Laying the IPI pipeline

The prospect of a gas pipeline linking Iran, Pakistan and India is back on the table.

It is a controversial project, but could ease severe energy shortages in India and Pakistan, and bolster regional security by providing the two South Asian neighbours with a shared interest. Talks on the 7 billion dollar project are due to resume this week, with pricing issues to the fore. The three sides have repeatedly stressed their commitment to reaching agreement this year, even though there are reservations in Iran about exporting a 'strategic' resource.

The turnaround is largely due to a change of heart in India, which had cooled on the pipeline project as its focus turned towards a nuclear deal with the United States. Yet negotiations with Washington have not gone smoothly and Delhi is reasserting its independence in foreign policy.

Relations between India and Pakistan have also improved. The pipeline provides Delhi and Islamabad with chance to share an economically and strategically significant asset, reducing the risk of another India-Pakistan war.  

Russia and China would both like to be involved in the project.  Gazprom has offered to build the pipeline, while Beijing would like to explore the possibilities of an extension to Gwadar, the port it has developed in Pakistan's resource-rich but volatile Baluchistan province.

 

The World Bank has already pledged to help finance the scheme, further reducing US leverage. Yet tough challenges lie ahead. Old enmities die hard and Islamabad and Delhi will have to show that they are prepared to commit significant resources to the scheme.