STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.
So much for isolating Iran. Iranian President Mahmoud Ahmadinejad has been visiting South Asia, trying to close a multibillion dollar gas pipeline deal. He is negotiating with U.S. allies. He was in India yesterday and Pakistan earlier this week. The Pakistani government said they agreed on a number of issues. Now, Iran first proposed this pipeline in the 1990s and the U.S. has been opposing it ever since.
NPR's Jackie Northam reports.
JACKIE NORTHAM: The proposed pipeline would wind through more than 1,600 miles, from Iran through the volatile and dangerous Pakistani province of Baluchistan and then to India, carrying with it in the initial phase some 60 million cubic meters of gas daily.
It's taking years for the three countries to hammer out an agreement. The need for energy is enormous in Pakistan and India to help the growing economies. But Washington is concerned about Pakistan and India's involvement in the deal, particularly India. The U.S. government says the revenue from gas sales will help fund Iran's nuclear program.
Mike Green led the Asia operations on the National Security Council staff until last year and is now at the Center for Strategic and International Studies. He says the U.S. needs to find a way to speak softly but carefully to India.
Mr. MIKE GREEN (Center for Strategic and International Studies): I think quiet diplomacy will be effective. If we're too loud about it, we're going to risk giving the opponents of closer U.S.-India ties a nice weapon to sort of beat up the government as they cooperate with us on everything from civilian nuclear power to military aircraft procurement.
NORTHAM: Christine Fair, a senior analyst at the RAND Corporation, says the U.S. doesn't need to worry about the pipeline for the foreseeable future. Fair says officials involved in the deal may have decided on transfer fees and the like, but there are much bigger, more practical hurdles to overcome before any pipeline is built.
Ms. CHRISTINE FAIR (RAND Corporation): The real issues are the security of the pipeline. And no company is going to be crazy enough to invest in these pipelines, given the insecurity of the Baluchistan area and given the very real possibility that the investments are going to violate U.S. law.
NORTHAM: And it may be Iran that stalls the project. Iran is sitting on the world's second largest natural gas reserve and is facing increasing demand from its domestic market as well as the international market.
Robert Johnston is the director of energy and natural resources at the Eurasia Group. Johnston says Iran has to decide strategically how it wants to expand its gas production, which projects take priority and bring in the most money. Johnston says for that reason the deal with India and Pakistan will not go ahead for at least a decade or two.
Mr. ROBERT JOHNSTON (Eurasia Group): I think that ultimately Iran will find better projects for its gas. Two other options that are more attractive are either developing pipeline links with Western Europe through Turkey or alternatively developing LNG markets in Asia.
NORTHAM: Johnston says India and Pakistan are probably both aware of this, but that hasn't stopped all sides from negotiating, because all sides have interests. Johnston says Iran is trying to drive the hardest bargain by having a number of parties compete for its natural resources. The RAND Corporation's Fair says for India and Pakistan it's all about the future.
Ms. FAIR: It is about positioning themselves to take advantage of these energy markets when they become available. It signals intent. It signals that they're both big players.
NORTHAM: Even if it means annoying an ally like the United States.
Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
