CSS 2018 Solved Current Affairs Past Papers | Iran-Pakistan Gas Pipeline and its Challenges
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Outline
1-Introduction
2-Understanding Iran-Pakistan Gas Pipeline
3-Importance of Iran-Pakistan Gas Pipeline
4-Progress of Iran-Pak Gas Pipeline: Current Scenario
5-Challenges to the Gas Pipeline
- ✓US Sanctions on Iran
- Evidence: according to Pakistani Reports, the project has been delayed for more than 10 years, mainly because of Pakistan’s fears about potential U.S. sanctions.
- ✓Regional Insecurity
- ✓Funding Concerns
- Evidence: The Gas Infrastructure Development Cess (GIDC) failed to fulfil the demand of $ 7 billion for the next phases of the project due to economic constraints
- ✓Trust Deficit Due to Geopolitical Tensions
- Evidence: The issues, including Shia-Sunni conflicts and exchanging tit-for-tat military strikes against each other, have created a trust deficit between nations.
- ✓Existence of Competing Pipelines Projects
- Evidence: Competing projects, such as the TAPI, divert the attention and resources from the IP gas pipeline.
6-Suitable Measures for the success of gas pipeline
- To enhance Diplomatic Relations
- To seek a Waiver of the US sanction
7-Conclusion
Answer to the Question
Introduction
Iran-Pakistan Gas Pipeline, a long-delayed project, plays a pivotal role in strengthening Iran-Pakistan diplomatic ties, enhancing economic development, and meeting the energy demands of Pakistan. However, if not given serious thought, the project might leave adverse economic, political, and regional results for both nations. For instance, Iran might take legal action against Pakistan for not terminating the project on its due date, Sep 2024, citing a breach of the agreement. This might result in monetary loss in the form of nearly $20 billion in penalties for Pakistan. Unfortunately, the growth of the project has been jeopardized due to various challenges, including geopolitical tensions between Iran and Pakistan, regional insecurity, and funding concerns. Above all, the U.S. imposed sanctions on Iran in 2008, which has hindered Pakistan from having economic ties with Iran and moving towards the commencement of the IP project due to the fear of potential penalties from the U.S., which might lead to greater economic loss for the country. According to Pakistani Reports, the project has been delayed for over 10 years, mainly because of Pakistan’s fears about potential U.S. sanctions. Nonetheless, if there is a will, there is always a way. Suitable measures, including enhancement of diplomatic ties with Iran and efforts to gain a waiver of U.S. sanctions, might assist Pakistan in overcoming the issues. To conclude, it is crucial for the country to consider the IP gas project seriously to avoid future potential repercussions.
Understanding Iran-Pakistan Gas Pipeline
To elaborate, Iran_ the Iran-Pakistan Gas Pipeline, also known as the Peace Pipeline, is a bilateral project between Iran and Pakistan, aiming at transporting natural gas from Iran to Pakistan. Initially, the project was conceptualized by Pakistan, Iran, and India as a tripartite project. Still, decades later, India withdrew from it in 2008 due to sanctions on Iran by the U.S. Significantly, the pipeline will extend nearly 781 km from the Iranian border to Pakistan’s port city, Gwadar, transporting 700 million cubic feet (mcf) and one billion cubic feet of natural gas a day sourced from Iran’s Pars Gas field. Unfortunately, Pakistan has failed to fulfil the agreement and meet the deadline of a 25-year supply agreement, which was re-signed in 2008 by both countries, committing to complete by 2014, which further led to Iranian threats of legal action and potential penalties amounting to $18 billion for Pakistan. However, considering the project’s economic benefits for both countries, Iran has set a new deadline for Pakistan to commence the project by Sep 2024, emphasizing the need to move forward with the project.
Importance of Iran-Pakistan Gas Pipeline
Significantly, the project possesses multi-dimensional benefits, including economic prosperity, regional integration, energy security, and geopolitical considerations, for Iran and Pakistan. To elaborate, by delivering 750 million to 1 billion cubic feet of natural gas daily, the project could significantly alleviate the energy shortages expected to increase by 70% by 2030. According to Hassan Nourain, the consul general of Iran in Karachi: “The network is designed to pass through Balochistan and Sindh provinces before entering Punjab. The pipeline from Iran will have an estimated capacity to funnel 750 million to around 1 billion cubic feet of natural gas per day. Economically, amidst ongoing fiscal challenges, the operation of the pipeline could generate substantial transit fees for Pakistan, contributing to national revenue. Moreover, the project gives both nations an opportunity to strengthen their diplomatic ties, regional influence in South Asia, political stability, and regional cooperation. Therefore, the Iran-Pakistan Gas Pipeline paves the way for Pakistan to meet its energy demands and for Iran to navigate the U.S. sanctions.
Iran-Pak Gas Pipeline: Current Scenario
Currently, after a long delay of ten years, the project has gained significant momentum aimed at advancing the project. On 29 March 2024, Pakistan’s Cabinet Committee on Energy approved the completion of the first 80km segment of the pipeline within Pakistan, extending from the Iranian border to the strategic port city of Gwadar. However, despite recent approvals, Pakistan has failed to complete the project by Sept 2024, resulting in legal actions and penalties that amount to $18 billion for Pakistan as a breach of the agreement. Although the progress of the project was dwindling due to a warning from its longstanding ally, Pakistan has expressed its intentions to fulfil the agreement and proceed with the project. According to Pakistan’s defence minister, Khawaja Muhammad Asif, “We will go ahead with construction of the pipeline.”
Challenges to the Gas Pipeline
Moreover, various tensions, including the U.S. sanctions on Iran, regional insecurity, and economic issues, have hampered the construction of the project. The following paragraphs further discuss the challenges faced by Iran and Pakistan since the initiation of the project.
