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The geopolitics of
pipelines
By Paola Ceragioli and
Maurizio Martellini
 Over the past 90 years
Iran, with its huge oil reserves representing 9 percent
of those of the world, has founded its strategic and
economic interests in the Persian Gulf on oil. Its
economy is based on oil export revenues, which
contribute as much as 80 percent of its total export
earnings and 40-50 percent of the government budget.
In recent years, Iran has held a share in the
Organization of Petroleum Exporting Countries (OPEC)
production of 13-14 percent. In order to maintain this
share, it needs not only to counterbalance the natural
decline in the present production, but also to meet the
requirements for additional production capacities. But
many things are changing.
One important
development is in the prominent role of natural gas as
the preferred fuel in world energy demand. This has
affected the economic and strategic interests of Iran
since the country also has the second largest gas
reserves in the world. Gas exports to Turkey, which only
started in December 2001, was the first case.
Thus, Iran began the development of its huge gas
resources very late, also because of difficulties in
finding gas markets abroad. Previously, Iran had mainly
wasted its large amount of gas in flaring, open burning
and pumping it back into the reservoirs to enhance oil
recovery.
Another important factor of change in
the past decade has been the discovery of large oil
reserves in the Caspian Sea. In view of such
discoveries, Iran's geographical position has the high
privilege of being the only country linking the two
strategically hydrocarbons regions of the Caspian Sea
and the Persian Gulf.
Thus, in principle, Iran
could have the opportunity to play a central role in the
competition for new pipeline networks, offering an
important waterways to the landlocked Central Asian
countries. However, up to now, United States opposition
and "Iran-Libya Sanctions Act" (ILSA) sanctions, have
strongly hindered projects for an Iranian route. To this
end, the approval of the controversial Baku-Ceyhan
pipeline construction in the summer of 2002, involving
Azerbaijan, Georgia, and Turkey, has been a highlight
confirming this tendency to Iranian exclusion.
Meanwhile, important internal developments have
contributed to altering Iranian perspectives on energy
policy. On the one hand, the shift of the center of
gravity of the Iranian economy and demography, from the
south to the north of the country, has increased the
role of Central Asia and the Caspian region in Iranian
foreign policy. On the other hand, Iran itself needs to
satisfy its growing national energy demand, besides
enhancing oil recovery in old oil reservoirs.
Another factor affecting Iranian policies is the
strong increase of energy demand in India. Iran has been
discussing with India possible gas exports for 12 years
now. And in early May, Iran and India quietly reached a
major long-term gas agreement under which Iran will
supply India with 5 million tonnes of liquefied gas
(LNG) annually for 25 years, and with 100,000 barrels of
oil per day for a trial period of one year.
The domestic situation
Iran was the
first country in the Middle East to export gas via
pipelines. Therefore, it has an already existing
internal pipelines network of almost 4,000 kilometers of
major lines, covering both the south-north and east-west
regions. This could represent a basis for a new enlarged
pipelines system. Along a south-north axis, the Persian
Gulf is connected via pipelines to the Caspian Sea. On
the other side the existing east-west pipelines extend
from Sarakhs on the Turkmenistan border to Rezaieh near
Turkey. The convenient transit routes, linking the
landlocked Caspian Sea to the Persian Gulf, are those
via Sarakhs, Dargas, Astra and the northern port cities
of Neka, Noshahr and Anzali towards the southern ports
of Chabahar, Bandar Abbas and Bandar Imam Khomeini.
The Iranian constitution (1979) strictly bans
any concession to foreigners in production or commerce,
thus prohibiting any sharing on energy investments or
operations. However, a 1987 petroleum law permitted
contracts between the Ministry of Petroleum, state
companies and "local and foreign individuals and legal
entities".
Buy-back contracts date to the time
of president Akbar Hashemi Rafsanjani and the
post-Iraq-Iran war years. They were introduced to
foreign companies in 1995, during the first
post-revolutionary oil and gas seminar that was held in
Teheran, but at first they did not receive much
attention. Since President Mohamed Khatami's election in
1997, some criticism started to come from the faction
opposed to the new government.
