Over the last few months we have written a few times about
It seems only natural that the two issues would eventually collide ...To review
Iran has the world's fourth largest oil reserves and second largest natural gas reserves and yet says they need nuclear power for civilian purposes. Most people believe that they are in fact trying to build a nuclear weapon. The US and EU have imposed an embargo on Iranian oil and threaten to blacklist any banks of any country that does not cut its imports of Iranian oil.
In the early 2000s the Pakistani government made a concerted attempt to shift their automobile energy source from oil/gasoline to compressed natural gas (CNG). In order to promote this switch the government set the price of CNG very low. The policy succeeded. 80% of their automotive fleet (3.5MM units) now run on CNG. Pakistan is now running low on CNG and power / industrial users are competing with gas stations for supply. At current utilization rates Pakistan will exhaust their proven natural gas reserves by 2020.
Here are the developments over the last few weeks
DAWN: (March 1, 2013) Groundbreaking of gas pipeline on 11th
'After a wait of almost two decades, the groundbreaking of UD 7.5 billion Iran-Pakistan gas pipeline will be performed on March 11 on the Pak-Iran border by the presidents of the two countries...President Asif Ali Zardari returned on Thursday after a two-day visit to Iran for finalising the gas pipeline deal and sorting out financing and technical issues. In Tehran, President Zardari, while rejecting the US pressure, had said: “We deeply believe in boosting bilateral ties. The international and regional players have tried in vain to prevent expansion of Iran-Pakistan ties but the people have learnt how to act against the enemies of Islam.”...Tehran has agreed to provide a USD 500 million loan to partially finance construction of the pipeline on the Pakistan side, which will cost USD 1.5 billion. Pakistan will pay the remaining cost from its own resources...If everything else goes well the pipeline will be completed in 15 months. Iran has already completed the pipeline in its territory, while the laying of 785-km-long Pakistani section will commence now. Pakistan plans to import 21.5 million cubic metres of gas daily from Iran via the pipeline."
DAWN: (March 5, 2013) Zardari seeks to allay US concerns
"Allaying concerns of the United States over the USD 7.5billion Pakistan-Iran gas pipeline project, President Asif Ali Zardari said on Monday that Pakistan did not intend to offend anyone by pursuing this project of national importance...“Let me tell you, Pakistan does not want to offend anyone. It is a sovereign country and has every right to pursue projects in its national interest,” ..The US has warned that the pipeline deal, if finalised, would raise serious concerns."
(btw I am sure that his "enemies of Islam.” comment was not meant to offend anyone.)
DAWN: (March 7, 2013) Islamabad to complete Iran-Pakistan pipeline ‘despite US pressure’
Pakistan will complete the USD 7.5 billion gas pipeline from Iran to Pakistan despite pressure from the United States, a spokesman for the foreign office said Thursday...It will be Zardari’s second visit to Iran since February 27 and comes after officials said a consortium would start work on the pipeline on Pakistani territory on March 11 despite American warnings of possible sanctions...Pakistan suffers from a crushing energy crisis, but the United States is pushing Islamabad to use its offered alternative solutions to help avoid sanctions...Although the pipeline on the Iranian side has almost been completed, Pakistan has run into repeated difficulties, both in financing the project and over a US threat of possible sanctions due to Iran’s nuclear activities...Iran eventually agreed to finance a third of the costs of laying the pipeline through Pakistan, with the work to be carried out by an Iranian company."
DAWN: (March 11, 2013) Pakistan stock market plummets over Iran pipeline sanction fears
"The Karachi Stock Exchange (KSE) benchmark 100-index ended 441.62 points, or 2.46 per cent, lower to close at 17,522.56 points...“There was a panic-like situation in the market as investors fear United States may impose economic sanctions on Pakistan because of the gas pipeline,” said analyst Mohammad Sohail of Topline Securities...“The market experienced turmoil all the day. It never recovered till it suspended trading.”..Brokers said selling was witnessed across all stocks...Pakistani analysts said a statement from the US State Department was expected later in the evening, which could determine the future course of the market...US State Department spokesperson Victoria Nuland has warned if the deal is finalised, it “would raise serious concerns under our Iran Sanctions Act.”
Reuters: (March 11, 2013) Pakistan starts work on Iranian gas line opposed by U.S.
