Economic managers’ wisdom

IP pipeline project could have only ever been completed and become functional had the sanctions on Iran been lifted

Editorial November 18, 2014

Suffering setback after setback, the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project seems unlikely to see the light of day. US sanctions on Iran were always a threat to the IP pipeline ever becoming a reality, and this seems to have only become obvious to Pakistan’s economic managers recently, who have decided to stall the $7.5-billion project until the international community lifts sanctions on Iran. These sanctions were placed in order to force the country to address the international community’s concerns over its nuclear programme, leading to the US, Australia and the European Union, among others, to restrict trading activity with the Islamic Republic. Given that Iran was going through a critical phase of isolation, the IP pipeline project could have only ever been completed and become functional had the sanctions been lifted. The US remains a key player here and continues to discourage the project.

What is beyond comprehension is Pakistan’s continued persistence on completing the project when sanctions are nowhere close to being lifted and there is the prospect of a heavy $3-million-per-day penalty also being imposed. Our economic managers’ perseverance surprises many. All this only begins to make sense when we take a look at the power crisis that we face. Not much work is left before the second phase of the work on the IP gas pipeline project is completed, but lifting of sanctions is still needed. Given that the country faces an acute gas shortage, Pakistan’s hopes for the completion of the pipeline can be forgiven. However, in all this time, another solution could have been worked on. It is only now that the government is looking to import LNG, which would need to be processed before being distributed. This would address some of the pressing need for gas in the country. However, in the absence of the IP project becoming functional, such a measure might not be enough to extract us out of the energy crisis we face.

Published in The Express Tribune, November 19th, 2014.

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Humza | 7 years ago | Reply

@Sonya: No other countries are not carrying on business with Iran as per normal. Iran is under international sanctions and you should read how the EU, Japan, China are all coming to terms with US pressure and sanctions. It has nothing to do with Saudi Arabia but the grond reality of the world. Pakistan cannot afford to provoke the wrath of the US over US sanctions on Iran. Even within Iran, public sentiment is towards opening up to US and breaking the impasse which is destroying the Iranian economy and causing horrible inflation. Only when Iran and the US come to an understanding can Pakistan complete its section of the pipeline.

Sonya | 7 years ago | Reply

What a pity that two sovereign nations can't cooperate with each other? Need to think - what if US lifts sanctions on Iran in light of the possibility of an agreement then Pakistan will have to come up with some other excuses. Why we do not accept that its not only US bilateral sanctions on Iran hindering the project but its Saudi's wish lists that their man in Pakistan (Nawaz Sharif) is fulfilling. India, EU and Japan - Korea on the other hand are trading with Iran like a business as usual.

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