Tehran, New Delhi and Islamabad are negotiating seriously over a pipeline originating at the South Pars field in Iran, crossing Pakistan, delivering much needed natural gas to western India. The proposed $4 billion pipeline offers something for everyone. Tehran could gain income and develop energy links to the south. Islamabad could supplement its natural gas reserves and pocket transit fees. New Delhi could secure the energy it needs to grow. In the process, the pipeline could mandate cooperation among three states in a tension-ridden region.
The pipeline project still faces significant hurdles. Tehran needs to offer New Delhi a reasonable price for natural gas. Washington opposes any project that would benefit Iran as long as Tehran’s nuclear ambitions remain unchecked. New Delhi needs to be satisfied that Islamabad will not turn off the tap, and Islamabad may not be able to assure supplies even if it wants to, since the pipeline would cross the restive province of Baluchistan, where it could become a magnet for tribal grievances.
Despite these obstacles, the pipeline talks have never been this close to success. If supplies can be assured, financing is unlikely to be a problem, despite Washington’s opposition, since India and Pakistan will not accept a US veto over their energy needs and economic security. A hollow US threat to oppose the project is therefore unwise, given the pipeline’s potential dividends for promoting regional peace, security and economic development. Tensions on the Subcontinent have held the pipeline hostage for over a decade, but these tensions are now thawing. India and Pakistan have begun a bus link across the Kashmir divide. “Cricket diplomacy” has been in full swing, with President Pervez Musharraf and his family watching the Pakistani national team compete in India. The prime ministers of both countries have made economic development their top priority. India cannot hope to achieve significant growth rates without new sources of energy, and Pakistan needs to position itself as a crossroads for trade between Central Asia and the Subcontinent. The trans-Pakistan pipeline is central to these goals. It is projected to carry three billion cubic feet of natural gas per day, one-third to Pakistan, the remainder to India.
Can Pakistan be trusted to transport the energy that India needs? New Delhi is hedging it bets, developing contingency plans against disruption. Disrupting energy flows would be most unwise for Pakistan, resulting in the loss of transit fees and alienating Iran, India, and capital markets. A successful pipeline could actually leverage Islamabad to improve domestic governance in Baluchistan. It could also have substantial ramifications for Indo-Pakistan relations, along with the opening of bus and rail lines. Is the Pakistani military willing to transition from confrontation to cooperation? Conventional wisdom remains skeptical on this score, but unusual things are happening in South Asia. The relaxation of tensions on the Subcontinent has widespread popular support. In addition to cricket lovers and divide families, traders, tourists and pilgrims are eager to travel across boundaries. Reversing these gears will be deeply unpopular.
President Pervez Musharraf has made economic growth a paramount objective. In this spirit, Pakistani officials have extended security guarantees for the pipeline. New Delhi has climbed down from linking the pipeline to Pakistan granting it Most Favored Nation trading status. Last month, the Indian cabinet gave the petroleum ministry the green light to negotiate with Pakistan. Meanwhile, direct trade between India and Pakistan is rising. The pipeline project is still not a sure thing. One of the parties may balk. Indo-Pakistan tensions could once again rise. Alternative pipeline routes or means of supply might be more politically and economically viable. But it is remarkable how far New Delhi and Islamabad have traveled since testing nuclear weapons in 1998, touching off a succession of brutally difficult crises.
Considering this remarkable journey- and the likely benefits of a pipeline deal- the Bush administration’s opposition to the project appears unwise. Even though the Iran Libya Sanctions Act imposes US sanctions against companies that invest in Iran, these penalties allow for a presidential waiver, which has been granted in the past.
President George W. Bush should not have to choose between supporting a pipeline for peace and checking Iran’s nuclear ambitions. Both are essential. It makes sense to begin thinking about the Iran-Pakistan-India pipeline as a potential opportunity instead of a problem. The Bush administration needs to work with Europe’s envoys to Tehran on how the pipeline could not only help transform India-Pakistan relations, but also help promote a satisfactory outcome to Iran’s nuclear ambitions.
This article was originally published in the Indian Express on April 19, 2005.