Iran-Pakistan Pipeline: Iran's New Economic Lifeline

[Dover]

Thursday, 18 June 2009 00:00
Gal Luft

While the world's eyes are focused on Iran and Pakistan, little attention has been paid to the two countries' recent decision to move ahead with their plans to connect their economies via a 1,300-mile natural gas pipeline to export some 150 million cubic meters of Iran's South Pars field gas to Pakistan per day. The 25-year deal which was signed in the sidelines of a regional summit that brought together Iranian President Mahmud Ahmadinejad and Pakistani President Asif Ali Zardari in Tehran on May 24 may seem like a standard energy project. It isn't. This deal could have profound implications for the geopolitics of energy in the 21-century, for the future of south Asia as well as for America’s ability to check Iran's hegemony in the Persian Gulf.

For both Iran and Pakistan the pipeline project would be highly beneficial. Iran sees in the pipeline not only an economic lifeline at a time when the US and its European allies are trying to weaken it economically but also an opportunity, should the pipeline be extended to either India or China, to create an unbreakable long term political and economic dependence of billions of Chinese and Indian customers on its gas. Pakistan, for its part, views the pipeline as the solution to its energy security challenge. Pakistan's domestic gas production is falling and its import dependence is growing by leaps and bounds. By connecting itself with the world's second largest gas reserve, Pakistan would guarantee reliable supply for decades to come. If the pipeline were to be extended to India it could also be an instrument for stability in the often tense Pakistan-India relations. Under any scenario of pipeline expansion which makes Pakistan a transit state Islamabad stands to gain from transit fees hundreds of millions of dollars every year.

Implications for the great powers

For the Obama administration the signing of the pipeline deal is a diplomatic setback which could undermine its policy of weakening Iran economically. Unlike the Bush Administration which was free to vocally oppose the project, including some unequivocal statements in opposition to the project by Secretary of State Condoleezza Rice, the Obama team chose to remain mute on the issue be it in order to facilitate rapprochement with Tehran or due to its reluctance to burden US-Pakistan relations at a volatile time when the Taliban is at Islamabad’s gate. Should the worst happen and a Taliban style regime take over Pakistan, the economies of the world’s most radical Shiite state and that of what could be the world’s most radical Sunni state would be connected to each other for decades to come like conjoined twins.

While for America the pipeline is an anathema, for Russia it is an opportunity. For several months now, Moscow has been concerned that Iranian gas might compete with Russian exports on the European market. A constituency within the European Union that seeks to lessen its dependence on Russia has been advocating the construction of the Nabucco pipeline to pump Caspian Sea gas to Europe which would bypass Russia. It is therefore in Russia's interest to derail the Nabucco project by diverting Iran’s gas away from Europe and locking it to the Asian market which for Russia is secondary (80% of Gazprom's export profits come from the Western European market). To this end Gazprom is keen to participate in the Iran-Pakistan pipeline project. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky said. This makes the Iran-Pakistan pipeline an irresolvable bone of contention between Washington and Moscow. While for the US the pipeline is a net geopolitical loss, for Russia it is another way to perpetuate its stranglehold over Europe. China also stands to potentially gain from the pipeline. Iranian gas will flow to the Balochistan province port of Gwadar, built with Chinese financing, in the Arabian Sea from where the gas could either be shipped to China either as LNG or run through a proposed pipeline going north, also financed by China, along the south-north Karakoram Highway, the highest paved international road in the world, connecting China's Xinjiang region with Pakistan’s northern areas across the Karakoram mountain range.

But for all the regional powers the Iran-Pakistan pipeline could have the most impact on India..cont'd

http://www.ensec.org/index.php?option=com_content&view=article&id=199:iran-pakistan-pipeline-irans-new-economic-lifeline&catid=96:content&Itemid=345

[dixiegrrrrl]

1. Which explains why we are in Pakistan now, and staying in Afghanistan.

Zbigniew Brzezinski laid it out years ago.
You know, Obama's foreign policy advisor?
The Dems Kissinger?

"America is now Eurasia's arbiter, with no major Eurasian issue soluble without America's participation or contrary to America's interests."
The Grand Chessboard. ( recommend this book, btw...explains a whole lot )

[Dover]

2. Sounds like a war cry to me. And typically egotistical. No major issue soluble without US?...LOL!

I think ol'Brz needs to pen a new book: How to lose at chess and gain friends. Or, in more esoteric terms - How to create a new game that erases black and white squares and dualistic reality.

Actually that region of the world is such a mess, I don't know if anything short of a massive
movement in the U.S. toward sustainable energy as well as new discoveries of same would save
us from that quagmire at this point. Continuing to compete for vulnerable pipeline projects in a weak global economy with global warming and untold other pressures bearing down just seems insane.

[dixiegrrrrl]

3. One of the many many many insane things we and other countries have done.

Most of history is replete with insane ideas, isn't it?
It's like one of those action movies where the here and villain are fighting on the deck of a burning sinking ship, because, gee, WINNING is what is really important, after all.