In buy-back
contracts, the contractor funds all investments and is
responsible for performing all activities including
drilling, exploration and pipeline execution. The
contractor receives investment plus interests and
profits from the Iranian state oil company (NIOC) in the
form of a production share. Then, after the contract is
completed, the investor transfers all the operations of
the field to NIOC. The advantage of the contractor
company depends on the fixed rate of return, which
prevents both from possible lowering of the oil price
and geological risks. In fact, in the first case, NIOC
would sell a larger amount of oil and gas to meet the
compensation, while, if reserves were overestimated, the
rate would remain the same.
On the other hand,
the company has no guarantee that it will be allowed to
develop the fields. Since strong objections have been
made to the buy-back arrangements in Iran, some changes
have recently been introduced. A first objection among
Iranian opposers of the mechanism concerns the danger
that foreign countries could tend to maximize output
extraction in the first few years of the operation in
order to get back their investment on schedule, without
taking care of an overall optimization of the reservoir
development, or even cause possible permanent damage to
the reservoir.
Other objections regard the
absence of any obligation or incentive for foreign
companies to employ their state-of-art technology since
no long-term investments are involved. Similarly, no
interest to transfer know-how is induced in foreign
investors.
As a consequence, in 2001 Italian ENI
signed a new form of buy-back contract where incentives
and penalties, based on performances, were introduced.
Any oil project, along with its budget, needs to be
approved by the majlis, the Iranian parliament, as a
first step, before passing through a more specialized
commission, still including three members of the majlis,
but also the board of directors and the trade commission
from NIOC.
While Iran has been successful in
concluding buy-back contracts on new oil and gas
projects, more difficulties have been encountered in
attracting direct foreign investments to Iran.
Iran and the Caspian Sea
In the years
following the war with Iraq, war damages in the south
were not totally compensated and large parts of the
southern population left for the north. Meanwhile, the
northeastern regions developed faster than in the south
and the west of the country. This caused a gradual shift
of the center of gravity of the Iranian economy and
demography from the south to the north, thus increasing
the relevance of Central Asia and the Caspian region.
Thus, in the game of the various possible
pipelines to connect the landlocked Caspian Sea, Iran
has claimed its role not merely as a transit route, but
also as a final market for Caspian oil. Tehran not only
claims to have offered the cheapest transit route in its
region for oil and gas, but also to be competitive from
a security point of view. This is because, as regards
transnational pipelines, the role of Iran also as a
final user of Caspian oil and gas could represent a
further guarantee that oil and gas flows would not be
interrupted. Heating and productive activities in the
northern provinces would immediately be affected in case
of interruptions.
However, as regards
transnational pipelines, price is just one argument
among others, and strategic issues are often dominant.
The ILSA sanctions and strong US opposition to any
Iranian influence in the Caspian Sea are still playing a
leading role, as the Baku-Tiblisi-Ceyhan pipeline seems
to show. A debate over whether this pipeline would be
commercially viable took eight years, since there are
serious questions as to whether there is enough oil
volume from Azerbaijan to justify the high costs; human
rights and environmental issues have been bypassed.
The proposed Iranian alternative - a
Baku-Tabriz-Ceyhanoption route - has been defeated for
cost/benefit factors, and the completion of the
Baku-Tiblisi-Ceyhan pipeline is scheduled for 2004, with
flowing oil planned for 2005. From the United States
point of view, the strong political attraction of such
an energy corridor from the Caucasus to the West depends
on the denial of a significant role for Iran as a
Caspian energy exporter, and because it reduces the
dependence of Caucasus and Central Asian countries on
the Russian pipeline network.
To improve its
overall cooperation in central Asia, Iran relies also on
the Economic Cooperation Organization (ECO), which is
based in Iran. ECO was founded in Islamabad on November
1992 and its member are Iran, Turkey, Pakistan and the
Central Asian countries.
At present, Iran's
infrastructure and population are located primarily in
the northern part of the country, while nearly all its
oil and gas reserves are in the south. Thus, over
700,000 daily barrels of oil are currently refined in
refineries located in the northern provinces for local
consumption, even though such refineries have
considerable excess capacity. Over 40 billion cm3 of gas
are currently pumped daily from the southern part of the
country to the northern provinces.
In Iran there is
also a high internal demand for cheap oil. This could be
fulfilled by means of the Caspian oil. Thus, Caspian oil
could be transported towards the northern refineries of
Iran and consumed in the northern Iranian provinces.
