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Despite US opposition, the
$ 7.5 billion Iran-Pakistan gas pipeline or the Peace Pipeline is going ahead as planned. The Peace Pipeline initially had three players — Pakistan, Iran, and India — but the latter decided to part from the project in 2009 to avail the US nuclear deal. The Peace Pipeline will help Pakistan end its growing energy crisis that has put its economic wellbeing at stake. Pakistan’s economy is operating below par, which is affecting productivity, causing declining exports, and widening the balance of payments deficit. The Peace Pipeline is a major step forward for Pakistan at a time when its textile and fertiliser sector are showing a decline in output. With long and unexpected power outages, the industrial sector is in peril, which is why the business community has shown feelings of joy and relief over the project.
Iran will soon complete constructing its end of the pipeline; however, the construction of the 780 kilometre section of the pipeline on the Pakistani side will cost Islamabad nearly $ 1.5 billion. Washington never accepted the Peace Pipeline project and had its reservations over the initiative. Even though Pakistan will overcome its energy needs with Iran’s support, the latter’s nuclear ambition compelled the US to oppose the project.
Pakistan is eager to complete the pipeline in due time. However, the US doubts if Pakistan can finance the project. Moreover, analysts believe that the US will impose sanctions on Pakistan for defying Washington’s directives and siding with a country having a nuclear plan that worries the west. In addition, Pakistan might face US sanctions as mentioned in the 1996 Iran Sanctions Act, which allows the US government to ban imports from any non-American company that makes an investment of more than $ 20 million a year in the Iranian oil and natural gas sector.
Even though the Peace Pipeline is expected to provide benefits to Pakistan, it also has an underlining political motive. Analysts view that Pakistan’s ruling party will use the gas pipeline project to amass votes and create a positive public image in the upcoming elections. People are wondering why the government went ahead with the project with only a few days left remaining before the dissolution of the assemblies. Even with a political motive in place, the Peace Pipeline will benefit the state and the credit goes to the president and his team for sealing the deal. Construction on the $ 1.5 billion pipeline is scheduled to be completed by December 2014. If the project goes according to plan, Iran will supply 21.5 million cubic metres of gas per day from its gas field in South Pars to Nawabshah. This will solve Pakistan’s energy crisis and revive industry that fell prey to power outages.
The US not only opposed the project but also suggested Pakistan an alternative pipeline route from Turkmenistan to Afghanistan, Pakistan and to India. Iran andPakistan never accepted the replacement route. Furthermore, India’s presence in the project would have kept both Pakistan and India on the verge of a war-like situation, which would only destabilise the South Asian region. The Peace Pipeline will begin transporting gas to Pakistan from December 2014. However, with the project already marred with delays, the final deadline is yet to be decided.
Prior to the inauguration of the Peace Pipeline project, the US State Department spokesperson, Victoria Nuland said, “If this deal is finalised for a proposed Iran-Pakistan pipeline, it would raise serious concerns under our Iran Sanctions Act. We’ve made that absolutely clear to our Pakistani counterparts.”
The US may impose sanctions on Pakistan for engaging in business-related activities with Iran. According to the Congressional Research Report, Iran is prohibited from selling technology or equipment that aids its energy sector. In addition, Iran lacks the authorisation to conduct business dealings that involve gas or fuels of any type with any country.
Even with the US closely monitoring the proceedings of the Peace Pipeline, President Asif Ali Zardari is hopeful for the many advantages the gas pipeline will bring to Pakistan and views it as a win-win project for Iran and Pakistan. Addressing the gathering at the inauguration ceremony, the president said, “The completion of the pipeline is in the interest of peace, security, and progress of the two countries. It will consolidate the economic, political and security ties of the two nations.” Pakistan’s Foreign Office is repeatedly asserting that Pakistan will not face any opposition from the US and believes that the US will show more understanding on this issue. Only time will tell if Washington comprehends the causes that led Pakistan to go ahead with the Peace Pipeline.
Iranian President Mahmoud Ahmadinejad views the Peace Pipeline as a symbol of resistance against western domination. In the post-9/11 era, Pakistan became a major ally of the US in curbing extremism. However, the Peace Pipeline could put Pakistan in a heap of trouble. Pakistan cannot afford any aggressive diplomacy from the US at a time when foreign aid is crucial for its survival.
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By Muhammad Omar Iftikhar
The writer is a Karachi-based journalist who writes frequently on regional issues with focus on South Asia (Daily Times)
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