Pakistan Confirms China Pullout From Pipeline Project, Eyes Other Options

[Shardul.....the lion]

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Chinese bank ditched the Best friend

As much as we like to delude ourselves into believing that China is an all-weather friend who will stand by us no matter what, the alliance between the two countries is one that is based, like all alliances, on convenience and self-interest. There are now increasing signs that, in many areas, these interests are now diverging. The Industrial and Commercial Bank of China, which had previously committed to financing the Iran-Pakistan gas pipeline, has now decided to back off, most likely because another alliance — that with the US — took precedence over the alliance with Pakistan. The US has already threatened to impose sanctions on any company that deals with Iran and it appears that the Chinese have caved in. The former has also worked overtime to ensure that the Iran-Pakistan gas pipeline does not become a reality and its efforts do not seem to have been in vain.

Fortunately, for Pakistan there are possible alternatives to finance the project. The second-lowest bidder for the contract, which is a consortium that includes local firms and foreign firms with experience working in Pakistan, can be a possible alternative to finance the project. Although this option will end up costing the government more, the Iran-Pakistan pipeline is so vital to the country’s energy needs that the extra cost can be overlooked. Other options available include cutting out the middlemen and dealing directly with friendly governments or even coming to a barter agreement with Iran where we would exchange wheat in return for construction help for the pipeline. A gas levy is also reportedly being considered but, given recent gas price increases, that option may not be palatable to the Pakistani people.

As for China, we need to prepare for a time when our alliance with them is severely undermined by growing relations between China and India. Trade between the two countries has now reached nearly $50 billion a year and is only expected to increase substantially in the next few years. For an alliance that started only because the two countries shared a mutual suspicion of India, this spells trouble. Relying on only one ally is never a good idea, and in the case of China, it is becoming increasingly problematic.

Published in The Express Tribune, March 15th, 2012.

Even Pakistani newspaper thinking that China ditched Pakistan.

I strongly feel India should help Pakistan in tough times. And it will benefit India too.
IF Pakistani army gives strong guarantees, India should finance the project.

[scrumpy]

Maybe it never made financial sense in the first place.

[lem34]

I think Pakistan should encourage Russian Iranian involvement.

[ManuZ]

I think Pakistan should encourage Russian Iranian involvement.

The Onliner thread is in the Memebers club bro.....

[lem34]

The Onliner thread is in the Memebers club bro.....

However my point was relevant to this thread

[ManuZ]

Why cant Pakistan Finance it??
How much the entire project cost?

[jbond197]

I actually thank China for financing Indian sponsored regime any more.

Energy crisis in Pakistan is not the only crisis gifted by Zardari clan.

Now, you started talking like a Bangladeshi members..

[sachin@india]

I think Pakistan should encourage Russian Iranian involvement.

what will happen to chechans in that case ? you should see the bigger picture of muslim Ummah.

[lem34]

what will happen to chechans in that case ? you should see the bigger picture of muslim Ummah.

Russia wants Pakistan to award Gazprom the pipeline-laying contract without bidding | NewsPakistan.PK
without-bidding/

It would appear that the Russians are interested but don't wish to enter into a bidding war. I think the bottom line is it would be beneficial for all countries concerned.



THE ROVING EYE
War, Pipelineistan-style
Pepe Escobar

United States Secretary of State Hillary "We came, we saw, he died" Clinton's message to Pakistan was stark; try to go ahead with the IP (Iran-Pakistan) gas pipeline, and we're going to take you out financially.

Islamabad, its economy in tatters, living in power-cut land, and desperate for energy, tried to argue. Pakistan's top official in the Petroleum and Natural Resources Ministry, Muhammad Ejaz Chaudhry, stressed that the 2,775-km, $1.5 billion IP was absolutely crucial for Pakistan's energy security.

That fell on deaf ears. Clinton evoked "particularly damaging" sanctions - tied to Washington's push to isolate Iran by all means available and the no-holds-barred campaign to force particularly



India, China and Turkey to cut off their imports of Iranian oil and gas.

So as Washington has been impotent to disrupt Pipelineistan moves in Central Asia - by isolating Iran and bypassing Russia - it's now going ballistic to prevent by all means the crucial integration of Southwest Asia and South Asia, from Iran's giant South Pars gas field to Pakistan's Balochistan and Sindh provinces.

IP, it should be remembered, is the original, $7 billion IPI; Iran-Pakistan-India, also known as the "peace pipeline". India dropped out in 2009 after non-stop harassment by the George W Bush and then Barack Obama administrations; India was offered access to civilian nuclear technology.

China, for its part, is still eyeing the possibility of extending IP out of Gwadar port, then crossing to Pakistan's north alongside the Karakoram Highway all the way to Xinjiang. China is already helping Islamabad to build civilian nuclear reactors - as part of Pakistan's energy security policy.

