Since the change of government in the US, there have been a lot of interesting developments in the Middle East, which merit closer investigation. In an unprecedented move, President Obama sent greetings and message to the people of Iran on the occasion of Nauroz; Persian New Year. In his message of peace, President Obama referred to the great historical heritage of the Persian Civilisation and indicated his intention of engaging with Iran. This indeed was a radical change from the policy of his predecessor, who in his typical way of speech, referred to Iran as a part of the “Axis of Evil”. Indeed the general consensus was that Iran would be the next target for US military intrusion after Afghanistan and Iraq. However, one change in the White House, and Iran has moved from the Evil Axis to a great civilisation. Unfortunately, with the same change, Pakistan, a non-NATO major ally in the last government, has been degraded to the conflict zone. I shall leave Pakistan for another day, and revert back to Iran. The change of heart in the US towards Iran comes not because of any ideological reform but rather from new energy politics and Iran’s growing significance. I believe this new politics of energy or the politics of pipelines will have a major impact on the political and economic future of the region. Such a change will also merit, re-alignment of Pakistan’s foreign and economic policy towards the region.
Iran’s sphere of political influence in the Middle East has increased after the Iraq and Lebanon Wars. This political rise of the Iranian bloc of Iran, Syria and Hezbollah in Lebanon and Shi’ite Iraq has inevitably led to deeper fissures in the region between Iran and the Arab bloc. These political tensions are already evident, and were one of the motives behind the support provided by Egypt to Israel during the Gaza War. As the US government plans an exit strategy from Iraq, Iran’s role will become even more important in the region and the US will increasingly need the support of the Iranian government to ensure that its commercial interests are preserved even after it removes its military from the country. Iraq is likely to become a battleground for extending political influence between Iran and the Arab bloc. Robert Gates, while visiting Saudi Arabia, commented that the only way to prevent Iran’s influence in Iraq would be more investments and active support of the Iraqi government by the Arab world. This shows that instead of being confrontational with Iran as in the past, the new US Administration wants to remain neutral and would rather have the Arab countries fight their own battles. I think Iraq would be the centre of a great political game in the region.
Iran’s political clout is also growing because it has an important role for a successful US policy in Afghanistan. Iran supports and has strong influence over the Tajik factions in Afghanistan who now have the favour of the US administration. In the past, the US and the Arab world, led by Saudi Arabia, supported the Sunni Pashtun groups. This change in the Afghanistan policy and the recent interest of President Obama in Afghanistan also amplifies Iran’s political significance in regional politics. While in the past, Saudi Arabia, Pakistan and the US used to be the main players involved in the discussions over the American strategy in Afghanistan, the US government is now engaging with Iran, Pakistan and the Karzai government in Afghanistan. This move is also unprecedented and signals the rising importance of Iran.
Besides growing political significance, the major reason for the shifting global political landscape is energy politics. Iran is now seen as a central piece in the battle for securing energy resources. Iran has the third largest proven oil reserves and the second largest gas reserves in the world. Since 1953, the sector has been nationalised and under the control of the State. Lack of private investment and because of economic sanctions imposed by the US, there has been limited investment in the sector and hence has huge potential for further expansion. According to the CEO of Gazprom, Russian oil giant, Iran, Qatar and Russia will be the only suppliers of gas left by 2030. Iran also holds access to 15% of the Caspian Sea, which is supposed to have up to 325 trillion cubic feet of natural gas and over 200 billion barrels of oil.
In my view, this politics of energy resources, especially gas resources will make Iran the most important country in the Middle East and will lead to even further economic and political tensions with countries like Qatar, Russia and Saudi Arabia, which are its biggest competitors in the energy market.
After the Gazprom-Ukraine energy crisis last year, EU has decided to diversify its sources of gas supplies. Currently, Russian oil and gas company, Gazprom provides gas to EU through Ukraine. Last year, Russia stopped gas supplies in order to renegotiate the pricing contract. In order to get access to gas to meet its energy demands, EU, along with the support of the US is constructing a 3,300-kilometer-long pipeline from the Caspian Sea via Turkey to Austria called the Nabucco project. This pipeline will end the dependence of EU on Russia. Azerbaijan was supposed to provide upstream gas resources but Azerbaijan moved closer to Russia and has signed a contract to provide Azeri gas to Russian pipelines. Following this, the EU is now considering securing gas from Turkmenistan and considering alternatives including Iran and Qatar.
Iran is also developing gas fields in Turkmenistan and is working on a separate Turkey-Iran gas pipeline. This pipeline will provide gas from Turkmenistan and Iran to Europe (Greece) through Turkey.
Iran has become a potential supplier of gas to the Middle East. The Kuwait government is currently in talks with Iran to build a gas pipeline from Iran, which can provide 300 million cubic feet of natural gas to Kuwait per day. Iran currently supplies gas to Oman, which remained neutral during the Iran-Iraq War. UAE’s Crescent Petroleum has also constructed a gas pipeline project with Iran but the Iranian oil and gas company has stopped work on the project in order to renegotiate pricing.
Outside of the Middle East, India and Pakistan are also finalising the deal on Iran-Pakistan-India gas pipeline. The biggest potential market for Iranian gas is, of course, China and a gas pipeline through Pakistan linking China with Iran could be the biggest piece in this complex puzzle of energy politics.
In my view, the most critical part of this political shift would be the impact on Qatar. Qatar has made huge investments in the gas sector especially in the Ras Laffan gas fields. Qatar has pioneered liquid to gas conversion (LNG) and doesn’t have to build gas pipelines to export its gas. Interestingly, Qatar and Iran share the main gas field in the region. Currently, Iran has under-explored its side of the field, while Qatar has been massively expanding exploration and production from its side of the border. Since the underground resource is shared, the division of the resource can lead to tension between the two countries.
Iran’s nuclear program along with its rising political influence and emerging importance as an energy supplier will have strong implications for future foreign strategies of countries like Saudi Arabia and the GCC region.
Unfortunately, besides so many other things which went wrong, Pakistan’s relationship with Iran also suffered because of our involvement in the Afghan War. US influence has also deterred normalisation in relationship in the past. However, in my opinion, our foreign and economic strategy towards Iran needs to be realigned. Iran, surprisingly and rather graciously, has committed economic assistance to Pakistan during the Friends of Pakistan Forum and President Zardari visited Iran for Turkey, Pakistan and Iran meetings. These measures further need to be strengthened. It is in Pakistan’s national interests to reactivate and strengthen organisations like ECO. Interestingly, governments led by Pakistan People’s Party have historically been active in ECO and have been good at developing relationships with Iran and Central Asia. The time remains apt for the revival of this policy.
