Pakistan and Iran: Gas Pipeline Fallacy Continues

During last week’s meeting between Pakistani Prime Minister Nawaz Sharif and Iranian President Hasan Rowhani, the two leaders trumpeted their efforts to restart the stalled Iran-Pakistan gas pipeline.

Sharif stated that he was visiting Iran with “finance, petroleum and interior [ministers] to resolve all matters which are creating hindrance in the project.”

Both leaders also highlighted a history of strong trade between the two nations and their joint desire to battle terrorist influences because they are “able to uproot terrorism and violence in the region by inviting other regional states to enhance intelligence, security and operational cooperation.”

All this sounds great until one researches the history of this project and its actual economic potential. When one does this, it’s plain to see that these press releases are a lot of hot air that, unlike regular hot air, won’t go anywhere.

Why is that?

To begin with, there’s the issue of who will buy this gas. Originally, India was a partner in this project – when it was called the Iran Pakistan India pipeline – but they dropped out over pricing disagreements. With India’s departure, the other two countries lost the one participant who needed the gas and could pay for it.

The second problem is security. The pipeline is supposed to be go through the unstable – isn’t everything in Pakistan unstable – province of Baluchistan. This province, which is battling a longstanding independence movement, has been nearly impossible for Islamabad to manage, and the possibility of a multi-billion dollar payday will only increase the incentive for the fighters.

Finally, there are geo-political issues. Both Saudi Arabia and the United States do not want this project to be successful and while China may provide some support, the opposition of the first two countries will make it very difficult for Pakistan to receive the funding support it will need to develop this pipeline.

This will also cause issues if Pakistan decides to develop its Gwadar port for this project since it will need both money – see point three above – and a viable client who wants Iranian gas – see point one above.

Therefore, anyone who buys into the malarkey of this project needs to chill out and invest in something else.