Pol­i­tics and the pipe­line

The Pak Banker - - 4EDITORIAL - Asif Ezdi

THE ground-break­ing cer­e­mony for the Pak­istan sec­tion of the Iran-Pak­istan gas pipe­line last Mon­day was an event of high sym­bolic im­por­tance. It was de­signed to seal Pak­istan's com­mit­ment to fi­nally go ahead with the project 19 years af­ter it was first mooted. But much of the west­ern me­dia played down its sig­nif­i­cance. One lead­ing news agency de­scribed it as a "neb­u­lous deal" and The Econ­o­mist weekly wrote that it looked like a gim­mick. The Bri­tish weekly noted also that for five years Zar­dari's ad­min­is­tra­tion had sat on the coun­try's en­ergy cri­sis, with lit­tle ac­tion be­yond get-rich-quick schemes for his cronies. The spokes­woman of the State De­part­ment also ex­pressed doubts that the pipe­line will ever be built. "We've heard this pipe­line an­nounced about 10 or 15 times be­fore in the past," she said, "so we have to see what ac­tu­ally hap­pens."

There can be no doubt that Zar­dari was mo­ti­vated mainly by con­sid­er­a­tions of domestic pol­i­tics and that his main pur­pose was to give the PPP a badly needed boost in the coming elec­tions. It is also true that a lot of work re­mains to be done be­fore Ira­nian gas starts flow­ing into Pak­istan. But even if Zar­dari's main in­ter­est was to ad­vance nar­row party in­ter­ests and even with the un­cer­tainty sur­round­ing the com­ple­tion of the project, go­ing ahead with it was the right de­ci­sion. Also, "what ac­tu­ally hap­pens" de­pends largely upon us, es­pe­cially on the re­source­ful­ness of the new government and on whether it has the spine and the nerves to stand up to US bul­ly­ing.

The pipe­line cer­tainly makes a lot of eco­nomic sense, be­cause it will nar­row the huge en­ergy deficit that is crip­pling our econ­omy. The price at which Iran has of­fered to sell the gas is not cheap but our domestic re­sources are de­plet­ing and the choice is not be­tween cheap gas and notso-cheap gas, but be­tween an as­sured sup- ply of gas at in­ter­na­tional prices and no gas at all.

The pipe­line agree­ment will also serve the for­eign pol­icy in­ter­ests of both coun­tries. Iran will gain be­cause it will lessen the coun­try's iso­la­tion in the face of US-led eco­nomic sanc­tions. For its part, Pak­istan will ben­e­fit from the fact that the pipe­line deal will help re­pair our some­what frayed re­la­tions with Iran and blunt In­dia's ef­fort to en­cir­cle Pak­istan by build­ing up strate­gic part­ner­ships with our west­ern neigh­bours. The In­dian pol­icy plan­ners can­not have failed to no­tice that the ground-break­ing for the pipe­line took place close to the south­ern Ira­nian port of Chaba­har which In­dia is de­vel­op­ing in or­der to gain ac­cess to land­locked Afghanistan and Cen­tral Asia, by­pass­ing Pak­istan and as an out­post to out­flank Pak­istan in the west­ern Ara­bian Sea.

In­dia can­not also have missed the fact that Iran and Pak­istan have be­gun talks on an oil re­fin­ery at Gwadar, not far from Chaba­har. In an­other sign of grow­ing mu­tual trust be­tween the two coun­tries, Ali Ak­bar Ve­lay­ati, a top for­eign pol­icy aide of Ira­nian Supreme Leader Khamenei, last month re­jected me­dia re­ports that Iran viewed Pak­istan's devel­op­ment of the Gwadar deep-sea port with sus­pi­cion.

In­dia has been riled by the IranPak­istan pipe­line also for an­other rea­son. For a long time, it tried to ex­clude Pak­istan by push­ing the idea of a deep-sea pipe­line from Iran to In­dia that would by­pass Pak­istan. In­dia later agreed to con­sider an Iran-Pak­istan-In­dia (IPI) pipe­line when the sub-sea project was found to be fi­nan­cially non-vi­able. But Delhi was never en­thu­si­as­tic about as­so­ci­at­ing Pak­istan with the ven­ture. In­dia fi­nally with­drew from IPI in 2008 un­der US pres­sure, but gave se­cu­rity con­cerns and high costs as the rea­son.

Over the coming years, the IranPak­istan pipe­line also has the po­ten­tial to trans­form the geopo­lit­i­cal land­scape of South and Cen­tral Asia and the Gulf re­gion by open­ing up a trans-re­gional en­ergy cor­ri­dor that links China, the world's sec­ond big­gest econ­omy, with the oil- and gas-pro­duc­ing coun­tries of the Per­sian Gulf through Pak­istan, with Gwadar as the hub. This route would re­duce the dis­tance be­tween west­ern China and the Gulf by a half.

Gwadar also has the ad­van­tage that it lies out­side the Strait of Hor­muz and would re­main open even if that nar­row pas­sage is closed for some rea­son. Iran's deputy oil min­is­ter, Javad Owji, was quoted last week as say­ing that Iran is hold­ing talks with sev­eral Chi­nese com­pa­nies for the ex­port of gas and LNG to China through a pipe­line that passes through Pak­istan. In ad­di­tion, a deep-water port at Gwadar con­nected with the hin­ter­land by

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