Finally, Pakistan and Iran have struck a US $7.5 billion ‘peace pipeline’ deal last week. India had quit the project after 9 years in 2008 after signing a deal with Iran in 1999. Though the reasons furnished from the Indian side are of pricing and security issues, nonetheless, experts on South Asian geo-politics suggest that it is an outcome, partially of US diplomatic pressure and US-India civil nuclear deal struck last year. Though the deal of selling civil nuclear technology to India, a non-signatory country of Nuclear Proliferation Treaty (NPT), required US to seek exemption from Nuclear Suppliers Group (NSG), yet it was worth it as the US geo-strategic policy for the region was to halt any possibility of future cooperation amongst India, Pakistan and Iran via ‘peace pipeline’. This pipeline, if it succeeds has a potential to create a strong rationale to build an unbreakable long term political and economic interdependence amongst the three states. Before jumping to the costs and benefits of the project to the region, it is necessary to have a look at its history. The history of ‘peace pipeline’ dates back to 1950. The original idea of Pakistan-Iran pipeline was the brainchild of a Pakistani civil engineer which he presented in his article titled “Persian Pipeline” back in 1950s. However, it took the two countries almost 45 years to realise it by signing a preliminary agreement in 1995. Later on the project was also conceptualised by an Indian environmentalist and climate change expert, Rajendra K. Pachauri in 1989 which led India sign a similar agreement with Iran in 1999. The project, however, was not welcomed in the western world due to the sole reason that it would give a strong economic and political lifeline to Iran. This project would provide a strong support to the Iranian regime’s falling income from oil and gas sales which could virtually disappear within a decade. As a result of sanctions against Iran, investment in Iran's energy sector has plummeted. Presently, Iran exports 2.34 million barrels of oil per day which is about 300,000 barrels below its Organisation of the Petroleum Exporting Countries (OPEC) quota. This project would tend to provide space to the crisis ridden Iran due to the sanctions leveled against it since 1970 and would virtually undermine the real effects of the embargo on the regime. Therefore, diplomatic efforts and rules of ‘carrot and stick’ were intensively exploited to thwart the project during last decade. And unfortunately all the fuss against the project partially succeeded with convergence of India’s initial reluctance to carry on the project into the abandonment after its civil nuclear deal with the US.
For India, the Iranian gas, being the closest source of energy, would have been the cheapest in the world to eradicate the energy crisis of as many as 400 million Indians, along with spurring the projected annual economic growth rate of 7 to 8 per cent in future. Though the Indian economy is one of the fastest growing economies in the world, yet many believe that India’s economy is stationed at a narrow base with rising poverty and pyramid-like capitalist business elite hampering the horizontal spread of progress. For more horizontal spread, it still has to figure out a long-term strategy to go for cheap and reliable energy resources. The civil nuclear deal with the US, along with other implications, demands strong scrutiny and compliance with US policy for the region on many political fronts which can further erode the country’s political sovereignty. Even the developmental economic advising firm, Dalberg has concluded that for the next 15 to 20 years such investment is likely to be far less valuable economically or environmentally than a variety of other measures to increase electricity production in India.
Pakistan, an economically rising country, with approximately 180 million population, is facing an acute shortage of energy supply and is the most energy insecure country in the Asian region. Regular failure in power supply to domestic, commercial and industrial units of the economy makes the whole country energy vulnerable and locates it in a “high risk” area. The country ought to benefit from this project in three varying ways: firstly, its low cost advantage. If imported gas costs $4.93 million BTU (at US $60 per barrel), it translates into $28.5 per barrel of oil equivalent–less than half of current oil prices. Interestingly, almost 30 per cent of domestic imports are petroleum related, claiming Rs721.233 billion (2009 figure). Seemingly, it can save almost half of the petroleum import bill to the national exchequer. On the other hand, it can claim several million US dollars as transit fee if the line is destined in New Delhi. Secondly, it can avoid energy supply vulnerability due to international oil price shocks in the world market. Lastly, geo-strategically, the most important advantage is that it can develop the Gwadar port, turning it into one of the world's most important energy hubs in the coming years.
The companies interested in the project are Royal Dutch Shell, British Gas Group and Petronas. In case of US sanctions on Iran, the incentive of multi million US dollar gains for these companies can have a lobbying influence on US administration to neutralise or at least minimise the impact of the sanctions on the project. However, harnessing this advantage is exceedingly conditional to the prudent and precise decisions taken by the Pakistani government in the pure interest of the nation.
-www.thenews.com.pk/
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