Iran
to India Natural Gas Pipeline:
The inherent
after affects from divergence decision making & Regionalism in India, Iran,
and Pakistan
Abstract: This research based case article would
primarily be an attempt at understanding the complex nuances of the existent
international trade relations between three geographically convergent but
politically divergent nations of India, Pakistan and Iran. Although
considerable instances are incorporated to provide a detailed understanding of
the present ground realities for the proposed pipeline project. The case is
basically divided into six major sections namely – Identifying the issues,
legal matters, geographical implications, trade clusters, environmental issues
and other important factors like the role of Islam etc., The case also talks of
the influence of USA on these nations, the world scenario for Natural Gas and
its future. The case would throw up a lot of interesting instances for
international trade negotiation and cooperation among nations and would drive the
theory of importance of interdependence among nations.
Keyword(s): Iran, India, Pakistan, and Natural Gas.
Iran
to India Natural Gas Pipeline:
I. Identification
– (1)
The Issue
Ever since the discovery of natural
gas reserves in Iran's South Pars fields in 1988, the Iranian government began
increasing efforts to promote higher gas exports abroad. The scenario for
profit are especially high in South Asian countries like India and Pakistan,
where natural gas reserves are low and energy demand exceeds energy supply. In
1995, Pakistan and Iran signed a preliminary agreement for construction of a
natural gas pipeline linking the Iranian South Pars natural gas field in the
Persian Gulf with Karachi, Pakistan's main industrial port located at the
Arabian Sea. Iran later proposed an extension of the pipeline from Pakistan
into India. Not only would Pakistan benefit from Iranian natural gas
exports, but also Pakistani territory would be used as a transit route to
export natural gas to India. Initially, the Indian government was
reluctant to enter into any agreement with Pakistan due to the historically
tense relationship between the two neighbours. As an alternative, India
suggested the development of a deep-sea pipeline where no threat to security of
resources could exist. At present, in 2000, Indian, Iranian, and Pakistani
government officials continue to negotiate the possible routes, modes of
transport, and geopolitics of the Iran to India natural gas pipeline.
These negotiations indicate a significant shift in inter and intra-regional
politics between the states. The potential for economic and developmental
gain from natural gas will force India, Iran, and Pakistan to reassess their
roles and policies in regional conflicts, like Kashmir, Afghanistan, and
national security issues. Furthermore, potential economic collaboration
and gain will also lead to a possible transformation of social and political
discourse between the countries, perhaps even leading to mediation and
resolution of regional conflicts.
2. Description - The Peace Pipeline: The inherent after affects from
divergence decision making & Regionalism
The exportation of natural gas
from Iran to India through Pakistan is a venture that may change the face of
regional politics in South Asia. It is a study in how economic collaboration
possesses the power to engender as well as transform social and political
discourse between countries. The Indian government speculated whether Pakistan
could guarantee security for the flow of natural gas in the pipeline.
Furthermore, Pakistan's collaboration with Iran may foster conflict resolution
as well. In the past, Iranian and Pakistani foreign policies have
disagreed on the issues of Afghanistan and Shi'a-Sunni conflicts in the
region. Thus, trade and the larger experience of economic globalization
possesses the ability to exist as mediators in conflicts in the region and
between regions.
Natural gas trade between India,
Iran, and Pakistan challenges the geopolitical, historical, and strategic
realities of the three countries and the general regions of the Mideast and
Asia. In this way, the relationship between the pipeline venture and
globalization is multidisciplinary. It is not characterized solely by economic
factors, even though the current economic realities in Iran, India, and
Pakistan do foreshadow the future necessity of economic collaboration. The
realities of this case study are representative of the notion that
multidisciplinary globalization is changing the face of regional politics and
altering the social and political landscape of regions.
NEGOTIATING THE PIPELINE
Holding approximately 9 percent
of the world's total reserves, Iran is OPEC's second largest producer of oil (Iran Background
Information). Along with oil reserves, Iran contains the world's second
largest natural gas reserves "at an estimated 812 trillion cubic feet
(Tcf)" (Ibid). While Iranian natural gas consumption is high, the country
urgently needs to promote export markets for gas due to its faltering economy
and to meet the demands of modernization. To meet these demands, Iran has
targeted emerging regional markets like South Asia for natural gas exports.
Iran has proposed the export of
natural gas from Iran to India since 1993. Alongside this proposal was
the plan to export natural gas to Pakistan as well. The Iranian
government proposed the construction of a pipeline from its South Pars fields
in the Persian Gulf to Pakistan's major cities of Karachi and Multan and then
further onto Delhi, India.
The following map shows the
pipeline's main route. Starting from the left side of the map, the
pipeline originates in Asaluyeh, Iran on the coast of the Persian Gulf near the
Iranian South Pars fields. It travels to Pakistan through Khuzdar, with
one section of it going on to Karachi on the Arabian Sea coast, and the main
section traveling on to Multan, Pakistan. From Multan, the pipeline
travels to Delhi, where it ends. At this point, India is free to consider
and negotiate further domestic routing of the pipeline.
In 1995, Pakistan and Iran
"signed a preliminary agreement for construction of a $3 billion, 870 mile
onshore gas export pipeline linking South Pars with Karachi, Pakistan" (Ibid).
This pipeline did not include the additional city of Multan, Pakistan and
excluded the transport of gas on into India. Under a new pipeline project
proposing to include India, the Pakistani government would be able to “inject
its own exportable gas for sale to the international market that is [Delhi]
India” or take out gas for domestic purposes in Multan. The pipeline
would be 2,670 km long with a 48-inch diameter, and hold $3.2 billion of gas
(Alexander's Gas and Oil Connections 2003). Pakistan could earn as much
as $500 million in royalties from a transit fee and save $200 million by
purchasing cheaper gas from this pipeline project (The Hindustan Times 7 July
2000). Four major companies have expressed interest in constructing the
Iran to India natural gas pipeline. They are BHP of Australia, NIGC,
Petronas of Malaysia, and French Total, which is already partnering with Iran
in the development of an international pipeline through Turkey (Alexander's Gas
and Oil Connections 2000). A consortium consisting of Shell, British Gas,
Petronas, and an Iranian business group already existed and “was negotiating
how to export gas from South Pars to Pakistan” (Iran Background
Information). Also involved is the Iran National Gas Company and the
Gas Authority of India Limited (GAIL).
For the pipeline project, the
year 1999 was characterized by several meetings between Indian and Iranian
government officials which resulted in the formation of delegations and
committees to further discuss the feasibility of the pipeline project. In
February 1999, Iran signed a preliminary "in-principle" agreement
with India, agreeing to the idea of bilateral collaboration. However, a
tripartite agreement is necessary between India, Iran, and Pakistan for the
implementation of the project (The Hindustan Times 7 July 2000).
In April 1999, the Iranian and
Indian governments established a bilateral task force of business and
government officials to look at the economic and industrial feasibility of
developing the pipeline. In September 1999, the National Iranian Gas Company sent
a two member delegation to hold talks with the Gas Authority of India Limited
(GAIL) and the Petroleum Ministry in India to discuss the production of a
feasibility report for the pipeline project (The Hindu 24 September 1999).
At the end of 1999, President
Pervez Musharraf of Pakistan visited Tehran to discuss bilateral relations as
well as the pipeline project. The months following Musharraf's visit to Iran
were characterized by more diplomatic visits in the region. In March 2000, the
Pakistani Secretary of Petroleum visited Iran to formally agree to the pipeline
project between the three countries. Iranian government officials visited
Islamabad later in April 2000 for the Pakistani government to sign the
contract.
The bilateral India-Iran task
force met again in July and August to discuss the feasibility, security, and
economics of the pipeline project. The purpose of the task force was for the
Indian government to achieve some clarity and confidence on these issues. The
Pakistani government and Iran already decided on some of the practical
logistics of the project, like security for the pipeline in Pakistan, duration
of its construction, and pipeline length. The Pakistani energy minister
guaranteed in July 2000 to Iran and India that security of the pipeline remains
of topmost concern and will be ensured. It was later decided that if the
Pakistani government agreed to build the pipeline in the shortest possible
time, that being three years, then the Iranian government would increase the
transit fee (The Hindustan Times 7 July 2000).
