Essay: Prospects of exploiting energy corridor

Introduction
1. The availability of energy resources is considered as one of the key components for economic development. As the development process accelerates, the demand on energy automatically increases. Hence, owing to the fact global energy consumption has more than doubled since 1970s. Continually increasing energy demand has forced countries to intensify efforts both from domestic resources as well abroad..
2. Similarly, today Pakistan is faced with ever growing energy needs, triggered by its continuing demographic boom and for boosting its growing economy. Estimates of the Planning Commission of Pakistan suggest that losses arising from electricity and natural gas shortages held down GDP growth rate by 3 to 4 percent in 2011-12 . The growing energy woes can be attributed to number of factors ,such as ; mismatch between growing energy demands and stagnating domestic production; poor governance for timely exploitation of its own considerable national energy resources; rising demographic profile and increased demand of industry. Opportunity, for addressing growing energy needs can be seen in changing geo-political milieu, specially in our neighboring Afghanistan.
3. ISAF are scheduled to begin leaving Afghanistan in 2014.Peace and stability may lead to Afghanistan becoming a major energy transit corridor, consumer and producer; a development that will also benefit its neighbors .
4. As a gateway to resource rich Central Asia, Afghanistan holds the key to unlock a new potential in region by acting as a transit route for energy supplies from Central Asia to energy markets in South Asia ‘ a scenario with win-win potentials for all stakeholders . Present impasse on Iran- Pakistan gas pipe line and economically unfeasible import of natural gas from Qatar and other Middle Eastern countries has forced Pakistan to look into its immediate neighborhood, none other than Afghanistan. Notwithstanding the obstacles which impede the exploitation of energy corridor from Afghanistan, opportunities which can be accrued are immense. Projects like TAPI and CASA hold great promises for making Pakistan and Afghanistan at the centre of energy-centric geo economic activity. Therefore, speedier progress on these projects will help promote regionalism, connecting West Asia with South Asia, Central Asia with South Asia and South Asia with East Asia. Transit revenues and industrialized projects accompanying the realization of pipeline and other energy projects will allow both Pakistan and Afghanistan to develop an indigenous economic base – not dependent ever on foreign aid. It will end unnecessary tension over security issues between Afghanistan and Pakistan, which are uniquely connected to each other through geography, ethnicity and history. The operationalization of North-South energy corridor not only holds promises for sub-regions of Asia but also potentially benefit all the extra-regional powers that have stakes in Asian stability in 21st century and beyond .
5. The emerging geo-political and geo-economic environment has brought to fore advantages of Pakistan-Afghanistan geographic contiguity, at the cross-roads of three most important sub-regions, West Asia, Central Asia and South Asia. However, this all should be seen through the lens of emerging scenario in Afghanistan after withdrawal of ERFs from the Afghanistan post 2014.
2. Aim. To carry out an appraisal of exploiting energy corridor through Afghanistan in the post draw down scenario by carrying out analysis of prospective projects and interests of regional/ international players and to proffer a viable recommendations. .
3. Scope. Paper Will unfold as under:-
a. Part-I : Exploitable reserves in the region and routes available
b. Part-II : Afghanistan geo-politics and geo-economics
c. Part-III : Afghanistan as energy corridor vis-??-vis Pakistan
d. Part ‘IV : Interests of regional and international powers
e. Part ‘V : Conclusions and recommendations
PART-I
EXPLOITABLE RESERVES IN THE REGION AND EXISITNG/PROPOSED ENERGY CORRIDORS
4. Before analyzing potential energy projects to be transited through Afghanistan, it is necessary to take stock of the energy potential of the region. Existing/ proposed energy corridors will also be discussed to establish the stakeholders and their interests.
5. Exploitable Reserves in the Region. Proven reserves of oil, gas and hydro electricity production in CARs is as shown in the table below:-
S/No Country Oil(bbl) Gas(tcf) Hydro Electricity(Gwe)
a. Kazakhstan 30 85 18.75
b. Turkmenistan 0.6 265 2.85
c. Kyrgyzstan 0.04 0.2 3.77
d. Tajikistan 0.5 0.2 4.43
e. Uzbekistan 0.59 65 12.35
Table-I
6. Proposed and Existing Oil/Gas Pipelines. Map on Annexure P.
a. East- West Interconnector Pipeline (Under Construction) The pipeline is likely to be completed by 2015. It is designed to transport gas from the newly discovered South Yolotan field in Turkmenistan to the Caspian port city of Turkmenbashi. Once completed, the pipeline is anticipated to deliver 30 bcm per year and will follow a similar route to that of a current pipeline from Dauletabad field to Turkmenbashi.
