The Diplomat: Will the Iran Deal Help the Iran-Pakistan Pipeline Project?

The recently concluded deal between Iran and the P5+1 group of world powers presents a range of opportunities for Pakistan. Under the deal, known as the Joint Comprehensive Plan of Action, Iran will receive relief from sanctions that were put into place by the United Nations, the United States, and the European Union for its nuclear program. For Iran’s neighbors, including Pakistan, this means reduced barriers for commercial activities. Specifically, the windfall from the Iran nuclear deal could reinvigorate the construction of the troubled Iran-Pakistan pipeline project.

A recent Agence France-Presse report notes that the $7.5 billion infrastructure project—a potential source of respite for energy-starved Pakistan—may allow Pakistan to meet its obligations and lead to the completion of the pipeline. As I noted in The Diplomat in late 2013, Pakistan pledged to accelerate the construction of its side of the pipeline but that later fell flat due to Pakistan’s inability to finance construction. In particular, Iran withdrew a $500 billion loan that would have allowed Pakistan to complete its part of the pipeline.

Most recently, following Chinese President Xi Jinping’s visit to Pakistan in April 2015, it became apparent that China would buttress Pakistan’s efforts to complete its side of the pipeline. Geographically, the southern end of the China-Pakistan Economic Corridor (CPEC), a massive infrastructure initiative that was formally unveiled during Xi’s visit to Pakistan, will end at the China-financed port city of Gwadar. Under the current arrangement, Pakistan will build the portion of the pipeline between Gwadar and the Iranian border (roughly 80 kilomters), and China will integrate the rest of the pipeline with the broader CPEC, including extending the pipeline to the Pakistani city of Nawabshah, north of Karachi. MORE