Wednesday :: Jun 15, 2005

Buffing The Crystal Ball

by pessimist

As I wrote in Niemoller's Iraqi Lament the BFEE/PNAC Petroleum Pirate Posse wasn't going to like their pet South Asians - the Indians and Pakistanis - making 'independent' energy deals, especially since their deal is with a member of Bu$h'$ 'Axis of Evil'.

Hard on the heels of their announcement of the deal, which was accompanied by a staunch declaration that there was no American involvement with this project, the US shows muscle in India-Pakistan-Iran pipeline accord:

US has warned Pakistan of sanctions if it goes ahead with the proposed $4 billion, 2,600-kilometer Iran-Pakistan-India gas pipeline. The latest US threat comes in the wake of a marathon nine-hour meeting between Indian and Iranian officials in Tehran that reiterated both countries' firm commitment toward building the pipeline. Apart from the pipeline issue, India signed a US$22-billion deal to buy liquefied natural gas (LNG) from Iran over 25 years starting 2009.

Culture Clash

Pakistan's newspaper Dawn, as well as The Times of India, quoted officials in Washington saying that the US warned Pakistan of sanctions if it went ahead with the project, disregarding US concerns over Iran's nuclear plan. This is despite Pakistan's Foreign Minister Khurshid M Kasuri making a strong plea in favor of the pipeline given the potential revenue ($700 million in transit fees alone) and the country's need for energy security.

Kasuri, who was in the US last week, impressed upon US Secretary of State Condoleezza Rice that Pakistan cannot abandon the project. However, the US believes that given the $1-billion-plus yearly aid that it has been advancing to Pakistan since 2002, the country should fall in line.

It's understood that Rice suggested to Kasuri that Pakistan should look at other options, including a pipeline from Qatar or the central Asian republic of Turkmenistan. Rice reportedly said that even if the US gave up its resistance to the pipeline, powerful groups within the US Congress would ensure that the project is derailed.

There are many ways to topple a train off the tracks - and war is just one of the options.

Here is another - extortion:

Asia Times Online had earlier reported that Rice, during her visit to India, had made it clear to her Indian counterpart, Foreign Minister Natwar Singh, that if India proceeds with the pipeline it could invite US ire under the Iran-Libya Sanctions Act (ILSA) that empowers President George W Bush to order punitive measures against any international company that invests more than $20 million a year in Iran's energy sector. Rice is now reported to have reiterated the same threat to Pakistan.

But this threat is largely empty:

The ILSA disallows any move that would aid Iran's economic expansion, as the US considers the country a "safe haven for terrorists". The sanctions provisions apply only to investments in Iran and not to any purchase of oil or gas, thus not affecting the Indo-Iran LNG deal that the two sides just signed.

There is, certainly, some serious doubt that King George can merely order his minions about to do his bidding, as the list of these minions is smaller almost daily. India and Pakistan don't appear to be very worried about this threat:

"We live in a very complex neighborhood, surrounded by governments and rulers of different orientation - communists, military dictatorships, monarchies...we hope the US understands the difficult choices we have to make for the well-being of our people," India's Ambassador to the US, Ronen Sen. A US official has been quoted as saying that the pipeline issue is a "minor wrinkle" in growing Indo-US relations.

In the new environment of improved Indo-Pak relations, India feels it can pull off the construction of the pipeline from Iran through Pakistan, which will make the gas transport much easier and cheaper. It is estimated that unless India taps new energy sources, given the rising international price of crude, it will be impossible to grow at the projected 7-8%. So the pipeline is an absolute must. India, which imports nearly 70% of its annual energy needs, has been using ships to ferry LNG.

That explains Indian recalcitrance toward obeying Hiz Hindness. What's Pakistan's interest?

Pakistan Tuesday asserted that the decision whether or not it would allow the pipeline to run through its territory would solely be taken in consideration for its national interest, hinting that external pressures from the US or others wouldn't make any difference. Foreign Office Spokesman Jalil Abbas Jilani said Pakistan is aware of US concerns, but Islamabad's national interest came first. He said the Iranian oil minister would visit Pakistan on June 20-21 at the invitation of his Pakistani counterpart to discuss the project. He also said that during their recent meetings in Islamabad, Pakistani and Indian ministers agreed to set up a joint working group to discuss all aspects of the project, including technical, financial and pricing issues.

What's in it for Iran, besides the obvious?

For Iran, which holds the world's largest gas reserves after Russia, India is as important as the European market, which it hopes to access through a pipeline across Turkey. Reacting to the new US pressure, Iran's Oil Minister Bijan Zanganeh said: "It is unreasonable to prevent India and Pakistan from accessing Iranian gas. Energy markets should be depoliticized. We sell crude oil and LNG. Why can't we be allowed to sell piped gas?" The minister told reporters on the sidelines of the Asia Oil and Gas conference that a decision on the pipeline would be inked within two weeks.

