To help Pakistan overcome financing issues, Iran had pledged to furnish $500 million for the $1.5 billion project, which Islamabad was to use to acquire engineering and construction materials to lay down its part of the pipeline. Islamabad had also decided to avail the buyer's credit facility to pay for the import of building materials, and to dip into Rs 30 billion it expects to raise during the current financial year through Gas Infrastructure Development Cess. Since outside companies have been reluctant to step in because of UN and US sanctions, Iran offered to have its companies join hands with local gas utilities, including Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC), to do the job.
Enthused government officials told journalists that Islamabad had assured the Iranian President that the project would be completed on time (Iran has almost completed its section of the pipeline) and that all issues had been settled to move ahead. The two sides were all set for the signing of the Inter-Governmental Co-operation Agreement (IGCA) in Tehran. President Asif Ali Zardari, who for a while had been vowing to proceed with the project, saying nobody could tell his government not to forge business and trade ties with neighbours, was to arrive in Tehran last Friday to put his signatures to the agreement. Instead, he headed for London and onwards to Paris and Ankara. No explanation was given for the cancellation of such an important visit.
So what happened between November 22-23 D-8 meeting in Islamabad and the first week of December? Finance Minister Dr Hafeez Sheikh, who had gone to Washington to secure economic assistance, returned home laden with promises of delivery on old commitments. The US, he announced, would release $600 million Coalition Support Fund (it was committed to do that, anyway, under earlier agreements, but had been employing money owed as a pressure lever. Unsurprisingly, it worked). It had iterated another old pledge to provide $200 million for the completion of Diamer-Bhasha dam, and to fund some other economic uplift programmes. Hafeez Sheikh was already busy begging and cajoling Washington to hold good on its previous promises when the government finalised arrangements for the signing of the IGCA. The explanation for change of plan within a short span of two weeks means only one thing: that the government used Iran to get money from Washington.
The US' offer of help, of course, comes not out of some selfless urge to support a friend in need. There are no free lunches in international relations. That country requires Pakistan's assistance at this particular juncture when it is trying to wrap up the Afghan endgame. Simply put, if Pakistan needs US support to prop up its economy, the US needs facilitation in its own plans. Had Islamabad stayed firm on its stand, Washington could have been expected to ease pressure. But old habits die hard. The dependency syndrome paralysed our rulers' ability to find alternative ways of coping with problems at hand.
It is worthwhile to note that following the US' lead the European Union slapped a ban on member states from buying Iranian oil or providing insurance for shipments beginning July 1 this year. Yet, as a subsequent press report points out, Iran's biggest Asian buyers - China, Japan, South Korea and India - have been working around the EU ban. While Japan started offering sovereign guarantees on shipments, South Korea requested Tehran to provide insurance cover to its oil shipments, or to use its own vessels to deliver the cargo. According to another report, Japan also approved government insurance cover of up to $7.6 billion for each vessel carrying Iranian crude to the country; and China offered Iran the use of its tankers for the safe shipment of some of its oil supplies. India, too, has been bypassing sanctions in order to fulfil its requirements.
What these examples show is that sanctions-related difficulties maybe there, but when it comes to self-interest, even US' best friends put their needs above all other considerations. Pakistan shouldn't give up such a vital gas pipeline project at a time it is facing a worst energy crisis. The day Hafeez Sheikh was photographed briefing Prime Minister Raja Pervez Ashraf on his 'successful' visit, SNGPL announced cutting off gas supplies to the industrial sector for an indefinite period. The government was also reported to be mulling over the idea of banning CNG for all private vehicles.
This country desperately needs energy from Iran as well as other sources since our requirements are only going to grow. The IP, without a doubt, is the single most important source of ensuring energy security for the near future. If more time is not wasted on toing and froing on the project, it will become operational in less than three years' time, taking care of our medium-term natural gas requirements. Pakistan should be importing 50 million cubic feet of gas per day, extendable to one billion cubic feet, for 25 years.
Just a few months ago, this government had announced a review of Pak-US relationship through parliamentary debate and discussion. The President, the Prime Minister and Foreign Minister since have been pointing to the global trend toward regional and sub-regional co-operation to emphasise greater trade and economic collaboration with neighbours. A notable manifestation of the new thinking is trade normalisation with India, raising the hope economic co-operation would lead to conflict resolution. Yet a reverse line is being followed vis-a-vis Iran, with which we have no conflict but a lot to share in terms of mutually beneficial economic exchanges. The government owes an explanation to the people as to why its resolve to construct the gas pipeline has fizzled out without any apparent reason.
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