CSM: Pakistan eyes 'peace pipeline' for region

Pakistan eyes 'peace pipeline' for region
It hopes a deal to ship Iranian gas to India via Pakistan can boost its energy supply, regional ties.
By Shahan Mufti, CSM, October 20, 2008
Source

GWADAR, PAKISTAN - Along the scenic coast in Pakistan's gas-rich Balochistan Province, a weathered roadside shop advertises "fuel available at every price."

Inside, heady fumes fill a room stacked with cylinders of compressed gas and barrels full of gasoline – fuel smuggled from Iran through the rugged border region 50 miles west of this Pakistani city, explains Balach Abdullah, the owner.

From here, the fuel makes its way as far as Karachi, Pakistan's largest city.

The Pakistani government is hoping to turn this clandestine exchange into a major energy and trade route.

The Iran-Pakistan-India (IPI) pipeline proposal is a $7.5 billion project that would transport gas from the western Iranian Pars gas field to India through Pakistan along a 1,500-mile route.

The pipeline would be a triumph for Pakistan. The country hopes to make itself a major energy player linking the gas in Central Asia and the oil in the Middle East to the fast-growing economies of China and India.

But geopolitical considerations, among others, have so far blocked the proposal from becoming a reality.

The United States, which this month signed a nuclear trade deal with India, opposes the plan that would bind its main rival, Iran, with key allies in the region. Proponents of the deal counter that it could improve security by boosting relations in the often volatile region – and have even dubbed the proposal the "Peace Pipeline."

"Washington has minced no words saying that they are completely opposed to the pipeline deal," says Tariq Fatimi, a former Pakistani ambassador to the United States who is now a consultant with a Pakistani energy exploration company.

Now that India has signed a nuclear deal with the US, he says, it would be more inclined to support American policy in the region, which might mean pulling back from such deals with Iran.

Despite the US nuclear deal, India has not pulled out of IPI discussions. Iran and Pakistan also remain supportive of the deal. Two days after the US-India nuclear deal was finalized, Iranian Foreign Minister Manouchehr Mottaki met his Pakistani counterpart in Islamabad and confirmed that the two countries would now begin work of the pipeline bilaterally.

"India may join the project whenever it is ready for this," the Iranian foreign minister said.

A 'Peace Pipeline'

Ismat Sabir, editor of the trade magazine Energy Update in Karachi says it would be "a win-win situation for everyone."

The three large Asian countries could become comfortably interdependent she explains, which would encourage trust in a region where neighborly relations have often been hostile.

"Iran will sell its gas over land to a major consumer, Pakistan will get some hefty transit fees, and India will finally start to meet its energy demands," she continues.

US urged to reconsider its position

In a report released this month, The Pakistan Policy Working Group, an independent and bipartisan group of top US experts on Pakistan in Washington, also suggested that the US "reconsider [its] opposition to the proposed Iran-Pakistan-India pipeline project" as a way of easing regional tensions, especially between India and Pakistan.

The report also points out that the pipeline is tied in with the precarious security situation in Balochistan Province, which borders Iran and Afghanistan.

An armed separatist rebellion has brewed in Pakistan's largest and least populated province for decades, and has intensified since 2006, when the Pakistani Army assassinated the high-profile Balochi leader, Akbar Khan Bugti.

In the latest incident of this low-intensity conflict, over the weekend a Balochi separatist group claimed responsibility for a bombing that killed three people in the Dera Bugti district, home to the country's largest gas reserves.

Iranian-Pakistani trade growing

In the past few months Iran and Pakistan have been warming diplomatically along the border that separates the two countries. In recent months a flurry of agreements have brought the two countries closer as they promise to transform the Balochistan region into an active transport, trade, and energy hub.

Over the summer, Iran and Pakistan signed four agreements that unveiled a new ground transport route and enhanced cooperation in the mining sector in the area rich in minerals.

Pakistani Foreign Minister Shah Mehmood Qureshi also announced last week that Pakistan would import 1,000 megawatts of electricity across the border from Iran, as his country suffers from one of the worst energy shortages in its history.

Already the illicit trade of Iranian gas in Balochistan, run by Mr. Abdullah and other merchants dotting the thinly populated southern coast of Pakistan with their makeshift filling stations, attest to the country's demand for energy. It also illustrates the porous nature of Pakistan's 600-mile border with Iran, as well as a history of close relations among the ethnic Balochis who live on either side.

Over the summer Iranian President Mahmoud Ahmadinejad visited Islamabad and New Delhi to finalize the pipeline deal at a time when the prospects of India's civil nuclear energy appeared to be dwindling. Disagreements among the three countries over gas pricing and delivery points have also been a stumbling block to negotiations.

Representatives from all three governments had met at venues from Spain to Saudi Arabia to discuss the final details of the plan, including pricing and delivery points.

Despite its recent nuclear deal with the US, India, which imports 70 percent of its required energy, will "need the nuclear deal, the IPI gas pipeline and more," according to Abbas Bilgarami, who works in the local oil and gas industry.

As a result, India might find itself growing closer to the US, Pakistan, and Iran, he says.

"The compulsions imposed on this region," by the US in its security concerns here "will have to be reconsidered," says Mr. Bilgarami. "The regional vision is still very strong."