There is potential for a gas pipeline to achieve what bilateral diplomacy, international diplomacy and 'track two' diplomacy have not been able to achieve in the last 20 years; a first step towards indirect trade between what are now South Asia's nuclear neighbours. Pakistan has agreed to allow a pipeline carrying Iranian natural gas to traverse its soil to reach markets in India. This can be regarded by the imaginative as a fundamental development in regional politics, except that the media at large and India's in particular, has not given it the importance it would seem to deserve.
To begin with, the very consideration of this project is linked to a reviving Pakistan-Iran relationship, which had plummeted earlier due to the Taliban Afghanistan factor. The thaw began with General Pervez Musharraf's December visit to Tehran, with the Chief Executive particularly keen to discuss trade possibilities with Iran. Pakistan's trade deficit this year is expected to touch USD 1.6 billion, due some extent to the tripling of world oil prices. The unannounced conclusion of the men who run Islamabad was that cash-strapped Pakistan cannot afford the exclusive Afghan focus to define Pak-Iran relations.
While other arenas of trade will obviously pick up steam in the days ahead, the most significant outcome of Gen Musharraf's Tehran visit was actually a trade project where Pakistan only provides its territorial good offices. This was the long-mooted gas pipeline project to feed natural gas from the Iranian fields to the population centres and industries in North India. The Iranians have expressed pleasant surprise at how unusually efficient Islamabad's response has suddenly been.
Indeed, for a subject that is potentially such a minefield — for allowing India to benefit from a project that actually physically uses Pakistani space — there has been great speed and no dillydallying. The Iranians, at least, put this development to Gen Musharraf´s personal interest in the project, which got the Ministry of Commerce and the Ministry of Petroleum activated.
All this indicates a significant change in the mindset of Pakistani policy-makers for the moment not having to worry about what the ´opposition´ might say. Indeed, the military men in the driving seat in Islamabad seem to be viewing the pipeline project positively rather than reactively, and that is refreshing. And, while certainly, the project does not equal to opening up trade with either Iran or India, the fallout of goodwill vis-a-vis Iran and (more significantly) India can be unprecedented.
The pipeline was first proposed by Iran in 1993, to supply gas from the South Paras gas fields (in Khuzestan province, presently operated by a French company) through overland pipeline, to Delhi, probably via Multan. The exact route of the pipeline and the commercial aspects are yet to be worked out, because the all-important factor till now had been Pakistani acquiescence. On the technical side, the outlay of the project is said to be about USD three billion. In addition to the Australian firm BHP which has already expressed interest, other companies are expected to join an international consortium which will finance and build the project. Pakistan, meanwhile, is expected to earn USD 500 to 600 million annually as transit fee —a tidy bonus for agreeing to support the needs of a presently hostile neighbour.
Although both the Mian Nawaz Sharif and the earlier Benazir Bhutto governments had examined the Iranian pipeline proposal, they were unable to clear it for a number reasons. These included reservations within a section of the army, of the possible impact of the project on Pakistan´s position on Kashmir, the stance on bilateral trade with India, and the fact that the sitting opposition could be expected to raise a controversy. Some within the Indian establishment, too, had rejected the idea of a pipeline which traversed Pakistan, instead proposing an off-shore pipeline. This, the Iranians maintained, was not financially viable.
At one point, responding to Pakistan´s reservations on the Iran-India pipeline project, Tehran had proposed to work on an Iran-Pakistan pipeline. However, differences over the price of the gas to be supplied stalled that project. Other factors served to muddy the decision-making at that time, including the American company UNOCAL´s proposal to bring down an oil and gas pipeline to Pakistan from Turkmenistan through Afghanistan. Ultimately, all discussion ceased as spiralling distrust enveloped Islamabad-Tehran relations, on the matter of the Taliban and sectarian violence within Pakistan.
With matters in military hands, the reservations within the GHQ of the Iran-India gasline through Pakistan disappeared. The project was then examined for its commercial considerations, and the prognosis was that it would be a win-win for all the three parties concerned, including Pakistan as the intermediary. And so in March, Pakistan´s secretary of petroleum travelled to Tehran to convey Islamabad´s agreement in principle to the proposed project. It was agreed that the Iranians would draw up a political Memorandum of Understanding to be signed by Iran, Pakistan and India.
Obviously, the concerns of both Pakistan and Indian have to be taken care of. New Delhi has every right to insist on a guaranteed continuous supply of the gas, which becomes a key issue in view of the perennial tensions between the two countries. On the Pakistani side, the insistence is that there will be no Indian manning of the pipeline, although Islamabad will allow neutral international monitoring of the section that passes through its territory.
The Iran-Pakistan-India gas pipeline project, indeed seems to be all win-win. But it is important not to count chicken before they hatch, especially when the matter involves South Asian geopolitics. Suffice it to say that Islamabad has shown a degree of maturity, going beyond the rejectionist and self-damaging mindset vis-a-vis New Delhi. If New Delhi is willing to receive a gas line that is provided partly courtesy Islamabad, then that alone will serve as a harbinger for peace. The pipeline is a third-party project, but at a time when India and Pakistan are not talking direct trade, this is as good a beginning as any.