Trade as channel for Regional
collabouration
As meetings amongst the three
governments, oil companies, and committees persisted; the pipeline project came
to involve a whole host of new issues, ranging from security concerns to
meeting the high demands for energy in South Asia. Regional cooperation in
the form of India-Pakistan collaboration, alongside India-Iran and
Iran-Pakistan collaboration, can potentially influence bilateral relationships
between the countries on the key issues and conflicts of Afghanistan, Kashmir,
and overall national security.
After meeting with Iranian
President Muhammad Khatami in New York in September 2000, Musharraf expressed
Pakistan's willingness to participate in the pipeline venture and promoted the
idea as an example of regional cooperation.(Times of India 11
September 2000). Also discussed was the need for evolving a joint
strategy towards the resolution of the Afghanistan conflict. Khatami
stressed on the need for two things. First, "for removing any
existing misunderstandings between Tehran and Islamabad” on the Afghanistan
conflict. Second, to evolve a joint strategy towards resolution of the
Afghanistan conflict (Times
of India 10 September 2000).
Iran and Afghanistan
Resolution of the Afghanistan
conflict within Afghanistan itself as well as between Iran and Pakistan would
lead to overall economic benefit in the region. Given the large amounts
of natural gas resources in Central Asia and the need to use Afghanistan as a
route to transport these resources to other markets like South Asia, oil
companies are extremely eager to invest in economic development and
collaboration with Afghanistan, Iran, and Pakistan. In the past, however,
the issue of Afghanistan has prevented such development.
(Source: CIA 2003)
Ahmed Rashid writes in Taliban: Militant Islam, Oil, and Fundamentalism in Central
Asia, “The U.S.
bombing of Bin Laden’s camps in August 1998 forced Unocal to pull out its staff
from Pakistan and Kandahar and finally, in December 1998, it formally withdrew
from the CentGas consortium, which it had struggled so hard to set up. The
plunge in world oil prices, which had hit the world’s oil industry, also hit
Unocal hard. Unocal withdrew from a pipeline project in Turkey, closed its
offices in Pakistan, Turkmenistan,” and withdrew financing due to civil war
among the Afghans" (Rashid 211).
The example of the Afghanistan
conflict introduces the issue of national security and its importance in the
context of regional cooperation. Initially, both Pakistan and India were
skeptical and rejected the pipeline proposal because of security concerns. Both
the Benazir Bhutto and Nawaz Sharif governments halted the projects because of
reservations in the army on the type of impact this project would have on the
regional issues of Kashmir and the government's position on bilateral trade
with India. (Zehra 2000). For the Indian government, concerns pertained to
“Pakistani fundamentalists disrupting supplies” (Bagchi 2000). India also
believes the pipeline places Islamabad at a strategic advantage where it can
“shut of the tap” in times of crisis or conflict (Reuters 2000).
Trade
as arbitration
The pipeline posits trade as a
mediator in the development of India, Iran, and Pakistan's bilateral policies
and conflict resolution. For Pakistan, the pipeline project assists in Pakistan
to re-establish ties with Iran. In recent decades, Pakistan and Iran have
remained isolated from one another due to major differences over the
Afghanistan civil war. Pakistan supports the Taliban while Iran supports the
opposition forces, the Northern Alliance, who are fighting against the Taliban
(Azhar 2000). For India, the pipeline project serves as a route to better
improve both trade relations and communication with Iran.
On November 7, 2000, and Indian
business delegation visited Iran to discuss what India's private sector is
willing to offer the Iran-India pipeline project. A. C. Patankar, the principal
advisor of the Confederation of Indian Industry, which has 4,000 member
companies, stated the roles and functions the private sector would like to
perform. First, he stated how the objective of the delegation's visit was to
explore business opportunities and also to strengthen India-Iran relations (The Times of Central Asia 7
November 2000). Second, he mentioned how dialogue between the two
countries experienced a "communication gap." This gap was the
"main reason for the low level of trade relations between Iran and
India" (Ibid).
The Indian point of view defines the pipeline project as a bilateral agreement
excluding the third country. Improved trade relations are viewed as
methods to upgrade communication gaps or differences in regional conflicts.
Pakistan and Iran could also
begin to resolve their regional conflicts in light of their proposed
collaboration on the pipeline project. Disputes between Pakistan and Iran
have traditionally focused on Afghanistan as well as tensions between Sunni and
Shi'a muslims. As Afghanistan's eastern and western neighbours, Pakistan
and Iran have proven detrimental to the Afghan peace process:
“There is no
common ground between the two states on a solution to the Afghan civil war and
even more ominously both states are funding proxy wars between Shi'a and Sunnis
in each other's countries as well as in Afghanistan, increasing the likelihood
of a major explosion in the region” (Rashid 211).
These conflicts are nothing new to
the region. They do, however, present a powerful challenge to the reality of
economic collaboration, interdependence and globalization in the region.
The need for resolution of these conflicts is fueled by the emergence of oil
and natural gas reserves and various other pipeline ventures in the region.
Knowing this, we must ask if the development of pipelines in war torn and
conflict laden regions bring resolution and if economic collaboration and
globalization can foster peace? Because of the potential economic prosperity
for all countries involved, a shift in regional political discourse is
necessary.
So far, the project has been
viewed as a catalyst for the promotion of regional cooperation and mediation by
only on bilateral levels. For Pakistan, pipeline is not viewed as a
partnership with India, but rather as “a bilateral Iran-Pakistan project,
which, through the Iranian partnership, does involve India” (Zehra 2000). Thus,
the Pakistani government views the pipeline project as regional collaboration
with Iran and not India. Pakistani promotion of economic collaboration
with Iran as an example of regional cooperation indicates a geopolitical shift
in both Pakistan and Iran's regional identity, since Pakistan historically has
identified with South Asia and Iran with the Mideast and Central Asia
regions. This shift shows Pakistan's economic and political alignment
with Central Asia and the Mideast more so than with South Asia. Perhaps
this is an effort by Pakistan to further distance itself from the role it has acquired
in the South Asian regional context. It is a role characterized
predominantly by its hostile relationship with a much larger India.
Additionally, India's hegemonic presence in areas of trade and economic
policies in the region has led most of the other South Asian countries to look
outside the region for greater economic collaboration.
In this case, economic
collaboration indirectly sows the seeds for a shift in regional politics and
perspective. With more economic collaboration between Iran and Pakistan, the
states’ previously conflicting positions on Afghanistan transform into common
policy objectives which are handled differently. Rather than taking sides in
the Afghanistan conflict, both Iran and Pakistan have decided to let “the
ground realities determine the flow of the Afghan situation” (Zehra 2000). The
pipeline project exemplifies the ushering in of an economic globalization that
changes the face of regional politics and, literally, a region. Sharing a 909
km border, Iran and Pakistan realized the necessity of a cooperative
relationship and foreign policy that would benefit both countries economically
through increased trade (CIA 2003).
In addition to promoting its
regional identity with Iran, Pakistan could further its sense of regionalism
with Iran, a transnational identity which does not recognize national borders,
to further promote economic collabouration. If this becomes the case,
Pakistan will be able to transform a political discourse of regionalism into a
communal and religious movement, stating that Iranians and Pakistanis should
work together economically because they are already spiritually unified as
Muslims. This too will serve to further Pakistan's regional identity away
from India, which is both secular and predominantly Hindu. In all
practicality, economic collaboration between Iran and Pakistan will not
completely erase Pakistan's presence and role in South Asia. It does, however,
represent a greater effort made at repairing and reinforcing inter-regional
ties. This effort is needed in relations between Iran and Pakistan but is even
more so urgently needed in the relationship between India and Pakistan.