Pakistan's stock market closed lower on Monday after the gas pipeline deal with Iran raised fears the United States would impose sanctions on Islamabad, dealers said...Asked if she wished to calm those worries, U.S. State Department spokeswoman Victoria Nuland bluntly told reporters in Washington: "I would not like to allay those fears. If this project actually goes forward we have serious concerns that sanctions would be triggered," she added. "All of that said, we've heard this pipeline announced about 10 or 15 times before ... so we'll have to see what actually happens."...Pakistan has pursued the pipeline scheme as a way of alleviating severe energy shortages that have sparked demonstrations and battered a weak government. At the same time, it badly needs the billions of dollars it receives in U.S. aid..."The Pakistani government wants to show it is willing to take foreign policy decisions that defy the U.S., particularly when such crucial issues as energy security are at stake," said Anthony Skinner, a director of British-based Maplecroft risks consultancy. "The pipeline not only caters to Pakistan's energy needs, but also lodges brownie points with the many critics of the U.S. amongst the electorate," he told Reuters....The project faces security challenges posed by ethnic Baluch militants who have demanded greater control over Baluchistan's natural resources, and by Iranian Sunni insurgents also based in Pakistan who are fighting for greater rights in Iran..."Having a pipeline running through the region makes it particularly vulnerable to bombings and disruption," said Skinner. "Washington could bolster its support for local elements, causing significant disruption to pipeline infrastructure."
DAWN: (March 13, 2013) ‘Gas pipeline dispute may not lead to US aid cut-off’
"The United States might not stop economic assistance to Pakistan over the Iran gas pipeline but the project would seriously strain relations between the two countries, diplomatic sources told Dawn...“The project will create lot of bitterness towards Pakistan, which Pakistan does not need,” said one source, noting Osama bin Laden’s discovery in Abbottabad had already tarnished Islamabad’s image in the United States...“The worry about Iran’s nuclear programme is real enough — and the perception that Pakistan may be helping them to make more money to evade international sanctions will further damage Pakistan’s stock here,” the source said."
UPI: (March 13, 2013) Iran pipeline to Pakistan tests U.S. stand
"Although Iran won't feel any economic benefit of the deal for some time, Tehran can chalk up one in the eye for "the Great Satan" as it seeks to throttle the Islamic Republic's energy exports, its economic mainstay...Monday's inauguration of Pakistan's participation in the much-delayed project is the first substantial defiance of Washington's campaign to cripple Iran's economy until Tehran abandons what the Western powers see as a drive to develop nuclear weapons...Middle East analyst Kaveh L. Afrasiabi observed that the pipeline deal is also "a timely break for Tehran, which is reeling under Western economic pressures..."It weakens the politics of leverage at nuclear negotiations with Iran which are currently at a turning point," he wrote in Asia Times Online this week...The dilemma the Americans now face, he noted, "is how to look for a greater stability role from a country that it is now threatening with (collateral) sanctions under the U.S. Sanctions Act."...Lastly, there are U.S. concerns that India, which was part of the project when it was mooted in 1994 but withdrew under U.S. pressure in 2008, might decide to defy the Americans as well...India, like Pakistan, its longtime regional adversary, desperately needs to boost its energy supplies to meet the demand of its burgeoning industrial sector and population."
Here is more from Wikipedia on the Iran-Pakistan Pipeline
In a related note Pakistan's parliament made it through a full five year term without being deposed. This is a first.
DAWN: (March 17, 2013) Days of mischief against democracy over, hopes Raja:
"The PPP-led federal coalition bid a historic farewell on Saturday as Pakistan’s first elected government to complete its parliamentary term, with Prime Minister Raja Pervez Ashraf voicing his confidence that it would mark the end of a “sinister chapter” in the country’s history of ambushes on democracy. The term of the government was linked to the expiry of the five-year term of the 342-seat National Assembly at midnight, though the prime minister might hang on for about a week until a caretaker successor takes over to oversee the next national elections within two months...The term of the National Assembly, elected in a 2008 vote that dealt a death knell to about nine years of military-led rule of Gen Pervez Musharraf, began with oath-taking by its members on March 17, 2008, though the coalition government, then headed by prime minister Yousuf Raza Gilani and also including PML-N, took office eight days later on March 25."
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