According to US Central Command, on January 10, 2012 a U.S. Navy carrier strike group entered the Indian Ocean en route to the Arabian Sea. The USS John C. Stennis carrier strike group is already sailing those waters. This move was precipitated by several factors.
The International Atomic Energy Agency has confirmed that Iran’s nuclear program is military in nature. Iran denies all allegations. Concerned about the situation, EU countries have agreed to ban the import of Iranian oil. In response, Tehran has threatened to close the Strait of Hormuz, through which passes 40% of all maritime oil shipments from the Persian Gulf. US Defense Secretary Leon Panetta said the United States will respond if Iran tries to close the Strait.
It is no less important to analyze Pakistan’s position regarding these developments from various points of view: international, regional and defense of national political and economic interests.
So, the Strait of Hormuz: Pakistan’s Baluchistan Province is on the Arabian Sea; and the Strait of Hormuz lies to the east, at the border with Iran. The only point of interest on the coast is the port of Gwadar, which was built and commissioned with Chinese technical and financial support in May 2007. To that point, the project cost a total of $280 million. Several piers are currently in operation, and the port’s infrastructure is under construction. One purpose of the port is to serve as a freight hub for raw hydrocarbons destined for Pakistan’s domestic market. Also, the local media has reported that a naval base for the Pakistani and Chinese navies will be located there.
First of all, the potential conflict would affect Pakistan-Iran relations; more precisely, it concerns Iran's nuclear program and hydrocarbons. Secondly, it affects the future of Pakistan-China cooperation.
In late December 2011, the Pakistani Foreign Ministry said that “…our relations with Iran are special and have been strengthened in all areas. Pakistan has always supported a state’s right to peaceful uses of nuclear technology in accordance with its international obligations.” “Pakistan believes that the issues related to Iran’s nuclear program should be resolved through peaceful means, and a mechanism already exists to do that. Escalation of the situation will not be in our interest.”
Islamabad also spoke unambiguously about the gas pipeline. “Our relations with Iran are special and there is no policy change. There is a desire to accelerate completion of the Iran-Pakistan gas pipeline, given that we are an energy-deficient country. Early completion of the project is most desirable.” Anticipating that the project will be resumed, Islamabad opened its border with Iran on December 18, 2011. It was closed in late September 2011 after a shooting incident in Mastung. Pakistan’s natural gas shortage has not only slowed growth in many sectors, it has affected virtually all spheres of life. During the election campaign in early 2008, the ruling Pakistan Peoples Party generously promised to solve the hydrocarbon supply problem and provide them to the populace. Summertime fuel shortages forced the government to limit supplies for the domestic market. As a result, the government faced massive protests calling for urgent action or dismissal of the federal cabinet of ministers.
Construction of the pipeline, which has a design capacity of 21.5 million cubic meters of gas per day, has already been delayed 10 years, and further delay could be disastrous for the country, which is facing a natural gas shortage. Today, individual voices are optimistically claiming that the project, which was originally scheduled for completion in 2014, might be completed a year earlier and start pumping gas in the second half of 2013. Pakistani Oil Minister Asim Hussain confirmed in December 2011 that all of the necessary surveying work for construction of the 790-kilometer gas pipeline in Pakistan has been completed. One reason for the delay has been a lack of funding. Pakistan has been desperately seeking foreign investments to complete the project. In 2011, Islamabad found a satisfactory sponsor in Beijing. China has also guaranteed to provide Pakistan with financial assistance to construct the pipeline. Islamabad plans to import $200-$250 million in gas each month, which adds up to $3 billion annually. Islamabad’s need for the Pakistan-Iran pipeline remains very high because it has no other way of meeting the growing demand for energy. Moreover, the draft Pakistan-Iran gas pipeline is expected to be much better for Islamabad than the TAPI project because, as its oil minister says, “…Iran guaranteed in negotiations that the price of gas delivered by the Pakistan-Iran pipeline will be lower than that envisaged for TAPI, and there is a high likelihood that Tehran will agree to Islamabad’s proposal.” China’s financial advisor is ICPC, and Pakistan’s advisor is Habib Bank Limited.
It is inconceivable that Islamabad would abandon the project now. Pakistan initiated it despite threats from the Obama administration, which is adamantly opposed to the resumption of work that would threaten the economic sanctions. The United States is pursuing its own geopolitical interests and promoting nonviable alternatives for Pakistan that would place an additional burden on its treasury. China is also pursuing its geostrategic interests by agreeing to fund the gas project, particularly in the Pakistani province of Baluchistan.
Pakistan’s civilian government has been negotiating construction of Gwadar Port with China ever since coming to power in 2008, but it achieved a breakthrough in the second half of 2011. For China, Gwadar means a trade outlet to the Middle East and the Indian Ocean. Development of the port is important in and of itself, but that alone is not sufficient. Over the long term, it will be necessary to develop a transport infrastructure (rail, highway and air) and telecommunications networks. Full implementation of the project in the 21st century implies the development of a backbone network from Gwadar eastward to Urumqi-Beijing-Shanghai, giving China an alternative trade corridor to the Gulf countries and Eastern Europe. This route is much shorter than the Straits of Malacca, which it currently uses. Pakistan’s geopolitical location is important to Beijing because it is at the crossroads of Central, South and West Asia. And that raises the question—will the countries in the region let anyone make waves in the Strait of Hormuz?