The relationship between Pakistan
and India has dominated the face of South Asian politics. It is a relationship
marked by political distrust, communal overtones, and land disputes. The
countries have fought three wars in the past 56 years (Alexander’s Gas and Oil
Connections 2003). Most economic collaboration with India is avoided by
Pakistan and other South Asian countries due to India's role as the geographic
and economic hegemon in the region. Cooperation is seen by Pakistan and other
countries as only strengthening India's economic dominance by securing a
regional market for India (Dash 1996). Additionally, the cultural and
social ties between India and Pakistan are exceedingly tense with numerous acts
of communal violence committed between Muslims and Hindus. One example is
the destruction of the Babri Mosque at Ayodhya in 1992 by Hindu
fundamentalists. The mosque was built under the authority of the first
Mughal emperor of India, Babar, in 1528. Leaders of Hindu fundamentalist
political parties and their followers believed that the Hindu god Rama was born
at the location of the Babri Mosque. Furthermore, they believed that
"Rama's birthplace was destroyed to build the mosque" (Ludden
1). To avenge this destruction, the fundamentalists plan to reconstruct a
temple in honour of Rama over the remains of the Babri Mosque. It is the
emergence and recurrence of events of this nature that have plagued the
political, economic, and social relationship between India and Pakistan.
Given the tense multidimensional
relationship, an agreement on the pipeline project between India and Pakistan
would be seen as an historic event. The only other successful bilateral
agreement between the two countries pertaining to distribution of resources is
the Indus Water Treaty of 1960. After India and Pakistan received independence
from the United Kingdom in 1947, the Indus River Basin was divided in half.
Initially, "the two nations failed to settle the dispute over distribution
of water resources in the basin" and only signed an agreement with the
facilitation of the World Bank thirteen years later in 1960 (Nakayama
1996). According to the treaty, Pakistan has access to the flows of the
Indus, Kabul, Jhelum, and Chenab rivers while India has rights to the Ravi,
Beas, and Sutlej rivers (Khan 2000).
An agreement between India and
Pakistan on the pipeline project will be considered historical because it also
directly impacts the Kashmir conflict, which has been the major source of
friction between the two countries since they both received independence from
the British in 1947. While Kashmir is comprised mostly of Muslims, it
also includes Hindu and Buddhist populations. For Pakistan, "Kashmir
is essential to maintaining national identity. Ceding control of the
third of the country it occupies to the Indians would be regarded as a betrayal
of Pakistan's historic portrayal of itself as a pan-Islamic homeland"
(Rose 95). For India, maintaining control in Kashmir is essential because
it is "the key to holding the subcontinent together, especially in this
era of increasing ethno-religious nationalism" (Rose 94). There are
large numbers of Muslims, Sikhs, and Christians in five Indian states and Sikh
separatists in the Indian state of Punjab (Rose 94). The Indian
government must consider these realities when debating whether it should agree
to a plebiscite amongst the Kashmiri people allowing them to determine their
own nationality or to direct bilateral negotiations with Pakistan over the
accession and/or succession of parts of Kashmir.
Pakistan and India
The Pakistan controlled part of
Kashmir is known as Azad ("free") Kashmir. The part that is
under Indian control is called Occupied Kashmir by Pakistan and known as Jammu
and Kashmir in India. They are divided by the "Line of Control"
(see Map A). The portion under Pakistani control is considered free while
the portion under Indian control is termed "occupied." India is
viewed as an occupier, the outsider who has come in and usurped land that
belongs to another nation. However, which nation does this refer
to?
(Source: CIA 2003)
Does it refer to the Pakistani
nation-state or to the Kashmiri nation as a people not defined by the
boundaries between India and Pakistan? In these questions it is evident
that the political discourse of Indian occupation of Kashmir has lead to
further questions of nationhood and nationality. These questions have
affected social discourse between the Indian, Pakistani, and Kashmiri people.
A new generation of Pakistani and Indian youth who did not experience the
horror of partition of the birth of the Kashmir conflict is well versed in the
rhetoric of the respective Indian and Pakistani enemy. Furthermore,
Kashmiris living in both Indian and Pakistani Kashmir have found themselves
increasingly discontent with both countries policies towards Kashmir and have
started calling for more political autonomy from India and Pakistan.
In a case similar to this one, a
proposed pipeline project in the European natural gas market has also being
labeled "the peace pipeline." The project involved a scheme to
ship Egyptian natural gas in liquid form (LNG) to Turkey. Previous to
this agreement, there was a plan to supply natural gas to Turkey through Israeli
territory. Instead of agreeing to the land route, Egypt opted for the LNG
route, providing Turkey with up to 350 billion cubic feet of gas starting in
2000 (Energy Information Administration 2000). "The switch to the
LNG scheme demonstrates that LNG is still commercially viable in areas where
political issues constrain pipeline development" (Energy Information
Administration 2000). This example shows how LNG development may serve as
an alternative to collaboration between countries and regions where cooperation
proves difficult on account of political conflicts. For India, this is
definitely the case. Instead of addressing regional disputes and points
of tension with Pakistan, India has considered the alternative option -- to
withdraw from collaboration with Pakistan and propose a pipeline that would go
through water instead of Pakistani territory.
India and Pakistan have never
been successful in negotiating Kashmir. The hostile political and social
discourse and lack of conflict resolution between India and Pakistan over
Kashmir is challenged by the emergence of the pipeline project. The project
forces the two countries to reconsider their political discourse and
interdependence, especially in light of their energy crises and desperate need
for natural gas resources.
ENERGY
UTILIZATION IN INDIA AND PAKISTAN
Both India and Pakistan consume
more energy than they produce. The production of natural gas in both countries
cannot meet the countries’ demands for energy and natural gas
consumption. Approximately 8 percent of energy consumption in India is
accounted for by natural gas (Dadwal 2000) and 27 percent in Pakistan (Tongia
1999). Table 1 (see below) shows the natural gas reserves,
production, and consumption of India, Iran, and Pakistan.Iran's 812 trillion
cubic feet of natural gas reserves and low levels of natural gas consumption
make it a natural potential distributor of natural gas resources to India and
Pakistan.
TABLE 1: NATURAL GAS STATISTICS - COUNTRY
SPECIFIC (CIA 2003)
Country
|
Natural Gas Reserves
|
Natural Gas Production
|
Natural Gas Consumption
|
India
|
22.9 trillion cubic feet (Tcf)
|
761 Bcf
|
761 Bcf
|
Iran
|
812 trillion cubic feet (Tcf)
|
1.9 Bcf
|
1.8 Bcf
|
Pakistan
|
21.6 trillion cubic feet (Tcf)
|
0.7 Tcf
|
0.7 Tcf
|
The current demand in India for natural
gas is nearly 96 million cubic meters per day (mcmd) and only 67 mcmd is
available (Dadwal 2000). Pakistan's demand also exceeds its current
supply. “Pakistan's demand for natural gas is expected to rise substantially in
the next few years, with an increase of roughly 50% by 2006” (Energy Information
Administration 2002). Furthermore, the output of 0.7 trillion cubic feet
(Tcf) meets only 39% of Pakistan's energy needs (Azhar 2000). Pakistan
has only 21.6 Tcf of natural gas reserves, resulting in the production of 0.7
Tcf of natural gas, which is exactly the same as the level of natural gas
consumption in the country. India also has this problem with both
production and consumption of natural gas at 761 billion cubic feet (Bcf).
Nearly 70 percent of India's
natural gas reserves are in the state of Gujarat and the Bombay High Basin. The
Indian government has encouraged further exploration of gas rich areas but it
will be unable to meet the increasing demand for natural gas and energy in
India's near future due to cost and industrialization factors.
Pakistan, as well, attempted to
cultivate its natural gas resources in the southern province of Sindh in a
natural wildlife preserve, where the “dry and hilly terrain supports many
endangered species and a quarter million rural people who refuse to give up
their way of life” (Forests.Org
1999/archive/asia). When the Sharif government in 1997 invited
British Premier Oil to cultivate the land into natural gas fields in hopes of
discovering the predicted three million cubic feet of gas, the quarter million
rural people living there protested, refusing to give up their way of life
(Ibid). Presently, the Pakistani government still hopes the development
of new natural gas fields would serve to prevent the future energy crisis
predicted in the next four years. However, this hope falls short of the
reality, considering the environmental concerns expressed by rural peoples as
well as lack of industrial facilities to implement cultivation efforts.