b. Central-Asia China Gas Pipeline. The pipeline carries natural gas from right bank of Amu Darya River in Turkmenistan and terminating in Chinese Xinjiang province. Pipeline was commissioned in 2007 with maximum discharge capacity of 40 bcm/year. According to CNPC the inflow of Turkmen gas wil help stabilizing the overall country’s consumption. The pipeline is independent of Russian supply/pipeline control.
c. Kazakhstan-China Pipeline. Its first direct oil import pipeline. It is East-West in orientation and runs from Kazakhstan’s Caspian shore to Xinjiang in China. It delivers 20 million tonnes/year.
d. Central Asia-Central Pipeline (CAC). It is Russian controlled system of natural gas pipelines, which runs from Turkmenistan via Uzbekistan and Kazakhstan to Russia. It is a network of five pipeline systems. The branches meet in Western Kazakhstan, from there the pipelines run up to the North; where they are connected to Russian natural gas pipeline system.
e. Caspian Pipeline Consortium (CPC). A 1500 km long pipeline to transport Caspian oil from Tengiz field in Kazakhstan to Russian Black sea port of Novorossiysk.
f. Baku -Tbilisi- Ceyhan (BTC) Oil Pipeline. It connects Baku, the capital city of Azerbaijan and Ceyhan, a port on the South ‘Eastern Mediterranean coast of Turkey, via Tbilisi, the Capital city of Georgia. The pipeline is known as one of the most strategic oil pipelines in the world as it was fully online in the mid 2000s and bypasses Russia by supplying Caspian crude oil to markets in Europe. It is perceived by the analysts that pipeline will weaken Russian influence in the region.
7. Afghanistan’s Geo-Strategic Significance and The Great Game.
a. Geo-Strategic Importance.
(1) Afghanistan is a landlocked and mountainous country located in South Asia. It is described as being the center or heart of Asia, connecting South and East Asia with Central and Western Asia. Strategically located at the crossroads of major trade routes, Afghanistan has attracted a succession of invaders since the sixth century BCE .
(2) The collapse of Soviet Union and discovery of mineral resources in Central Asia dramatically altered the geopolitical equation. Afghanistan has thus, once again acquired critical importance as a land bridge for oil and natural gas pipelines and trade route. Today, the Central Asian states have come to draw much attention as it is believed that they hold the potential key to energy security in the 21st century. The landlocked nature of the Central Asians states imposes inherent constraints in unraveling this potential .
b. The Old and New Energy Great Game.
(1) ‘Old Great Game’ refers to an undeclared war of competition, when the British in India and Tsarist of Russia fought an undeclared war of competition and influence to contain each other in Central Asia and Afghanistan. The Centre of Gravity for both powers was Afghanistan..
(2) In the 20th century, the players in the ‘Great Game’ changed-Russia gave way to the Soviet Union after 1917, and after the World War II, Britain was replaced by the United States. The Cold War ended with the collapse of the Soviet Union in the 1990s, giving birth to many new states on the debris of the collapse. These new states were mostly Turkic-speaking in Central Asia and the Caucasus forming new players in the ‘Great Game’. Interdependence among the players as well as among the states of the region has further complicated the situation. US invasion of Afghanistan in the after math of 9/11 has radically transformed the geo-politics of the region. Resurgence of Taliban and Al Qaeda has added new players to the complex gambit of stake holders in the region. With planned withdrawal of US/ISAF post 2014, power struggle among the regional stake holders is likely to take the front stage..
(2) Western experts believe that the untapped hydrocarbon resources in the Central Asia Republics could make the region the Persian Gulf in the next century. It is in this context that Afghanistan is again emerging as a murky battleground among big powers. The agenda is being set by geopolitics and oil. No less than seven possible routes are being considered to bring oil and gas either westwards to the Black sea or the Mediterranean or South to the Persian Gulf.
8. Afghanistan as a Energy Corridor Vis-a’-Vis Pakistan
a. TAPI (Turkmenistan-Afghanistan-Pakistan-India) Pipeline Project)
(1) Genesis of the Project
(a) The idea of a pipeline was first floated before the Taliban captured Kabul. In 1995, Turkmenistan and Pakistan signed a MoU regarding the TAPI project.
