In the recent energy talks between Pakistan and the United States, a key thing that became apparent was that Washington was desirous of reshaping its relations with Islamabad in the wake of extensive Chinese influence and investment of billions of dollars to give a push to Pakistan’s economy.
At a press briefing, US Special Envoy for Energy Amos Hochstein though welcomed the massive flow of Chinese investment, a perception has emerged that Beijing’s deepening partnership with Islamabad including the takeover of the strategic Gwadar Port has disturbed the US and India. This has prompted the US to gain a geopolitical foothold in the region which China seems to be dominating.
Hochstein, however, said, “it is not a question of dollar, we are doing it in our own way to build infrastructure in Pakistan,” adding, the US would provide expertise and technical assistance. This indicates that the US has no money to inject into the investment-starved energy sector.
At the same time, Hochstein called for putting the Iran-Pakistan (IP) gas pipeline project on the back burner until sanctions against Tehran were lifted. Instead, he pointed out, Pakistan should focus more on the Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline and the Central Asia-South Asia (CASA) 1000 power import project.
Washington has come in for a lot of flak here as a major share of the technical assistance allegedly goes back to its consultants and the actual money spent on specific purposes remains very low.
Apart from this, the US has spent billions of dollars on counter-terrorism efforts in Pakistan, but officials suggest that it would have been better, had Pakistan injected finances into energy projects to give a boost to the economy and provide jobs to people in order to discourage many from joining the ranks of militants. Unemployment is considered to be a major reason for the spread of terrorism and militancy.
LNG the right choice
During the talks, US authorities also laid stress on the importance of liquefied natural gas (LNG) in resolving Pakistan’s energy crisis. It again, this time indirectly, sent a message that Pakistan should stay away from the IP gas pipeline, rather it should go for LNG imports from Qatar.
US companies like ConocoPhillips have shareholdings in LNG manufacturing and sales in Qatar. In a strategic move, these companies had pumped capital into Qatar to secure gas supplies and meet the demand back home. However, after the discovery of huge shale gas reserves in the US, it is going to become an exporter of LNG in 2016.
Now that the US does not require Qatar gas, these companies would like to sell LNG to countries like Pakistan in a bid to prevent Islamabad from going for Iranian gas imports.
On the other side, the US is said to be pushing Iran to export gas to Europe via Turkey in an attempt to prevent EU states from importing Russian gas and heap pressure on Moscow due to the Ukrainian crisis. Reports suggest that Washington has also offered LNG exports to the EU at discounted rates.
China and Russia too have close relations with Iran and both are scouting for investment opportunities there.
Relations with Tehran
In the case of Pakistan and Iran, there have been some developments in recent months which would have a significant impact on their relations.
The attack mounted by Saudi Arabian forces on Yemen’s Houthi fighters has triggered a cold war between Tehran and Riyadh. Pakistan views its ties with both of them as extremely important.
A preliminary nuclear deal between Iran and global powers including the US has sparked prospects of lifting of economic sanctions. No doubt, the removal of curbs will lead to a major leap forward in relations between Iran and Pakistan as progress on different energy projects including the IP pipeline and electricity import has been stalled.
Petroleum and Natural Resources Minister Shahid Khaqan Abbasi said recently Pakistan was laying an LNG pipeline from Gwadar with no hope of receiving gas from Iran. “But now we are hopeful that we will be able to build the pipeline with Iran.”
Things will be clear in June when Iran and the world powers are to sign a final nuclear deal.
Abbasi dismissed the perception that the cold war between Iran and Saudi Arabia would hamper progress on the IP pipeline project.
This is the right time for Pakistan to cash in on the investment offers from different countries when the US has little to invest. China is investing in the energy sector and Russia has also come up with investment offers.
THE WRITER IS A STAFF CORRESPONDENT
Published in The Express Tribune, May 11th, 2015.