Pakistan Signs Iran Gas Pipeline Deal

In clear defiance of the US campaign to isolate Iran, Pakistan this week formally signed an agreement for the construction of a 560-mile, $7.5 billion gas pipeline from Iran's South Pars gas field in the Gulf through Pakistan's Balochistan province to Sindh province. The agreement with Iran came within days of America's announcement of plans to push stricter sanctions against Iran, and just days before the start of the planned US-Pakistan strategic dialog in Washington.

"By connecting itself with the world's second largest gas reserves, Pakistan would guarantee reliable supply for decades to come," U.S. energy analyst Gal Luft told UPI.

Pakistan is not alone in snubbing the world's sole superpower. Just last week, the Israelis did the same when they announced plans to build 1600 new units in occupied East Jerusalem during Vice President Joseph Biden's visit there. Subsequent denunciations of Israeli actions by the Quartet (UN, Europe, Russia and US) and angry rhetoric in Washington has only served to strengthen the Jewish state's resolve to go ahead with the settlement construction on Palestinian land.

Turkey, Brazil and China have in the past month each delivered timely snubs of Washington's push for sanctions against the Iranian regime, according to a story in the Wall Street Journal. Russia joined the list of snubbers when it surprised the U.S. delegation this week by announcing that it plans to help Iran launch its first nuclear reactor by July just as Secretary of State Hillary Clinton wrapped up her Moscow visit.

Strangely enough, a country like India which prides itself on its independence in setting foreign policy, is out of tune with the rest of the world in its decision to pull out of the Iran-Pakistan-India gap pipeline project under intense US pressure. It seems India is quite satisfied with the access to US nuclear technology in exchange for obeying Washington on Iran.

The US has so far rejected any civilian nuclear deal with Pakistan. But there are some US analysts, like Christine Fair, who see the benefits of such a deal. Here is how Fair put it in a recent Wall Street Journal op ed:

"Pakistan terrifies the United States because it is a unique nexus of nuclear proliferation and Islamist militancy. But with success in Afghanistan elusive, Washington needs Islamabad more than ever, and vice versa. The two countries have never been able to achieve a durable relationship based on mutual trust. That could be fixed, however, if the U.S. were willing to consider a radical new approach: a policy centered on a conditions-based civilian nuclear deal.

Nuclear cooperation could deliver results where billions of dollars of American aid have failed. Pakistan has long benefited from Washington's largess—including more than $15 billion in aid and lucrative reimbursements since 9/11—while only marginally delivering on U.S. expectations. Islamabad has refused to work against the Afghan Taliban and homegrown terror groups like Lashkar-e-Taiba, or provide Washington access to A.Q. Khan to verify that his nuclear black markets have been dismantled."

Fair argues in her Op Ed that "In the long shadow of A.Q. Khan and continued uncertainty about the status of his networks, it is easy to forget that Pakistan has established a Strategic Plans Division that has done much to improve safety of the country's nuclear assets."

The United States no longer enjoys the kind of unchallenged superpower status it did immediately after the collapse of the Soviet Union. In spite of the fact that the US economy is still the world's largest accounting for 27% of global GDP, and its military is the most powerful with the ability to project American power around the globe, there are increasing challenges to its authority by many nations. In fact, the current US situation is best explained by its parallels to that faced by the Vito Corleone character in the classic movie "The Godfather", as described by "The Godfather Doctrine", a foreign policy parable by John Hulsman and Wes Mitchell. It appears that the US has lost its perceived power to make offers that no one can refuse.

It seems that the elaborate framework of international institutions that US helped architect and build after WW II, such as UN Security Council, NATO, World Bank, OECD, WTO, IMF, and IAEA, through which America exercises tremendous power and control, are being weakened partly due to America's own missteps, and my guess is that these alliances and institutions will not survive beyond the next few decades. There will be a huge realignment of nations, as the powerful new players, including China, Russia, Germany, Japan, Brazil, India, South Africa will demand greater say in the affairs of the world. So will the Iranians, the Koreans, the Turks, the Pakistanis and the Arabs. With their growing economic power, the Chinese are already starting to take steps to replace the US dollar with the Chinese yuan as a major reserve and trade currency in the world.

