Since Pakistan and Iran both the states are struggling in their respective energy and economic sectors due to variant factors, the collaboration of Pakistan and Iran will eventually be the remedy for sustaining their energy requirement by strengthening the ties through more practical steps. Pakistan is in a tantalising situation where increased energy demand is becoming a heavy burden on its already crippling economy.
On the other hand, the re-imposition of US sanctions upon Iran after the former’s withdrawal from JCPOA has momentously affected the Iranian energy sector. As the clouds of uncertainty regarding the economy perseverance are looming over both states, the resuming of postponed Iran-Pakistan gas pipeline project could enable both states to grasp the straws for overcoming the economic and energy hurdles.
The project was initially designed to integrate Iran, Pakistan and India in which the latter two states would acquire gas from Iran, the second-largest country in terms of gas reservoirs. However, due to its objection over transit fee and strategic apprehension regarding the passing of the pipeline route from Pakistan, India pulled off from the project. Thus, the project eventually became the bilateral venture between Pakistan and Iran. Despite its strong commitments to the fulfilment of the project, Pakistan couldn’t complete its share of construction at the given timeframe. The evolving factor which was cited was the lack of investors’ interests in the project substantially due to UN-imposed sanctions upon Iran and US pressures. Resultantly, the project which could have proven the remedy for Pakistan’s energy crisis met with its distressing fate.
However, the current geopolitical situation of both South and West Asia may prove to be the compelling factor for resuming IP Gas pipeline project. Not only it would be of economic advantage for both the states but also the strategic significance of it can’t be neglected. With the Chinese investment pouring into Pakistan in the face of China Pakistan Economic Corridor (CPEC) and 20 billion dollars investment plan by KSA after the February visit by Crown Prince Muhammad Bin Salman earlier this year, IP project would also add its share in the economic revival of the country. More importantly, the industrial hubs that are being created alongside CPEC can be the potential market for the Iranian Gas. Also to consider is the interest of China into the project that would allow Chinese access to Iranian Gas while Pakistan would benefit from the transit fee.
From the Iranian view, the dire situation to find the new costumes for its energy transfer is of utmost importance after the imposition of US sanctions since the latter’s withdrawal from the Nuclear Deal. Moreover, Iranian motivation behind the success of this project is also due to the quest of finding the alternatives of its oil-dependent economy. In addition to it, extending its gas supply to Pakistan might open up the new markets like China as discussed above. Being the potential candidate of averting US economic hegemony, the rapid industrialization of China makes it reliant upon importing energy sources which cost cheaper and durable for the maximum duration. While oil is exhausting along with its unpredictable pricing due to the geopolitical situation, the arrival of Iranian Gas into the market could open up the new sectors for Iran to construct its pipeline and divert the states from oil towards gas.
Apart from the economic standpoint, both Iran and Pakistan could benefit from this project from the security aspect as well. For Pakistan, the situation to initiate this project with Iran is perfectly feasible and sustainable owing to certain factors.
Firstly, due to US pressure, India is already considering to cut short its oil import from Iran. Under such circumstances, Pakistan’s decision to purchase Iranian Gas would undoubtedly bridge the two countries to the closest possible terms and would help Pakistan in shedding the perceived Iranian inclination towards India.
Secondly, purchasing gas from Iran and allowing Chinese access to it would enhance the regional standing of Pakistan which would help it in enforcing its perspective regarding the regional dynamics.
Thirdly, Pakistan’s long struggle to match the defence pace with India due to the fragile economy could also be minimized, if not diminished completely, due to the IP Project.
Lastly, Pakistan’s indecision over inaugurating the project with Iran was mainly due to UN and US sanctions upon Iran. However, since UN sanctions have been removed after JCPOA and US dependency upon Pakistan has enlarged because of peace talks with the Taliban, Pakistan could use this leverage in abandoning US concerns and materialize the pipe dream.
Iran, on the other hand, can use this project in creating its nexus which could help in enhancing its influence at the diplomatic and international arena. Iran has already constructed its share of pipeline and more than ready to start construction Pakistani side, if required, or to hand over a loan to Pakistan in assisting the construction.
Conclusively, it is evident that the project holds significant fiscal and security measurement for both Iran and Pakistan. The scope of this project is not limited in enhancing Pak-Iran ties rather the utilization of this project in countering the respective geopolitical opposed circumstances for both the states can’t be overdue. Resultantly, it is inevitable for both Pakistan and Iran in taking concrete steps towards the practical envisagement of this project which could generate the advantageous prospects for both countries and develop the notion of regional connectivity and interdependency.
This would also assist both the states in their intention of border management and counter-terrorism operations since the security of the pipeline would demand such policies. Hence, only through such confidence-building-measures, both the states could prosper and succeed in their respective geographical sphere of influence while avoiding the contradiction with each other.
DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy and position of Regional Rapport.