Thursday, March 16, 2006

A pipeline from Iran could be a casualty of India's new entente with the U.S.

Pipeline Sacrifice
February 24, 2006

The myth that India needs a stronger nuclear deterrent fuels a nuclear deal with the US, and the pound of flesh is the proposed gas pipeline from Iran via Pakistan.

Ignoring serious political discord at home, the Indian government on 4 February chose to vote along with the United States in the International Atomic Energy Agency (IAEA), referring the Iranian nuclear research program to the UN Security Council. Two weeks later, policy-makers in Delhi had no definite information on the status of an ambitious deal concluded early in 2005 for the import of liquefied natural gas (LNG) from Iran. Media reports had appeared of an Iranian intent to negotiate the deal afresh, but the Indian government had not received any official indication to this effect, said a senior official of the Ministry of Petroleum and Natural Gas.

The minister who had concluded the deal for India meanwhile, found himself rather abruptly supplanted. Since the Congress-led government assumed office in May 2004, Mani Shankar Aiyar had devoted himself in most part to his assignment as Minister for Petroleum and Natural Gas, which was merely a temporary charge. On 29 January, Prime Minister Manmohan Singh, after months of barely concealed discomfort with Aiyar’s visionary enthusiasm, replaced him with Murli Deora, a Bombay politician known for his pro-US inclinations. It was termed a “routine reshuffle” of the Union Cabinet, but it left Aiyar with a badly shrunken profile, as minister for local self-government and youth affairs.

Most analysts believe that the IAEA vote and the ministry reshuffle have dealt a double blow to the energy security strategy that Aiyar had mapped out with great foresight during his tenure in the Ministry. The LNG import deal was the first major breakthrough achieved under his stewardship. Yet even this mammoth 25-year deal was dwarfed in every respect by the other project that Aiyar lent his considerable authority and enthusiasm to. It was an enterprise that many thought could “redirect the history of Southasia” – a gas pipeline that would bring the abundant energy resources of the world’s largest natural gas fields just offshore of Iran, to the energy hungry towns and villages of India. (See cover story in Himal Southasian, July-August 2005). The necessity of securing transit through Pakistan for vital energy supplies to India, it was thought, would act as a great confidence-building measure between the two antagonistic Southasian countries.

Slow burial
Manmohan Singh’s first public display of disquiet came in Washington DC on 18 July 2005, shortly after he had clinched a deal – that remains contentious to this day -- on civilian nuclear cooperation with the US. Asked specifically about the pipeline from Iran, he admitted, rather casually, that it might prove an impossible dream. Since finance for the project could well be impossible to organise, he indicated, he was not inclined to invest too much hope in the gas pipeline from Iran.

This debunking by the prime minister of a project that his colleague in the union cabinet had worked tirelessly to bring within the realm of possibility, clearly took many aback, not merely diplomats and activists but so too officials in India’s petroleum exploration and extraction industries. It was pointed out that the constraints on finance for the project were specific to the US and its rather whimsically defined notion of “terrorism”. India had no reason to play by the same rules, since it has a different set of interests to pursue in its near neighbourhood.

Aware that he had seriously ruffled political sensibilities at home, Manmohan Singh sought to simulate at least a degree of enthusiasm for the pipeline project, specifically mentioning it during his Independence Day address to the nation on 15 August 2005.

Despite this, it was clear that the Manmohan Singh government was unwilling to risk any of its newly earned political capital with the US. The collapse of interest in a project of potentially historic significance, was inextricably tied to the new phase of the ‘strategic partnership’ that India has embarked on with the US.

The deal with the US in July 2005 revived long dormant dreams of imperial glory within the Indian establishment. To have won the assent of the overlord of the global atomic imperium was a significant achievement, which put India’s strategic nuclear deterrent on more stable foundations. And in opening up the prospect of civilian nuclear cooperation with other world powers – for the minor reciprocal concession of fencing off military facilities from the civilian sector – it seemed also to have opened up the pathway to energy security.

