Iran's Foreign Policy and the Iran-Pakistan-India Gas Pipeline

Shortly after the revolution in 1979, Iran somewhat irrationally distanced itself from the international community. Partly because of revolutionary fervor, Iran initially made itself vulnerable. The American hostage crisis and the eight-year war with Iraq exposed Iran to economic hardship and international isolation.

Post-revolutionary Iran has sought to overcome its weakness by using economic and political resources to create an international coalition aimed at counteracting pressure imposed by the West. To achieve this goal, Iran has played different cards, including strengthening ties with Middle Eastern groups such as Hizbullah and Hamas; keeping a window of dialogue open or trying to avoid confrontation with the European Union with the aim of challenging the US embargo and political pressure; engaging in military-industrial cooperation with Russia and China in order to create a friendlier environment at the UN Security Council while advancing its nuclear agenda; and pursuing a policy of détente with the GCC states, with the broader objective of reducing US influence in the Persian Gulf.

In addition to these efforts, Iran has sought to build a pipeline to transfer Iranian natural gas to the Indian subcontinent — though bringing this project to fruition has proven elusive. Natural gas reserves were discovered in Iran’s South Pars field ten years after the revolution. Soon after this discovery, the governments of Iran, Pakistan, and India increased their efforts to realize a natural gas pipeline project that will serve the twin purpose of increasing Iran’s gas exports and meeting high energy demand in South Asian countries. The Iran-Pakistan-India (IPI) gas pipeline, also called the “Peace Pipeline,” has special significance for both economic and political reasons. Not only would this project greatly benefit energy-deficient countries such as India and Pakistan, but it also has the potential to affect the nature of the relations among them and to contribute to greater regional stability.

Iran, which has the world’s second largest proven natural gas reserves after Russia, has been eager to exploit this resource not only as source of revenue, but also as leverage for political gains. India, with an increasing need for energy as its population quickly approaches 1.3 billion, is the biggest potential customer. Pakistan, which refuses to establish normal trading ties with India, also can benefit greatly from the pipeline by earning hundreds of millions of dollars in transit fees and other annual royalties from both Iran and India. Were this pipeline to be constructed, Pakistan’s role between Iran and India would be very similar to that of Ukraine between Russia and the European Union.

The United States has been opposed to the gas pipeline project, citing various security concerns. Washington is fearful that a situation might emerge where these countries would directly or indirectly confront the United States and other Western countries for the control of energy bases. In addition, emerging strategic relations between Iran and India could lead to cooperation in the nuclear sphere, or at a minimum provide the revenue that could be used to further Iran’s alleged nuclear weapons program and its support for terrorism. In addition, this project could help to shape an environment in which Iran might be able to perpetuate its poor human rights record.

Until recently, Iran faced two main challenges in bringing this project to fruition. The first challenge is the historic conflict between India and Pakistan over Muslim Kashmir, in which Iran has taken the pragmatic stance of non-intervention. Regarding the Kashmir conflict, it is worth noting that Iran has had similar experiences with its northern neighbors, maintaining a more or less neutral position on the Chechens’ conflict with Russia, basically because of the strategically significant gains that this posture promised to yield. Similarly, Iran’s position on the Armenia-Azerbaijan conflict over Nagorno-Karabakh was driven by strategic concerns, which ruled out taking a pro-Azeri position, rather than by religious ideology.

The second and more important challenge was and still is the American perception — with which most Western states appear to agree — that Iran should not be allowed to make long-term commitments on its strategic resources with non-Western countries. It is important to mention that these Western concerns are not limited to Iran; there is a general concern that the revenues generated by Pakistan also could be further used to support terrorist activities, depending on who channels the funding. The Pakistani involvement in the terrorist attacks in Mumbai in November 2008 confirms that this concern is not baseless.

The attacks in Mumbai undoubtedly had direct and lasting implications for international security, but its immediate regional impact was to disrupt Iran’s efforts to reach a final agreement on the pipeline project at a time when there were signs of progress despite the change of government in Pakistan. Following the Mumbai attacks, however, Iran’s negotiations with India and Pakistan on the issue of the gas pipeline came to an abrupt halt. The IPI project seems unlikely to move forward any time soon. Many strategists believe that Pakistan’s raison d’être is deeply rooted in the conflict with India. If their assessment is correct, then Iran either will have to wait a long time for the Peace Pipeline to materialize or look for other highly costly and doubtful options like transiting the pipeline through waters not far from Pakistan’s southern shores.

The focal issue for Iran is to push the pipeline project into an operational phase. However, Iran faces several obstacles and uncertainties. First, although the United States recognizes the growing energy needs of India and Pakistan, it has repeatedly expressed concerns over international participation in energy projects with Iran. Second, it is not clear which countries/companies will eventually become involved in the implementation of the project. China, Russia, Japan, and even some European countries have expressed interest in the project’s long-term potential. Obviously, Russian involvement in the pipeline project, in addition to their involvement in Caspian Sea projects, could complicate the situation further by reducing US companies’ participation in the region.

In conclusion, the Mumbai terrorist attacks have disrupted Iran’s politico-economic strategy. Indeed, they have deprived Iran of a major foreign policy achievement — of which there have been very few in the past 30 years.