ISLAMABAD:
After two days of negotiations between the two countries, Pakistan has turned down a request by Iran to offer a transit facility to Iranian exports to India and even expressed reservations at allowing Tehran to finance the Pakistan portion of the gas pipeline between the two neighbours, owing to international sanctions against Iran’s energy sector.
Officials familiar with the closed door negotiations of the 18th session of the Pakistan-Iran Joint Economic Commission (JEC) said that Pakistan turned down the Iranian request for transit to India based on a clause in the International Road Transportation of Passenger and Goods agreement, signed between the two countries in 2008.
Under the treaty, a transit facility cannot be granted unless both countries have an agreement with the third country in question. Pakistan does not yet have a transit agreement with India, they said.
Pakistan has also been reluctant to accept Iran’s offer to finance Pakistan’s portion of the much-needed gas pipeline between the two countries, fearing the consequences of international sanctions that might be triggered for cooperating with Iran.
Islamabad is instead seeking financing from Moscow and Beijing for the Pakistani portion which is slated to cost $1.5 billion, a figure that could go higher once a ‘bankable’ feasibility study – currently being conducted – is completed.
Finance ministry officials said that during the meetings with Iranian officials, they were informed that the remaining 250 kilometres of the Iranian section of the pipeline would be completed in another 18 months, a timeframe that conflicts with Iranian Foreign Minister Ali Akbar Salehi’s public statement at the JEC meeting stating that the Iranian side would be completed within seven months.
Salehi also suggested that the pipeline could be extended to other countries, an implicit indication that the project may be extended to include the western portions of China.
The United States has, in the past, expressed opposition to the project but Finance Minister Abdul Hafeez Shaikh said that Pakistan remains committed to the project “nonetheless.”
Three MoUs signed
At the conclusion of the JEC meeting, the two countries signed three memoranda of understanding on economic and technical cooperation, on the jointly owned Pak-Iran Investment Company and cooperation between Pakistan Television Corporation and Islamic Republic of Iran Broadcasting. Iran and Pakistan also agreed in principle to sign an MoU on cooperation against money laundering.
The two countries also constituted joint working groups to facilitate cooperation in the energy sector, particularly on Iran’s offer to sell 1,100 megawatts of electricity to energy-starved Pakistan.
Trade barriers
Finance ministry officials were particularly proud of having secured an agreement by Tehran to review its tariff structure and non-tariff barriers on exports to Iran. The volume of trade between Pakistan and Iran in fiscal year 2011 was valued at $1.4 billion, of which roughly $1.2 billion were Iranian exports to Pakistan.
Islamabad feels that Tehran’s tariff structure, as well as other barriers to trade, are largely to blame for the tremendous imbalance in the trade between the two countries. Pakistan officials hope to expand the volume to $4.5 billion within the next three years.
Iran has a population of about 75 million people and the size of its economy is estimated at $357 billion, providing a significant opportunity for Pakistani exporters.
Preparing for a ‘post-American’ future
The Iranian foreign minister said that it was important for Islamabad and Tehran to work together during a period of ‘transition’ – a hint at the withdrawal of US troops from Afghanistan, scheduled to take place by 2014.
Salehi also said that Prime Minister Yousaf Raza Gilani’s coming trip to Iran on Monday would help ties between the two nations.
Published in The Express Tribune, September 9th, 2011.
COMMENTS (20)
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@EMP_PULSE: then why dont you realise that aksai chin is a part of china?????
@Nasir: "As per UN point of view Kashmir is a disputed territory. Wake up…"
Sorry, I think you need to wake up. The UN's resolutions on Kashmir are non-binding.
slaves will be slaves
People running pakistan are jerks
@Thinking Pakistani: "A former PM of Singapore on the secret for Asian Tiger said its simple. Make sure you have twenty-four hours electricity. Everything else will follow….." But is that not exactly what the forces who want Pakistan to crumble, would not want to happen and how well they have succeeded.So far.
What is stopping PAK to sign a transit agreement with India to get this project going. Why borrow money from others while Iran is willing to put the bill. Strange politics. Iran needs export, PAK needs transit revenue plus gas, India, china need gas. If there is a transit agreement with third country, the project is ready to role regardless of sanctions against Iran, since it is Iran's money.
While opposition of the US to Iranian pipe line is known, I do not think that it will last long given that china and India are the major purchasers of the gas.
PAK should think of her energy security as everybody else.
@Anonymous: As per UN point of view Kashmir is a disputed territory. Wake up...
@Faraz. The sanctions were not put in place by the West - they were put in place by the UN Security Council which includes your "all weather" friend China.
The Map is definitely incomplete. The region that has been omitted is an internationally recognized disputed territory, which means both countries lay claim to it. who gave the Express Tribune the right to take it out ?
@Nasir: The truth has tumbled out. From my point of view, the map is perfect.
Take care of each other. How easy this project could be if supposed to be done in Europe. It needed only one year, from proposition to final utilization. Now it is more than fifteen years you cannot implement such an easy project of a pipeline. Americans exploit the South Pars reserve through horizontal piping technology and spend the money in the name of Qatar in Hollywood. One million Qatar population yearly income from that reserve is more than 75 million Iranians all together. Do something. Make friendship with each other. Wake up from heavy sleeping: "Az khaabeh graan khiz!" -Alaama Iqbal Lahori
@Faraz: Unfair? You want to make your own policies and the west makes their own. Nobody is forcing your hand one way or another. There are upsides and downsides to everything.
That being said. I'm from the west and don't care what you and Iran do as neighbors. It's completely understandable to want to get along with your neighbors and it's also a good idea. But, to act like you're entitled to things from a country when you go against their policies is just ridiculous. Think of the trash talk any country gets from Pakistani citizens when they have a good relationship with India. You'd probably sanction the crap right out of them if you had the ability to do so.
The map of Pakistan with this news caption is wrong. It seems ET has some Western/ Indian interests and committed to appraise them. Govt of Pakistan should announce a proper map of Pakistan in which occupied Kashmir must be shown as disputed territory. Shame on ET.
Am i seeing incomplete Pakistani Map in the picture??
Damn these sanctions. Such an unfair system it is. I mean why should Pakistan adhere to the sanctions when they've been placed by the west? When will we be able to stand up to the West and tell them to bugger off?
Transit facility between Iran & India should be provided as it will generate revenue for pakistan and direct flights between Islamabad & Tehran should also be initiated
we need peace and stability to proceed. 80% success is showing UP. 180 million people are not going anywehere....A former PM of Singapore on the secret for Asian Tiger said its simple. Make sure you have twenty-four hours electricity. Everything else will follow.....@Shahzad Hussain:
this projct is good for both
There are ample reasons for Pakistan to increase its trade volumes between all its neighbours, taking concrete steps in mending close ties with Afghanistan, Iran, China and India will eventually strengthen economy of Pakistan and there are hopes that in future it will grow on its own and will not depend on conditional aids from US or any other country. Lest be hopefull for a properous and wealthy Pakistan.