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South Asia

India, Pakistan and the 'peace' pipeline
By M K Bhadrakumar

Diplomatic circles were keyed up more than usual. The occasion: a meeting between the Indian and Pakistani foreign ministers in Delhi in early September. The reason: a new element had been added this time to the usual anticipation surrounding such high-level interactions between the two nuclear neighbors - a natural gas pipeline project.

Most felt the time had come for the two rivals to join in a common gas endeavor. A joint statement issued after the talks in Delhi reflected as much. "In our discussions, we recognized the importance of availability and access to energy resources in the region around South Asia. We have agreed that the ministers of petroleum and gas could meet to discuss the issue in its multifarious dimensions."

Some Indian commentators view the pipeline as a "peace pipeline", implying its potential as a confidence-building measure (CBM) for the two countries, despite their deep differences. Others have lauded it as a "win-win geo-economic" idea for both India and Pakistan. But, alas, there was nothing more than the carefully-worded diplomatese on what many thought would be the mother of all CBMs. The foreign ministers just wouldn't go any further, but it was more than mutual suspicion that prevented them from doing so. There was more at play here - geopolitics.

What the two couldn't agree on was whether they would go for a Iran-Pakistan-India pipeline or a Turkmenistan-Afghanistan-Pakistan (TAP) pipeline, also known as the Trans Afghan Pipeline. While the proposed TAP project would supply natural gas from the Daulatabad fields in southeast Turkmenistan (a sovereign nation in Central Asia that has broken away from the erstwhile Soviet Union) to Afghanistan, Pakistan and then on to India, the Iran-Pakistan-India line would deliver the gas from Iran to India through Pakistan.

The United States is keenly interested in the sourcing of natural gas supplies for the rapidly growing Indian market. Early September, the US Trade Development Agency signed an agreement with the Gas Authority of India for its partial funding (US$700,000) of a feasibility study for a natural gas grid in India. The US has thereby underlined its keenness to be involved in India's multi-billion dollar market for gas distribution.

Like India, Pakistan also has choices to make. Pakistan has been working on both the TAP and the Iran-Pakistan-India pipeline project. According to Pakistan's oil ministry, its demand for natural gas is expected to grow at about 6% annually. Pakistan's oil minister went on record in August as saying that by the end of the year, Islamabad hoped to prioritize between the TAP, the Iranian project and an altogether third variant, namely, an Oman-Pakistan gas pipeline project.

The main problem with the Iran-India pipeline is that the US is likely to come down heavily on any country that aspires to enter into a collaboration with Iran in the energy sector. The geopolitical reality is that any significant involvement of Iran at the moment in any grand venture would require the tacit agreement of the US and Israel. The two would see any development that could accrue to Iran's strategic power as very much their business until such time as they have quite figured out the "Iran question".

From the American and Israeli point of view, Iran is making an unprecedented bid for regional power, which poses challenges to their vital geostrategic interests in the Gulf region. Americans are thus keenly tracking all developments that could have a bearing on Iran's strategic environment. Turkey, Russia, the European Union and Japan, all are have been put on notice recently on their possible collaboration with Iran. Would India and Pakistan escape notice?

Iranian President Mohammad Khatami drew attention to this geopolitical reality when he pointedly said at a press conference at Dushanbe, Tajikistan recently: "We are certain that all of the region's powers must keep up good relations, and this will allow the regional powers to stand up against the ambitions of certain countries."

Earlier, the US had been frank about its expectations that a Taliban regime in Afghanistan would stabilize the country and thereby facilitate the TAP to India through Pakistan. American energy firms had even opened offices in Delhi in the 1990s in anticipation of the TAP's huge downstream business potential. Soon after the Taliban's ouster in 2001, the US signaled that once Hamid Karzai's interim regime managed to bring about some stability, the TAP would be revived. Some skeptics actually hold that the prime motive for the US intervention in Afghanistan in 2001 had much to do with considerations centered around the transportation of Caspian oil and gas reserves to the international market via a route minus Russia and Iran.

At any rate, the US had hoped to make good the TAP once the presidential election in Afghanistan to legitimize the Karzai government was out of the way. Elections are due on October 9. The Asian Development Bank, which undertook a feasibility study of TAP, recently confirmed that paperwork on the project was complete and that gas supplies could reach Pakistan by 2010.

Meanwhile, Russia's shadow was beginning to appear behind TAP. The Americans had all along predicated TAP on the belief that it would bring unlimited access to Turkmenistan's formidable Daulatabad gas reserves. But last April, while the stabilization of the Karzai regime was still to be conclusively clinched and the shadows of Iraq were lengthening, Russia entered into a 25-year natural gas agreement with Turkmenistan that effectively put it in control of Turkmen gas, as well as its transportation and marketing. The deal, dubbed by world energy circles as "the gas deal of the century", casts Russia in the role of a market leader in natural gas sales.

Clearly, if TAP's original objective was to bypass Russia in the evacuation of Turkmen gas, that has been rendered unrealistic. The million-dollar question now is whether the Americans would strive to transform the TAP into a joint US-Russian project. But that calls for a period of detente in the Great Game.

There are other angles to the equation. Russia would like to make decisions in its energy alliances in its medium- and long-term foreign policy interests. Russia's focus is unmistakably on the marketing of Turkmen gas in the Russian and European markets. By this approach, in geopolitical terms, Russia hopes to find itself in a commanding position as the supply source of natural gas for West Europe (36% as of now) and Central Europe (over 50%).

Russia is buying Turkmen gas at half the international price. The price differential enables Russia to subsidize its own domestic consumers and thereby stimulate the Russian economy, especially its industry. Also, Russia uses Turkmen gas to top up its quantum of gas exports to West Europe, giving itself the much-needed breathing space for the technical upgradation of its northern Yamal and Shtokman gas fields.

Russia would arguably like to take part in the exploitation of Iran's giant South Pars gas fields and for directing future sales of the Iranian gas to India. This would be both expedient as well as geostrategically sound. Expediency suggests that Iran does not compete with Russia for the European market. At the same time, an Iranian gas pipeline with Russian backing or participation heading toward India through Pakistani territory would have been, ideally, quite in consonance with the Russian vision of a multipolar world, apart from strengthening Russia's strategic partnership with India. But the very idea would run into American opposition.

The India-Pakistan joint statement has therefore carefully flagged the "multifarious dimensions" of the saga of energy pipelines for the two south Asian countries. The circumspection is only natural.

M K Bhadrakumar was a career diplomat in the Indian Foreign Service for 30 years.

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Sep 15, 2004




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