DIPLOMACY: INDO-IRANIAN GAS PROJECT

Peace In Pipeline

India wants to put on Iran the onus of ensuring safe transit of gas through a turbulent Pakistan

By Shishir Gupta

COMING CLOSER: President Khatami of Iran (left) and A.B. Vajpayee

Gas pipelines are usually harbingers of economic progress. But the proposed 2,657-km Indo-Iran gas pipeline is likely to go beyond commerce. It may emerge as an enduring symbol of peace in the subcontinent. Although Kashmir is the core issue for Islamabad in the forthcoming Indo-Pak summit in Agra, the politico-economic dimensions of an onshore pipeline via Pakistan may well assume centrestage.

If the pre-summit posturing by the foreign ministers of the two countries is any indication, then Pakistan's strategy will be to veer India around to agree that Kashmir is a disputed territory, the "main hurdle" to peace in the subcontinent. As a quid pro quo, Islamabad perhaps could offer a pull back of troops from the Line of Control and agree to greater economic cooperation with India. Pakistan has already indicated its willingness to reduce import duties on a number of items from India and has offered a corridor for the proposed Indo-Iran pipeline.

Last week, eight years after India and Iran signed a memorandum of understanding on the transfer of gas in 1993, the $6 billion (Rs 28,200 crore) pipeline project got off the ground. At the fourth Indo-Iran Joint Committee meeting held on June 11-12, Delhi and Teheran agreed to commission feasibility studies on the transportation of gas from the Assuliyeh fields in southern Iran to India via land and deep-sea routes. While the land corridor study has been awarded to Australian energy major Broken Hill Property, Italian conglomerate Snamprogetti is exploring the offshore option. Although the final decision still hinges on the feasibility reports, the onshore pipeline, which traverses 707 km of Pakistani territory, is seen by security analysts here as a confidence building measure between Delhi and Islamabad.

Evidently, Pakistan needs the pipeline as much as India does, though for entirely different reasons. The Pakistani economy is in a shambles and the country is increasingly facing international isolation for its misadventure in Kargil and support to pan-Islamic fundamentalist groups. By allowing the pipeline to go through its Baluchistan province, Pakistan may be able to send a signal that it is not in the clutch of fundamentalists but is ready to cooperate with its arch rival India. Experts say that the onshore Indo-Iran gas pipeline may assuage the international community's security concerns over Pakistan.

It would also give Pakistani President Pervez Musharraf a chance to project himself as a reformer instead of a dictator. The state-run TV channel quoted him as saying, "If they (India) don't want to buy gas cheap, it's their problem. But if they want the pipeline we are prepared."

An onshore pipeline also makes economic sense to Islamabad. Pakistan would earn anywhere between $200-400 million per annum as transit fee from the project. Pakistan is desperate for such a project after its hopes of participating in an oil pipeline from Turkmenistan to Karachi via Afghanistan were dashed when the project was put on hold. Little wonder that Pakistan has told Teheran it is prepared to even extend sovereign guarantee for the security of the onshore gas pipeline.

Crucial though the project is for India, Delhi will not discuss it during the forthcoming Agra summit. Rather, it would leave it to Teheran to work out a bilateral arrangement with Islamabad to ensure the security of the pipeline through Pakistani territory. Teheran does not want the pipeline to get bogged down in Indo-Pak politics. In fact, it wants the project to be handled by a consortium of multinational companies, including US heavyweight Exxon-Mobil, so that the pipeline can be put on a fast track.

This move is not without its political overtones. By involving multinational oil giants, Iran hopes that corporate America will exert pressure on Washington to ease some of the two-decade-old economic and political restrictions imposed on it. A number of Indian companies-such as Reliance Industries which has set up a multi-billion dollar refinery in Jamnagar in Gujarat-are keen to participate in the onshore pipeline effort. Pakistan, on its part, has indicated it willingness to go along with any arrangement acceptable to India and Iran.

Some experts feel that the security threat to the onshore pipeline in Pakistan is not as serious as India perceives it to be. Says Lt-General Satish Nambiar, director, United Services Institution: "It will be a foolish Pakistani leadership that will allow fundamentalist elements to knock off the pipeline. There is no security threat to pipelines running through conflict areas in other parts of the world. Of course, a disruption due to an attack from Taliban-type groups cannot be ruled out."

Nambiar sees the land option as an expression of India's confidence in Pakistan but views the project as purely a business transaction, something that can help boost commercial and economic exchanges between Delhi and Islamabad. Perhaps this may even make Pakistan extend most favoured nation status to India.