A New Pipeline Could Undo America’s Influence In Asia
From the moment that the U.S. re-imposed sanctions in earnest on Iran late last year, Pakistan has been looking at ways to resuscitate a deal that had been agreed in principle before the U.S. unilaterally withdrew from the Joint Comprehensive Plan of Action (JCPOA) last May. This deal involved moving as much gas as Pakistan needs from Iran’s Asalouyeh into Pakistan’s Gwadar and then on to Nawabshah for further transit if required. At the same time, China has been in long-running discussions with Pakistan over the specific projects that Beijing wanted to place in Pakistan as part of its ‘One Belt, One Road’ (OBOR) programme. All the while, the U.S. has been
any such arrangement but
OilPrice.com understands that the Iran-China-Pakistan deal is now back on, and with a vengeance.
China’s covert strategic deals are virtually always buried in interminably long anodyne statements that belie the true laser-focused intentions of Beijing and this time is no different. Joint statements just over a week ago from both Pakistan and China sides laid out four projects that are part of a ‘broader co-operation’ between China and Pakistan. They all sound relatively run-of-the-mill affairs, although still major undertakings, and are: the upgrading of the Pakistan Refinery Karachi, the building out of a coal to liquid engineering plant based on Thar coal at Thar Sindh, the utilisation of Thar Block VI for coal gasification and fertiliser projects, and the finalisation of the feasibility study on South-North Gas Pipeline Project that traverses Pakistan.
The fact that they are much more significant to the global geopolitical balance was evidenced by the U.S.’s furious warnings to Pakistan, based on the fact that all of these projects are in reality a key part of Beijing’s planned China-Pakistan Economic Corridor (CPEC), which, in turn, is a cornerstone of the OBOR initiative. Even as it was, U.S. South Asia diplomat, Alice Wells, warned that CPEC – which, vitally, includes heavy financing from Beijing and, therefore, a massive debt obligation to China by the host country over time - will only profit Beijing. As it stands, the cost of just the first round of CPEC projects has risen from an initial costing of US$48 billion to at least US$62 billion right now. “It’s clear, or it needs to be clear, that CPEC is not about aid,” said Wells. “[The CPEC] corridor is going to take a growing toll on the Pakistan economy, especially when the bulk of payments start to come due in the next four to six years,” she added. “Even if loan payments are deferred, they are going to continue to hang over Pakistan’s economic development potential, hamstringing Prime Minister [Imran] Khan’s reform agenda,” she underlined.
The U.S.’s fury would have been much worse if it knew that, in fact, the ‘finalisation of the feasibility study on South-North Gas Pipeline Project’ whilst true, is just proverbially the tip of the iceberg. “The actual plan is to resuscitate the Iran-Pakistan oil and gas pipelines over time, beginning with the gas pipeline, moving unlimited amounts of Iranian gas to Pakistan, and then into China and the rest of Asia should it be needed,” a senior source who works closely with Iran’s Petroleum Ministry told OilPrice.com last week. “It is being done in conjunction with Russia, with the twin aims of firstly ensuring that China’s ‘One Belt, one Road’ initiative continues to run smoothly from the East through Pakistan and then Westwards into Iran and onwards into Europe,” he said. “And, secondly, to ensure for Russia that Iran’s gas does not start flowing freely into Europe as and when the U.S. sanctions are lifted, as this would undermine Russia’s power over Europe, which is founded on supplying over a third of Europe’s gas,” he added.
For China, the new pipeline – integral to its plan of making Iran and Pakistan its client states over time – has the added benefit of putting the U.S. on the backfoot in the ongoing trade war. For Iran, the incentives of closer ties with China and Russia are principally financial but also relate to China being just one of five Permanent Members on the U.N. Security Council (the others being Russia, the U.S., the U.K., and France). For Pakistan as well there is the added incentive that it is tired of being lambasted by the U.S. for its duplicity in dealing with international terrorism. Not that long ago, the U.S. accused Pakistan of supporting the Taliban (correct but it was catalysed by the U.S.’s key Middle Eastern ‘ally’, Saudi Arabia), Al Qaeda (correct but catalysed, funded and logistically supported by the Saudis), the Haqqani network (correct but also funded and logistically supported by the Saudis), and Islamic State (sort of correct but that was also mainly, of course, the Saudis) against U.S. forces, despite taking hundreds of billions of dollars in aid payments.
