After failing to finish a natural gas pipeline linking the two countries a decade ago, Pakistan has no viable choices in negotiating the legal maze and Iran’s anger. For Islamabad, missing a much-needed supply of a quite clean fossil fuel results in a double blow because the project stands next to zero prospects of materializing.
Pakistan may, however, use the knowledge gained to do a thorough review of the viability of mega-energy projects prior to their commitment. A good national energy strategy depends on such sharpness throughout the political and bureaucratic administrative apparatus. This is especially true in a nation struggling under years of economic and energy crises. Tehran sent Islamabad a last ultimatum to complete its share of Iran-Pakistan gas pipeline; otherwise, prepare to be taken to the Paris-based International Court of Arbitration, where it may be fined around $18 billion.
For Islamabad, missing a much-needed supply of a quite clean fossil fuel results in a double blow because the project stands next to zero prospects of materializing.
Pakistan’s need for the gas is just as great as Iran’s need for the money from sales. Fast-growing domestic energy demand stretches thin the declining domestic gas supply of the South Asian nation, and it has battled to locate reasonably priced liquefied natural gas sources. Pakistan’s economy has been kept afloat by many International Monetary Fund bailouts from a severe energy crisis over many years typified by chronic fuel, gas and power shortages and high prices playing their role in crippling it.
With the most recent Iranian warning, Islamabad has reaffirmed its incapability in response to the potential of secondary US penalties for trading with Iran. Under pressure from Washington, Pakistan temporarily halted the pipeline project and sent a force majeure notice to Iran to exit from the gas sales and purchase agreement.
Following a historic agreement between major world powers and Iran, Pakistan had a window of opportunity that it did not seize in the years following which the latter was granted sanctions relief in exchange for curbs on its nuclear program. Pakistan’s political leaders have either flip-flipped or used ineffective rhetoric throughout the years on the subject of requesting a waiver from US sanctions to enable the Iran gas project to go forward.
Although US pressure and the possibility of secondary penalties on nations and companies engaged with Iran are genuine, they are just one of the many reasons Pakistan has been unable to keep up half of the bargain. It has grappled with certain other difficult issues. Pakistan’s political and economic unrest as well as foreign lenders reluctant to the risk being linked with Iran, funding for the project — which comes into a few billions of dollars — has been difficult to get.
Pakistan’s political and economic unrest as well as foreign lenders reluctant to risk being linked with Iran, funding for the project — which comes into a few billions of dollars — has been difficult to get.
China, who under a bilateral economic corridor project invests in infrastructure projects in Pakistan, is not interested; India, who had first considered purchasing Iranian gas by extending the pipeline into its territory, withdrew in 2009 after considering the geopolitical concerns.
The project come to pass, separatist violence and unrest in the southwest Pakistani province of Balochistan, through which the gas pipeline would have to pass, threaten construction and also compromise the safety and security of the infrastructure and gas flows. The rugged geography of the area presents building difficulties for the pipeline as well. Not even all the land required to route the pipeline across the nation has been bought by the federal government.
Transnational gas pipeline ideas abound in the cemetery of energy projects, especially in geopolitically and economically stable areas. Furthermore, evidence of the ugly face of worldwide energy weaponizing in geopolitical conflicts in today’s globe is the blowing up of the gigantic Nord Stream 1 and 2 underwater gas pipelines between Russia and Europe.
Like the rest of its emerging-economy colleagues in the Global South, Pakistan deserves the freedom to pursue its energy security.
Under the US-Pakistan Clean Energy Partnership initiative, the United States makes all the appropriate gestures of supporting the country’s aim of strengthening its electrical infrastructure and obtaining a share for renewable energies in its power sector. Pakistan’s economic engine must remain running in the interim from a consistent and reasonably priced supply of fossil fuels.
Like the rest of its emerging-economy colleagues in the Global South, Pakistan deserves the freedom to pursue its energy security, set the pace of decarbonization in a way most suited for its economic growth and obtain its needs from any supplier of choice, free from West arm-twisting.
But it must enter any megaprojects and long-term energy accords with its eyes wide open and put a reasonable dose of reality into its energy strategy. That involves making sure it will have the required funding, local regulatory and community support before pledging to undertake initiatives. Not as an afterthought, commercial and political choices involving sticky international problems must be realistically assessed with regard for the obstacles and engage all stakeholders from the beginning.
Dr. Zukun Lyu is a research scholar in the Department of Political Science at the University of Siena. She has been to national and international conferences and written 21 research articles that have been published in international journals.