ICBC, China's largest bank and the world's number one lender, was already positioned as financial adviser to IP. But then, contemplating the (sanctions) writing on the wall, it started to "show less interest", as Islamabad chose to spin it. Is ICBC totally out? Not exactly. At least according to the Pakistani Ministry of Petroleum's spokesman, Irfan Ashraf Qazid; "ICBC is still engaged in the IP project and the negotiations are still going on."

A mega-bank such as ICBC, with myriad global interests, may be wary of defying the Washington sanction machine; but other financing options may be found, as in other banks or government-level agreements with China or Russia. Pakistan's Foreign Minister Hina Rabbani Khar has just made it very clear. Pakistan badly needs gas that should start flowing by December 2014.

Islamabad and Tehran have already agreed on pricing. Iran's 900-km stretch of IP is already built; Pakistan's is starting, via ILF Engineering from Germany. Iran's IRNA agency said Pakistan has announced that the IP is still on; predictably, Western media spin is that the Chinese got scared and backed out.

IPC, anyone?

For Washington, the only way to go is another Pipelineistan gambit - the perennially troubled TAPI (Turkmenistan-Afghanistan-Pakistan-India). Even assuming it will find financing; even assuming the Taliban will be taking their cut (that was, in fact, why negotiations between them and the Bill Clinton then Bush administrations failed); and even assuming it would not be bombed routinely by mujahideen, TAPI would only be ready, optimistically, by 2018. And Islamabad simply can't wait that long.
Predictably, Washington's anti-IP campaign has been relentless - including, of course, shadow war. Islamabad is convinced that the CIA, the Indian intel agency RAW, the Israeli Mossad and the British MI-6 have been actively conspiring to get some sort of Greater Balochistan to secede from the central government. They have been, a la Libyan model, financing and weaponizing selected Baloch fighters. Not because they love their independent spirit - but as a means to balkanize Pakistan.

To compound Washington's fury, "isolated" Iran, by the way, is about to start exporting an extra 80,000 barrels of oil a day to Pakistan; and has already committed $250 million to the Pakistani stretch of IP.

This has got the potential of becoming much, much uglier. Washington won't be deterred from its intent to smash IP. For an Iran under pressure and a strangled Pakistani economy - as well as China - this is all about the Asian Energy Security Grid.

ICBC may be out - sort of. But the whole thing could become even juicier if Beijing decides to step in for good, and turn it from IP to IPC. Will Washington have the guts to defy Beijing head on?

[sachin@india]

It would appear that the Russians are interested but don't wish to enter into a bidding war. I think the bottom line is it would be beneficial for all countries concerned.

ofcourse..it is beneficial to them that is why they are offering.....it is also beneficial for chinese but because of sanctions they have pulled off.

[lem34]

ofcourse..it is beneficial to them that is why they are offering.....it is also beneficial for chinese but because of sanctions they have pulled off.

If you look at post 39 it is clear why some of you Indians are getting a leetle beet excited.

I think that a Russian Iranian tie up is better than a Chinese link. China are already Pakistan's allies. This deal would push Iran and Russia closer too.

The beauty of this deal is that even our gutless leaders can not do anything but agree to it

[OrionHunter]

Higher than mountain.........

This has nothing to do with Sino-Pak friendship. Though it is one of China's 'Big Four' state-owned commercial banks, the refusal is purely political in nature as the ICBC is worried about US sanctions against companies that deal with Iran.

The project was to be funded not by China's ICBC alone but by a consortium headed by it. This was apparently due to the US opposition to the venture. I believe even Habib Bank and the EYFRSH too are hesitant for fear of US sanctions on companies it is dealing with creating a ripple effect.

[Safriz]

the title is misleding.
chinese government did not offer any assistance.
it was a private bank trying to strike a deal for financial profit...and thats what banks do.

[lem34]

This has nothing to do with Sino-Pak friendship. Though it is one of China's 'Big Four' state-owned commercial banks, the refusal is purely political in nature as the ICBC is worried about US sanctions against companies that deal with Iran.

The project was to be funded not by China's ICBC alone but by a consortium headed by it. This was apparently due to the US opposition to the venture. I believe even Habib Bank and the EYFRSH too are hesitant for fear of US sanctions on companies it is dealing with creating a ripple effect.

Exactly. At last someone who sees through the fog

I think its very unlikely but if Indians could ignore Americans and join and finance the pipeline. It would make eminent sense.

Suppose our leaders are not the sharpest in the tool box

[OrionHunter]

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I think its very unlikely but if Indians could ignore Americans and join and finance the pipeline. It would make eminent sense.

Suppose our leaders are not the sharpest in the tool box

Yep! Our politicians don't have the balls to do this. I mean, stand up to the US of A? Naaah! India quietly withdrew from the pipeline project citing the high landed cost of gas from Iran. Nuts! We know that was just an excuse manufactured to placate the US of A and bow to American diktats!

When the heck are we South Asians going to get rid of our slave mentality and stand up for what is best for our national interests? When are we going to learn to c0ck a snook at the Americans and their pet poodle, the UK and start thinking independently? When are we going to shed our mortal fear of the West lead by the US of A?

Whatever happened to our so called supreme national interests?