Iran-Pakistan pipeline could finally become reality
Iran and Pakistan both have political and economic interests in seeing a long-delayed gas pipeline come to fruition.
The Iran-Pakistan (IP) pipeline can be characterized as a second “Bushehr” for the Islamic Republic: costly, high-profile, repeatedly delayed and greatly exposed to political pressure. However, 20 years after Iran and Pakistan first signed an agreement to construct a natural gas pipeline, the project finally seems en route to fruition.
Of the numerous obstacles to the project’s finalization, US opposition in particular has weighed heavily.
Washington has long lobbied for the Turkmenistan-Afghanistan-Pakistan-India pipeline while discouraging the IP pipeline, promoting Turkmen over Iranian natural gas. In recent years, toughened Western sanctions on Iran have made the project even more cumbersome.
Punitive measures targeting involvement in Iran’s energy industry, along with financial and banking restrictions, have hit funding for Pakistan’s section of the pipeline, and complicated discussions on payment mechanisms. Compounded by Islamabad’s dire economic condition, Iran has ended up building its section from its southern city of Asalouyeh to its border with Pakistan. Islamabad is contractually obliged to pay steep fines, beginning in the winter of 2014, when gas deliveries were supposed to commence. However, payment of these fines, triggered by Pakistan’s failure to build and operate its section of the IP pipeline, has not materialized — with Iranian consent.
