During a recent discussion on Indo-US relations, a former senior adviser to the Government of India, who retired some years ago, expressed his surprise that the community of non-governmental strategic analysts in New Delhi had failed to forewarn the policy-makers of the Government of India over the likelihood of opposition from the US to the construction of a gas pipeline from Iran through Pakistan till the Indian border to sell gas to Pakistan and India.
He was referring to the present discussions involving the officials of the Governments of India, Iran and Pakistan over the construction of the pipeline. India, which was unenthusiastic about the project till last year, has changed its stand and offered to buy the gas from Iran transiting through Pakistan if the prices are suitable and the security of the supplies is assured. At the same time, it has made it clear that it would have no role in the construction of the pipeline through Pakistani territory.
The offer to treat the gas pipeline as a stand-alone issue without linking it to progress on the settlement of the Kashmir issue between India and Pakistan was first made by Gen.Pervez Musharraf after he seized power in October 1999. Pakistan badly needed the US $ 700 to 800 million, which Iran then offered to him as the transit fee.
Iran was keen that India should accept the offer. At some of the discussions on its offer at New Delhi in which I participated, security experts of the Government of India advised against India accepting the offer. While agreeing with their security concerns, I advised at the same time against rejecting the offer. I pointed out that this was the first time in some years that Pakistan had offered to talk to India on an economic issue without linking it to the Kashmir issue. I felt that to encourage Pakistan to get into the habit of discussing various issues with India without bringing in Kashmir every time, India should agree to the talks on the pipeline issue without any illusions that the pipeline would go through.
I cautioned that the pipeline would remain a pipedream because the US would never let it materialise unless and until there is a normalisation of its relations with Iran. My advice was not accepted. I had referred to this again in an article of November 26, 2004, on Indo-Pakistan economic relations, which is available at www.saag.org.
Since the beginning of this year, the US, through its Ambassador in New Delhi as well as through Ms.Condoleezza Rice, Secretary of State, during her recent visit to New Delhi on March 16, 2005, had expressed its reservations over the wisdom of India and Pakistan going ahead with this project in view of its concerns over Iran due to various issues.
Since then, many Indian analysts have been urging the Government of India not to succumb to the US pressure and to go ahead with the project. The question is not whether India and Pakistan should heed the US caution or not, but whether Iran would be able to complete the project on its own without financial and technical assistance from the West.
It just does not have the funds required for a project of this nature. The pipeline would be going through an earth-quake prone area, inhabited on both sides of the Pakistan-Iran border by Sunni Balochs, who are strongly opposed to this. The Balochs in Pakistan have revived their independence struggle and have been frequently disrupting the gas supplies from the Sui area of Balochistan to the rest of Pakistan. They have been demanding higher royalty fees from Islamabad for the Sui gas.
Moreover, they have been saying that they will not allow Iran to construct the pipeline through their territory unless it holds negotiations with them and agrees to pay them part of the transit fee directly instead of paying the entire amount to Islamabad.
The US policy towards Iran's oil and gas capability since the Islamic revolutionaries seized power in 1979 has been two pronged: Firstly, in spite of all the sanctions imposed against Iran, it has not tried to disrupt Iran's access to the international oil market because in the absence of Iranian oil, supplies would be affected and prices would go up. Secondly, at the same time, it has created difficulties in the way of Iran procuring modern technology abroad for modernising its oil industry.
The proposed gas pipeline through Pakistan would be the first trans-national pipeline Iran would be undertaking since 1979. The construction and maintenance of a pipeline of this nature through quake-prone areas requires special civil and chemical engineering skills and a high level of expertise in the use of information technology for the monitoring of the gas flow and maintenance of the pipeline.
Iran does not have either the money or the special skills required for a project of this nature. It will have to form a consortium of Western, Australian and Japanese companies for raising the money as well as for engineering assistance in the construction and maintenance. Unless there is a dramatic improvement in the US relations with Iran, Washington would be able to see to it that such a consortium does not come into being. Russia may be able to help technologically, but will not be able to raise the money.
Similar difficulties would arise in the case of the proposed gas pipeline from Myanmar via Bangladesh. Myanmar's position is worse because it suffers from sanctions imposed not only by the US, but also by the West European countries.
While India could by all means go ahead with its talks with Teheran and Yangon in order to give itself the satisfaction of having stood up to US pressure, it should not have any illusions that Teheran or Yangon would be able to execute their project. It would be unwise to base India's energy security plans on the assumption and in the hope that gas would start flowing from Iran and Myanmar tomorrow.
It is not for tomorrow. Nor for the day after either. It is a long way off.
The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute for Topical Studies, Chennai, and Distinguished Fellow and Convenor, Observer Research Foundation, Chennai Chapter. E-mail:
[email protected] Courtesy: South Asia Analysis Group, New Delhi, Paper no. 1314, March 31, 2005.
* Views expressed in this article are those of the author and do not necessarily reflect those of Observer Research Foundation.
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