Pipeline Politics

Written by Huzaima Bukhari & Dr. Ikramul Haq  •  Region  •  May 2013 PDF Print E-mail

The Iran-Pakistan Gas Pipeline may be an election stunt but how beneficial will it prove in addressing Pakistan’s energy woes?

Critics of Pakistan President Asif Ali Zardari always find themselves bewildered and flabbergasted by his shrewd and unpredictable stance in home politics. This time however, he seems to have successfully shocked international players as well. In spite of warnings from Washington, President Zardari joined Iranian President Mahmoud Ahmadinejad on March 11, 2013 to launch the groundbreaking work on the 781-kilometres long Iran-Pakistan pipeline project on the Pakistani side of the border. The Iran-Pakistan (IP) gas pipeline project, initiated in 1995, has faced perpetual opposition from the United States and its allies. Speeches by heads of both the countries at the ceremony, reaffirming their commitment to go ahead with the project have created an uproar in all Western capitals with Washington being quick to express its reservations and even threaten Pakistan with possible sanctions.

Victoria Nuland, spokesperson of the State Department, said: “We have to see what actually happens. We’ve heard this pipeline announced about 10 or 15 times before in the past, and if it really materialises, Iran Sanctions Act would be triggered.” Dubbing Pakistan’s move “in the wrong direction at the wrong time,” she said it came as a surprise “when we are supporting large-scale energy projects in Pakistan, plan to add some 900 megawatts by the end of 2013 and further generation through renovating plants at Tarbela and Mangla, as well as modernizing others plants and building new dams at Satpara and Gomal Zam.”

The United States has opposed the project since its inception and successfully wooed India to pull out of it through the civil nuclear deal. After India’s exit, Iran and Pakistan signed an accord in June 2010 to continue with the project. The government of Pakistan announced in October 2011 that “our dependence on the Pak-Iran pipeline is very high and there is no other substitute at present to meet the growing demand of energy.” This statement irritated the Unites States, which has been pleading and promoting the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

In a smart move, President Zardari during his visit to Turkmen capital, Ashgabat, to attend the Nauroz Festival in March, said, “Pakistan attaches great importance to the TAPI and wants to see the project built as soon as possible.” During his meeting with Turkmen President, Dr. Gurbanguly M. Berdimuhamedov, he said Turkmenistan could help Pakistan meet its growing energy needs. In return, Pakistan could provide a trade corridor to Turkmenistan—over land and through its ports. This neutralized the impression that Pakistan had tilted towards Iran. By stressing the need for cooperation amongst the states of the region to promote economic development and peace, President Zardari successfully countered Washington’s diplomatic onslaught.

Pakistan, the completion of the pipeline, is expected to receive 21.5 million cubic meters of natural gas on a daily basis. Faced with an extraordinary energy crisis, Pakistan is in dire need of natural gas as its shortage has caused misery to millions of Pakistanis on account of its demand as a domestic fuel and closure of industries. Iran has already constructed more than 900 kilometres of the pipeline on its side. The Tehran-based Tadbir energy development group has undertaken the entire engineering procurement and construction work for the first segment of the project. It will also carry out the second segment of the project and extend a financial loan of $500 million to Pakistan. Iran and Pakistan are optimistic about completing the IP gas pipeline by December 2014.

TAPI, a 1,680 kilometer gas pipeline project, is backed by the Asian Development Bank (ADP), with the potential of bringing 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan’s gas fields and then passing near the cities of Herat and Kandahar in Afghanistan and then crossing into Pakistan near Quetta and linking with existing pipelines at Multan and then crossing into India. TAPI was initially designed to provide gas to Pakistan through Afghanistan. India joined in April 2008 and recently Bangladesh has also expressed its interest in becoming a part of TAPI. The Pakistan cabinet approved the Gas Pipeline Framework Agreement (GPFA) for TAPI on October 27, 2010. On November 13, 2011, Pakistan and Turkmenistan initiated the Gas Sales and Purchase Agreement (GSPA). This multi-national project is expected to be operational by 2016.

The U.S. and its allies want Pakistan to renounce the IP gas pipeline and pursue only TAPI. This is not only unacceptable to Pakistan and Iran, but China and Russia have also serious apprehensions about the intentions of the U.S. and its allies in the region. Giant Western companies enjoying the main financial control over Turkmenistan’s gas reserves desire a monopoly over the markets. The tussle over IP and TAPI is not a mere economic battle - it has geopolitical dimensions as well. The appointment by the U.S. of Afghan-born Zalmay Khalilzad as a special envoy to Afghanistan, nine days after the US-backed interim government of Hamid Karzai took office in Kabul, underscored the real economic and financial interests at stake in the U.S. military intervention in Central Asia. Khalilzad was intimately involved in the long-running U.S. efforts to obtain direct access to the oil and gas resources of the region, largely unexploited but believed to be the second largest in the world, after the Persian Gulf, through TAPI and other similar projects.

Beelam Ramzan in IP Pipeline: Energy Corridor says that “replacement of imported furnace oil by Iranian gas in heavy industries will result in annual savings of billions.” This project, she says, “will help expand bilateral trade in invaluable energy resources, obviously of much significance to energy-deficient Pakistan.” Expressing concern over the security situation in Balochistan, she concludes: “constructive engagement with the U.S. on the issue is crucial for the success of this project.”

Anjum Ibrahim in Pipeline Politics, observes: “those enamored of President Zardari’s political acumen that accounted for his survival for five years see the IP gas pipeline inauguration as killing two birds with one stone: to show to the electorate that the party leadership is defying the U.S. and at the same time sending a message that the energy crisis would now be resolved because of his personal intervention.”

According to Ibrahim, “Punjab Chief Minister Shahbaz Sharif has accused the “Zardari gang” of deferring the signing ceremony till a mere few days before the government completed its tenure and not five years ago to create complications for the next government.” This, she claims, “reveals that not only is Shahbaz Sharif aware of the political dimensions of the ceremony, to which he was invited but never attended, but also is not sure if the next government would get a green signal from the establishment and is then blamed for not implementing a good project due to a pro-U.S. stance.”

Whether President Zardari has been playing politics with the IP gas pipeline is debatable. But one thing is certain - that completion of the project would be a great challenge for Pakistan’s civil and military leadership. The stakes are too high, keeping in view the foreign-backed insurgency in Balochistan where the major part of the pipeline lies. The next government, as very aptly observed by Ibrahim, “would be damned if it undertakes it with the U.S. threatening reprisals and damned if it doesn’t with the public angered over its abandonment.”

Pursuance of IP by Iran and Pakistan would certainly deal a serious blow to the U.S. and its allies as they scramble to grab oil and gas resources of this region, benefiting multinational corporations that finance the Western ruling elites. According to Eric Draitser (Balochistan: Crossroads of Proxy War), it should not be overlooked that “China’s insatiable thirst for oil and gas makes the development of pipelines from Central Asia, Iran, and elsewhere invaluable to them. The Iran-Pakistan pipeline, the Turkmenistan-Afghanistan-Pakistan-India pipeline, and other projects all serve to increase the importance of Balochistan in the eyes of the Chinese. Additionally, the Chinese-funded Pakistani Gwadar Port is the access point for Chinese commercial shipping to the Indian Ocean and on to Africa. With all of this as a backdrop, one can begin to see just why Balochistan is so significant to the Chinese and, conversely, why the United States and its allies seek to destabilize it.” 

Huzaima Bukhari & Dr. Ikramul Haq are partners in the law firm Huzaima & Ikram (member Taxand) and Adjunct Professors at Lahore University of Management Sciences (LUMS).

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