WASHINGTON DC, June 6, 2005 | ISSN: 1684-2057 | www.satribune.com

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Iran-Pak-India Gas Pipeline is a Dream Coming True

By Kanak Mani Dixit

NEW DELHI, June 6: Offshore Iran, in an area of the Persian Gulf known as South Pars, lies a resource that could redirect the course of history in South Asia, 3000 km to the east.

The resource is natural gas – essentially methane – and its import has become necessary in order to feed the demand for energy in faraway India. And so a gas pipeline is proposed that will traverse the Makran coast that Alexander walked during his last, ill-fated campaign, snake across the Balochistan-Sindh desert to Multan, and cross the Indus River to arrive finally in Rajasthan – to quench the thirst for energy of the South Asian economic behemoth.

Along the way, the gasline would also top up the energy needs of Pakistan, whose own known reserves are expected to run out in a dozen years.

Till only a couple of years ago, this was a pie-in-the-sky project to all but a few visionaries – there is no other word to describe them – who understood how a long pipe carrying gas could also serve as the mother of all confidence-building measures.

For the passage of natural gas through Pakistan to India, its price set at a fair level by Tehran and its uninterrupted flow guaranteed by Islamabad, will change the geopolitical landscape of the Subcontinent. In one stroke, the joint stakeholding of an economic resource will defuse the five-and-a-half decade-long India-Pakistan hostility. Many tightly-wound bilateral problems, including the matter of Kashmir, will suddenly become manageable.

Indeed, the geopolitics of South Asia will be transformed the moment the New Delhi housewife is able to turn the tap for cheap natural gas piped directly into her kitchen, finally rid of the cumbersome red cylinders of liquid petroleum gas (LPG) that have been her burden for decades.

Even more significantly, natural gas via pipeline will provide Indian industry with a massive boost in sectors ranging from petrochemicals to fertilizers; electric power production will increase dramatically and a myriad of new commercial uses will be supported. Once Pakistan begins to receive transit fees that could run to USD 600 million yearly and Islamabad is asked to give international undertakings not to turn off the tap in any circumstance, a threshold will have been crossed in India-Pakistan relations.

For long, hard-headed state-centric analysts in Delhi and Islamabad regarded the pipeline proposal as one prepared by and for romantics who floated outside the perimeter of reality.

Perceptions began to change when the Federal Cabinet in Islamabad approved the concept of a gasline to India and President Gen Pervez Musharraf announced that he would allow unconditional passage of Iranian gas. The immediate reaction across the border, where the overly cautious Brajesh Mishra was National Security Advisor to the Bharatiya Janata Party (BJP)-led government, was skepticism fueled by the inertia of the intelligence and foreign policy establishments.

Horrors! How could Pakistan be entrusted with a resource whose blockage would devastate a dependent Indian economy? What if Islamabad turned off the tap? “This project is a lemon,” announced a New Delhi heavyweight to his colleagues.

While openly there were few takers in India, there was definitely a growing sense of anticipation. What sustained this undercurrent of attention was a diligent reflective exercise, underway since 1995, to study the economic feasibility of transporting Iranian gas to India with an eye to the peace dividend that this would deliver. Very few people outside of a close-knit circle even knew of the Balusa Group, but this ‘track two’ effort had been laying the ground for new thinking.

Rounded up by a brother-sister émigré twosome born in India, brought up in Pakistan and naturalized in the United States – one an energy specialist and the other a senior foreign policy player in Washington DC – the Balusa Group had been engaged in the study of India-Pakistan relations, with special attention to the possibility of natural gas linkages, for nearly a decade. Because of this groundwork, even though Gen Musharraf’s guarantee was snubbed in public, in private, Indian politicians, industrialists, analysts and academics were beginning to sit up.

The realignment of regional geopolitics following the 9/11 attacks in the United States unexpectedly threw up possibilities to jump start the peace process, and the real breakthrough came in Islamabad on the sidelines of the Twelfth SAARC Summit, when Gen Musharraf gave Prime Minister Atal Behari Vajpayee an undertaking, as indicated in a joint statement, “that he will not permit any territory under Pakistan's control to be used to support terrorism in any manner." This commitment paved the way for an inter-governmental ‘composite dialogue’ on a range of issues, and along the way the ‘track two’ pipeline project suddenly became kosher and was made part of the official ‘track one’ process.

