THE planned import of gas through a multi-billion-dollar pipeline from Iran has become a major foreign policy challenge for Islamabad. Slow progress on the project also reflects a disconnect between the country’s business interests and its foreign policy objectives. Prime Minister Nawaz Sharif underscored this predicament when he admitted some time ago that the US had warned Pakistan of sanctions if it went ahead with the
Iran-Pakistan gas pipeline project. Indeed, it was Washington’s pressure that pulled India away from the project. In return, New Delhi secured a civil nuclear cooperation deal with the Americans. Islamabad, on the other hand, has dragged its feet on the project — which is to start delivery of 750mmcfd Iranian gas from the end of next year — at the expense of its growing present and future energy requirements. Even a Foreign Office view that the completion of the project would not invite international sanctions has been unable to push the government into starting the construction of the 781km pipeline on its side.
Now Islamabad has asked Tehran to reduce the interest rate on $500m, one-third of the total cost of laying the pipeline on Pakistan’s side. While the government is fully within its rights to ask for reduction in the borrowing cost, or renegotiating the price of gas, such demands should not appear as delaying tactics while Pakistan waits for a nod from Washington. If this is not what Islamabad is entangled in right now why hasn’t any headway been made more than six months after the presidents of Pakistan and Iran inaugurated the construction phase of the pipeline on the Pakistani side? Why hasn’t a sovereign guarantee for Iranian financing been extended to achieve the financial close of the project? A plausible explanation could be that both countries were busy organising their respective elections. Still the fact that no progress has been made weeks after the political transition in Islamabad and Tehran is a subject of negative speculation.
The Americans must also realise the importance of Iranian gas for this country and stop trying to wean Islamabad away from the project. By dropping its opposition to the pipeline project, Washington will also be sending positive signals to the new Iranian leader who has already expres-sed willingness to talk on Tehran’s controversial nuclear programme. But more importantly, it is for the Pakistan government to understand what is best for its people.
Wednesday, September 18, 2013
Delaying tactics?: Iran-Pakistan pipeline project
THE planned import of gas through a multi-billion-dollar pipeline from Iran has become a major foreign policy challenge for Islamabad. Slow progress on the project also reflects a disconnect between the country’s business interests and its foreign policy objectives. Prime Minister Nawaz Sharif underscored this predicament when he admitted some time ago that the US had warned Pakistan of sanctions if it went ahead with the
Iran-Pakistan gas pipeline project. Indeed, it was Washington’s pressure that pulled India away from the project. In return, New Delhi secured a civil nuclear cooperation deal with the Americans. Islamabad, on the other hand, has dragged its feet on the project — which is to start delivery of 750mmcfd Iranian gas from the end of next year — at the expense of its growing present and future energy requirements. Even a Foreign Office view that the completion of the project would not invite international sanctions has been unable to push the government into starting the construction of the 781km pipeline on its side.
Now Islamabad has asked Tehran to reduce the interest rate on $500m, one-third of the total cost of laying the pipeline on Pakistan’s side. While the government is fully within its rights to ask for reduction in the borrowing cost, or renegotiating the price of gas, such demands should not appear as delaying tactics while Pakistan waits for a nod from Washington. If this is not what Islamabad is entangled in right now why hasn’t any headway been made more than six months after the presidents of Pakistan and Iran inaugurated the construction phase of the pipeline on the Pakistani side? Why hasn’t a sovereign guarantee for Iranian financing been extended to achieve the financial close of the project? A plausible explanation could be that both countries were busy organising their respective elections. Still the fact that no progress has been made weeks after the political transition in Islamabad and Tehran is a subject of negative speculation.
The Americans must also realise the importance of Iranian gas for this country and stop trying to wean Islamabad away from the project. By dropping its opposition to the pipeline project, Washington will also be sending positive signals to the new Iranian leader who has already expres-sed willingness to talk on Tehran’s controversial nuclear programme. But more importantly, it is for the Pakistan government to understand what is best for its people.
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