There have since been a number of reservations voiced in India about the agreement, all of it from the wrong side. Some have argued that the US is being unfair in insisting that India should immediately segregate civilian and military nuclear facilities, since that would confine India to an unacceptably small nuclear deterrent force. Others have grumbled about the civilian nuclear sector being opened up to an unreasonable degree of scrutiny, rendering valuable intellectual property resources vulnerable to theft. On occasion, these two arguments have converged to create a climate of opinion for classifying research programmes in nuclear power – such as the fast breeder and the advanced heavy water reactor – as military programmes.

Underlying the entire process has been the old game of ‘threat inflation’, so familiar from the Cold War, when the US kept conjuring up dark visions of a Soviet empire that was rapidly outstripping it in nuclear capabilities and deployments. Sober analysts then showed, and have now confirmed, that all this was self-serving fiction manufactured by the US nuclear establishment and the defence forces, eager to see sufficient lethal toys around to satisfy everybody’s greed. India’s Department of Atomic Energy (DAE) today has embarked upon the same path. Nobody from within its ranks – or for that matter, from the New Delhi strategic establishment – has come forward with a reasonable explanation of what would be a “minimum credible deterrent” in terms of India’s nuclear doctrine. But loyalists within India’s fourth estate have started putting out the obvious fabrication that India has already yielded strategic pre-eminence to Pakistan and will fall further behind, unless a sufficiently large part of its nuclear R&D program is placed within the military fence.

Toeing the line
The same alliance of the nuclear and strategic communities has driven India’s policy on Iran since the US began ratcheting up the pressure on that front. Last September, India voted in favour of an IAEA resolution which noted that Iran’s nuclear program, as a threat to world peace, rightly belonged within the domain of the UN Security Council. This was followed by the February reference to the Security Council and the quite extraordinary demand placed on Iran, that it should go beyond the formal stipulations of the Nuclear Non-Proliferation Treaty (NPT) and all agreements concluded under its aegis, to adopt “transparency and confidence-building measures” that may at regular intervals be demanded of it.

The NPT as it has existed till now, recognised two kinds of states – those with the nuclear weapon and those without. India stayed out of the bargain because it viewed the NPT as a flawed and discriminatory treaty. But now a special niche has been fashioned for India in the global nuclear imperium, as a “responsible state with advanced nuclear technology”. At the same time, another niche of a very different sort is being created for Iran: as a signatory to the NPT and a state without nuclear weapons, it would still be obliged to submit to greater rigours than the treaty dictates

Partly because of the gross inconsistency in this approach, non-proliferation strategists in the US have begun mobilising Congressional opinion against the deal with India. This in turn has created a situation in which India is compelled to prove itself a loyal ally and acquiesce in all US demands. In case the message was not adequately clear, US Ambassador David Mulford, much to the outrage of the Indian intelligentsia and the embarrassment of the government, declared that the nuclear deal would ‘die’ if India did not vote against Iran at the IAEA meeting in February.

Demands that Mulford’s diplomatic credentials be cancelled have been rebuffed by Prime Minister Manmohan Singh for the moment, but his government has had a hard time seeking to justify its new accommodation with the US. In the bargain, two issues of vital importance for India’s energy security have drifted back into the public limelight: the very real benefits that the gas pipeline from Iran could bring, and the consistent failure of the country’s atomic energy establishment to fulfil promises of an energy plenitude to come through nuclear fission.

Opening doors, shutting doors
Shortly after independence, when nuclear fission seemed to promise a virtually inexhaustible abundance of energy, India committed itself to a three-stage program that went all the way from the first generation of reactors based on a moderated nuclear reaction, to “fast reactors” that would breed fuel even as it generated heat, and then towards a design that would transform available deposits of a rare mineral into an unlimited source of energy.

The nuclear dream soon meandered into a succession of dead-ends. Grand plans to meet a fifth or even a fourth of the country’s commercial electricity needs through the nuclear route failed to fructify. But it was only five decades after its three-stage perspective plan for nuclear energy was written, that India’s atomic energy establishment conceded that it did not have the resources to even establish the first stage on a sound basis. Uranium, the DAE admitted, was severely limited as an accessible resource for India. And to provide the necessary impetus to the nuclear energy perspective plan, the doors needed to be opened to the import of uranium from overseas sources.

