Pakistan’s Pipeline Project Caught in the Iran-US Crossfire

In September, Iran issued a “final notice” to Pakistan regarding its failure to uphold an agreement on a mutual gas pipeline project. The notice warned Pakistan of arbitration in Paris if construction did not proceed. The ultimatum marks a critical juncture in Pakistan’s foreign relations, particularly with Tehran.

Soon after Iran’s warning, the United States also sent a clear message to Islamabad: engage with Iran at your own peril. Matthew Miller, spokesperson for the U.S. State Department, made it unequivocally clear that Washington would continue enforcing sanctions against Iran and cautioned Pakistan about the ramifications of any business dealings with Tehran.

Back in March 2013, Pakistan and Iran set in motion a joint gas pipeline project. The groundbreaking ceremony for the $7.5 billion project was near Iran’s port city of Chabahar. The project has been mired in delays for over a decade, primarily due to Pakistan’s apprehensions about potential U.S. sanctions should it proceed.

However, recent developments indicate that work has resumed on certain sections of the pipeline, with completion anticipated within 24 months. Pakistan in March 2024 approved work on the 80-kilometer (49-mile) first phase of the Iran-Pakistan gas pipeline project within its borders to avoid arbitration in France and a potential $20 billion penalty. The first phase was scheduled to start from the Iranian border and end at the strategic port area of Gwadar in Balochistan province.

Yet, this progress is overshadowed by broader implications involving shortcomings in Pakistan’s foreign policy toward both Iran and the United States.

Pakistan finds itself caught in a precarious balancing act as it struggles to maintain favorable relations with each nation without incurring threats or repercussions from the other. The ongoing saga of the gas pipeline serves as just one example of this diplomatic tightrope walk where every mention of cooperation with Iran elicits swift warnings from Washington.

Much of this has to do with Pakistan’s inability to effectively engage and communicate its strategies and intentions over the gas pipeline to Iran. The state of this relationship has led to public warnings from Iran, signaling a breakdown in dialogue that is detrimental to both parties.

The warning from Iran came months after a military showdown between Pakistan and Iran, which serves as a stark reminder of the precarious state of relations between these two neighboring countries. That incident, stemming from alleged cross-border militant attacks, underscored a troubling lack of cooperation that is critical for both nations, especially given their long border.

Similarly, while Islamabad may claim progress in its relationship with the United States, it has struggled to carve out a more substantial space for itself on this front. U.S. President Joe Biden’s recent remarks about the importance of an enduring partnership between Pakistan and the U.S. highlight a broader geopolitical reality: maintaining strong bilateral ties with Pakistan is essential for regional stability. However, from Pakistan’s perspective, this rhetoric must translate into actionable strategies that do not jeopardize projects like the Iranian gas pipeline due to potential U.S. sanctions. This doesn’t, however, seem to be happening anytime soon.

In fact, recent U.S. sanctions imposed on three Chinese firms and one Pakistani company allegedly involved in assisting Pakistan’s ballistic missile program only complicate matters further for Islamabad. Despite being labeled as a long-term partner by U.S. officials, these actions reveal an underlying tension characterized by a lack of strategic dynamics in the relationship. That limits Pakistan’s options with the United States.

Moreover, the recent visit by U.S. Acting Under Secretary of State John Bass – aimed at discussing economic and security cooperation, including countering terrorism – shows that Pakistan urgently needs to reassess its diplomatic strategies with Washington to gain more than verbal support.

For some time now, Pakistan has been actively seeking assistance from the United States to strengthen its counterterrorism efforts. However, despite these ongoing requests, the support from the U.S. has largely been limited to verbal endorsements and condemnations of militancy rather than substantial action.

For instance, Pakistan has struggled to convince U.S. officials that resuming the suspended military aid program could align with U.S. interests, particularly given that the militant threat in the Afghanistan-Pakistan region continues to pose risks not only to regional stability but also to U.S. national security.

This failure is occurring within a critical cooperation zone – counterterrorism – that has historically been a central focus of collaboration between Islamabad and Washington. The implications are clear: Without renewed military support and a robust partnership in addressing these threats, Pakistan may face even greater challenges in its cooperation with the United States.

These complex dynamics leave little room for maneuvering for Islamabad. Without a robust relationship or leverage over either Iran or the U.S., Pakistan risks facing more severe consequences as it attempts to navigate its energy needs while appeasing its powerful allies.

The situation calls for thoughtful examination and strategic planning if Islamabad hopes to emerge from this quagmire unscathed and bolster its energy security while keeping its relationship intact with the U.S.