Meanwhile an equivalent amount of oil produced in the
reservoirs of southern Iran would be shipped to the
Persian Gulf from the Iranian coasts.
Iran
complains that oil from Kazakh sources is of
inconsistent quality (paraffinic and sulfurous) while
Kazakhs firms are pressured by the US not to use the
route even if it is much cheaper. This kind of route for
Caspian oil has been widely considered much cheaper than
any other possible transportation via new pipelines.
Washington has opposed large-scale oil swaps with Iran
by American companies, even though the ILSA does not
prohibit foreign companies from trading in Iranian crude
oil and gas.
Another big concern for Iranian
policy towards the Caspian region is the unresolved
legal status of the Caspian Sea. Up to 1991, Iran and
Soviet Union were the only two countries overlooking the
Caspian Sea and therefore there were only bilateral
treaties between them, which envisaged a joint sharing
of the Caspian sea. No distinction was made between
seabed and water surface. Since the collapse of the
Soviet Union in 1991, the existence of new riparian
Caspian Sea states - there are now five in all
Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan -
has imposed an urgency for defining a new legal status
for the Caspian Sea, especially since the discovery of
new huge offshore hydrocarbon reservoirs.
If the
Law of the Sea Convention (1982) were applied to the
Caspian Sea, an equal division of the sea and undersea
resources should be considered among the riparian
states. If instead the Caspian Sea is not treated as a
sea, its resources would be developed jointly, based on
a "condominium" approach.
In the past, the two
extreme positions were the one of Azerbaijan and Iran:
the first advocated a full division both of the water
surface and the seabed, while Iran's preference was the
full "condominium approach", without any division among
national sectors.
However, the partial
development of some Caspian underwater resources by
countries in the offshore regions, generally considered
as their own national waters, has gradually reduced the
probability of a joint regime. The original positions
also seem to have evolved, and since 1997 Iran has
apparently abandoned the joint sovereignty option,
starting to favor a full division of the Caspian Sea as
regards both water surface and sea floor.
Thus
the principle of a seabed shared among the five littoral
countries now seems to be commonly accepted. It is the
criteria for such division that is still to be agreed.
The main problems are the different sizes of the shared
sectors and the overlapping of some offshore reservoirs.
As regards the surface, many options are still open:
from full division to the establishment of national
waters, the widths of which can again give rise to many
different possible options. The water surface regime
involves passengers and cargo navigation, environment,
fishing (including the fishing of the world's largest
population of sturgeon-producing caviar), besides
warship navigation.
The most recent document
where official borders are mentioned dates back to 1957,
in the Soviet Union era, where Astara and Hasan-Guli
were indicated as the land-based border points between
Iran and the then USSR, but without clarifying if the
undersea dividing line should simply correspond to a
straight line between the two landings. Such an enclosed
area would represent 11 percent of the whole Caspian Sea
area, not accepted by Iran given the entirely different
situation in which it was agreed.
A basic
principle to divide the Caspian Sea is the one of the
"median line": where national zones meet in the middle
of the sea, borders would be equidistant from the facing
coastlines. However, by such a principle, the sea
division would favor those countries with coasts that
are convex with respect to the Caspian Sea. Thus
Kazakhstan would receive 28-29 percent of the Caspian
Sea, followed by Azerbaijan with 21 percent, Russia with
19 percent, Turkmenistan with 18 percent and last Iran,
which would receive the smallest sector of Caspian Sea
with 13-14 percent. But Iran is willing to accept a
sharing option only if based on equal 20 percent
sectors.
Meanwhile, several countries have
signed bilateral agreements, often ascribing different
regimes to the seabed and to the water surface. Iran
rejected as illegal all unilateral and bilateral
agreements, arguing that only the old Soviet-Iranian
agreements could be considered valid until a new legal
status of the Caspian Sea is achieved among all the
states.
Nevertheless, besides development of
off-shore reservoirs lying in seabeds of undisputed
national ownership, exploration operations were also
started in some contested area, giving rise to strong
tensions in the region, so that they were eventually
forced to a halt. Both Iran and Turkmenistan oppose
efforts to develop natural resources in the disputed
area until a final legal status is achieved for the
Caspian Sea.
