Pakistan Pipeline Caught in U.S. - Iran Crossfire

By Malik Ayub Sumbal, July 11, 2014

Nawaz Sharif’s government faces a tough time as its decision to build a gas pipeline to Iran Irks Washington

Iran and Pakistan have more in common than just the term Islamic Republic in their official names. The two countries have had a long love-and-hate relationship stemming from their Islamic and sectarian roots. Iran is predominantly the center of a religious majority represented by the Shiite sect of Islam, which is largely represented amongst Muslims in Pakistan. Each year, hundreds of Pakistani pilgrims visit Iran to pay homage to religious shrines. Despite this long-standing link, Iran and Pakistan have seldom been on good terms when it comes to economic or infrastructural cooperation. The obvious reason could be the strain in U.S.-Iran ties on the backdrop of Pakistan’s status as a U.S. ally in war against terror. Pakistan has traditionally promoted pro-American policies and, consequently, it became more alienated from Iran in terms of international diplomatic ties.

Then what has caused the rift between Tehran and Islamabad to subside and pave the way for one of the largest cooperation projects in the energy sector? A deeper look into the conditions under which the contract to build a major gas trunkline had been signed definitely shed some light.

The $7.6-billion Iran-Pakistan-India (IPI) gas pipeline project was initially proposed in 1994 and envisaged as a tri-national energy solution. Initially, India launched a massive campaign to participate in the project as its huge economy promised steady demand for energy. However, U.S. pressure definitely made India weary of the prospects and it withdrew from the project in 2009 soon after signing a nuclear pact with Washington. Pakistan and Iran however stood their ground despite tremendous pressure from the United States. Iran supposedly didn’t have any other option as U.N.-backed sanctions nearly paralyzed its economy. Pakistan with its long-standing energy crisis found no better option but to face the American pressure to escape from backing out in this project. 

Why would Pakistan do so? As per contract Iran would provide Pakistan with 750 million cubic feet of natural gas per day over a 25-year period starting in late 2014. For the energy-starved Pakistan, this was the deal of a century as it wouldn’t only help eradicate the Middle Eastern country’s electricity crisis, but would also help Pakistan come to terms with its fuel crisis. With India out of the game and China jumping in as a supporter, the project seemed even more lucrative to all parties involved.

Things went as planned and former Pakistan President Asif Ali Zardari made sure the project was launched according to schedule. In early 2013, he approved a $1.5-billion construction deal with Iran (co-financed by Pakistan, Iran and China) to build the 785-kilometer section of the pipeline. At that stage both Pakistan and Iran looked determined to go ahead with the project that could not only resolve the regional energy crisis, but also defuse longtime rivalries and shape out a new geopolitical scenario. Who wouldn’t like that to happen? Apparently the United