- US Sanctions on Iran
Initially, the most significant challenge that hampered the progress of the Iran–Pakistan Gas Pipeline project was the sanctions imposed on Iran by the U.S. Due to the U.S. sanctions, foreign investment, funding and financing for the pipeline has been deterred. The U.S. has warned Pakistan that any kind of deal with Iran may result in the potential risks of sanctions for Pakistan. According to Pakistani Reports, the project has been delayed for over 10 years, mainly because of Pakistan’s fears about potential U.S. sanctions. Therefore, the imposed sanctions on Iran are the biggest challenge to the progress and commencement of the project.
- Regional Insecurity
Furthermore, the proposed route of the Iran-Pakistan gas pipeline passes through the Balochistan provinces, Sistan and Baluchistan province of Iran and Balochistan province in Pakistan, which have been the hub of insurgencies for decades. Such problems have adversely affected the progress, posing threats to the infrastructure and construction. According to the 2019 report of CRSS, a Pakistan-based research think tank, Balochistan was the worst-hit province, accounting for more than 40 per cent of all causalities. Thus, the regional insecurity wreaked havoc on the success of the project’s construction.
- Economic Concerns
Moreover, the lack of availability of funding resources further thwarted the progress of Iran _ the Iran-Pakistan gas Pipeline project. Amidst economic challenges, Pakistan struggles to mobilize around $7.5 billion for the completion of the project, further complicating the issue for the nation. To elaborate, the Gas Infrastructure Development Cess (GIDC), which has funded ($ 158 million) and completed the first phase of the project, has now failed to fulfil the demands of $ 7 billion for the next phases of the project due to economic constraints. Therefore, economic setbacks are the major factor that plague the progress of the project.
- Trust Deficit Due to Geopolitical Tensions
Apart from that, Pak and Iran are confronting geopolitical tensions apart from insurgency issues in the region. The issues, including Shia-Sunni conflicts and exchanging tit-for-tat military strikes against each other, have created a trust deficit that complicates negotiations and cooperation on large-scale projects like the Iran-Pakistan gas pipeline. Moreover, Pakistan’s close ties with Saudi Arabia, Iran’s regional rival, and Iran’s ties with India, Pakistan’s long-term rival country, have significantly hindered the project’s progress. For example, India’s withdrawal in 2008 has not only caused economic constraints but also reduced the pipeline’s plan capacity and length; on the other side, Saudi Arabia, a major financial supporter of Pakistan, has been seen opposing the project and discouraging Pakistan in the pipeline project, adding a layer of complexity. In 2019, Saudi Arabia agreed to set up a $10 billion oil refinery in Pakistan’s Gwadar port, directly competing IP gas pipeline. Therefore, the trust deficit due to geo-political tensions and rivalry nations of both countries _ Iran and Pakistan_ is one of the major causes that hinder the development of the project.
- Existence of Competing Pipeline Projects
Significantly, the presence of competing projects, particularly the Turkmenistan- Afghanistan _ Pakistan _ India) TAPI diverts attention and resources from the IP gas pipeline projects. Moreover, TAPI, which aligns with the U.S. interests project, and Saudi Arabia’s tempting offer for an oil refinery project at Gwadar port provide Pakistan with greater advantages and opportunities, encouraging the nation to prioritize and invest in such major projects over the IP pipeline gas project. Thus, the existence of more advantageous projects demotivates Pakistan from investing in the IP gas pipeline, further affecting Iran- Pakistan’s trust in working not only on the IP project but also on future projects.
Suitable Measures for the success of gas pipeline
However, considering the ongoing challenges surrounding the Iran—Pakistan Gas Pipeline, some possible measures are suggested that might assist in countering or at least minimizing the issues.
- To enhance Diplomatic Relations
First, Pakistan needs to enhance diplomatic negotiations with Iran to prevent future political turmoil that creates a barrier between the neighbouring countries. For this purpose, there should be re-negotiation on timelines and terms of the ongoing IP gas pipeline project to sidestep potential penalties and mitigate future economic repercussions since the delay in completing the IP gas project not only hinders Pakistan’s economic development but also undermines the growth of the previously taken initiatives. Therefore, diplomatic ties with Iran should be given prior attention.
- To seek a Waiver of the US sanction
Additionally, Pakistan should look into initiatives to get over the U.S. sanctions. To facilitate this, the state should continue seeking a waiver of sanctions on the IP Gas Project and give the project serious thought. However, since the IP gas pipeline is a project that needs to be built inside the Pakistani territory, securing exemptions from the sanctions is essential for the country to commence its share of the pipeline and import natural gas into the country. Therefore, it is high time for the nation to consider its right to build the pipeline, whether by seeking a sanction waiver or bypassing it.
Conclusion
In a nutshell, the Iran-Pakistan Gas Pipeline Project, also known as the Peace Pipeline, plays a significant role in strengthening Iran-Pak diplomatic relations, enhancing economic development, and maintaining regional stability. Also, it might meet the energy demands of Pakistan, which is predicted to rise to 70 per cent by 2030, according to a World Bank report. Unfortunately, the U.S. imposed sanctions on Iran, financial concerns, regional insecurity, and fragile Pak-Iran relations have impeded Pakistan from completing the project. Although the nation has approved the commencement of 80 km of the pipeline, the projection needs more effort from the country. To meet the challenges and prevent future repercussions, the nation should seek exemption from the U.S. sanctions and negotiate with Iran to extend the timeline and terms for completing the project. To conclude, the completion of the Iran-Pak gas pipeline is crucial for both countries to meet current economic and energy demands and pave the way for future bilateral economic plans.
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