SHOULD PAK ABANDON IP FOR US CIVIL NUKE?

SYED FAZL-E-HAIDER
(feedback@pgeconomist.com)
May 24 - 30, 20
10

Though United States is ready to go to its absolute limits to help energy-deficient Pakistan overcome its energy crisis, yet it has asked the country to reconsider its deal for building a multi-billion-dollar pipeline with Iran and to seek other alternatives for meeting its energy shortages. Islamabad has refused to entertain the US diktat on Iran-Pakistan (IP) gas pipeline after the Washington dampened the country's hopes for a civilian nuclear deal, similar to the one the US signed with India in 2008. The US wants Islamabad to address its immediate energy needs instead of pinning its hopes on a civilian nuclear deal.

Critics say that it would be folly to link IP project to Iran and the nuclear issue, as nothing stopped China and Russia from having lucrative power deals with Iran.

Pakistan signed operational agreement on IP gas pipeline with Iran in March, hardly a week before its scheduled strategic talks with Washington in which Islamabad requested for civil nuclear cooperation. The pipeline was initially mooted to carry gas from Iran to Pakistan and on to India. India withdrew from negotiations last year after signing a nuclear deal with the United States, but has kept open the option of rejoining the project at a later stage. Pakistan recently offered to provide India with security guarantees for the pipeline from the South Pars gas complex in Iran as an incentive to join the project.

The delay in the implementation of the IP project, the experts say, is causing the country a daily loss of $5 million, as import of 750 mmcfd of natural gas from Iran would support the production of 4,600 megawatts of electricity, for which 7.5 million tonnes of HSFO (high-sulphur fuel oil) is required. The border price of IP gas based on the current price of Brent would be $8.05/mmbtu, while the country will have to pay $11.95/mmbtu based on the current price of HSFO. The country's furnace oil import bill is projected to rise by 237 percent by 2012, to $18.641 billion, as compared to $4.334 billion the country had to pay from 2004 to 2007.

Washington has formally opposed the IP pipeline project and advised Islamabad to seek other alternatives following the Pak-US strategic dialogue in March. The US is opposed to large investments in any Iranian project because of Iran's dispute with the international community over its nuclear programme.

Many analysts contend that Washington's advice to Islamabad not to proceed with IP pipeline project is unrealistic, as Pakistan cannot go back on the Iran deal because of its chronic gas shortage for its own proven gas reserves are dwindling.

The proposed pipeline project from Iran would have far-reaching geopolitical ramifications; hence Islamabad should not jump to abandon the project on the US's directive.

What is more interesting is the timing when the US decided to wave a stick at the IP pipeline project, following the strategic dialogue in Washington, where US dangled Pakistan a carrot. Some analysts however see the US carrot and stick policy as the beginning of a bargaining deal over Islamabad's withdrawal from the IP pipeline project for a civilian nuclear deal. Washington has not ruled out the idea of future cooperation in civilian nuclear field, but currently it is assisting Pakistan with power generation programmes in other fields.

Pakistan expressed its desire to gain recognition as a nuclear state at a two-day Nuclear Security summit in Washington by claiming that it has acquired advanced nuclear fuel cycle capability and can offer it to the rest of the world under IAEA safeguards. With over 35 years' experience of operating nuclear power plants successfully; Pakistan intends to expand its scope to meet its growing energy requirements.

China supported Pakistan in its quest for civil nuclear technology when Beijing declared at the summit that every country had the right to the peaceful use of nuclear technology.

Though Pakistan's hopes for civil nuclear cooperation have been a non-starter in its 'strategic dialogue' with the United States in Washington last month, yet the bilateral discussions on a nuclear cooperation deal can be a starter for a rapid change in the geopolitical realities of the whole Asian region.

Using its nuclear card, the US can influence Pakistan to walk away from Iran gas pipeline project, as Washington is presently trying for tougher economic sanctions against Iran on its nuclear plans and is opposed to the IP project that will accrue great economic benefit to Iran. India has already walked out of the project after the US offered her cooperation in civil nuclear energy.

In case Pakistan also withdraws like India, the actually conceived Iran-Pakistan-India (IPI) pipeline project may finally round off to I (Iran).

Islamabad has asked Washington to end discriminatory behavior towards Pakistan and provide civil nuclear technology to overcome acute energy shortage in the country. For Pakistan, the progress on the nuclear cooperation deal largely depends on how shrewdly and astutely it plays its IP card in Washington, as the India did by striking not only a civil nuclear deal with the US, but also keeping her option open to join pipeline project from Iran.

It is however not the India's withdrawal that serves the long-term US interests- as China is interested to replace India in gas pipeline project from Iran- but it is strategically located Pakistan that provides the real key to jumpstart strategic pipelines from energy rich central Asia or Middle East to energy hungry southeast and west Asia.

Presently, Pakistan has become a strategic priority for the US, as US efforts in Pakistan are vital for its success in Afghanistan.

Washington can kill many birds with one stone (nuclear cooperation deal). For instance, in a tit-for-tat dialogue with Islamabad for a civilian nuclear deal, the US may ask Islamabad to abandon IP pipeline project, which is likely to be extended to China after India has withdrawn. Beijing has shown interest in building an Iran-Pakistan-China (IPC) pipeline that provides it a chance of getting a secure overland gas pipeline.

Washington can also deprive Iran of the economic bonanza associated with its gas exports to Pakistan, India or China through pipelines, as without Pakistan's participation, all the proposed pipeline projects from Iran via Pakistan, whether it be the IP, IPI or IPC would be a failure or a flop idea. US can also persuade Pakistan to embrace a gas pipeline project from Turkmenistan via Afghanistan.