Indian Prime Minister Manmohan Singh's recent visit to United States spells more than one implications for India. From the energy security point of view, India would be in a dilemma. India will find it very difficult to choose the path between towing the United States line "to help India become a major world power in the 21st century" or joining the tri-nation gas pipeline project to meet its growing energy needs. The recent bilateral nuclear pact has clearly cast a shadow over the widely discussed Iran-Pakistan-India multi-billion dollar gas pipeline project.
The Indian economy grew at a rate of 6.9 per cent in 2004-2005. The economy is expected to grow at around 7 per cent annually in the next 20 years, in which case India's energy needs will quadruple. Being energy-deficient, India needs safe and diverse sources of energy to maintain the growth momentum. The requirement of natural gas is growing at a rate of 6.5 per cent every year. Natural gas is not only environment-friendly, but also cost-effective, and has efficient burning characteristics. It provides price stability for long-term energy needs because natural gas is available abundantly as compared to oil, and is widely scattered all over the world. Thus, the choice of sources of supplies is larger than for oil, for which India predominantly depends on trouble-torn West Asia.
The Iran-India-Pakistan pipeline is a step in right direction for India's growing energy needs. The 2,775-kilometre pipeline project would transport gas from South Pars in Iran to India, and would cost around $7 billion. During deliberations, the land option was found suitable compared to the costly, but relatively secure alternatives of shipping the gas as liquefied natural gas (LNG), or through a deep-sea direct pipeline between Iran and India.
The proposed Iran-Pakistan-India pipeline makes greater economic sense with the attendant political and security significance. The project is rated by many as the mother of all CBMs between India and Pakistan as it binds both the countries to a common cause. Neither of the signatories is likely to accept disruptions for the fear of losing enormously. Both countries, especially Pakistan, will want to keep their home-grown dissent under control to milk the benefits of the pipeline. It will give Pakistan around $500 million dollars just in terms of transit fees. This economic gain expected will eventually lead to a possible transformation of socio-political discourse between the countries, perhaps even leading to negotiations and resolution of regional conflicts. Appropriately, the pipeline has been termed by many as the 'peace pipeline'.
However, America's policy towards Iran, described by Bush administration as a part of the "Axis of Evil", has much to do with the future of the pipeline. It has opposed any significant hydrocarbon deal that would help Iran finance its alleged terrorist and clandestine nuclear activities. Given the possibilities that the pipeline may one day link up with China and other East Asian countries, and help create a broad energy-based cooperative framework amongst the Asian countries raises fears among big world powers, especially the US. These countries are expected to be the largest producers and consumers in the future and a strong Asian energy-economy - by the basic nature of market forces - will dictate terms in the energy market. This is the last thing that the US would like to see in the future.
In this regard, close cooperation with India is a part of US tactics in countering both China and Iran, and thereby ensuring their global energy supremacy. By signing a civilian nuclear pact with India that gives India access to more advanced nuclear fuels from the global market, the US seems to have achieved that mission. Furthermore, by accepting India's nuclear position and cooperating closely with it in various fields, the US can maintain their objectives of energy supremacy while dealing effectively with Iran. Hence, the US is desperately trying to dissuade India from the project.
As evident from Prime Minister Manmohan Singh's statement soon after signing the pact, the Indian tone softened up. Dr Singh said, " I am realistic enough to realise that there are many risks considering all the uncertainties of the situation in Iran. I don't know if any international consortium of bankers would probably underwrite this." Although Indian Petroleum Minister Mani Shankar Aiyar's fierce defence of the project is palpable, yet India will think twice before antagonizing US Congress, where the nuclear deal will be finally ratified. Moreover, the Americans will definitely not want to see India getting closer to Iran, thereby putting their larger energy goal at stake. It would be interesting to see how India responds to the pressure tactics and the adroitness with which it maintains the balance between the newfound desire for American nuclear technology and the Iran-Pak-India peace pipeline.