Why are Sonia Gandhi and Manmohan Singh so intent on building a pipeline across Pakistan that will carry Iranian gas to India? Although both are usually ever ready to obey the instructions conveyed through Maino Era India'snew Viceroy, Nicholas Burns, this is one issue on which both have resisted Washington'spressure. Is it because the pipeline would cost $10 billion to construct (including $4 billion in land) and generate an estimated $2.8 billion in slush money? An overland oil and gas pipeline has other defects besides the high costs. These are: it would (1) sharply enhance the value of the gas reserves of Pakistan at Sui and thus benefit the generals who run that country much more than it would India (2) pass through Baluchistan, a province where the majority of the population seeks independence from the Punjabi domination imposed by the jehadi army of Pakistan and (3) give the Musharraf regime more than $600 million annually just in transit fees. These reasons make such a pipeline a financial and security disaster for India. However, there is little doubt that there is need for a pipeline that can transport Iranian oil and gas to the hungry markets for both in India. Rather than an overland pipeline that has the effect of generating $2.8 billion in black money (or double the value of the entire Bofors gun transaction), what needs to be implemented is the long-pending proposal for an undersea pipeline that can, if Pakistan shows its intention of abandoning its terrorism against India, have a branch that runs to and from there as well.
That George W Bush opposes any pipeline between Iran and India is another example of the way in which his fundamentalist thinking is going counter to US interests. For, the reality is that such a pipeline would (a) in fact increase the economic vulnerability of Iran to US naval attack on the pipeline (b) develop a constituency in Pakistan that favours business over conflict with India and (c) open a market for US companies to be engaged in refining and shipment of the natural gas.
There are suggestions for an alternative overland route. This is the proposal for a gas pipeline that would link Central Asia with the Sui fields in Pakistan and onwards to markets in India. This would certainly have some strategic advantages, such as (1) promoting development of precisely those areas in Afghanistan and northern Pakistan that are most vulnerable to terrorist recruitment of unemployed youth, (2) save an estimated $3 billion in costs of construction, owing to the shorter route, (3) enable the Central Asian gas producers to free themselves from the current necessity of selling their production to Gazprom at cut-rate prices. It would also create a strong mercantile interest within Pakistan for friendly relations with India. Within Pakistan and into Amritsar in India, the length of the pipeline would be less than 900 kilometres, and would pass entirely within countries friendly to the US. In contrast, the proposed Iran-Pakistan-India route would be much longer, and much more expensive. But because this higher cost means more bribes, politicians in Iran, Pakistan and India favour this route over the much more operationally feasible alternative, which is a sealink.
Such an underwater pipeline would involve a submarine pipeline from Iran that passes through the waters off Pakistan to Gujarat state in India, the home of several huge petrochemicals complexes. The waters close to the coast are relatively shallow, and up to 10 kilometres of pipeline can be laid by ocean barges. Going through sealanes would avoid the need for purchase of land, besides skirting the problem of insurgency in Baluchistan and disaffection among Pashtun tribes on the Afghan-Pakistan border. Of course, although the pipeline would not create any social problems, a huge disadvantage for those in power in both India and Pakistan is that relatively little slush money can get generated through such an option, unlike in the case of the overland route, where costs can be padded up by higher markups. Small wonder that few politicians in either Pakistan or India are talking of an undersea route. Such pipelines have been built before, most notably the Lagos-Ivory Coast/Ghana one built by Chevron and the Sicily-Libya pipeline of ENI. The pipeline would commence at the Iranian port of Chahbahar and be laid eastwards (at a distance of around 10 kilometres) along the Makran coast and then off Karachi to Gujarat. The total cost of the 1200-kilometre pipeline would be USD 2billion, a sum well within the financing ability of any of the participating countries. Besides, as the Pakistan navy would have the primary responsibility for safeguarding the pipeline, it would increase the influence of this more outward-looking and liberal wing of the Pakistan military or the still-jihadist army. Among the projects that would derive immediate benefit from it would be the petrochemical complexes along the Gujarat coast and the Karachi Hub Power Company, which is funded by Saudi Arabia
The ensuring of an assured market for Iranian gas from a country with developing military ties to the US?India?would help ensure that the extremists in Iran do not go out of hand, provided the US and the EU move away from the present Texan gunslinger approach and offers Tehran a nuclear compromise that gives Iran the NPT-assured right to develop nuclear energy for its own use, rather than seek to arbitrarily change the NPT rules to make an exception out of Iran, making that country as much an international nuclear pariah as has been done to India since 1974. This despite Tehran not having detonated any nuclear device, nor demonstrating any capability of doing so. While it is a fact that nuclear technology should never come in the control of a religious state, the best way to deal with Iran would be to make it clear to the Iranian people that a government which is moderate would not face obstacles in the way of developing nuclear power. In contrast, today under GNEP, the world is sought to be divided into the few who have the monopoly of uranium enrichment and the many who are to be denied that right, including India. This is unacceptable to any self-respecting country, which is why Manmohan Singh'sand Sonia Gandhi'ssilence on GNEP comes as a surprise.
Rather than leave the execution of the project to government?which is not known to be particularly allergic to graft?it would be better to create special purpose vehicles (SPVs) to implement the scheme and administer it. The SPV or SPVs can either be wholly private or a public-private partnership, with the private interests having the majority stake. Funding can easily be got from the Middle East, especially if the SPV is registered in a location such as Dubai. Such a decision would open the way for local funds to participate in the costs of the operation, which would have an assured volume of profit. One roadblock would be the US, which is adamantly opposed to any project based in Iran except in the unlikely event of that country succumbing to its dictates and scrapping its full nuclear programme, something that even a liberal head of state would find impossible to do in the spirit of nationalism that has been active in Iran since the toppling of Mohammad Mossadeq in 1953. The second roadblock is the incompetence of the mullahs in Iran. These individuals, who control both the country and the economy, have no clue as to the needs of a modern economy, and as as far removed from market logic as the Himalayas are from the Indian Ocean. Presently, the mullahs have been coming up with contradictory and unrealistic pricing formulas for the gas that Iran would supply, and this needs to be resolved at the political level.
Shia Iran to the west and Sunni Indonesia to the east are two Muslim-majority countries that have resisted efforts at destroying their indigenous culture. They can form important strategic partners for India in the future. A good way of developing better ties with Iran would be to construct an undersea pipeline from that country to India that would give revenue to Tehran and energy to New Delhi. The sooner the slush-filled option of an overland pipeline through Pakistan is abandoned in favour of an undersea alternative, the better it would be for the entire region.