Globalization and Regional Cooperation in
the developing world
Because of the demand for energy
in South Asia, both Pakistan and India must reevaluate their positions on the
Iran-India pipeline project. They must view the project as the emergence of an
economic globalization by which regional cooperation could save them from a
common future crisis. Historically,
“As the
globalization process began to gather speed, states quickly realized that their
neighbours, who often had similar economies to their own, faced many became one
way of attempting to come to grips with these common problems” (Stubbs 232).
In the context of South Asia, this
economic globalization thus plays an influential role in forming and transforming
regional politics and relations.
II. Legal Clusters –
(3)
dialogue and standing:
India, Iran, and Pakistan have
verbally agreed to collabourate on the India to Iran natural gas
pipeline. Timeline for construction is pending because feasibility issues
such as security, cost and length of production are currently being negotiated
between the three countries.
The Natural Gas Industry in India &
Protectionism
In the case of the Iran to India
natural gas pipeline, India proposed the transportation of natural gas in
liquid form (LNG), using the coastline along the Arabian Sea. The pipeline
would begin in Iran and travel from the South Pars Oil Field in the Persian
Gulf through the Arabian Sea, just outside the territorial waters of Pakistan
and onto Delhi by way of ports on India's western coast. Pakistan has
refused to allow a feasibility study to be conducted by India near its waters
on the exclusive economic zone (EEZ). The issue of importance here is the
suggestion and development of LNG transportation by the Indian
government. The most visible World Trade Organization trade issue
pertains to the Indian government's policy proposals towards the importation of
natural gas. In its policies dealing with natural gas, India implemented certain
restrictions on trade that discriminated against foreign oil companies and
foreign natural gas.
While constructing an overland
pipeline is the more economically and strategically feasible option, the Indian
government considered for a long time the possible transportation of natural
gas in liquid form (LNG) by way of LNG carriers. In the 1970s into the 1980s,
"LNG became a proven means of supply which was technically reliable and
safe and also offered the most economic means of bringing large volumes of gas
to markets where delivery by pipeline was impractical" (Tata Energy Research
Institute 2000).
In the 1980s, the chairman of the
Jawaharlal Nehru Port, Mr. MP Pinto, encouraged the Indian shipping industry to
enter the LNG transportation sector due to the looming energy crisis in India
and also in an attempt to save the Indian shipping industry (Ibid). LNG
was both a cheaper and safer source of energy in comparison to other energy
generating resources. While most natural gas reserves are transmitted by
pipelines, the LNG trade developed as a result of the demand for natural gas in
far away markets. LNG trade was considered safe and reliable because it offered
the most economic means of transporting large volumes of natural gas to markets
where pipeline construction was impractical. Current LNG trade is predominant
in the Atlantic Basin and the Pacific Rim (Tata Energy Research Institute
2000).
Transporting natural gas in
liquid form is possible but it is complicated, being more costly in its initial
phases of development and more industrially advanced than the construction of a
land based pipeline.
“In its gaseous
state, natural gas is quite bulky --a high pressure pipeline can transmit only
about a fifth of the amount of energy per day, which can be transmitted in an
oil pipeline, even though gas travels much faster. When gas is cooled to -160
degrees Celsius, it becomes liquid and much more compact, occupying 1/600 of
its gaseous volume” (Tata Energy Research Institute 2000).
New centers of production for LNG
are being developed like the countries of Nigeria, Trinidad, Oman, Qatar,
Malaysia, and Australia. Even though raw materials for LNG production are
cheap, processing and transport costs are high. However, as demand for
LNG increases, the costs of processing and transport are predicted to
decrease. At present, "existing LNG contracts and new commitments
indicate that global LNG trade might rise by as much as 60 percent (to 107
million tons) by 2000" (Energy Information Administration 2000). In
previous years, Spain, Belgium, France, and Turkey purchased large amounts of
LNG. Historically, Asia is the major market for LNG. Demand is also
increasing for LNG in the European market.
Because the Indian shipping
industry's state was so poor, the government considered protecting the
"domestic shipping industry and preventing any erosion in domestic
tonnage" by requiring domestic shipping companies to acquire LNG carriers
(Ibid). Requiring Indian shipping companies to acquire LNG carriers was unsuccessful
due to the Indian companies lack of funds and inexperience in handling LNG. In
the middle of 1999, a more extensive LNG shipping policy took shape when the
government proposed to "make it mandatory for foreign LNG companies to
have an Indian partner or Indian participation for transporting LNG into the
country" (Ibid). The goal of this intention was to get Indian companies
involved in LNG shipping and in the process receive technical and financial
support from foreign companies to do so. Currently, the Gas Authority of
India (GAIL) is involved in two LNG ventures with Petronet LNG, "which is
setting up two LNG import terminals at Dahej in Gujarat and Kochi in
Kerala" (Express India 13 May 1999).
The WTO's Agreement on
Trade-Related Investment Measures (TRIMS) recognizes that "no member shall
apply any measure that discriminates against foreigners or foreign
products" (World
Trade Organization). This agreement also applies to "measures which
require particular levels of local procurement by an enterprise ('local content
requirements')" (Ibid).
The rules of this agreement place India within the framework of implementing
protectionism. India's attempt to facilitate the domestic LNG industry is only
one in the country's many attempts to limit foreign ownership and competition.
While Indian protectionist
policies are well known amongst the trade world, recent agreements with the
United States and shifts in policy have revealed that India is on its way
towards incorporating a more inclusive and foreign friendly framework of trade.
"Restrictions on foreign ownership have relaxed" and "tariffs on
imported goods have been lowered" and even eliminated in the case of
equipment for large scale power generation projects (Energy Information Administration2003).
Furthermore, the United States and India "reached agreement in January
2000 on the removal of 1,400 specific trade barriers to open India to increased
U.S. exports" (Ibid). Two of the largest export sectors for India and the
U.S., those of oil and gas equipment, were both related to energy like a mega
investment by USA in Dabhol Power project. It is evident that these changes in
India's governmental policies show greater economic liberalization and
cooperation. Nevertheless, the country still remains politically cautious to
economic liberalization policies. In the case of natural gas imports, and their
transportation by either pipeline or LNG tanker, India is at a
crossroads. It must
·
Decide which steps to take to augment the
condition of its shipping industry and economy,
·
Decide how best to reap the benefits of this
form of economic globalization, and
·
Consider the best option for its citizens, all
of whom will experience severe energy shortages in the coming decade.
The World Trade Organization's policies on local content requirements and
foreign firms are directly related to and impact these decisions India must
make.
4.
Medium and possibility: Inter-Regional (Mideast and South Asia) & Intra-Sub
regional (South Asia)
The focus is intra-sub regional because of negotiations
between India and Pakistan over the following factors. These factors
contribute to the sub-regional scope of the dispute:
- Building a
pipeline through Pakistani territory to transport natural gas to India,
- Possible
sharing of natural gas exports from Iran, and
- Security
issues over how the part of the pipeline in Pakistan
Negotiations on these issues will
directly impact the sub-regional political and social discourse of South
Asia. More specifically, possible trade between the governments has the
potential to alter sub-regional cultural perspectives the citizens of India and
Pakistan have of each other. For other South Asian governments, trade
between India and Pakistan may lead them to also participate in greater
regional trade.
The focus is inter-regional due
to the potential for economic collaboration between Iran, the gateway from Asia
into the Mideast, and India and Pakistan, the heart of South Asia. This
case connects the economies, foreign policies, and geopolitics of India, Iran,
and Pakistan.
The final decision on the
pipeline route for natural gas from Iran to India and what role Pakistan plays
in that decision will directly impact the development of political and social
discourse, foreign policy decisions, security concerns, and regional conflicts
like Afghanistan, Kashmir, and sectarian violence.
5.
Decision span:
The three countries directly
impacted by the construction of the proposed natural gas pipeline are Iran,
India, and Pakistan. The dispute is also indirectly related to Afghanistan and
the United States.
III. Geographic
Clusters – (6) Geographic Locations
- Geographic Domain: Mideast; Asia
b. Geographic Site: Mideast; South
Asia
c. Geographic Impact: India; Iran;
Pakistan (The geographic impact is both inter-
regional and intra-regional.)
