India, Pakistan Push Ahead with Iran Pipeline Plan

By Patrick Goodenough | July 7, 2008 | 8:16 PM EDT

( - India and Pakistan are edging closer to agreement on building a pipeline to carry natural gas from Iran through Pakistani territory to India -- a project opposed by the Bush administration.

On a visit to Pakistan, Indian petroleum minister Mani Shankar Aiyar said Monday he was optimistic the $4 billion plan could get "off the ground" by early next year.

A panel of officials from the two countries would review the "legal, commercial, technical and financial issues," and ministers from both would hold further meetings, he said. "The pipeline looks like a certainty now."

Aiyar met with Pakistan Prime Minister Shaukat Aziz, whom he said saw the pipeline as the basis on which to build better relations between the two countries.

Aziz said in a statement afterwards the project would foster "an enduring relationship" between India and Pakistan.

The nuclear-armed neighbors are traditional foes and have fought three wars since they won independence in 1948.

Like its giant neighbor China, India is anxious to find energy suppliers to fuel its fast-growing economy, while Iran with its large natural gas reserves has been looking for regional markets since the 1990s. A 2,600-kilometer pipeline linking the two was suggested more than a decade ago.

But Pakistan lies between the two countries, and the Iran-India pipeline plan ran up against the bitter Indo-Pakistan rivalry. With relations between Delhi and Islamabad beginning to improve last year, the proposal took on a new momentum, especially since Pakistan is itself facing shortages and is keen to import Iranian gas.

The Iran proposal is only one under consideration. India is also looking into the possibility of importing gas from the Central Asian Republics, via Afghanistan and Pakistan. A third proposal involves importing gas from Qatar, again via Pakistan.

The U.S. opposes the Iran plan because it would be a major source of revenue for the Islamic republic, and Washington wants to keep pressure on Tehran over its suspected nuclear weapons programs.

Speaking in Islamabad, Aiyar said India was aware of and sensitive to American concerns, "but [the] U.S. is also aware of our energy needs."

During a visit to India last March, Secretary of State Condoleezza Rice said she raised the issue in a meeting with her Indian counterpart, K. Natwar Singh.

Rice also held out the possibility that the U.S. could help India to acquire nuclear power plant technology as an alternative source of energy.

Singh said, however, that India had longstanding friendly ties with Iran and would push ahead with the idea.

Pakistan has also given no indication in public that it will comply with U.S. requests not to pursue the project.

Islamabad has become a close ally of the U.S. since the 9/11 terror attacks, and the U.S. has been moving to strengthen ties with India too. Washington's ambassador to India said earlier this year that it was now official U.S. policy to help India become "a major world power" in the 21st century.

Indian security analyst Bahukutumbi Raman has cautioned India not to be overly optimistic about the pipeline project.

Noting that the pipeline's proposed route takes it through earthquake-prone areas, he said in a recent analysis that Iran had neither the finances nor the special skills required to build it.

Tehran would therefore need to look to a consortium of Western and Japanese companies to raise the money and provide the technical skills, he said.

"Unless there is a dramatic improvement in the U.S. relations with Iran, Washington would be able to see to it that such a consortium does not come into being."

Russia has helped Iran develop its nuclear sector, but in this case, Raman said, "Russia may be able to help technologically, but will not be able to raise the money."

Raman, a former senior government and intelligence agency official, also noted that the envisaged route goes through Pakistani areas dominated by Balochs, an ethnic minority of Iranian origin fighting for autonomy from Islamabad.

Balochs already have threatened to prevent the construction work from going ahead unless they benefit financially, he said.

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Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow