SPEAKING
FREELY India losing the gas
war By Farid Bakht
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
In the 1930s,
Indians ran the business sector in Rangoon (now
Yangon). Less than a generation later they were
out. In Burma, later Myanmar, one general handed
over power to another general.
The
West shunned the decades-old military power
structure. Independent Delhi dutifully followed
suit, as a "model democracy" should. Meanwhile,
the Chinese moved in.
Today, Yangon and
Mandalay are outposts of Chinese capitalism. China
has cultivated relationships, supplied the army
and provided money and consumer goods necessary to
keep the middle class in check. Even the South
Koreans are visible. Daewoo leads the exploration
and production of the giant gas fields in the
Arakanese or Rohinga region in northwestern
Myanmar.
Belatedly, the Indians did an
about-turn and started courting the generals.
Roads were built to connect the far-flung
northeastern states (or Seven Sisters) with
Myanmar. Oil concessions were established.
Business was back on the agenda.
India then sat down with the authorities in
Bangladesh and offered to pay 100 million euros
(US$121 million) worth of annual transit fees for
a pipeline to run from Myanmar to West
Bengal, through Bangladeshi territory. Dhaka
tagged conditions. Delhi became exasperated. Think-tanks
muttered about expensive alternatives bypassing
Bangladesh altogether.
Now it seems India
has been bypassed too. Just as Indian Petroleum
Minister Mani Shankar Aiyar was about to jet off
to Beijing, the Myanmar generals announced that
gas would not be flowing north and west. It would
instead go east - to China, to Kunming. Nine years
of planning went up in smoke, in an instant. This
cannot be brushed off as an incidental hiccup.
This has very serious ramifications.
India
is hungry for gas. Demand is set to increase
fivefold within 15 years. It has been expecting
Bangladesh to export gas since 1997.
Multinationals, a US president and various company
leaders in private jets whizzed into Dhaka,
thinking deals were going to be signed, only to
leave empty-handed. Bitterness turned to delight
with a convenient democratic regime change in
2001.
New ministers publicly declared that
gas would be exported. The project was back on
track. The Asian Development Bank was ready to
play. Then a bunch of intellectuals and remnants
of the "old left" put a stop to it. A few
meetings, nationwide "long marches" and
middle-class objections were all that was needed.
To export was to commit political suicide.
Bangladesh is to Asia what Bolivia is to South
America.
Then some clever individuals
figured out that Myanmar, with far greater
reserves than Bangladesh, would fill the gap. Even
better, the pipeline would flow through Bangladesh
and pick up the latter's gas on the way. Of
course, it would not be explained in that way. The
spin was that gas from one region of Bangladesh
would be transported to another (for free).
In reality, it would be exported via the
back door, since the sector is beyond any
independent audit. As well, "surplus" gas from
Tripura (in northeastern India) would be
"evacuated".
If the generals in Myanmar
stick to their decision, then the Indian economic
machine has now lost all three gas-producing
regions (Myanmar, Bangladesh and Tripura).
What happens now?
Behind-the-scenes lobbying is no doubt in motion to reverse
this decision. Indian oil companies still have
a presence in Myanmar. Beyond, the track record
of India in its search for energy is poor,
despite the tenacity of its petroleum minister.
The Chinese are running rings around India.
The Chinese economy is a black hole that is sucking
up energy, wherever it is and however expensive it
seems to be. The Chinese are not factoring in
today's oil or gas prices when they purchase
companies or fields. They know that, barring a
depression, energy costs are on their way up over
the medium term.
Choosing the wrong
partner India is paying the price for
years of neglect and faulty diplomacy in the
east. Instead of kowtowing to the Americans, it
should have struck up a solid strategic partnership
with China at least five years ago. Jointly, they
could have bought energy stakes at lower levels
of investment. Aiyar signed some deals with
the Chinese this month. I wonder if Beijing is
humoring Delhi in agreeing to cooperate, after it
has bought up much of the action in Nigeria,
Central Asia and Latin America. A relatively small
joint venture in Syria is no compensation.
If India is faltering in the
east, it looks as if it's making a
monumental strategic error toward its west. China had already
signed up an 80-billion-euro deal with Iran. India followed
with an audacious plan to purchase Iranian gas via
a pipeline through its nuclear foe, Pakistan.
The Americans were miffed. They had
conquered Afghanistan to secure an alternative
pipeline (Turkmenistan, Afghanistan and Pakistan
or TAP) to sell Central Asian gas to India. At
first, Delhi seemed steadfast in its resolve to
stay with Iran. Now it is buckling. At best, it is
sending out contradictory signals. One moment the
Iran deal is on. Next, the Indians side with the
US over the nuclear issue. Is it a case of the pot
calling the kettle black?
The left
in India is livid at the craven behavior of
the foreign-policy mandarins in Delhi. Energy security
looks as if it's being sacrificed for US nuclear
cooperation. Do Indian planners really believe
that nuclear power is going to be cheap? Why
do they trust Washington? Already some people are
wondering whether the recent flare-up in Pakistan's
troubled Balochistan province is receiving
a foreign boost. Pakistani President General
Pervez Musharraf is blaming India. He is surely
wrong. Whoever is supplying the logistics, it
does seem to fit the United States' latest turn to bring
Pakistan to heel and discourage an
Iranian-Pakistani-Indian pipeline.
Change in direction With the
probable loss of gas to the east, India now must
make up the shortfall by sticking to purchasing
gas from Iran. That means standing shoulder to
shoulder with Russia and China to prevent a US
military strike on Iran later this year. If it
comes to it, it has to consider the expensive
option of shipping Iranian light petroleum gas,
rather than the uncertainty of relying on tenuous
Islamabad control over its provinces. That way, it
can cut out the US-Pakistani factor in its energy
calculations, even while that entails
strengthening its blue-water navy to patrol the
sea lanes.
Meanwhile, there must be more
intensified exploration for reserves within its
own territory, on land and offshore.
India also needs to decide where it stands with
China. Has anyone done the calculations of the
billions of euros India has lost by competing and
losing out in the scramble for gas? It needs to
cooperate with China in Central Asia and Southeast Asia.
In the former, that means pulling back support
for the Afghan operation, killing any lingering
hopes for a TAP pipeline. The pipeline will never
happen in any case. US giant Unocal and Delhi have
mutually exclusive objectives, though this does
not seem to be apparent in parts of Delhi.
It has to shore up its eastern diplomatic
front and more. What does it want and expect from
its neighbors to the east? It has to change
direction and come up with a new vision. Instead
of looking at this region as merely a series of
gas fields, it has to encourage domestic usage of
that gas for their own electrification and
industrialization.
Rather than Indians
taking out the gas, it could have its own power
companies invest in producing electricity from the
gas. That way, these economies will develop,
become markets and provide opportunities for other
Indian companies to invest and sell to. With that
will come political stability, better transport
links and economic cooperation. In short, buy gas
from West Asia. Encourage gas to be used in
situ on its eastern borders.
Meanwhile, gas in Bangladesh
and Tripura lies largely unutilized. Myanmar's gas
looks as if it's being siphoned out to China.
Shortsightedness is not confined to Indian
policymakers. It is endemic to the region. Where
we need giants for leaders, we have pigmies.
Farid Bakht is a newspaper columnist
based in London and Dhaka. He is author of the
book Arrival or Departure: Bangladesh in
Dangerous Times, which will be available at the
Kolkata book fair on January 22.
(Copyright 2006 Farid Bakht.)
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