The US-India nuclear deal, and India's decision to abandon the IPI gas pipeline, and the growing India-US ties appear to be part of a larger realignment in Asia and the world. There is an effort by the US to "co-opt" India as a close ally in the emerging new world order.

Related Links:

US-India Military Ties

Can Chinese Yuan Replace US Dollar as Reserve Currency

Vito Corleone: A Metaphor For Uncle Sam?

US-India Nuclear Deal

Pakistan's Energy Crisis

Pax Corleone

The Godfather movie

Manmohan Singh Professes Love of America


Riaz Haq said…
Media reports indicate that days after Iran and Pakistan signed pacts to implement a long-delayed gas pipeline, India said it has proposed trilateral talks in May to address concerns that have been impeding its joining the project.

"We have genuine issues that need to be addressed before we sign up for the (Iran-Pakistan-India) pipeline. We have proposed dates in May for technical level talks in Tehran to iron these out," oil secretary S Sundareshan told PTI here.

New Delhi has been boycotting project talks since 2008 after its concerns of safe delivery of gas were ignored. It wants Iran to be responsible for safe passage of gas through 1,035-km pipeline length in Pakistan and would pay for the fuel only when it is delivered at Pakistan-India border.

Iran on the other hand has suggested a trilateral mechanism, meaning contractual provisions between three countries, to ensure safe delivery of gas to India. Under this system, New Delhi pays for its share of gas even if the supplies were to be disrupted in Pakistan, officials said.

"... As far as India is concerned, we are in consultation with the government of Iran. We have certain concerns. Concerns about pricing, concerns about security, which have been taken up with the government of Iran," external affairs minister S M Krishna said here.
India wants in-built safeguards in the contract to ensure safe delivery of gas at India-Pakistan border.

While the 1,100-km pipeline from South Pars gas fields inthe Persian Gulf to Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.

India feels that its participation in execution of pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of the operations, they said, adding Islamabad has so far not agreed to the proposal.

Under the terms of deal signed Tuesday, Iran will supply 750 million cubic feet a day of gas to Pakistan for 25 years.

The pipeline has been on the drawing board since the mid-1990s,hen Iran and India inked preliminary agreements to
transport gas through Pakistan. It was dubbed the "Peace
Pipeline" because of hopes it would lead to a detente between
neighbours India and Pakistan.

India says it fears for safety of the pipeline in Pakistan's Baluchistan province, home to a militant Islamist separatist movement.

Officials said New Delhi is also upset with Iran's frequent changes in gas price.

Iran had originally priced its gas at USD 3.2 per mBtu but later in 2007 revised the rates to USD 4.93 per mBtu at USD 60 a barrel crude oil prices, which was accepted by India. Last year, it again revised it and according to the new pricing formula, the fuel will cost New Delhi USD 8.3 at USD 60 per barrel oil price at Iran-Pakistan border.

Added to this would be a minimum of USD 1.1-1.2 per mBtu towards transportation cost and transit fee that India would
have to pay for wheeling the gas through Pakistan, they said.

Gas from the Panna/Mukta and Tapti fields in Mumbai offshore fetches the maximum USD 5.70 per mBtu, while Reliance Industries' Krishna Godavari basin gas has been priced at USD
4.20 per mBtu if crude oil price was USD 60 or more.

Officials said Iran was not willing to commit to a supply-or-pay regime wherein it would have been held accountable for non-delivery of gas at Indian border. It, however, wants New Delhi to commit to a strict take-or-pay clause wherein India would have to pay even if it does not take deliveries.

All it now says is that if Pakistan were to disrupt supplies to India, Iran will make a proportionate cut in the quantities to be delivered to Islamabad.
Riaz Haq said…
The BBC is reporting that Pak govt is seeking supreme court approval to pursue Dr. AQ Khan over his alleged interview with Washington Post regarding proliferation to Iran and Iraq. It comes days before discussions in Washington for a possible civilian nuke deal with US:

Pakistan's government has filed a court application to investigate disgraced nuclear scientist Abdul Qadeer Khan.

Officials cited an interview allegedly given by Dr Khan to the Washington Post newspaper, which says he was involved in proliferation to Iran and Iraq.

Dr Khan has denied giving any such interview to the media.

