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Trouble on the Iran-Pakistan Pipeline Front

By Jen Alic | Thu, 22 March 2012 23:44 | 0

Pakistan may be seem to be getting political about the Iran-Pakistan (IP) Pipeline, which the US is working hard, if not deviously, to thwart, but the truth of the matter is that Pakistan’s future energy security may rely on the project.

Pakistani political leaders across the board, from ruling to opposition, are urging the government not to bow to US pressure to forego the pipeline plans in favor helping to contain Iran, Pakistan’s neighbor.

On 21 March, Nawab Zulfiqar Ali Magsi, governor of the Balochistan Province, the country’s largest province and the future host of the Pakistani part of the pipeline, spoke out against Western pressure and expressed a lack of concern over whether Iran became a nuclear weapons power. Likewise, Pakistani Defense Minister Chaudhry Ahmed Mukhtar vowed to continue to build strong relations with Tehran and to forge ahead with the pipeline as quickly as possible. They were not alone.

Particularly, they believe the pipeline, as well as strengthened economic ties with Iran in general, will help to boost development in economically marginalized Balochistan and by default, help quell continuous unrest there.

For Pakistan, the pipeline will be extremely fortuitous, as the country faces severe power and energy shortages. The planned IP Pipeline is 2,700-km long and will launch from Iran’s southern Assalouyeh Energy Zone, covering a 1,100-km stretch of Iran and then passing into Pakistan through the Balochistan and Sindh Provinces. Some 900 kilometers of the pipeline have already been built on the Iranian side, and pricing agreements have been put in place. The Pakistani government wants to the pipeline finished and operational by the end of 2014.

The pipeline deal has a colorful history. Originally, this was a $7 billion deal that included India and was dubbed the “Peace Pipeline.” However, under pressure from Washington (plus a controversially generous gift of civilian nuclear technology access), India backed out in 2009. China then stepped in as an interested party, hoping to extend the pipeline through Pakistan’s port of Gwadar to its Xinjiang Province. China’s ICBC bank, the biggest lender in the world, had taken on the position of financial advisor for the IP pipeline project, but recently it has shown signs of hesitation. While reports indicate that China may be backing out, however, Pakistani officials say that ICBC is still involved in negotiations. While the ICBC, as a major global lender, may be more vulnerable to the consequences of undermining Washington’s sanctions against Iran, other Chinese lenders may not be, and we may see a shift in negotiations to reflect that.

How Far Can Washington Go?

The Pakistani public, wearied by US drone attacks on its territory, are growing increasingly anti-American, and the general public consensus is that the US is fomenting separatism in Balochistan in a parallel effort to sabotage the pipeline project with Iran. Official Islamabad is also convinced that external parties – from the US to India and Washington – are working to divide and conquer in Balochistan.

Balochistan is a convenient venue for stirring up trouble, with huge gas reserves and vast mineral resources, coupled with an ongoing, armed dispute between economically, culturally and socially marginalized Balochi nationalists who have serious grievances against Pakistan's Punjab-dominated federal government. Also important is the fact that Iran has a problem with Balochi separatists, the latter occasionally clashing with Iranian forces in Baloch-dominated regions across the border. If the Balochis are empowered to step up the conflict, Iran could be forced to back down from its pipeline plans in light of the security situation. 

Balochistan became a very public issue for Pakistanis across the board in late-February when the US House of Representatives moved a resolution seeking the right of self-determination for the people of Balochistan. It was intended to send a clear message to Pakistan as Pakistani, Iranian and Afghan leaders made a pledge of cooperation during a summit in Islamabad, with a nice photo opportunity that hit hard at the US cause. (It is also not lost on Washington that Afghan leader Hamid Karzai would support Pakistan in a military stand-off with the US.) Furthermore, it was a clear message that Washington would explore numerous avenues to stop the Iran-Pakistan pipeline from happening.

In the meantime, the possibility of US interference in Balochistan has perhaps given the Pakistani government more impetus to work with the Balochis to head off an intensified conflict. On 18 March, Pakistani Prime Minister Yousaf Raza Gilani said the government was willing to go as far as holding a referendum in Balochistan to determine the will of the people.

On the diplomatic front, US Secretary of State Hillary Clinton has threatened to deal with Pakistan financially – through sanctions – if it insists on moving forward with the IP pipeline.

Failing diplomatic and possible shadow military solutions, the US is also hoping to lure Pakistani into an alternative pipeline deal – the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, bypassing Iran and excluding Russia. The TAPI pipeline, however, is a stop-and-start project that lacks financing and, significantly, security, due to the fact that it would be either targeted by the Taliban or the Taliban would have to be figured in as benefactors, which would mean much for the conflict in Afghanistan. Even the most optimistic observers put a completion date at around 2018.

Again, enter China. Even if China’s largest bank balks and the IP pipeline deal, that does not mean that other Chinese entities won’t pick up the pieces, making the pipeline project that much more difficult for the US to thwart. In the meantime, reports in late March indicated that Russia is also back on the scene eyeing involvement in the IP pipeline through its state-run gas giant, Gazprom – an offer Islamabad will be happy to entertain if China indeed backs out.

The IP pipeline debacle will have serious implications on a number of levels, from wide-reaching geopolitical dynamics to US-Pakistani relations and the war in Afghanistan. The question is how to balance Pakistan’s needs with greater geopolitical realities without turning Pakistan into the next war zone, starting with Balochistan.

By. Jen Alic of Oilprice.com

Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.

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