The Oil Politics in South Asia

South Asia Tribune, June 12, 2005

Iran Crisis Casts Shadow Over All Three Pipeline Projects in South Asia
By M B Naqvi

KARACHI, June 13: South Asia has decided to enter the Big League nations’ struggle to secure oil (and gas) supplies that are not (yet) under the sole superpower’s control.

The rate at which the US is acquiring control over the vast deposits of hydrocarbons (oil and gas) in former Soviet Central Asian Republics was highlighted by the recent commissioning of a new oil pipeline to take oil from Caucasus directly to Europe, bypassing the two older Russian-controlled pipelines: one in the north directly from Russia to Europe and the second from Baku to Turkey through Black Sea and busy Straits of Bosphorous. Needless to say all of ME oil is under tight US control, except that of Iran.

India, with a rapidly expanding economy, is anxious to conclude an agreement with Iran for assured gas supplies through an overland pipeline through Pakistan. The idea of this gas pipeline originated in Iran for both political and commercial reasons. Its background is that serious 25 years old rift with the US, with the latter trying to isolate Iran, a named member of Bush’s Axis of Evil. Both India and Pakistan responded positively to the Iranian idea; indeed Pakistan showed keenness to join the project, hoping for transit fees it could charge.

Pakistan and India initially seemed not to have taken the American opposition to the project into their calculations. It emerged into full view last March when US Secretary of State Condoleezza Rice termed the project as ‘not a good idea for Pakistan’.

Indians seem to have rejected the American dislike of this project on the ground of their burgeoning energy needs that require a secure source of supplies. Pakistan that was originally enthusiastic about this project, became gradually cool toward it. But India’s Petroleum Minister Mani Shankar Aiyar visited Islamabad last week and persuaded Pakistan to endorse the Indo-Iranian deal.

But Pakistan’s climbing on the Indo-Iranian bandwagon was not single-minded: It actually adopted the policy of welcoming all schemes of transporting oil in any shape through pipelines. Whereupon India too has begun showing lively interest in two other pipeline projects. Although this has actually diluted the enthusiasm considerably in the original Indo-Pakistani-Iranian gas pipeline, both countries go on saying that they will ignore the American objections and remain committed to the gas pipeline project. It raises questions.

The US has minced no words in opposing the project. America has excellent relations with both India and Pakistan. While the US is assiduously wooing India, promising to help make it a global greater power, America heavily depends on Pakistan for the conduct of War on Terror, fight al-Qaeda and winning peace in Afghanistan.

But Pak-American relations also include Pakistan’s various vulnerabilities; indeed Pakistan’s prosperity, with a GDP growth of 7 to 8 per cent, is sustained mainly by US aid, goodwill and help in sharply reducing the debt-servicing burden. From various angles, the gas pipeline project looks wobbly, though the governments in Islamabad and New Delhi are upbeat for the record.

There are two other pipelines being actively discussed in Pakistan. One is for oil to be brought from Sharjah under waters of Persian Gulf through a pipeline; Americans seem to have some minor share in the project.

The other is a major three-country project: Hydrocarbons will be of Turkmenistan; they will be carried through a pipeline to Afghanistan and Pakistan’s newest port at Gwadar to be exported to the rest of the world. The company that will set up the pipeline and manage the distribution of these hydrocarbons is a composite subsidiary of major American oil corporations. America is keen that this project should be implemented and should succeed.

This UNOCAL project, being backed by American government to the hilt, when and if it succeeds, the US may have acquired effective control over most of oil of former Soviet Republics in Central Asia. This pipeline is intended to transport as many hydrocarbons from Turkmenistan, Uzbekistan, Kyrghistan, Kazakhstan as possible to Gwadar for export.

This project more or less completes the American design of being able to carry (and control) as much oil from various regions of former Soviet Union in Asia. The Russians are not involved in UNOCAL or the new pipeline from Baku to a Turkish port via Georgia.

This is of course pure geopolitical rivalry between the hyper power and the two giants of Asia: Russia and China. Both the latter are trying to win over the rulers of Kazakhstan, Uzbekistan and Kyrghistan to their side and to meet China’s needs on a (secure) permanent basis.

What the final upshot of this non-ideological struggle will be cannot be foreseen. All that can be said is that, as of now, the US is way ahead of its chief rivals, though the latter have strongly revived their Shanghai Six – China is also trying to woo India, Pakistan, Bangladesh, Sri Lanka, even Nepal and Burma, not to speak of relative success of Chinese diplomacy in Southeast Asia. China’s ability to stay on good terms with authoritarian rulers can stand it in good stead in all Southern Asian regions.

Much will depend on how the three major crises are resolved or when the push comes to shove: over North Korea’s nuclear Weapons of Mass Destruction, on Taiwan, and indeed Iran. With the passage of time, the danger of war over them goes on decreasing, though what the Israeli lobby, Neocons and hawks can do to make or unmake America’s Asian policies remains uncertain. The aim of 21st Century Project, an imperial enterprise, would primarily require the subordination of Iran at least, if not North Korea. But after what has happened in Iraq and Afghanistan (to a smaller extent), nothing definite can be said.

One thing is certain, though. The US favored UNOCAL pipeline has to run the gauntlet of what is a guerilla war in Afghanistan and to a smaller extent the law and order situation in Pakistani Balochistan. Even the Iranian pipeline will have to traverse, west-east, the same Pakistani Balochistan.

The law and order situation in Pakistani Balochistan can however vastly improve if good governance and political savoir faire can be brought to bear on it. Afghanistan situation can not be said to as amenable to improvement as Pakistan’s for the reason that continued presence of foreign troops is an incitement to rebellion – which is vital to the survival of Karzai regime.

There is thus the crisis over Iran casts a long shadow on all the three pipelines from Iran, Sharjah, and Turkmenistan. The economics of Sharjah pipeline is likely to knock it out. Any US intervention in Iran will be like 15 or 20 Iraqs. Nothing can be said about the future in that case.

But geo-strategic struggles need not always demand wars: diplomacy backed by plenty of dollars – an art in which the US excels – can do wonders, though dollars alone can not decide the outcome of titanic geo-political struggles among the US, Russia and China. At some stage, Europe and Japan will also actively enter the new Great Game in Asia to make it even more complex.

The writer is a seasoned analyst who contributes to several Indian and Pakistani newspapers