The application from Pakistan's government comes ahead of talks in Washington on a possible civilian nuclear deal with the United States.

"We want to question Dr Khan about this interview, which has revealed sensitive information about Pakistan's nuclear programme," the government said in its application to the high court in Lahore.

The court had been hearing a petition filed by Dr Khan who accuses the government of restricting his movement, despite a court order last August freeing him from house arrest.

He was detained in 2004, following a televised confession that he had been involved in international nuclear proliferation.

The BBC's Syed Shoaib Hasan says Pakistan's government has been keeping close tabs on the former head of the country's nuclear programme since his release.

"We want to learn who is passing on such information to foreign newspapers," the government's application to the court said on Monday.

"Such information has a direct bearing on the security of Pakistan's nuclear programme."

The interviews that have upset the government were published on 10 and 14 March in the Washington Post.

Dr Khan has denied giving them. Speaking on Monday to local newspapers and TV channels in Pakistan, he said the information had been fabricated.

The petition happened to be filed as Pakistan's military chief and foreign minister landed in the United States.

They are to begin talks with US officials on 24 March on a possible civilian nuclear deal between the two countries.
Riaz Haq said…
From Wall Street Journal:

China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.

The arrival of President Xi Jinping is expected to showcase China’s commitment to infrastructure development in ally Pakistan, at a time when few other countries are willing to make major investments in cash-strapped, terrorism-plagued, Pakistan.

The pipeline would amount to an early benefit for both Pakistan and Iran from the framework agreement reached earlier this month between Tehran and the U.S. and other world powers to prevent Iran from developing nuclear weapons. The U.S. had previously threatened Pakistan with sanctions if it went ahead with the project.


“We’re building it,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told The Wall Street Journal, referring to the pipeline. “The process has started.”

The pipeline will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline, which will cost up to $2 billion.

Tehran says that its 560-mile (900-kilometer) part of the pipeline from an Iranian gas field is complete. Iran has long pressed Pakistan to build its half of the scheme.

Pakistan hasn’t begun construction, however, in light of threatened sanctions from the U.S. for trading with Iran. Islamabad had been trying to work around the sanctions by asking the Chinese to construct the pipeline but not yet connect it to the Iranian portion. The prospect of an Iran nuclear agreement, which would ease the sanctions in stages once the deal is completed, has given Islamabad further impetus to clear the project. Among the first restrictions to be lifted, according to the framework accord, would be prohibitions on Iranian energy exports.

“This [Iran nuclear agreement] will help us in getting a few things which were coming into the way of the Iran-Pakistan gas pipeline to be cleared and we will move forward,” Pakistan’s ambassador to Iran, Noor Muhammad Jadmani, said Sunday in Tehran, according a report on IRNA, the official Iranian news agency.

Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 435 miles (700 kilometers) of pipeline from the western Pakistani port of Gwadar to Nawabshah in the southern province of Sindh, where it will connect to Pakistan’s existing gas-distribution pipeline network.

China Petroleum Pipeline Bureau referred questions to CNPC, which didn’t respond to a request for comment.

The cost would be $1.5 billion to $1.8 billion for the pipeline, or $2 billion if an optional Liquefied Natural Gas terminal at Gwadar is included in the scheme. Under the deal, 85% of the financing will be provided by a Chinese loan, with Pakistan coming up with the rest.

The remaining 50 miles (80 kilometers), from Gwadar to the Iranian border, will be built by Pakistan. The pipeline, which would take two years to build, would eventually supply Pakistan with enough gas to fuel 4,500 megawatts of electricity generation—almost as much as the country’s entire current electricity shortfall.

The pipeline would give Iran a market to its east for its gas. The pipeline scheme, conceived in 1995, originally was supposed to extend to India. Tehran blames U.S. pressure for India dropping out in 2009.
Riaz Haq said…
#Pakistan only country in world where majority (57%) views #Iran favorably. Only 16% #Pakistanis negative on #Iran. …

These are among the key findings of a new survey by the Pew Research Center conducted in 40 countries among 45,435 respondents from March 25 to May 27, 2015.

Iran is viewed negatively by most nations surveyed, with a global median of 58% saying they have an unfavorable opinion of the country that borders Afghanistan in the east and Iraq in the west. Pakistan is the only country polled where a majority (57%) views Iran favorably.

