New Delhi
27 October 2007
Two years ago, United States Secretary of State Condoleezza Rice
flew in to India to tell Prime Minister Manmohan Singh's Government not to proceed with
the India-Pakistan-Iran gas pipeline project. She left, promising to pave the way for a
civil nuclear cooperation agreement. US Treasury Secretary Henry Paulson is expected
to do the same during his visit to India starting from Sunday. "We're hoping that India
won't move forward on [the pipeline,]" a Treasury official said.
US Treasury Undersecretary for International Affairs David McCormick told a news
conference in Washington that Mr Paulson will urge Indian officials not to move forward
with the India-Pakistan-Iran gas pipeline project. "We're hoping that India won't move
forward on this," McCormick said, "We think at a time when the world should be
imposing greater discipline on its interactions with [Iranian] companies and financial
institutions and the Iranian government more broadly, that this is not the right path
forward. We have been very clear on that." McCormick went on to suggest that the US
had a "profound understanding" of India's energy needs and it was "one of the
underlying pieces of logic" of the nuclear deal. "But," he added, "we don't see a pipeline
with Iran providing India with any real energy security given the state of the Iranian
regime."
The US Department of Treasury has said that Mr Henry M Paulson will travel to India to
meet with government officials and business leaders. Paulson will be in Kolkata on
Sunday to meet with West Bengal Chief Minister Bhattacharya and business leaders. He
will then travel to Mumbai where he will deliver remarks to the India-US CEO Forum
Infrastructure Conference and meet with various officials including Reserve Bank of India
Governor Reddy and Securities and Exchange Board of India Chairman M Damodaran.
From there, he travels to New Delhi where he will participate in a discussion at the
Fortune Global Forum. He will also meet with government leaders including Union
Minister of Finance P Chidambaram.
Mr Paulson left no one in doubt that he will try to push for the nuclear deal on his visit to
India. He told the Washington-based Council on Foreign Relations on October 24 that the
proposed agreement on civilian nuclear cooperation is an important part of the US -
India relationship, and it is beneficial to both countries. "India is one of the world's
largest and most peaceful states with advanced nuclear technologies, and has been
isolated from the rest of the world on nuclear issues. This agreement will bring India into
the nuclear nonproliferation mainstream, providing access to the technology which can
help it reach its economic and environmental objectives. The United States remains
committed to this agreement," he said.
New Delhi maintains that it is interested to purchase the Iranian gas but the fresh round
of sanctions by the US on Iran may have put the "peace pipeline" project in a quandary.
The Iranian Revolutionary Guard Corps (IRGC) and its subsidiaries are involved in
pipeline projects but Washington has since designated them as "proliferators of
weapons of mass destruction." The IRGC is said to be a multi-faceted business
conglomerate and it controls over 100 Iranian companies, many of which are involved in
oil pipeline projects. Ms Rice announced the sanctions at a joint briefing with Mr Paulson
earlier this week. On the occasion, Mr Paulson said that the Revolutionary Guard "is so
deeply entrenched in Iran's economy, that it is increasingly likely that if you are doing
business with Iran you are doing business with the IRGC."
Mr Chidambaram recently said in Washington that India is committed to the India-
Pakistan-Iran gas pipeline. He was in the US for the annual meetings of the International
Monetary Fund and the World Bank. He discussed the gas pipeline in his talks with
Iranian Finance and Economic Affairs Minister Davood Danesh Jafari. "He asked me
about our commitment to the pipeline. I said we remain committed to the pipeline. We
would have to sort out one or two issues relating to the transit charges. He urged us to
resolve these as quickly as possible," Mr Chidambaram said. "It is completely doable.
We should do it. Iran has the gas and we need the gas. We have a problem on the
transit charges and that is a problem India and Pakistan would have to resolve. I don't
know of any other problems. It is a commercial negotiation, a commercial matter and
should be dealt with as a commercial matter," he added.
Pakistan and Iran have said that they would sign a memorandum of understanding on
the pipeline. Pakistan has since invited India for talks for finding out a solution to
determine transit fee issue. India had boycotted the trilateral discussion in Tehran last
month, saying it could not attend a trilateral meeting before resolving issues with
Pakistan over the transit fee. According to reports, Pakistan Petroleum Secretary Farrakh
Qayyum wrote a letter inviting his Indian counterpart MS Srinivasan for a comprehensive
bilateral talks between November 1 to 3 or between November 12 to 14.
The fresh round of sanctions are described as the toughest sanctions on Tehran since
1979. The sanctions will cut off over 20 Iranian entities owned or controlled by Iran's
elite Revolutionary Guard. Also targeted are the State-owned Bank Melli, Bank Mellat
and Bank Saderat. Ms Rice has said that no US citizen or private organisation will be
allowed to engage in financial transactions with the Iranian entities. Washington could
also invoke the 1996 Iran-Libya Sanctions Act to impose sanctions on countries that
assist Iran in exploiting its petroleum resources.
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