IV. Trade
Clusters – (7) Type of Measure:
Business Contracts Between
Governments and Multinational Firms; Foreign Policy Between Governments.
8.
Relation of Trade Measure to Environmental Impact:
- Directly Related to Product: Yes - Oil
b. Indirectly Related to Product:
Yes - Pipeline Equipment
c. Not Related to Product: Yes -
Conflict Resolution
d. Related to Process: Yes -
Pollution; Land
9.
Trade Product Identification: Natural Gas
10.
Economic Data
Table 2 (see below) shows
the main economic indicators for India, Iran and Pakistan. By looking
just at these indicators, it is obvious that all three countries would seek to
benefit from a collabourated effort in developing the pipeline. Iran,
which has the highest rate of inflation, at 15.3 percent, amongst the three
countries, also has the highest GDP growth rate. It is second to India in
its level of GDP nominal, which is $456 billion. The development of the
pipeline and other projects like it by the Iranian government would help to
increase the GDP growth rate as well as the GDP nominal rate further. Domestic
labour and resources would be utilized in these projects and would greatly
contribute to the development of these economic indicators. India and
Pakistan could also fare well in the pipeline project, which would bring in
employment for skilled and unskilled workers.
TABLE 2: ECONOMIC INDICATORS (Source: CIA 2003)
Country
|
Economic Aid
|
External Debt
|
Inflation Rate
|
GDP Nominal
|
GDP Growth Rate
|
GDP Per Capita
|
India
|
$2.9 billion (1999)
|
$100.6billion (2001)
|
5.4% (2002)
|
$2.66trillion (2002)
|
4.3% (2002)
|
$2,540 (2002)
|
Iran
|
$408 million (2002)
|
$8.7 billion (2002)
|
15.3% (2002)
|
$456 billion (2002)
|
6.5%(2002)
|
$7,000 (2002)
|
Pakistan
|
$2.4 billion (2001)
|
$32.3 billion (2002)
|
3.9% (2002)
|
$311 billion (2002)
|
4.5% (2002)
|
$2,100 (2002)
|
Table 3 discusses natural gas
producers worldwide. While Russia, the United States, and Canada continue
to lead the world in natural gas production, Iran will soon emerge as a leading
producer in years to come with its high number of reserves trillion cubic
feet (Tcf). However, it has yet to cultivate these reserves and implement
most of its pipeline projects. The only regional competition Iran has in
this list is that of Uzbekistan in the northeast, which produces 52,150 Mm3 of
natural gas compared to Iran's 48,300 Mm3.
TABLE 3: NATURAL GAS
STATISTICS - GENERAL
Producers
|
Mm3
|
% of World Total
|
Russia
|
590 985
|
24.8
|
United States
|
538 698
|
22.6
|
Canada
|
172 889
|
7.3
|
United Kingdom
|
95 614
|
4.0
|
Netherlands
|
80 436
|
3.4
|
Algeria
|
72 317
|
3.0
|
Indonesia
|
68 142
|
2.9
|
Uzbekistan
|
52 150
|
2.2
|
Iran
|
48 300
|
2.0
|
Norway
|
47 598
|
2.0
|
Rest of the World
|
611 426
|
25.7
|
World
|
2 378 555
|
100.0
|
SOURCE: INTERNATIONAL
ENERGY AGENCY 1999
11.
Impact of Trade Restriction: High
Iran, India, and Pakistan have
sanctions imposed on them by the United States. These sanctions directly target
and affect international and regional trade with and amongst these three
nations. They seek to influence the three nations practices related to
terrorism and nuclear testing. Aside from the sanctions, India has also pursued
protectionist and import substitution trade policies that have placed numerous
limitations on foreign investment in the country
(Energy Information
Administration 2000).
The Iran-Libya Sanctions Act of
1996 due to the United States' disapproval of Iran's support of international
terrorism. Statutory sanctions were imposed in 1984, when Iran was officially
placed on the list of state supporters of international terrorism (United
States Department of State). Not only were weapons sales prohibited, but all
assistance and loans to Iran from international financial institutions were
prohibited as well. In 1997, an Executive Order prohibited the importation of
goods and services from Iran. The 1997 sanctions restated that U.S. citizens
were prohibited from engaging in all trade and investment activities in Iran
(Energy Information
Administration 2000). This action was primarily spurred on by "Iranian
efforts to disrupt the flow of oil from the Persian Gulf with naval mines and
missile attacks"
(Ibid).
In 1995, more comprehensive and
financially restrictive sanctions were imposed. These measures prohibited all
commercial and financial transactions with Iran. The details of the 1995
sanctions are concerned with foreign investment in Iran. "The bill
sanctions foreign companies that provide new investments over $40 million for
the development of petroleum resources in Iran" (Ibid). If these
companies violate these sanctions, the United States can "impose two out
of seven possible sanctions against the violating company" (Ibid). The seven
possible sanctions deal with the denial of export licenses, bank assistance,
loans, credits, and procurements for the violating company. These
sanctions pose serious predicaments for numerous American and international oil
companies who are seeking active roles in the development of natural gas
reserves in Iran. Except for carpets and foodstuffs, the importation of Iranian-origin
goods or services into the United States has been prohibited since October 19,
1987(http://www.travel.state.gov/iran.html).
India
and Pakistan sanctions of 1998
Following the May 1998 nuclear weapons
tests, numerous sanctions were imposed on India and additional sanctions were
imposed on Pakistan, where most assistance was already prohibited since 1990.
For both India and Pakistan, U.S. government credits and guarantees, like OPIC
risk insurance and Eximbank financing, were suspended. The United States also
opposed further loan assistance to both countries from the World Bank and the
International Monetary Fund (IMF)
(Energy Information Administration).
These specific sanctions were suspended in October 1998. In 1999, additional
sanctions, like U.S. bank lending to the Indian government, were also waived.
All major sanctions against India were subsequently waived.
For Pakistan, the post-nuclear
testing sanctions added additional stress to a country already bound by
sanctions imposed in 1990 by the Pressler Amendment. This amendment proposed
the continuation of military sales and aid based on the following two
conditions: (1) "that Pakistan not possess a nuclear explosive device, and
(2) that new aid will reduce significantly the risk that Pakistan will possess
such a device" (Origins
of the Pressler Amendment). As more and more evidence was gathered by the
U.S. about Pakistan developing nuclear capabilities, sanctions were imposed in
1990 through this amendment.
According to the United States,
sanctions have also been imposed to "minimize the damage" in the
region to other U.S. interests (United
States Department of State). The sanctions remain in place and directly
impact the development of the pipeline project. American and International oil
firms want desperately to collabourate with Iran, India, and Pakistan. The
United States government, instead of lifting sanctions, continues to encourage
international and American companies to build pipelines through routes
excluding Iran. It has strongly supported the development and construction of
pipelines in Central Asia.
12.
Industry Sector: Natural Gas
13. Exporters and
Importers: Major Exporter (s):
Iran
As the world's second largest
natural gas producer (15 percent), Iran contains an estimated 812 trillion
cubic feet (Tcf) in proven natural gas reserves (Energy Information
Administration). Since 1990, Iran has been undergoing an ongoing gas
utilization program which was designed to boost natural gas production to 10
Tcf per year by 2010, allowing for increased gas exports abroad
(Iran Background Information).
Iran produced about 2.6 Tcf of
natural gas in 1996, marketing 1.3 Tcf of it and produced about 1.9 Tcf of
natural gas in 1998 (Energy Information Administration). While South
Pars, the largest gas field in Iran, contains much of Iran's unused natural
gas, the Aghar and Dalan fields have produced nearly "600 million cubic
feet per day (Mmcf/d) respectively" (Ibid).
Overall, oil and petroleum count
for 80 percent of Iran's export commodities (Central
Intelligence Administration2003). Iran has an emerging market for its
natural gas exports. There are possible ventures including Turkey, Europe,
India, Pakistan, South Korea, Taiwan, and coastal China (Ibid). Iran and Turkey
signed a $20 billion agreement in 1996 calling for Iran to export natural gas
to Turkey over 22 years (Ibid).