Pipeline gas is attractive because of its competitive price and stable and long-term supply. The extended multinational gaslines in operation, such as those from Siberia to Germany and from Algeria to France, have already proven the technical, economic and political viability of such projects and will be useful in evaluating the Iran-to-India proposal.

Pakistan has had decades of experience with its own extensive domestic natural gas network, which branches out to all regions from the gas fields of Balochistan and Sindh. Natural gas is the fuel of choice of the twenty-first century: it is cheaper and cleaner than most alternatives and it is found within easy reach in the outlying regions of South Asia, from Burma to Turkmenistan and Iran.

Both the Indian and Pakistani economies are expected to grow at more than six percent yearly for the next decade. Their hunger for energy is already acute and their own proven gas reserves are quite modest in relation to projected demand.

In the improved atmosphere of today, with political will evident on both sides, the issues have been separated and the Iranian pipeline stands alone and on its own merits. Most importantly, the pipeline’s chaperones in New Delhi’s Ministry of Petroleum and Natural Gas have managed to convince the political front rank that the gasline is to be seen simply as a project for energy security, which is vital for the economy’s growth.

Things are so close to a breakthrough that India’s Petroleum Secretary SC Tripathi told reporters that if the upcoming negotiations between Islamabad, New Delhi and Tehran went smoothly, ground could be broken within two years and the natural gas could actually begin to flow by October-December 2009.

Even discounting such an optimistic scenario, the peace-building potential of the gasline is already beginning to kick in as the three countries start to discuss the modalities of the project. The vital need for natural gas imports is already informing rhetoric in New Delhi and Islamabad and playing a part in modulating positions. This trend will continue as the construction of the pipeline proceeds and the facts of an intertwined Indian and Pakistani economy are, literally, created on the ground.

And so, the scene is set for a USD 5 billion project that would place a pipe of 56 inches diameter and 2700 km length to carry gas under pressure from the offshore South Pars gas field to Delhi and Gujarat, carrying 3.2 billion cubic feet of gas a day. Initially, the flow of natural gas will be shared 2:1 between India and Pakistan, but this single pipeline will probably prove inadequate. The Iranian gasline may have to be complemented by one from Turkmenistan, and later one from Qatar or Oman. For now, the question with regard to the gasline from Iran is no longer ‘if’, but ‘when’.

It is the coincidence of leaderships in Islamabad and New Delhi that has delivered a permutation capable of propelling the gasline project. Pakistan is ruled by a general president who is largely unencumbered by political obligations and who sees the achievement of peace with India as a crowning glory that could wipe away the stain of autocracy.

Notable advance is expected on the pipeline front as Aiyar visits Pakistan and Iran in early June. His trip to Islamabad from 4-7 June for discussions with Pakistan’s Minister of Petroleum and Natural Resources, Amanullah Khan Jadoon, will be the first time the brass tacks of the gasline will be discussed, including transit fees, security guarantees and continuity of flow. After a stopover in Baku in Azerbaijan to attend the 12th International Caspian Oil and Gas Pipeline Conference, Aiyar arrives in Tehran on 11 June to sign an agreement to buy LNG and to discuss the pricing of the piped gas on offer.

The most obvious alternative to the Iranian gasline is the Turkmenistan-Afghanistan-Pakistan (TAP) project. The three governments have been in consultation on the matter since 1999, and a detailed feasibility study has been carried out on a line that would transport gas from the Dauletabad reserves of Turkmenistan to Multan.

However, the Indian interest in Iran’s natural gas has lately diverted Pakistan’s attention and this seems to have offended the Turkmenistani side. Recently, Islamabad's representative asked his Ashgabat colleague to provide “gas reserves certification”, essentially proof that the Dauletabad field had the required volume. The Turkmenistan delegation responded by demanding that Pakistan provide its own “firm demand projections”, and its peeved minister is said to have retorted, “We have enough gas to supply the world for two hundred years!”

The maturity that has suddenly emerged in the India-Pakistan relationship is hard to comprehend given the bile that existed in its place for much of the last decade. But while confidence-building efforts are welcome, feel-good measures that merely emphasize the bhai-bhai nature of the India-Pakistan interface will not be enough to peg the relationship to an adequate threshold.