The project of laying trans-Caspian
pipelines, strongly opposed from the start by Iran and
Russia, and then abandoned by all the Caspian countries,
could now be revived following the approval of the
Baku-Ceyhan pipeline, in order to "fill" the expensive
pipeline.
And for the first time in centuries,
Iran does not have a common border with Russia. The
Russian counterweight disappeared in 1991, precisely
when the Gulf War provided the impetus for a long-term
American military buildup in the Persian Gulf.
Iran had tried to prevent the collapse of the
Soviet Union. During the Azeri crisis, Rafsanjani warned
Baku against a Soviet dissolution, which would have
favored the West and Islam. Indeed, the deterioration of
Russian influence around the Caspian Sea has been
combined with a growing American - and even European -
political and commercial involvement in the area.
Containing their influence has been since then a common
interest of Russia and Iran, especially after the
buildup of American military influence in the region
following September 11.
Russia and Iran have
begun to share the same strategic alignments. In the
Nagorno-Karabakh conflict in Azerbaijan, while claiming
a neutral position, both Iran and Russia have not hidden
their pro-Armenian stance. Only in Tajik conflicts have
their interests diverged, so that they have supported
antagonist groups. In March 2001, during a meeting in
Moscow, President Vladimir Putin and Khatami signed the
first broad cooperation agreement since Iran's Islamic
revolution in 1979.
As regards energy policy,
Russia and Iran are strong regional rivals, possessing
the two largest gas reserves in the world and being
respectively the third and fourth oil producers in the
world. Thus they represent alternative routes for
pipelines in the Caspian Sea and alternative suppliers
of energy.
Moreover, Russia and Iran have often
clashed on crude oil prices. In fact, while Russia was
looking to increase its market share, Iran seemed more
inclined to promote production cuts to sustain oil
prices. Until the dissolution of the Soviet Union, only
relatively old bilateral treaties signed between the two
countries determined the Caspian Sea legal status: the
one signed in 1921 between Persia and Russian Soviet
Federative Socialist Republic and the one signed in 1940
between Iran and the Soviet Union. In these treaties no
differentiation was emphasized between warships,
passengers and cargos, and a joint sharing of the
Caspian sea resources was established, without any
distinction between seabed and surface.
Since
neither Russia nor Iran have found any offshore
reservoirs, in principle they had no interest in abiding
by the old rules after the Soviet collapse. However, in
1998 Russia signed a bilateral treaty with Kazakhstan,
in which the latter's right to its subsea resources was
recognized, while joint control of water surface was
agreed upon. It was de facto an abrogation of the
original Iranian-Russian condominium, and Russia did it
without consulting Iran.
Another energy policy
issue between Iran and Russia regards nuclear reactors.
Following the meeting with Khatami of March 2001,
despite opposition from the United States, Putin
promised closer cooperation with Iran over its nuclear
energy program. In the meeting of April 2002, Putin
reaffirmed his intention to sell Iran a Russian-built
nuclear reactor.
Relations with the other CIS
countries
Starting from a conservative and
cautious attitude towards the newly independent
countries, Iran evolves towards a more assertive policy
as new perspectives are coming to Iran in Caspian oil
transportation.
Turkmenistan.
Turkmenistan is not at all a country with particular
affinity with Iran: secular, with close ties with the US
and Israel (the companies of which play an important
role in the Turkmen economy) it had also conducted a
long dialogue with the Taliban regarding the
trans-Afghan pipeline towards Southeastern Asia.
However, Iranian-Turkmen ties have been characterized by
high pragmatism and economic cooperation. Thus, besides
the many efforts by the post-Soviet republics to create
hydrocarbon exporting markets, alternative to Russia,
only one pipeline has been constructed since the
collapse of the Soviet Union: this was in 1997, to
export Turkmen gas towards the northern provinces of
Iran. Thus Iran imports some natural gas from
Turkmenistan, for use in Iran's northern areas, but
represents less than 1 percent of Turkmen non-CIS
imports.
In April, Turkmenistan signed a
framework agreement on gas cooperation with Putin as
well as a 25-year contract on gas supplies to Russia
with Russian natural gas monopoly Gazprom. Turkmenistan
pledged to supply up 100 billion cubic meters of gas to
Russia from 2010 onward or a total of 2 trillion cubic
meters in 25 years. Russia would pay Turkmenistan US$44
per thousand cubic meters, 50 percent of the payment in
barter and 50 percent in cash.