TABLE 4: IRAN TRADE STATISTICS (SOURCE: CIA 2003)
Exports
|
Exports Partners
|
Exports Products
|
Imports
|
Imports Partners
|
Imports Products
|
$24.8 billion (2002)
|
Japan, China, Italy, Greece, South Korea
|
petroleum 85%, carpets, fruits
& nuts, iron & steel
|
$21.8 billion (2002)
|
Germany, Italy, China, South
Korea, France
|
machinery, military supplies,
foodstuffs, pharmaceuticals, technical services, capital goods
|
Table 4 (see above) explains
Iran's export and import statistics. The 85 percent petroleum export
statistic is of particular importance to the Iran to India pipeline
project. Iran is a country that has benefited from its exportation of
petroleum. It will continue to do the same with natural gas if legal and
political conditions permit the pipeline project to be implemented.
Major
Importer (s): India
During 1998-1999, India produced
about 75 million standard cubic meters (mmscmd) of natural gas per day. Most of
this gas is produced in the Western offshore area of India
(Energy Information
Administration). About 60 mmscmd of this gas was sold to Indian states
(Natural Gas).
While India's consumption of
natural gas has increased in recent years, its resources are severely limited.
Domestic gas supply cannot keep pace with domestic gas demand (Energy Information
Administration). According to a 1992 projection, the production of gas in
the country is expected to maintain an average of 85 mmscmd while the demand is
registered at 260 mmscmd ("Natural
Gas" 2000). For this reason, the country must import natural gas from
the Mideast. "India will have to import most of its gas requirements,
either via pipeline or Liquefied Natural Gas (LNG) tanker, making it one of the
world's largest gas importers" (Ibid).
Aside from the Iran-India
pipeline project, additional possibilities include importing from Bangladesh
and Myanmar. India also signed an agreement with Oman in 1994 to import 56.6
mmscmd of natural gas in the time span of ten years (Ibid).
TABLE 5: INDIA TRADE STATISTICS (Source:
CIA 2003)
Exports
|
Exports Partners
|
Exports Products
|
Imports
|
Imports Partners
|
Imports Products
|
$44.5 billion (2001)
|
US, UK, Germany, Japan, (2000)
|
Textile goods, gems and jewelry,
engineering goods, chemicals, leather manufactures
|
$53.8 billion (2001)
|
US, Belgium, UK, Germany,
Japan (2000)
|
Crude oil, machinery, gems,
fertilizer, chemicals
|
Table 5 (see above) explains
India's import and export statistics. India's economy is based
predominantly in textile manufacturing, importing large amounts of textile and
leather goods. Natural resources like crude oil and petroleum products
are limited and are one of the country's largest groups of imports. The
natural resources provide for most of the energy consumed in India
V. Environment
Clusters – (14)
Environmental Problem Type:
Natural Gas as renewable energy
resource and substitute for high carbon agents; Pollution Land
15. Resource Impact and Effect: The
growing demand and benefits of Natural Gas
In recent years, there has been a
shift in global energy markets' demands for natural gas. Demand for
natural gas in Asia alone "expected to expand from 650 million tons of oil
equivalent (mtoe) in 1994 to 1,380 mtoe by 2010." This is an annual
growth rate of 4.9 percent (World Bank). In 2000 alone, the gas import
demand for just South Asia was 8.8 percent and is expected to grow to 28.3
percent in 2005 and 54.9 percent in 2010 (World Bank 2000).
With the increase in demand in
Asia, and with 32 percent (45,000 bcm) of natural gas reserves in the Middle
East, the potential for trade between the two regions is high. The lack of
sufficient indigenous gas reserves in Asia also makes trade with the Middle
East very crucial. Ultimately, the " volumes of exploitable gas
reserves" in Asia and the Middle East " form the basis for greatly
expanded intra- and inter-regional trade" (World Bank 2000).
The increase in demand for
natural gas is characterized by its overall efficiency, abundance, and
existence as a clean burning fuel. The power sector has the potential to become
the largest consumer of natural gas in global gas markets and specifically for
South Asia. According to the World Bank's "Natural Gas Trade in Asia and
the Middle East" paper, utilization of natural gas in power generation has
both economic and environmental benefits. Compared to using fuel, oil, or coal,
natural gas has the following economic benefits:
(1) Least capital cost per unit
power generation capacity:
- natural gas plant: $650/kW
- coal-fired plant: $1,300/kW
- fuel-oil fired plant: $1,000/kW
(2) Higher thermal efficiency:
- natural gas plant: 45 - 50 percent
- coal fired plant: 30 - 35 percent
- fuel-oil fired plant: 30 - 35 percent
(3) Shorter construction period:
- natural gas plant: 2 - 3 years
- coal fired plant: 5 years
- fuel-oil fired plant: 4 years (Source: World Bank 2000)
The economic challenges in
natural gas trade involve locating direct investment and securing financial
arrangements for the construction of the pipeline. According to the World Bank,
securing financial arrangements for projects in Asia should not be difficult.
The real challenges lie in resolving commercial and political conflicts (World
Bank 2000). This is exactly the case in the Iran to India natural gas
pipeline. While numerous oil companies are interested in constructing and
investing in the pipeline, commercial and political conflicts like sanctions
and regional politics have proven to be strong challenges.
The main environmental benefit of
using natural gas is that in switching from high-carbon coal to low-carbon
natural gas, the output of carbon dioxide is reduced. This in effect
contributes to reducing the effect of global warming since carbon dioxide is a
major source of global warming (World Bank 2000). This environmental reality
affects India directly, where coal is 70.3 percent of the major fuel utilized
for power generation (Ibid). This high dependence on coal creates adverse
environmental effects for India.
Knowing India's high dependency
on coal and the potential adverse environmental effects makes the necessity for
natural gas trade in the region even more significant. Not only that, but
evaluation of clean energy and environmental issues is needed. Both India and
the United States have been involved in forming better collaboration with each
another on such issues.
In March 2000, India and the
United States signed the "U.S.-India Joint Statement on Energy and
Environment Cooperation" which directly addressed issues of global
warming, renewable energy sources, and the energy power sector. This statement
speaks to the argument made in this paper that India must reevaluate its energy
and environmental agenda. The statement focuses on the development of
multilateral cooperation between India and the United States in
- Addressing
climate change issues
- Reducing
greenhouse gas emissions
- Identifying,
initiating, and monitoring "public and private collabourative
projects in research, development, transfer, demonstration, and deployment
of appropriate technologies, and review policies in the area of clean
energy, renewable energy, energy efficiency, and power sector reform"
(World Bank 2000)
Not only this, but the two
countries have also agreed to expand and explore " for commercial
development and cooperation in clean energy" (World Bank 2000). In looking
at the points of this statement, it is possible that the United States would
encourage any potential venture involving a pipeline pumping natural gas into
India. However, the Iran-Libya
Sanctions Act of 1996 (see impact of trade restriction section),
which restricts foreign companies from investing over $40 million for the
development of petroleum resources in Iran as well as buying oil equipment from
Iran, hinders development and support of the Iran-India pipeline project from
the United States government. The inevitable result is a clash of American
foreign policy with intra-regional initiatives taken on by Iran and India.
While the United States wants to promote trade and environmental issues with
India, it remains firm in its goal to isolate Iran from the international
community.
Initiatives to promote
environmental development and clean energy between India and the United States
conflict with the foreign policy between the United States and Iran. This
situation exemplifies the linkages between environment, trade, and foreign
policy. The irony is that India's energy industry desperately needs the natural
gas resources Iran is offering. Thus, the Iran to India natural gas
pipeline has great implications and complications for regional and foreign
policy transformation.
The benefits of using natural gas
for the energy sector are equally as beneficial for Pakistan as they are for
India. Nearly half (49 percent) of Pakistan's energy consumption is
residential, with the industrial sector attributed with the next highest level
of consumption at 33.5 percent (Energy Information
Administration 2003). Oil makes up 43.5 percent of energy consumption
and natural gas 38.3 percent.
