and security implications in that project, and Pakistan has successfully evaded the obligation to toe the US stance in that regard.

The IP gas pipeline is, alternatively, a start of the first energy-corridor in the region. Its completion will be a test case of our diplomatic and political triumph.

India showed her willingness to join the pipeline deal and signed a MoU to this effect but eventually walked-out stating security and pricing issues. Inclusion of India or similarly China can provide the much desired impetus to counterbalance international pressures on this wobbly bilateral deal.

The IP pipeline has great geopolitical and economic significance for Pakistan if it is completed. However, if it could not see the light of the day it will be due to mounting US resistance coupled with our own security problems and political opportunism.

The writer holds an LLM degree in international economic law from the University of Warwick. Email: beelam_ramzan@yahoo.com

Beelam Ramzan, "The cup and the lip," The News. 2013-04-04.