Pakistan is yet again faced with another international arbitration case as an irate Iran threatens to take the country to The Hague for unilaterally shelving the Iran-Pakistan gas pipeline.
The apprehension regarding the tenuous IP gas pipeline project, conveniently relegated to the back burner of Pakistans’ foreign agenda for over three years, is now threatening to boil over to the tune of $1.2 billion in damages as per the penalty clause against Pakistan’s failure to execute its end of the development.
Iran’s ire in this instance is legitimate and long overdue for despite its repeated calls for Pakistan to complete its end of the pipeline infrastructure, the leadership has exhibited little to no initiative in the construction process. Pakistan’s' consistent foot dragging and dithering over the venture, and in turn any positive bilateral engagement with Tehran, seems to be dictated by its ever latent hope of of rekindling ties with a currently sulking US and not risking ruffling KSA feathers.
Pakistan’s’ foreign policy repeatedly suffers through its politics of pandering to international players for the trickle-down economics of acquired funding. While the government’s feeble explanations remain unconvincing, the opposition is quick to ascribe this foreign policy gaffe to PML-Ns long list of failures in office. Faced with global ostracisation under the impending FATF greylist, a condemning censure that our leadership has trivialized as being just a minor 'embarrassment' for Pakistan, the state needs to salvage what little amenable international relations and credibility it has left.
Pakistan has lost several high profile commercial agreements to arbitration, most of them of strategic importance, and is liable to pay millions in compensation to local and international business firms, further maiming an already crippled national exchequer; it cannot afford another hefty penalization.
The leadership should focus on providing economic opportunities at the local level which projects like IP and CPEC offer, if integrated effectively. The aim should be to align Pakistan with its neighbors through its geostrategic strengths. The pipeline is not only integral to Pakistan’s faltering energy needs it also stands to be the bedrock for a healthy Pak-Iran bilateral relationship. The government needs to take ownership of its end of the contract and work actively to re-engage with Tehran over the project.