The pipeline even has the power to restrain the two countries on the issue of Kashmir, the key yardstick by which any proposed India-Pakistan CBM must be measured. But can the hawks and ultra-nationalists on both sides still gather enough energy to sabotage the gasline proposal?

To be sure, there is a still some distance from the hand to the mouth when it comes to the Iranian gas pipeline. The idea has never been this close to becoming a reality, but a number of things could still go wrong. Most significantly, the building of the gasline depends on the absence of accidents and incidents along the way that could derail the larger peace effort – massive militant attacks, assassinations and other events with potential to fuel nationalist chauvinism and tie the hands of even the most clear-headed president or prime minister.

Other, less dramatic obstacles could emerge as well: Iran could ask for too high a price for its natural gas, or Islamabad could put an unrealistic tag on the transit. On the possibility of Pakistan obstructing the flow of gas, Pakistani ministers have repeatedly stated their willingness to address India's security concerns in every way possible. Beyond this, an umbrella agreement could bind Iran to stop the flow of gas into Pakistan if Pakistan were to stop its flow into India.

Many disincentives can be introduced to keep Islamabad from playing with the tap, and these would give India added confidence at the initial stages. The formula that New Delhi as a customer favors at present is to sign a bilateral agreement with Tehran by which Iran would provide gas at the Pakistan-India border, with the onus on Tehran to guarantee the flow through another bilateral agreement with Islamabad.

Experts in Pakistan, however, discount the level of the threat, particularly to the Iranian line, which would have no connection to the source of Baloch discontent. They say that Pakistan as the transit state would have to provide ironclad guarantees against disruption, and that a dedicated patrolling force (perhaps the Pakistan Army on contract) and high technology remote monitoring would largely take care of the problem.

The greatest worry by far with regard to the future of the pipeline proposal, however, is not the Afghan or Baloch tribesmen but the Government of the United States of America. Currently engaged in a jousting match with Tehran with regard to the latter’s nuclear ambitions, the Americans have made it clear that they eye the possible deal between the South Asians and Iran with distaste. At a press conference on 16 March during her first trip to New Delhi after taking office as Secretary of State, Condoleezza Rice conceded that South Asia had growing energy needs. But then she added, “I think that our views concerning Iran are very well known by this time. We have communicated to the Indian government our concerns about the gas pipeline cooperation between Iran and India.”

The fact is that the sanctions America slapped against Iran in 1984 following the extended hostage crisis are still in place and prohibit American companies from working with Tehran. In addition, there is the Iran-Libya Sanctions Act of 1996, which provides penalties even for third-country companies that work with Iran. If they decided not to look the other way, the Americans are in a position to lean heavily on a very US-dependent Gen Pervez Musharraf and nudge the gasline proposal towards collapse.

Rice’s statement sent shock waves through government and industry in India and Pakistan, but the official South Asian response thus far has been marked by a show of bravado, one that could well dissipate if the screws were to be tightened.

Standing by Rice’s side at the press conference, Indian Foreign Minister K Natwar Singh said, “We have no problems of any kind with Iran.” Minister Mani Shankar Aiyar emphasizes the civilisational ties India has with Iran and the importance of Iranian gas for eradicating poverty in South Asia as a whole.

Over in Pakistan, Prime Minister Shaukat Aziz has said that Pakistan will make a decision on the project based on the national interest and nothing else, while Minister of Petroleum and Natural Resources Amanullah Khan Jadoon has said that Pakistan needs natural gas and will look at all options of supply, including Iran.

It is possible, however, that the Americans will not go through with all the motions of opposing the project. One New Delhi bureaucrat who is crossing his fingers likes to point out that Rice did not actually raise the matter of the Iranian pipeline in her bilateral talks with South Block officials, and what she said of US disapproval was only in response to a question at the press conference that followed.

Indeed, the US may not want to be seen as coming out against a project that would contribute directly to lasting India-Pakistan peace. Or a project that would help lift the economy of all of South Asia, the most depressed populous region in the world. Would Washington DC be willing to put a spanner in the works of a project that practically has a halo around it?

Overall, the consensus of analysts and bureaucrats in New Delhi and Islamabad is that the Americans would not do such a thing, although no one will know for sure until, as Mani Shankar Aiyar says, the project-related agreements are signed and there for the US to react to.

The writer is editor of Himal, a South Asian magazine published from Nepal. This article was cut short to one-third its size published in Himal

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