Eurasian Energy: Circumstances Pushing Iran and Pakistan to Link Up
For most of 2009, a pipeline deal involving Iran, Pakistan and India, has been stalled. But recent indicators suggest that a new version of the pipeline could get moving again.
The so-called IPI route envisioned shipping Iranian gas eastward to Pakistan and India. From the concept's inception it has faced hurdles and experienced setbacks. The United States, for example, has invariably discouraged Pakistan and India from dealing with Iran. Tehran, meanwhile, has rankled Islamabad and New Dehli by proving hard to pin down on a pricing scheme.
It appears that India is now ready to bow out of the project, leaving Iran to deal solely with Pakistan. India's diminished interest in IPI is the result of several factors, the most signficant being the continuing Indian-Pakistani tension over the 2008 terror attack in Mumbai. The sense of urgency in New Dehli to get the deal done has also eased due to domestic gas discoveries from the Krishna-Godavari field. In addition, India may be responding to its own cost concerns about Iranian imports, and to US pressure regarding doing business with Iran.
As India's interest wanes, Pakistan's appears to be rising. Islamabad is facing an acute energy crisis: roughly 50 percent of Islamabad's energy needs are derived from natural gas, and the country urgently needs to tap into new sources of energy.
The IPI project is increasingly looking like the only viable option that can meet the country's rapidly rising demand within the needed timeframe. According to one estimate, if IPI or some other source does not come online by 2012, Pakistan could face energy shortages. Pakistan signed a deal last June to import 750 million cubic feet of gas per day, enough to generate 5,000 megawatts of electricity, but that won't come close to meeting the country's need. In late August, the Economic Coordination Committee approved the IPI route, but construction will be dependent on foreign contractors.
Other options -- most notably a route that would ship Turkmen gas via Afghanistan to Pakistan -- remain blocked by political factors, namely the Taliban insurgency in Afghanistan. [For background see the Eurasia Insight archive].
To Pakistan's potential benefit, it appears that needed foreign assistance for an IP route may well materialize. The Kremlin-controlled entity Gazprom is especially eager to promote Iranian-Pakistani energy cooperation, which would serve Russian economic and political interests. The Kremlin has long been interested in channeling Iranian gas away from Europe, thereby ensuring that Tehran does not compete with Moscow in the European export market. Moreover, an IP pipeline would limit Turkmenistan's ability to diversify its customer base, and thus break its current energy-export dependence on Russia. In another plus for Moscow, an Iranian-Pakistani route would frustrate US efforts to reorient Central Asian energy flows to South Asia. [For background see the Eurasia Insight archive].
Eager to secure Russian support, Iran invited Gazprom to participate in talks with Pakistan this past summer. Tehran eventually agreed to a Gazprom role in the construction of the pipeline.
Washington continues to exert heavy pressure on Pakistan not to build the pipeline. US officials have hinted that they might withhold financial aid for Pakistan, if Islamabad proceeds with the project. At least some institutions within the Pakistani leadership, most notably the powerful ISI intelligence apparatus, has voiced doubts about doing business with Iran. But with the intelligence agency's motives remaining unclear, there is no telling whether ISI opposition is steadfast or wavering.
What is known is that there is considerable tension in US-Pakistani relations. That fact was underscored by Secretary of State Hilary Clinton's contentious three-day trip to Islamabad in late October. Clinton had blunt words for Pakistani leaders, charging them with a lack of effort in the struggle to contain Islamic radicals. Meanwhile, Clinton faced repeated and pointed criticism from Pakistanis, with much of the anger connected to US drone missile attacks against suspected militant targets.
Another given is Pakistan's need to import energy. If Islamabad can't meet its energy needs, there's a high risk that it would become an exporter of instability to its neighbors, including Central Asiain states. Ultimately, that is the geopolitical driver behind the IP pipeline, and it is an issue that posesses profound consequences for Iran, as well as South and Central Asia.
Stephen Blank is a professor at the US Army War College. The views expressed this article do not in any way represent the views of the US Army, Defense Department or the US Government.