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Daily News Analysis

Pakistan trying to wriggle out of Iran pipeline agreement

Crescent International

The government of Prime Minister Nawaz Sharif is trying to wriggle out of its agreement with Iran to construct the gas pipeline that would provide major relief to energy starved Pakistan. Industrial production has been badly affected by shortage of electricity with many industrialists shutting their factories and relocating abroad. The people of Pakistan have historical suffered at the hands of incompetent and selfish rulers.

Islamabad, Crescent Online
December 18, 2013, 08:34 EST

Pakistan, a country of over 180 million, is encountering a severe energy crisis where industry and daily life have been badly affected because of extreme shortage of electricity. The Iran-Pakistan pipeline promised to be a significant source of relief. Now Pakistani Prime Minister Nawaz Sharif’s close ties with Saudi Arabia and the United States have put the future of the pipeline is in jeopardy.

Personal rather than national interest dictates Sharif’s policy. When he was ousted from power in October 1999 and imprisoned by then military dictator General Pervez Musharraf, it was Saudi Arabia that intervened and got Sharif out of jail and into exile in the desert kingdom.

While Sharif and his family were accommodated in Jeddah, there are reports he also invested heavily in Saudi Arabia. His investments may not amount to much by Saudi standards, the fact is that Sharif cultivated close ties with the Saudi ruling family and is heavily indebted to them.

He would always defer to their interests rather than take care of Pakistan’s needs. The Iran-Pakistan pipeline project appears to have become the sacrificial lamb in order to keep the Saudis, and indeed the Americans happy.

In November 2013, Pakistan and Iran renegotiated the deadline under which Pakistan was to complete construction of its end of the pipeline. The deadline for the completion was originally set for December 2014, but lack of preparation (and funds) on Pakistan’s part made it clear the date had to be re-negotiated.

Recently, Iran has said it cannot provide Pakistan a loan to construct its end of the pipeline. During negotiations between the two countries, Pakistan had requested a loan of $2 billion from Iran in order to construct its part of the pipeline. Iran had initially agreed to do so but the political dynamics have changed.

The recent announcement by Tehran exposes the fault lines between the two countries sharing a contiguous border, since Nawaz Sharif took office as prime minister after the May elections.

Iran’s Deputy Oil Minister Ali Majedi stated Iran has no obligation to finance the Pakistani side of the project, and also claimed shortage of funds on Iran’s side. Majedi’s comments were posted on the oil ministry's website, shana.ir, on Saturday (December 14). “Pakistani officials were told in recent talks that, given the sanctions, Iran is not able to finance construction of the pipeline (in Pakistan) and has no obligation to do so,” he said.

Iran has already invested $2 billion on the project and expects Pakistan to fulfill its side of the agreement, as a means of exporting Iranian oil to the Asian market. Pakistan needs the pipeline to meet its severe energy shortages. Majedi said that Tehran will demand compensation if Islamabad fails to take Iranian gas by the end of next year. But with the Sharif government completely dependent on Saudi Arabia and the US, the fate of the pipeline remains in limbo.


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