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Pakistani oil diplomacy at a
crossroads
By M K Bhadrakumar
The Indian cabinet decision on February 9
authorizing the Petroleum Ministry to commence
negotiations over the US$4 billion
Iran-Pakistan-India gas pipeline project poses a
dilemma for Islamabad that goes beyond the issues
of energy security or trade ties with India. A
Hobson's choice faces Islamabad: it has to balance
public opinion on cooperation involving Iran and
India with Washington's approval of the project.
Indian Petroleum Minister Mani Shankar
Aiyar said while announcing the government
decision in New Delhi, "The ball is very firmly in
Pakistan's court. It is now for them to respond to
my letter of October [2004] which said that we
hold a 'conversation without commitment' on
cooperation in the hydrocarbon sector and the
Iran-India gas pipeline through Pakistan."
Delhi's decision signifies an all-out
effort to firm up energy supplies through
pipelines from Myanmar, Bangladesh, Iran and
Turkmenistan. A multiple pipeline strategy suits
India. By the year 2025, India should meet 85% of
its energy requirements through international
projects that provide for supplies of 400 million
cubic meters of gas per day - as against the
current need of 90 million cubic meters.
India has shown a distinct preference for
the Iranian pipeline. The reasons are not only
political but economic - and sound practicality,
too. India regards Iran as a close, friendly
neighbor. As Aiyar said during a recent visit to
the US, "We are conscious about difference in
perspectives the world over on how the world
should treat Iran. We are going full steam ahead
in developing our relations with Iran in the
hydrocarbon sector."
The 12-year-old Iran
pipeline idea enjoys a head start over the
Trans-Afghan pipeline (TAP) or the
Myanmar-Bangladesh pipeline. An Iranian delegation
was expected in Delhi this week for further
detailed discussions. Aiyar expressed hope that he
would visit Tehran in June, and by that time an
agreement should be ready committing the Iranian
side to deliver the gas on India's border with
Pakistan. "There will be two sets of bilateral
agreements. In the first one Iran will enter into
a pact with India for delivery of natural gas at
Indian borders, while the second would be between
Iran and Pakistan on how the gas is to be
transported to the Indian border," Aiyar
explained.
In comparison, Aiyar said, "no
steps have been taken till now" on the proposed
TAP project (from Turkmenistan via Pakistan).
Delhi is yet to study the report on the TAP, which
is yet to be handed in by the Asian Development
Bank. Besides, TAP is predicated on the volatility
of the Afghan situation. Would the renegade
Taliban remnants allow it?
Turkmenistan's
Dowlatabad gas fields are the intended supply
source for the TAP. Despite American enthusiasm
for the TAP historically (which Washington has
acknowledged to be the basis of the US interest in
the Taliban from 1994), Russia gained a long-term
access to Turkmen gas reserves that left question
marks about any surplus available with Ashkabad
for feeding the TAP.
Americans have been
working on Ashkabad to resile from the contractual
obligations with Russia. However, other than the
perennial human-rights issue, US leverage on
Ashkabad has limits.
From the Indian
perspective, the delivered cost of Iranian gas,
estimated to be $2.4 per million British thermal
units, is highly competitive - roughly half the
price being demanded by Myanmar for supplies
through a much smaller pipeline. Indian industry
is keen on the Iran pipeline. The pipeline would
be "four times cheaper than any other option" for
India, apart from its "multiplier effect" in the
downstream for the Indian economy in terms of
income and employment generation, Onkar Kanwar,
president of the Federation of Indian Chambers of
Commerce and Industry said in Delhi while
welcoming the government decision.
Pakistan had hitherto put a construct that
it was rearing to go on the Iran pipeline project.
Pakistani officials threatened from time to time
to go ahead with the project, whether India joined
or not. As recently as the end of January, in an
interview with the Financial Times newspaper,
Prime Minister Shaukat Aziz strongly urged the
Indian leadership to back the Iran pipeline as the
first among confidence-building measures that did
not need to be held hostage to differences over
the Kashmir problem.
But now that the
Indian decision brings the project to a
qualitatively new stage, ambiguities are creeping
in. Pakistan's minister of petroleum and natural
resources, Amanullah Khan Jadoon, while broadly
welcoming the Indian decision, entered the caveat
that Pakistan was yet to make up its mind on which
of the three pipeline ideas (TAP, Iran or a Qatar
pipeline) was "feasible" and should be started
first. "A decision would be taken shortly," Khan
announced. Meanwhile, he revealed that his Turkmen
counterpart would visit Islamabad some time in
March to discuss the TAP and that Pakistan was
expecting an "audit report" on the availability of
gas from the Dowlatabad fields that would make TAP
viable in principle.
Lately, Pakistani
commentators have been voicing apprehensions that
Islamabad was under pressure to fall in line over
US regional policy requirements concerning Iran.
Some compared the present juncture to the fateful
times in September 2001, when Islamabad simply
buckled under US pressure and dumped the Taliban.
The recent phenomenon of periodic media "leaks"
from Washington of the nuclear proliferation of
Pakistan's Dr Abdul Qadeer Khan have been
interpreted by Pakistani commentators to be a
Faustian threat to Islamabad to play ball.
The US would, arguably, find it
distasteful if its efforts to isolate Iran
regionally failed, and the TAP's prospects would
be adversely affected if Iran, Pakistan and India
went ahead with their pipeline project. From
Pakistan's point of view, of course, the ideal
solution would lie in being allowed to proceed
with both the TAP and the Iranian pipeline. But
that is something for Washington to decide.
The TAP has always been of deep interest
to the United States. US diplomacy in the region
in the 1990s worked hard to project the Taliban as
a factor of regional stability - while American
oil companies were consorting with the Taliban
functionaries over the TAP's implementation.
Washington is bearing the cost of an
indeterminate war in Afghanistan that is already
three years old - while yet to enjoy the "peace
dividends". At a minimum, the TAP can be a great
money-spinner for decades to come.
The
Taliban have been somewhat rubbished. The US has
also succeeded in establishing control over the
strategic Herat region in western Afghanistan.
Rashid Dostum has been warned in no uncertain
terms to keep away from Badghis province, which is
the gateway to the Turkmen border through which
TAP must pass. The US has persuaded the North
Atlantic Treaty Organization to expand its
operations to western Afghanistan, and to work
under a unified command with the American forces
from February 2006. Thus, the groundwork for
"stabilizing" the TAP's route through Afghanistan
is almost complete. Never before has the TAP dream
come so close to realization.
The least
that Washington would expect from Islamabad at
this point is not to close the door on TAP just
yet - at least until Turkmenistan pronounces its
final word. The US is working hard on him.
M K Bhadrakumar is a former
Indian career diplomat who has served in
Islamabad, Kabul, Tashkent and Moscow.
(Copyright 2005 Asia Times Online Ltd. All
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