Iran gives Pakistan ultimatum to build the cross-border gas pipeline
Iran has threatened to appeal to the International Court of Arbitration if Pakistan does not comply with a bilateral agreement, but the United States, opposed to the project, would trigger sanctions, leaving Islamabad between a rock and hard place.
Islamabad (AsiaNews) – Iran has given Pakistan a final notice to build its part of a gas pipeline connecting the two countries, otherwise it will take its case to the International Court of Arbitration, which deals with trade disputes between states.
Pakistan’s position is complicated by the fact that importing Iranian gas would immediately trigger US sanctions.
Inaugurated in 2013, Iran said it had spent US$ 2 billion to build its part of the pipeline (1,150 kilometres).
Last year, Pakistan cited force majeure to avoid meeting its contractual obligations, but Iran refused to hear reason.
After Islamabad announced in February this year that it was ready to start construction of its 80-kilometre pipeline, Donald Lu, US Assistant Secretary for Central and South Asia, sent a notice to Pakistan and work has been at a standstill ever since.
In 2014, Pakistan had asked for a 10-year extension to build the structure, which is set to expire at the end of the month. Pakistani officials are trying to find a balance so as not to anger either Washington or Tehran.
“Pakistan has violated the terms of a bilateral agreement for which it can be sued,” economist Ikram ul Haq told Nikkei Asia.
If it loses the case, Pakistan, with an economy already in crisis, risks having to pay up to US $ 18 billion dollars. Pakistani officials hope, however, to strike another type of deal with Iran.
In 2019, for example, the South Asian nation was ordered to pay US$ 6 billion to Australia for cancelling agreements regarding copper and gold mining, but, thanks to a new agreement, it paid only US$ 1 billion.
Iran is rich in natural gas, but is isolated from the international community due to US sanctions. Despite this, the illegal gas trade between Iran and Pakistan is worth about US$ 1 billion, according to experts.
“Pakistan is economically weak and dependent on the IMF," ul Haq added. "Unlike India, Pakistan cannot get any waiver from America." India is strong US ally against Chinese aims in the region.
Washington’s support is essential to keep funding coming in, leaving Islamabad little wiggle room on the issue.
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