Kazakhstan. Iran was the second
country to recognize Kazakhstan and open its embassy in
Almaty - at the time still Kazakhstan's capital.
Kazakhstan and Iran have been cooperating in the
contexts of the Islamic Conference Organization, in the
Afghanistan and Tajikistan regional questions, in oil
cooperation, despite harboring different positions on
the Caspian legal status.
Kazakhstan considers
transportation and communications as the basic levels of
cooperation with Iran. In 1997, an agreement was signed
between Iran and Kazakhstan concerning an oil swap of 2
megatons of oil per year. Kazakh officials pointed out
that the Iranian route provided the most economical and
secure option.
In April 2002, during Khatami's
tour of the region, he signed a protocol for commercial,
technical and cultural cooperation with Khazakstan. On
that occasion the country invoked again the possibility
of building a pipeline to Iran while, at the very same
time, the Kazakh foreign minister was declaring to
parliament that the US commercial involvement in the
Caspian Sea also had national security implications for
Kazakhstan. In any case, since the Baku-Ceyhan pipeline
construction began in summer 2002, things may have
changed as Khazak oil could in future be transported
towards Western markets through the oversized
Baku-Ceyhan pipeline, thus making it profitable. A
passenger train service on a 3,000 kilometer railway
from Almaty to Tehran, passing through Tajikistan,
Uzbekistan and Turkmenistan, will allow easier
connections between the people of the two countries.
Azerbaijan. Iran and Azerbaijan,
having historical and cultural affinities, share about
618 kilometers of land borders, besides bordering in the
Caspian Sea. One specific situation characterizes and
affects in complex ties between the countries: in Iran
there are many more Azeri - a population of Turkic
ethnicity and language - than in Azerbaijan itself.
Iranian foreign policy has never played on ethnicity
because it could have backfired in a multi-ethnic Iran,
possibly giving rise also to ethnic Azeri feelings
inside the country.
President Haidar Aliyev
(currently in power) has dismissed Azeri claims on
"southern Azerbaijan", and the idea of a "Great
Azerbaijan" lacks appeal among the Iranian Azeri,
despite the 1994 riots demanding the creation of a
separate province. There are still some Iranian Azeri in
favor of a return of northern Azerbaijan to the
"motherland", from which they were detached in 1823.
Things might change if Azerbaijan can become an oil-rich
pole of attraction and a bridgehead for Turkey and the
West, in the presence of an economically depressed Iran.
From a religious point of view, Azerbaijan has
the second largest Shi'ite population in the world,
(after Iran) being the only other country with a Shi'ite
majority. Although Shi'ites strongly identify with Iran,
this affinity has not avoided tense relations between
the two countries. Even if officially neutral, Iran
supported Armenia over the Nagorno-Karabakh conflict,
following an Iranian tradition of Armenian support
against Turks. Moreover, Iran also opposes Azerbaijan's
connections with Turkey, the United States and Israel.
From a commercial point of view, the two
neighboring countries have jointly managed various hydro
projects straddling their common border on the River
Aras. In the mid 1970s the Iranian gas network was
connected to the Soviet network in Azerbaijan to export
Iranian gas to the Soviet Union, by means of the
pipeline Baku-Astara. Through this route, gas swaps
could take place from Azerbaijan.
However, in
July 2001 diplomatic tension arose between the two
countries. Vessels belonging to oil conglomerate
BP-Amoco, charged by an Azeri consortium, were
threatened by an Iranian warship while they were
conducting explorations in a field lying in an
Iranian-Azeri contested area. British Petroleum,
operator for this field by an agreement between
Azerbaijan and an international consortium, then
announced that it would suspend its surveys in the
disputed area until the Caspian Sea controversies were
clarified.
Armenia. Armenia has no
internal petroleum resources (hydropower and nuclear
power being the only local sources of energy) and has to
rely on foreign gas imports. In 1992, Iran and Armenia
signed a general agreement on connecting their gas
networks by constructing a new gas pipeline. The entire
pipeline should be 141 kilometers long. According to the
project, the pipeline should start near Tabriz and lie
in Iranian territory for 100 kilometers. Then the
remaining 41 kilometers should end near Magri. Here it
could be connected to the already existing gas pipeline
network.