Hydroelectric power is the main
source of renewable energy for domestic use. It generates 40% of all
electricity in the country (Ibid). Most of this hydroelectric power is
generated in northern Pakistan. "Difficulty of access and the high cost of
transmission to the populous south make development of this potential a distant
prospect" (Ibid)).
While India has high utilization
and supply of coal reserves, Pakistan lacks lower coal reserves. This, unlike
the case in India, keeps the carbon intensity in the country low. Nevertheless,
carbon levels are high due to emissions from vehicles. In 1998, Pakistan's
carbon intensity was 0.52 metric tonnes of carbon/thousand $(2001) that is
comparable to India at 0.51 and the United States at 0.15 (Energy Information
Administration 2003).
Aside from the level of carbon
emissions, numerous additional factors contribute to the deteriorating
condition of Pakistan's environment. Ongoing deforestation, industrial
overspill, factory and vehicle emissions continue to adversely affect the
environment. In the past two decades, the government passed environmental
ordinances and treaties to further address these issues. The Pakistan
Environmental Protection Ordinance of 1983 established three main goals for
environmental protection efforts. These goals are:
- Promotion of
sustainable development
- Improvement
of efficiency in the management and use of resources
- Conservation
of natural resources
Sub-categories
of these goals included:
- Energy
efficiency improvements
- Renewable
resource development/deployment
- Urban waste
management
- Pollution
prevention/reduction
- Integration
of population and environmental programs
- Institutional
support of common resources (Energy Information Administration 2000)
In relation to the India-Iran
pipeline, these issues are highly significant. Like India, Pakistan must meet
the demands of its domestic energy consumption. As stated earlier,
hydroelectric energy as the main domestic energy source is difficult to develop
due to its distance from the majority of Pakistan's population. To solve this
problem, Pakistan is turning to solar power "in order to provide
electricity to rural areas that would otherwise not have electricity in the
foreseeable future (because they are either too remote and/or too expensive to
connect to the national grid)" (Energy Information Administration 2003).
If Pakistan, like India, turns
also to natural gas as a new source of renewable energy for its domestic
market, then it may be able to resolve the conditions of lack of access to
rural communities. The pipeline would be traveling from Iran from the
southwestern portion of Pakistan towards Multan, an urban city located in the
heart of the Punjab province. The land between the southwestern
Pakistani-Iranian border and Multan is predominantly a desert and dry area
populated by tribal communities living in villages. It is proposed that the
pipeline will be opened for domestic use in Multan. However, the fact that it
travels through remote rural areas where renewable energy is in demand,
prospects for extending the pipeline into a domestic network providing natural
gas to village populations.
Thus, the proposed pipeline has
the potential to promote renewable resource development/deployment and improve
energy efficiency. Both of these potential results are major
sub-categories of the Pakistan Environmental Protection Ordinance of
1983. Also related to environmental issues are social and cultural
issues. The development of the pipeline interacts with trade, government
policies, regionalism, and globalization. At the heart of this discussion
is the question of how the shifts and changes of all of these factors
contribute to transformation and interaction with social and cultural factors.
16.
Substitutes: Coal, fuel, wood, animal waste.
VI. Other Factors – (17) Culture:
The interest of western and
multinational oil companies in developing resources in the Mideast and South
Asian regions is both welcomed and resisted by indigenous populations.
Economic development and collaboration between countries and these companies
directly impacts aspects of the social and political cultures in these regions.
THE ISLAMIST PERSPECTIVE
The
Islamist movements in Iran and Pakistan would perceive the entry and
involvement of western companies/ countries in economic development as
neo-imperialistic or an extension of the legacy of earlier western exploitation
of the east. Also, these political religious movements may associate western
involvement with ideas of secularism. This too may conflict with forces
within the regions trying to implement national infrastructures for the
application of interpretations of Islamic law. Because of these factors,
Islamists may not view economic and natural resource development by western
forces, lack of sustainable development, and the looming energy crisis in South
Asia as the most feasible solution to economic decline. They are more
concerned with (1) the preservation of Islamic values and traditions based on
their own interpretations, and (2) the rejection of any elements of western
culture and society which could possibly be seen as threats to
"Islamic" traditions in the region.
Furthermore, Islamic
fundamentalism historically existed as a backlash to imperialist capitalist
policies of the west on Muslim countries. It attacked capitalism "as
a radical anti-imperialist movement and as a project for recasting state and
society" (Stallings 61). The rise of many fundamentalist movements
in Muslim countries emerged as "a result of the failures of the secular
left" and in hopes of becoming secular modernizing states (Stallings 61).
This historical reality is
ironically posited against the recent developments of the past decade, when
various western oil firms competed against with each other for contracts to
build oil and natural gas pipelines from Central Asia through Afghanistan and
into South Asia by courting the governing Islamist Taliban regime in
Afghanistan. One example of this courtship was when the Argentinean oil
company Bridas' chairperson Carlos Bulgheroni, in his "impeccable blue
blazer with gold buttons, a yellow silk tie, and Italian loafers" met with
Mullah Muhammad Hassan, the Governor of Kandahar and member of Taliban (Rashid
6). This was just one of many secret courtships to negotiate potential
pipeline routes through Afghanistan. One can certainly imagine the meeting of
the two divergent forces of Bulgheroni and Mullah Hassan: one representing the
strict, shari'a based, and aggressive world of the Taliban, and the other
representing the complete opposite of western capitalism, consumption, and
materialism. The mere fact that these two individuals, representing two
entirely different worlds, interacted with one another is evidence enough of
the intersection of trade and culture and its impact on interaction between
groups around the world. This example has the potential to duplicate
itself in Pakistan as well, where Taliban-influenced philosophies exist and
where anti-imperialist movements thrive in the form of Islamist political parties.
The presence of indigenous communities
Another example where culture may
experience transformation by way of economic development is in the actual
construction of the pipeline and the route it follows. These two issues
deal directly the environment and people of indigenous communities.
Traveling from Iran and into Pakistan, the pipeline project would encounter
various tribal communities in the rural areas of Baluchistan, where a large
part of the pipeline will be constructed. From a socio-cultural perspective,
a wide variety of conflicts may emerge from this encounter.
First, the construction of such a
lengthy pipeline will employ large amounts of local labour. While this
will provide temporary employment for many of Pakistan's rural poor, it may also
interfere with domestic labour dynamics. For example, the province of
Baluchistan has experienced a constant influx of Afghan refugees for the past
20 years due to Afghanistan's ongoing civil war. These refugees, poor and
illiterate, are top choice over Pakistani labourers for local businesses as
cheap labour. They will work for fewer wages than Pakistani
labourers. As a result, increased tensions exist between the Afghan
labourer who is seeking refuge and stability in neighboring Pakistan and the Baluchistan labourer who is trying to feed his/her family
while living on a meager wage. Both groups seek to benefit from potential
pipeline construction in their regions but the pipeline project could lead to local
level problems amongst these labourers.
While physical construction of
the pipeline will require large amounts of unskilled labour, other technical
aspects of pipeline implementation will require skilled and educated workers
with backgrounds in science and technology. These workers may be recruited
from both abroad and within the country of construction. Due to increased
focus on careers and education in science and technology in recent decades in
both India and Pakistan, employment of skilled workers will bring much needed
jobs to an educated middle class.
Second, since the pipeline will
travel through rural areas in Pakistan, it will encounter areas of land
controlled by feudal landlords or tribes. The Pakistani government may
choose to pay off these groups by unofficially granting them access to the
natural gas resources and/or some form of control over the pipeline.
Another option is that the government may officially purchase the land from
these groups. Either way, such options can alter or come into conflict
with the socio-cultural mindsets of tribal communities. For example, a
certain tribe may have an historical, political, or familial tie to the
land. Also, distribution of more land to one family may grant them more
political power than a family that has less land. The selling of land by
certain groups may disrupt the political structures of tribal communities.
