Pipeline diplomacy

The overland route for gas will benefit all players

IF the Iran-India gas pipeline is not already on the agenda for talks between A.B. Vajpayee and Pervez Musharraf, it ought to be put there and given high priority. One good reason is that among a long list of contentious and sensitive items, this one is guaranteed to spread sweetness and light — and prosperity. Both sides would gain from it, financially, psychologically and in the eyes of the world. In the run-up to the summit, there has been considerable discussion in the media about the pros and cons of an overland pipeline through Pakistan. While not underestimating the risks of sabotage by terrorists, industry circles and energy specialists have generally come out in favour of a pipeline through Pakistan. The advantages for India are undeniable. Present guesstimates are an overland pipeline from Iran’s gas fields will be a third of the cost of a pipeline under the sea. It will also take half the time to lay and be more economical to maintain. Time and money are equally important. India’s demand for energy is one of the fastest growing in the world. With regard to gas specifically, energy experts say current supplies meet only half the demand. And India’s appetite will increase rapidly in the years ahead.

There have been talks for many years with Iran and other potential suppliers about the feasibility of gas pipelines. A decision cannot now be postponed for much longer without hurting India’s long term economic growth prospects. Iran, on its part, with the second largest reserves of gas in the world, is in need of buyers. New Delhi and Tehran are planning to carry out techno-economic studies of both overland and undersea pipelines. It is sensible to examine both options because even though the overland route would be preferable there is no certainty that peace will break out in the region, or even common sense, for that matter. Also, the additional costs that must be incurred to ensure pipeline security will have to be examined. Meanwhile, New Delhi should thoroughly explore the Pakistan route, find out what security commitments Islamabad is prepared to offer and what kind of commercial relationship can be worked out. Vajpayee and Musharraf can set the ball rolling in Agra.

There is no question that Pakistan would gain a great deal. Estimates of what it could earn from transit fees range from $400 million to $750 million a year. No government can afford to forgo that kind of income and certainly not one as deeply in debt as the present one. Second, it would be chance to present a responsible face to the world. If, despite all its historical baggage, India can make such a deal, it is bound to encourage other investors to look afresh at opportunities in Pakistan. Strategic affairs specialists in the subcontinent will recognise other kinds of positive spin-offs from the pipeline. After a long time there is a real opportunity for constructive cooperation. This sort of opportunity for mutual benefit does not come along every day. So it would be very short-sighted of the leaders of the two countries not to grab it with both hands.