The European Union supports an
extension of the projected pipeline to Georgia's Black
Sea coast, from where gas could be delivered to Europe
through a route alternative to the Iran-Turkey-Greece
route. Thus EU plans to devote US$30 million to prepare
the technical and legal documentation for this pipeline.
One reason why the EU is in favor of this project is its
concern about the Medzamor nuclear power plant which had
already been closed in 1989 because of seismic and
safety fears. Facing an acute energy crisis, Armenia
started operating the plant again, but Europeans are now
pressing for closure.
Such a pipeline could give
the Turkmens a new avenue to export their hydrocarbon
resources, alternative to the trans-Afghanistan one.
Pipeline construction had been planned for 2001, but the
project has been postponed because of two main
obstacles. The first one, claimed by Armenia, regards
the price of the Iranian gas. In fact Russia has always
supplied gas to Armenia at a cheaper price than the
international one and therefore cheaper than the Iranian
price. The second obstacle, on the Iranian side, regards
Armenia's payments, which could be made by supplying
electricity to Iran.
Iran and
Turkey
By a 1996 agreement, Turkey was supposed
to start importing Iranian gas by 1999 for 23 years. The
deal was strongly opposed by the Bill Clinton
administration for fear that it could have hampered the
efforts to isolate Iran, while recognizing that Turkey
had important energy needs and not a lot of good
options. In order to avoid US sanctions, each country
was responsible only for work on the pipeline portion
lying on its own soil. The gas transportation costs for
Turkey were lowered because the pipeline use, from the
Iranian side, was shared with the gas delivered to
Iranian users of the northern provinces. The gas flow
was postponed several times because of work delays on
both sides. Reportedly, US opposition also seemed to
have played some role in the delays by blocking the
delivery of powerful compressors for the project.
In the end, in December 2001, Turkey started
importing gas from Iran, via a 2,577 kilometer pipeline,
from Tapirs to Ankara. Iran had previously threatened to
seek fines against Turkey because of the delays. Turkey
is recovering less quickly than expected from its own
economic crisis, and consequently, since the gas flow
started, the amount has been so small that it hardly
seems to have been worth the investment. In fact Turkey
imported less than it promised to buy. Thus, at the end
of March 2002, Iran stopped its electricity exports to
Turkey. In summer-autumn 2002, Turkey suspended its gas
imports from Iran for four months, claiming fuel quality
problems. In November 2002, the gas flow from Iran to
Turkey was resumed, after negotiating a lower gas price.
The Indian and Pakistani
markets
Energy requirements for both India and
Pakistan have been rising at the rate of 6-7 percent
annually during the past decade, and expected to double
at the end of the next decade. Iran has been negotiating
with India on a pipeline since the early 1990s. And in
early May, Iran and India quietly reached a major
long-term gas agreement under which Iran will supply
India with 5 million tonnes of liquefied gas (LNG)
annually for 25 years, and with 100,000 barrels of oil
per day for a trial period of one year.
Iran has
just two basic options here: either to lay a pipeline
overland from Iranian gas fields to India, via Pakistan,
or to lay a pipeline under water from the fields to the
final destination, thus bypassing Pakistan. India has
always insisted on avoiding Pakistani territory.
On its part, Pakistan has always favored the
passage of pipelines on its soil to get annual revenue
in terms of royalties. At the moment Pakistan is not
interested in getting gas from any pipelines. However,
unless domestic exploration programs result in new
discoveries in the next few years, the Pakistani
shortfall in gas supplies anticipated by 2005-06 could
be met only through new imports. In this case, a
possible supplier could be Iran, or alternatively Qatar,
Turkmenistan or the United Arab Emirates.
In
February 2002, in spite of a new India-Pakistan crisis
following the December 13 attacks on the Indian
parliament, a memorandum of understanding to undertake a
feasibility study on an onshore route for the transfer
of Iranian gas to India via Pakistan was signed between
the Iranian oil minister and his Pakistani counterpart.
A feasibility study will be conducted by an Australian
company, while a feasibility study for the deep sea
pipeline has been commissioned to an Italian company.