George's Ace In The Hole

But it is easier said than done, given Pakistan's dependence on, as well as proclivity toward, the US.

Pakistan has of late adopted the policy of welcoming all schemes to transport oil in any shape through pipelines. Two other pipeline projects are being actively discussed in Pakistan. One is for oil to be brought from Sharjah [United Arab Emirates] under Persian Gulf waters through a pipeline - US interests seem to have some minor share in the project.

This is severely short-sighted. This pipeline would have to run hundreds of miles along the Iranian coast, and would necessitate the stationing of significant US Navy assets in order to protect this pipeline - indefinitely. Just how are we American taxpayers supposed to pay for this protection 'service' to the UAE?

Luckily, this option isn't considered viable:

The economics of the Sharjah pipeline is likely to knock it out of the running in any case.

And the other pie-in-the-blue-sky plan?

The other plan is a major three-country project: hydrocarbons sourced in Turkmenistan carried through a pipeline to Afghanistan and Pakistan's newest port at Gawadar, to be exported to the rest of the world. The company that will set up that pipeline and manage distribution of these hydrocarbons is a composite subsidiary of major US oil corporations, so it is not surprising that Washington is keen that this project succeeds. When and if this UNOCAL project - intended to transport as many hydrocarbons from Turkmenistan, Uzbekistan, Kyrgyzstan and Kazakhstan as possible - succeeds, the US may have attained its objective of acquiring access to most of the oil from the former Soviet republics in Central Asia, which is considered to be more secure than Middle Eastern oil and does not involve an implicit subsidy to Islamic fanatics.

The US-favored UNOCAL pipeline has to run the gauntlet of a simmering guerrilla war in Afghanistan and an unpredictable law and order situation in Pakistani Balochistan. The Afghanistan situation cannot be said to be as amenable to improvement as Pakistan's because the continued presence of foreign troops - vital to the survival of the Karzai regime - is an incitement to rebellion.

The specific point against the viability of this pipeline is that it would have to run through Afghanistan, and we know just how well former UNOCAL employee Hamid Karzai has Kabul under control while the rest of that nation is returning to Taliban influence! This pipeline would require a massive increase in US Army troops, and we have repeatedly heard that the recruiting goals are falling far short of projections.

But it won't be any easier for Iran to run a pipeline thorugh the neighboring area of Balochistan - it's something of a lawless wild west area:

Even the Iranian pipeline will have to traverse Balochistan, albeit west-to-east. The law and order situation in that region can, however, vastly improve if good governance and political savoir faire can be brought to bear on it.

'Good governance and political savoir faire' are euphemisms for prompt deliveries of baksheesh - bribes. The local tribes are quite capable of changing sides at the drop of a raise on the ante. Thus, the possibilities for conflict in this area appear ripe for exploitation by all parties concerned.

I've already covered the interests of Iran, Pakistan, India, and the United States. These are, however, not the only energy bets being covered:

Triangulating The Great Game

The pipeline projects illustrate the geopolitical rivalry between the world's hyper-power and the two giants of Asia: Russia and China. Both are trying to win over the rulers of Kazakhstan, Uzbekistan and Kyrgyzstan to their side and to meet their fuel needs on a secure and permanent basis.

The US is losing control in the region. China has recently concluded negotiations for trade and military pacts with Iran, and there have been other means of support. China is even interested in establishing a pipeline connection to Iran by buying in to the India pipeline. In addition, China is assisting Iran's missile program, which would have dire consequences for King George's intended assault upon Teheran.

But what of Russia? Ol' Pooty-poot has to be getting tired of Bu$hCo initiatives intended to corporatize Russia just like any third world nation subverted by the process described in detail in Confessions of an Economic Hit Man, therefore he has an interest in establishing ties with both China and Iran. Add in Russian support for Iran'a nuclear program, and the situation expands to such a degree that the insanity that is North Korea pales in comparison, and the potential for an incredible military disaster looms:

The Iranian nuclear crisis casts a long shadow on all the three proposed pipelines: from Iran, Sharjah, and Turkmenistan.
Any US intervention in Iran would create a situation like 15 or 20 Iraqs.
Nothing can be said about the future in that case.

Maybe it's time for America to begin a new diplomatic initiative, based not on Schwarzenegger-like muscle flexing, but for meaningful discussions intended to ease the tensions which motivate a 1914-like arms race between the US and the rest of the world. If the death toll was massive in the 'war to end all wars', it can only be inconceivable now - trenches are no impediment to nuclear blasts. But that won't come about until the American voting public ceases its infantile dependency on the smooth-talking Bu$hCo charletains and grows up to become political adults ready to face up to their responsibilities to themselves, their families, their nations - and their world.

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