Lastly, the development,
construction, and continued use of the pipeline may transform the lifestyles of
indigenous rural communities in both Pakistan and India. In Pakistan,
there is already discontent over proposed cultivation of natural gas reserves
in the Kirthar Wildlife National Park in the southern province of
Sindh. Alongside international environmental groups, the Sindh
Wildlife Department and indigenous people living in the area protested gas
exploration in the park. Gas exploration will not only damage the natural
environment of the park but may impact the lifestyles of indigenous
peoples. The cultivation of natural gas reserves could transform and displace
the agricultural economy of rural communities, replacing it with a situation
where cheap labour is required for construction of the pipeline and other
industrial purposes. The call for cheap labour will inevitably result in
the migration of workers from other rural communities to places where pipeline
construction and industrialization are occurring. This, in effect, will
result in dramatic shifts in the local economies of rural communities.
They may no longer be able to depend on agricultural production and labour if
there is a shift in the employment prospects in nearby locales.
Construction and industrialization are not negative forces in the context of
development, especially in poor countries. It is important, however, for
governments and companies to accurately and fairly assess the cost of such
activity on indigenous rural communities.
The pipeline will provide much
needed natural gas to rural communities in both India and Pakistan.
Families living in villages that used animal waste for fuel purposes will be
able to use natural gas on small portable stoves. For developing rural
areas, households can shift from using expensive forms of energy, like coal,
oil, and wood, to natural gas that is more economical and environment
friendly. Rural communities will be able to continue in their progress
towards development by providing cheaper and more sources of energy.
18.
Relevant Literature
NEWSPAPERS
- The Times of India
- The Hindustan Times
- Economic and Political Weekly
- Economic and Political Weekly (India)
- Dawn
- The Frontier Post
- Jung Group of Newspapers
- The Times of Central Asia
- Islamic Republic of Iran
Broadcasting
- Islamic Republic News Agency
- Iran Press Service
- Pakistan
Environment and Development Quarterly
WEBSITES
- Alexander's Gas and Oil Connections
- CIA World Fact book
- Energy Information Administration
- International Energy Agency
- Tata Energy Research Institute (India)
- World
trade organisation
BOOKS
- Amineh,
Medhi Parvizi. Towards the Control of Oil Resources in the
Caspian Region. New York: St. Martin's Press, 1999
- Croissant,
Michael P. and Bulent Aras, Eds. Oil and Geopolitics in the
Caspian Sea Region. London: Praeger Publishers, 1999.
- Dasgupta,
Biplab. The Oil Industry in India: Some Economic Aspects.
Hertford: Stephen Austin and Sons Ltd., 1971.
- Falk,
Richard. Predatory Globalization: A Critique.
Cambridge: Polity Press, 1999.
- International
Energy Agency. Key World Energy Statistics from the IEA. 1999 Edition.
London: IEA Publications, 1999.
- Mostafa,
Elm. Oil, Power, and Principle. Syracuse:
Syracuse University Press, 1992.
- Rashid,
Ahmed. Taliban: Militant Islam, Oil and Fundamentalism in Central Asia.
New Haven: Yale University Press, 2000.
- Stallings,
Barbara, Ed. Global Change, Regional Response: The New
International Context of Development. Cambridge University Press,
1995.
- Stubbs,
Richard and Geoffrey R.D. Underhill, Eds. Political Economy and the
Changing Global Order. Oxford: Oxford University Press, 2000.
ARTICLES
- Alexander’s
Gas and Oil Connections. “Iran-Pakistan-India
gas pipeline plan stuck in political dilemma.” (Version current at 11
September 2000).
- Azhar,
Saeed. “Pakistan
keen on gas pipeline to India.” The Times of India.
(Version current at 11 September 2000)
- Bagchi,
Indrani. “Pakistan
guarantee for gas pipeline.” The Economic Times.
(Version current at 11 September 2000).
- Central
Intelligence Agency. “India.”
(Version current at 11 September 2000).
- “Iran.”
(Version current at 11 September 2000).
- “Pakistan.”
(Version current at 11 September 2000).
- Chakraborty,
Madhumita. "Gail
initiates talks to revive Indo-Iran pipeline project."Express
India (India). 13 May 1999.
- Dadwal,
Shebonti Ray. “The
Current Oil 'Crisis’: Implications for India.” IDSA.
(Version current at 21 September 2000).
- “Energy Security: India's
Options.” IDSA. (Version current at 21 September 2000).
- Energy
Information Administration. “India.”
(Version current at February 2000).
- “Iran.”
(Version current at February 2000).
- “Pakistan.” (Version
current at February 2000).
- “India: Environment
Issues.” (Version current at 6 November 2000).
- “Natural Gas.”
(Version current at 1 November 2000).
- “Pakistan: Environment
Issues.” (Version current at 6 November 2000).
- “General Background.” (Version
current at 11 September 2000).
- “India, Iran to
examine gas pipeline proposals.” Yahoo India News.
(Version current at 11 September 2000).
- "Iran
to examine gas pipeline proposals." Reuters. 16 August
2000.
- “Iran-India Pipeline
Beneficial to All Concerned.” The Times of Central Asia.
(Version current at 7 November 2000).
- "Iran
pipeline project revived." The Hindu (India). 24
September 1999.
- Khan, Asim
R., M. Kaleem Ullah, and Saim Muhammad. “Water Availability
and Some Macro Level Issues Related to Water Resources Planning and
Management in the Indus Basin Irrigation System in Pakistan.” (Version
current at 6 November 2000).
- "Musharraf to
permit Iran-India gas pipeline through Pak." Times of
India (India). 10 September 2000.
- Ludden,
David. "Introduction Ayodhya: A Window on the
World." Making India Hindu. Oxford: Oxford
University Press, 1996.
- Ministry of
Petroleum and Natural Gas, Government of India. “Natural Gas.”
(Version current at 11 September 2000).
- Nakayama, M.
“Role of the World Bank in Negotiation Process of the Indus Water Treaty.”
Journal of Japan Social, Hydroelectric, and Water Resources (1),
77-87.
- Namboodiri,
Udayan. “India
agrees to study feasibility of overland natural gas pipeline.” The
Hindustan Times. (Version current at 11 September 2000).
- "Natural Gas."
(Version current at 11 September 2000).
- "Natural Gas Dreams
Menace Pakistan Wildlife Park." Forests.org. 8
June 1999.
- Najam, Adil.
“Forthcoming Trade Negotiations: Identifying Pakistan's Interests.”
Prepared by the Pakistan Mission in Geneva. Canada: International
Institute for Sustainable Development, 1999.
- "Pakistan
expects to earn $700m from Iran-India pipeline." The
Hindustan Times. 7 July 2000. (Version current at 6
November 2000).
- “Pakistan supports
India-Iran pipeline: Tarar opens ECO energy moot.” Dawn.
(Version current at 7 November 2000).
- Parrott,
Stewart. “Iran:
New Gas Pipeline Boosts Regional Ambitions.” Radio Free Europe.
(Version current at 11 September 2000).
- Rose,
Alexander. "Paradise Lost: The Ordeal of
Kashmir." The National Interest. Number 58 (Winter
1999/2000): 88-96.
- “$704m foreign investment
in oil, gas sector.” Dawn. (Version current at 7
November 2000).
- Tata Energy
Research Institute. “Energy and
Environment.” (Version current at 26 October 2000).
- “Liquefied natural gas
transportation: in the pipeline.” (Version current at 26 October
2000).
- Tongia,
Rahul and V.S. Arunachalam. “Natural
Gas Imports by South Asia: Pipelines or Pipedreams?” Economic and
Political Weekly. May 1999.
- United
States Department of State.
“U.S.-India Joint Statement on Energy and Environment Cooperation.”
(Version current at 10 October 2000).
- “Fact
Sheet: Iran-Libya Sanctions Act of 1996.” (Version current at 20
September 2000).
- “Fact
Sheet: India and Pakistan Sanctions.” (Version current at 10
October 2000).
-
"U.S.-India Joint Statement on Energy and Environment
Cooperation." 22 March 2000.
- World Bank. “Natural
Gas Trade in Asia and the Middle East.” IEN Occasional Paper No.
8. (Version current at 1 November 2000).
- Zehra,
Nasim. “The Peace Pipeline.” The News International
(Pakistan). Friday 21 April 2