In August 2002 the Russian company Gazprom
revived its project of an underwater pipeline,
previously abandoned for its high cost. Following the
"Blue Stream" model, the pipeline should lie at a depth
of 2 kilometers in Pakistan's territorial waters, thus
well protected against any possible terrorist attack.
However, at the end of 2002, India's prime minister
raised strong objections to this project because of the
unresolved tensions with Pakistan.
The
alternative route, excluding Iran, remains the
trans-Afghan pipeline, which has seen the long time
involvement of the Argentine company Bridas and the US
company UNOCAL over the period 1994-1999.
With
regard to Pakistan, the country is importing crude oil
from Iran, toward which it exports motor gasoline. Its
import of light crude diesel from Iran started in the
summer of 2000. In 1991, Iran and Pakistan signed an
agreement for the establishment of a refinery in
Balochistan. Over the past two years the common issue of
cross-border smuggling of petroleum products was
undertaken: Pakistan has asked Iran to help in the
control of motor spirit smuggling from Iran, while Iran
wants Pakistan to help it contain drug smuggling.
The US and Europe
Since 1993, when
the Clinton administration took office, the United
States has pursued the so-called policy of "dual
containment", aimed at isolating Iraq and Iran, in
particular to deter Iran from destabilizing the
pro-American regimes of the Persian Gulf.
However, although Iraq has been subjected to UN
embargoes, which were supported by European countries,
sanctions against Iran were not shared by all European
allies. In 1995, Clinton signed executive orders
prohibiting at first only US companies but then also
their foreign subsidiaries from conducting business with
Iran, while also banning any "contract for the financing
of the development of petroleum resources located in
Iran".
The US Iran-Libya Sanctions Act (ILSA) of
1996 imposes mandatory and discretionary sanctions also
on non-US companies investing more than $20 million
annually in the Iranian oil and gas sectors.
Notwithstanding comprehensive unilateral sanctions
against Iran and Libya (1986), the ILSA is different in
jurisdictional scope, involving not a primary sanction,
as the previous embargoes did, but a secondary boycott.
Thus, US-based CONOCO was forced by the ILSA to
abrogate a big contract in Iran. When in autumn 1997
France's Total and Malaysia's Petronas signed a $2
billion (well beyond the $20 million threshold)
agreement on the largest gas field in Iran, ILSA was
openly violated.
Meanwhile, in May 1997, Khatami
was elected president of Iran and on January 1998 in a
CNN interview he proposed a "dialogue among
civilizations". In 1997 the US government decided that
the new pipeline from Turkmenistan to Iran did not
technically violate the ILSA, while in May 1998 the
Clinton administration granted a waiver to the companies
involved in order to avoid clashes with its European
allies.
Following this, ENI, Royal Dutch Shell,
TotalFinaElf and British Petroleum have agreed to large
projects in Iran without any reprisal from the US
government. In March 2000, then US secretary of state
Madeleine Albright announced the lifting of certain
sanctions against Iranian luxury goods, such as carpets
and caviar. In 2001, the US Department of State singled
out Iran as "the most active state sponsor of terrorism
in 2000", and in July 2001 the US Congress voted
overwhelming to renew the ILSA for five more years.
The ILSA has angered the US's allies as they see it
as an affront to their sovereignty and their
independence in trade policy. Given the situation,
various companies have tended to delay commitments, thus
slowing down the development of Iran's energy sector.
After September 11, 2001, Khatami strongly
condemned the episode, defining it as an "anti-human and
anti-Islamic" atrocity. Iran, although a strong opposer
of the Taliban, sharply criticized the US air strikes on
Afghanistan, and argued that efforts to lead a global
war against terrorism should be left to the United
Nations. Relations became tense again following the
State of the Union address by President George W Bush on
January 2002 which referred to Iran as belonging to an
"axis of evil", alongside Iraq and North Korea.
More recently the US has accused Tehran of
continuing to pursue a nuclear armaments program, and
now in the latest pressure, Tehran is accused of
harboring al-Qaeda members.
Paola
Ceragioli, Landau Network, Centro Volta, Como, Italy
and Maurizio Martellini, secretary general of the
Landau Network.
(Copyright Heartland. This
version has been edited by Asia Times Online.)
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