In the Middle East, roughly nine-in-ten Israelis (92%) hold a negative opinion of Iran, including nearly all Israeli Jews (97%) and more than six-in-ten Israeli Arabs (63%).

Attitudes are nearly as negative in Jordan, where 89% have an unfavorable view of Iran. Smaller majorities of Turks, Lebanese and Palestinians also give their regional neighbor low marks. Meanwhile, in Lebanon attitudes divide along religious lines. More than nine-in-ten Lebanese Shia Muslims (95%) express a positive opinion of Iran — the country with the world’s largest Shia Muslim population — compared with 29% of Lebanese Christians and just 5% of Sunni Muslims.

With the exception of Pakistan, publics in the Asia-Pacific region are either mixed or negative in their assessments of Iran. Unfavorable views of the Islamic Republic are especially widespread in Japan and Australia (73% and 67%, respectively). Even in Pakistan, opinion of Iran has somewhat soured, with negative ratings increasing from 8% to 16% over the past year.

Iran’s image also suffers in Latin America, where a median of 61% across six countries express unfavorable views. Publics in Africa, while negative on balance, are more mixed in their assessments of Iran. A median of 39% in nine African nations surveyed view Iran in a negative light, 32% view the nation positively, and a quarter do not offer any opinion. In Nigeria, attitudes differ among the predominant religious groups: 43% of Muslims express favorable views of Iran while only 23% of Christians hold that view.

Amidst the negotiations over the future of Tehran’s nuclear program, publics in the so-called “P5+1” countries are generally critical of Iran. Roughly three-quarters of Americans (76%) view Iran unfavorably, virtually unchanged from last year. Majorities in France (81%), Germany (78%), the UK (62%) and China (61%) share this opinion. Only in Russia do about a third (34%) rate Iran positively, and even here the prevailing view is negative (44%).
Riaz Haq said…
#Pakistan banks on bonanza from #Irandeal. #Nawazsharif Advisor Tariq Fatemi talks in #Washington … via @washtimes

The lifting of economic sanctions on Iran will open “massive trade” opportunities for Pakistan and could effectively transform the energy markets of South Asia by paving the way for a long-awaited gas pipeline across the Iran-Pakistan border, a top Pakistani diplomat said Friday, expressing his nation’s deep hope that the Obama administration’s nuclear deal with Tehran goes into effect as soon as possible.

Syed Tariq Fatemi, special assistant to Pakistani Prime Minister Nawaz Sharif, said his country is being “mindful” not to take action until U.N. sanctions officially lifted, but he asserted that Islamabad is already in constant communication with Iranian authorities about the prospects for the stalled pipeline, as well as other avenues for growing commercial ties between the two nations who share a 560-mile border.

In a wide-ranging chat with reporters at the Pakistani Embassy in Washington, Mr. Fatemi said that after a decade of internal turmoil, Pakistan is on a path toward stability and democratic transformation — and increased trade is essential to the goal of weening the nation’s economy off of handouts from the U.S. and other international powers.

Pakistan’s hopes are just one sign of the wide-ranging implications of the nuclear deal negotiated by the Obama administration and five international partners with Iran, which may quickly lead to an end to punishing economic and financial restrictions on the Iranian economy.

“An end to sanctions will open up new opportunities for Pakistan to enhance its commercial and economic ties with Iran,” Mr. Fatemi said. “We have a long border and we could have massive trade with that country should this issue of sanctions no longer be hovering over us.”

The “Iran-Pakistan Gas Pipeline Project,” he said, could ease crippling power shortages that plague Pakistan, where blackouts combined with an intense heat wave killed more than 1,000 people during recent months.

But Mr. Fatemi said the prospective pipeline would “not only benefit Pakistan in terms of providing us with a valuable source of energy, we also believe that such a pipeline could encourage cooperation amongst the countries of the region that would really strengthen peace and stability.”

“Iran’s coming into out into the mainstream of international politics will [also] be a positive development,” said Mr. Fatemi, who played down the idea that closer ties between Islamabad and Tehran might anger Arab powers in the Middle East who have expressed discontent over the Iran nuclear deal.

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