This was in the prevailing international regime of oversight and control, a forbidding prospect. India chose not to accede to the NPT when it was put up for signature in 1970, and as such, was dependent on contingent acts of goodwill by the overlords of the global nuclear trade, for access to resources and technology. With the first of India’s nuclear tests in 1974, and more so with the succession of explosions that followed almost a quarter century afterwards, the doors were firmly closed on this source. In the process of seeking to reopen the door to nuclear energy, India seems resigned to the need to shut several others, including the gas pipeline from Iran.

Politics of energy
The clue to unravelling this policy muddle in India lies in understanding the complex geopolitics of energy. The Taliban regime in Afghanistan once merited the patronage of the US, because it held the key to tapping the oil and gas reserves of Central Asia for transportation to the warm waters of the Indian Ocean. For Washington, the geopolitical compulsions behind the unseemly embrace of the Taliban remain unchanged. Central Asia and the Caspian Sea are believed potentially to be an enormously productive energy exporting region. And every possibility must be found of avoiding the natural routes of egress for these resources – south through Iran or north through the Russian Republic. That would be contrary to the geopolitics of energy as the U.S. conceives it.

The Baku-Tbilisi-Ceyhan (BTC) pipeline, the 1800 km long crude oil conduit -- ten years in the making and inaugurated last September -- is now the most visible symbol of this geopolitical intent. Beginning on the Caspian Sea coast just south of Azerbaijan’s capital city of Baku, the pipeline snakes west till well after the Georgian capital of Tbilisi. It then plunges south, carefully skirting a secessionist province of Georgia on the Black Sea coast, before entering Turkey and delicately working its way through regions of Kurdish unrest towards the Mediterranean port of Ceyhan. For a project that had to traverse such politically volatile terrain, the economics of the BTC pipeline remain uncertain. Azerbaijan lacks the oil to feed it and the US has had to pressure Kazakhstan on the other shore of the Caspian, to start pumping oil through the Baku terminal.

Again in its effort to cut Iran out of India’s energy matrix, the US has energetically pursued the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline, which would bring some benefits at its tail-end to India. The Asian Development Bank has since long been the principal consultant for the project, but India’s interest is limited by the perception that the gas fields of Turkmenistan do not have the abundance of Iran’s. And curiously, all the problems cited as potentially fatal for the Iran pipeline – such as the secessionist movement in Baluchistan province of Pakistan – are applicable with greater force to both the BTC and TAP project. The Iran project however, has an advantage that the other two lack: its yield is not in question.

India’s reticence to play the game the way it should be coincides with a series of aggressive moves by other majors in the trade, all intended in the years to come, to establish a dispersed locus of control in the global energy grind. Just last December, Russia concluded a deal with Germany, to build a submarine pipeline under the Baltic, making landfall on the German coast and in the process bypassing the Ukraine and Poland. Signalling a new intent to use energy resources for maximum economic and political leverage, Russia also unilaterally terminated gas supply deals with Ukraine and Georgia, indicating to them that their newfound political chumminess with the US was not without an economic price.

Viewed in this context, India’s steadfast vigil over ancient nuclear shibboleths looks rather pathetic, designed to propel the country ever more rapidly into a state of chronic energy deficit. Apart from the economic calculus, energy options also exercise an influence on the moral and political climate. Nuclear energy, with its ever intimate interface with weapons technology, feeds a mood of national chauvinism and hysteria. A natural gas pipeline that connects neighbours, on the other hand, gives every country a vested interest in the security and stability of the other, in turn creating an atmosphere for deepening economic cooperation. After two successive votes in the IAEA that have rightly been perceived by Iran as hostile acts, India will now have to engage in serious damage-control if it wants to get back to the energy security scenario that Mani Shankar Aiyar had so carefully crafted.


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