Iran to broker multi billion dollar pipeline

Dec 20, 2004 01:00 AM

The Americans' ambivalent dealings with India and Pakistan, nuclear-armed enemies that until 9/11 were largely shunned by Washington for one reason or another, are underpinned by efforts to get the two Asian rivals to bury the hatchet.
Both have become key allies in the war against terrorism and have thus benefited from US largesse. But much to the Bush administration's chagrin, the one who may break the logjam of more than half a century of religious enmity is none other than Iran, a member of President George W. Bush's "axis of evil", which, according to recent US allegations, has received help on its nuclear and missile programmes from Indian as well as Pakistani scientists and stands accused of stirring up trouble for the Americans in Iraq.

How is Tehran to achieve this breakthrough? A $ 3.5 bn, 2,670 km pipeline to carry natural gas from Iran to India -- across Pakistan; and not just that, but across unruly tribal areas like Balochistan, Pakistan's "wild east" where Islamabad's rule is,to say the least, remote. The proposed pipeline would run from Asaluyeh on Iran's Gulf coast, the terminal for the rich offshore South Pars and Salman gas fields, into northwest India.
Iran has the world's second largest gas reserves after Russia and sorely needs to secure the markets the Americans seek to deny the Islamic Republic.
India imports 70 % of its energy needs and the pipeline would help New Delhi overcome its energy deficit. Iran, desperate to break out of its international isolation, has offered to pay for 60 % of the proposed pipeline. Pakistan produces about 70 mm cmpd of gas, but needs 96 mm cm and could face a shortfall of 8.5 mm cmpd by 2010.

The pipeline project was first mooted way back in 1989 but because of tensions between the two South Asian neighbours it pretty much languished until post-9/11, when the Bush administration nursemaided them back to the negotiating table and set in motion a peace process in April 2003. At that time, India's then prime minister, Atal Bahari Vajpayee, extended a "hand of friendship" to Pakistan during a visit to the Indian zone of disputed Kashmir.
Vajpayee's Hindu nationalist government fell during general elections in Spring 2004, but the process has continued under the new Congress-led government in New Delhi. The pipeline was one of the main items on the agenda when Pakistan's foreign minister, Khursheed Mehmood, met Indian Oil Minister Mani Shankar Aiyar during a three-day visit to New Delhi in September.

India's security concerns have been the main stumbling block. New Delhi fears a pipeline running through Pakistan could be sabotaged, or used as a political weapon by Islamabad. As the two countries have fought three wars and come close a couple of other times since independence from Britain in 1947, New Delhi has a point. But the Pakistanis, who would also like access to Iranian energy, have now said they would guarantee India a secure supply.
That may be easier said than done. Balochistan is facing growing unrest. The little-known Balochistan Liberation Army is waging an increasingly violent insurgency demanding more control over the region's natural resources as well as greater political and economic rights.

That could endanger the proposed pipeline if no political settlement is reached in Balochistan, or if Al Qaeda extends its tentacles into the unruly region.
"If our security concerns are adequately addressed, this project could turn out to be the economic bedrock which could buttress many more economic proposals," a senior Indian Foreign Ministry official noted. "The economic gains for Pakistan, estimated at $ 600 mm to $ 800 mm annually in transit fees alone, are a reasonable guarantee against sabotage."

The project has been given greater urgency as oil prices have gone through the roof because of expectations the turmoil in Iraq will get worse and the threat of terrorist attacks on the energy industry and disruptions in production in Nigeria and elsewhere increase.
Indian Prime Minister Manmohan Singh and Pakistani President Pervez Musharraf discussed it during their first meeting in New York on the sidelines of the United Nations General Assembly in late September and commented on how it "could contribute to the welfare and prosperity of the people of both countries".

Iran says the pipeline would save India at least $ 300 mm a year in energy costs. R.K. Pachauri, director of India's independent Tata Energy and Resources Institute and one of the pipeline's greatest advocates, says the new government has softened its position and "is willing to talk about the pipeline as long as other trading opportunities are also considered".
He says that India could even generate power for Pakistan using the Iranian gas and create an "interlocking" measure. With Pakistan's own energy requirements growing, it could end up using half of the gas pumped through the pipeline.

For Tehran, facing a worsening confrontation with the US over its alleged nuclear arms programme, and threats by Israel to carry out pre-emptive strikes against Iran's nuclear facilities to prevent it acquiring nuclear weapons, the prospect of extending its influence eastwards into the vast Asian markets is tantalising enough.
But to supply two of America's most important allies of the moment with much-needed energy, and in so doing prod them towards peace that would eliminate the threat of nuclear conflict on the subcontinent, would bring Tehran, desperate to end its isolation, enormous international prestige, as well as wealth, that even the Americans would be unable to ignore.

It would also pay the Americans back for their efforts to cut out Iran, and Russia, from the benefits that will come from the oil and gas wealth of the Caspian Sea Basin. The US is behind the construction of pipelines to carry oil and gas from the Caspian from Azerbaijan through Georgia to Turkey for western Europe, even though Iran could provide a shorter and cheaper export route via the Gulf.
Iran and India, despite the differences in their ideological orientations, foreign policies and political systems, have maintained friendly relations even before the 1979 Islamic revolution took Iran out of the US orbit. Neither wants to see a US-led unipolar international system and both have ambitions of becoming major world powers.

In January 2003, India and Iran forged a strategic military alliance that dramatically altered the political landscape in South Asia, giving Hindu-majority India -- which has the world's second largest Muslim population, some 150 mm, including the largest Shi'ite community outside Iran -- a relationship with a leading Muslim state that it had long sought. Under the agreement, India would have access to Iranian military bases in the event of conflict with Pakistan, and that fundamentally alters Islamabad's strategic calculations.
An Indian-Iranian strategic partnership is seen by many as the key to regional stability in the Middle East and Asia, particularly as China's economic power and political ambitions swell in the decades ahead to pose the primary long-term security concern.

If the so-called "peace pipeline" lives up to its name, the political and economic benefits to South Asia and its environs would be immense and the Americans would be wise to go along with it, even if it irks President Bush to have to deal with Iran.
However, there have been few signs of conciliation; in September the US imposed sanctions on two Indian nuclear scientists it claimed had aided Iran's clandestine weapons programmes -- while it has failed to take action against Pakistani scientists who ran a black market nuclear arms network that supplied Iran, North Korea and Libya for years.
Not a good sign.

Source: The Middle East
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