Fears of possible U.S. sanctions
Iranian President Mahmoud Ahmadinejad (L) and his Pakistani counterpart Asif Ali Zardari attend the inauguration ceremony of a gas pipeline linking the two neighbours in the Iranian border city of Chah Bahar on March 11, 2013. (AFP)
The inauguration ceremony was held in the Iranian border city of Chabahar and was attended by senior officials from both countries. Pakistani state television announced that representatives of several Arab countries were also present.
Pakistani officials described the pipeline as a “pipeline of peace”, which will meet the energy requirements of Pakistan.
Initially, India was also part of the pipeline deal; however it distanced itself from the project in 2009, citing security reasons and high costs.
Pakistani officials described the pipeline as a “pipeline of peace”, which will meet the energy requirements of Pakistan.
Initially, India was also part of the pipeline deal; however it distanced itself from the project in 2009, citing security reasons and high costs.
Pakistani officials informed Asharq Al-Awsat that Iran has completed the 900 km stretch of the pipeline on its side of the border, and now Iranian firms will help construct the remainder of the pipeline on the Pakistani side.
The Pakistani government announced the finalization of the pipeline deal last month, when President Zardari visited Tehran. The announcement came amid much speculation in the national press about a possible U.S. reaction.
Moreover, there are serious doubts about how Pakistan could finance the pipeline and whether it could go through with the project without facing U.S. sanctions, which Washington has put in place to pressure Iran over its nuclear program.
The U.S. has opposed the project, instead promoting an alternative pipeline that runs from the gas fields of Turkmenistan to Afghanistan, Pakistan and then to India. The U.S. has also championed a number of electricity generation projects within Pakistan, such as helping renovate hydropower dams.
Under American regulations, a wide-ranging list of business-related activities with Iran can trigger American sanctions. Certain sales of technology or equipment that allow Iran to develop its energy sector are barred, as are most transactions involving gasoline or other fuels, according to a January statement by the Congressional Research Report. The regulations also bar business dealings with Iranian financial institutions.
Possible penalties include barring the offending entity from receiving American military equipment or making it essentially impossible to do business with American banks.
Several Pakistani officials have brushed aside the US pressure in this regard. The presidential spokesman Farhatullah Babar revealed in Islamabad on Sunday that the project was being commissioned purely to meet the economic needs of the country, and was being carried out by two sovereign states.
“The government is going to initiate this important project in view of the energy requirements. The project will bring economic prosperity, provide better opportunities to the people and help defeat militancy,” he said.
The Pakistani foreign office said earlier last week that the country is “not in a fix” on account of US pressure because of Iran being sanctioned.
“We are very clear about this project. It is in our national interest to go ahead with it,” a foreign office spokesman told a press conference on Thursday.
Tehran has agreed to lend Islamabad USD 500 million, or a third of the estimated USD 1.5 billion cost of the 750 km Pakistani section of the pipeline.
Information Minister Qamar Zaman Kaira stressed to journalists in Islamabad that at no point of time, during the last five years, has any official from the US administration ever raised the issue with Pakistani officials, at any level. He claimed that had they done so, his government would have discussed the matter with their American counterparts.
Pakistan’s state owned television quoted President Asif Ali Zardari as saying that the pipeline project is extremely important for Pakistan. The president asserted that world peace is linked to Pakistan’s peace, and that the country cannot change its existing neighbors. Zardari stated that the Pakistani nation must recognize its strength, and in this regard it should learn from Iran.
However, security analysts are predicting that the pipeline construction project could encounter a major obstacle on the Pakistani side of the border as it passes through the troubled Baluchistan province, where a low-key insurgency is ongoing.
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