(b) With an annual carrying capacity of 33 bcm (billion cubic meters) of Turkmen natural gas , the pipeline was projected to run from Turkmenistan’s Dauletabad gas field across Afghanistan and Pakistan and terminate at the northwestern Indian town of Fazilka.
(c) In 1997 the Central Asia Gas Pipeline Ltd consortium, led by US Company UNOCAL, flew a Taliban delegation to UNOCAL headquarters in Houston; Where the Taliban signed off on the pact .9/11 American led military operations drove the Taliban from power. Since then, central issue facing TAPI is security, which is needed for the construction of the pipeline and ensuring sustained supply of gas through it upon completion.
(2) Developments on the Project. On December 2010, after nearly two years of inter-governmental deliberations, the presidents of Turkmenistan, Afghanistan and Pakistan, and India’s energy Minister signed a framework agreement at a summit in Ashgabat to build the 1,680 km pipeline .
(3) Impediments to the Project
(a) Security of the Pipeline. Out of 1,680 km, only 100 km of it will touch Turkmen and Indian territories. The rest will have to pass through troubled terrain of Afghanistan (the provinces of Herat, Helmand and Kandahar, the last two being the hub of Taliban-led insurgency stronghold) and Pakistan (specially the restive province of Balochistan) .
(b) India Factor. Apprehensions between Pakistan and India are the road block to the project. India remains concerned about the likely security arrangement of the pipeline, likely to be disrupted by non state actors. Issue of transit fees is also likely to arise, as was the case in IPI gas pipeline project. India withdrew from the project on the pretext of transit fees.
(c) Investment for the Project. Due to delay in the implementation of the project, its cost has risen from $7 bn to $10 bn. One of the reason for delay has been difficulty in finding prospective investor company, which can finance, build and run the project. US oil giant Chevron has shown interest in the project, but its demand for oil exploration has not been welcomed by Turkmenistan.
(4) Benefits from the TAPI Project-An Analysis
(a) Pakistan. Through the TAPI project, Pakistan will diversify its own energy supply sources, meet any energy shortfalls in the country and offer attractive pricing both at the domestic and industrial levels. Huge foreign exchange will be generated through export of liquefied gas to international markets. Apart from an estimated $700m royalty from the transit facility, Pakistan would also be allowed to purchase $200m worth of gas at a cheaper rate. Overall, on an immediate basis, Pakistan would benefit to the tune of $6bn, which would give a tremendous boost to its economic growth rate. The TAPI project could also act as a strong non-military confidence building measure between India and Pakistan.
(b) Turkmenistan. With the construction of this pipeline Turkmenistan’s vast natural gas reserves would be open for export to new international markets, and would bring huge monetary returns to the country. Currently, pipelines across Russia are the main outlets for Turkmenistan’s oil and gas exports, which offer limited scope and potential due to the Russian control. The members of the Commonwealth of Independent States (CIS), such as Armenia, Ukraine, Georgia, and Russia owe Turkmenistan huge amounts of money for gas imports, which they have not yet paid. This has forced Turkmenistan not only to reduce its oil production but also to search for alternate and reliable markets in Asia and Europe. The fall in production and loss of revenues has adversely affected the Turkmen economy, creating a severe economic recession, a balance of payment crisis and increasing poverty and unemployment. With reinvigoration of TAPI much needed capital will flow to Turkmenistan. Ashkhabad plans to increase its gas production to meet the projected production and export targets. .
(c) Afghanistan. The TAPI pipeline project would prove a jackpot for the people of Afghanistan as the project would bring in over $300 m as royalty to the country. The inflow of this cash and foreign investment would help in stabilizing the Apart from making energy resources available to Afghanistan for its domestic and industrial needs, it would also generate full-scale business activity and create new job opportunities. The introduction of new technology in the country would, in the long run, help Afghanistan develop and strengthen its technical and professional base. Overall, one can assume that this project would act as a development catalyst for Afghanistan to significantly address its critically damaged economy. Economic stability would certainly contribute towards the overall political and social stability in the country, which Afghanistan needs for its domestic development.
b. Central Asia ‘ South Asia Regional Electricity Trade Project (CASA-1000)
(1) General
(a) The CASA 1000 foresees a $1 billion, 1000 Megawatt (MW) electricity grid, designed to bring the summer surplus of cheap hydroelectricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan via northern Afghanistan .
(b) CASA 1000 would have up to 1300 MW of transmission capacity and would offer Afghanistan the possibilities of taking up to 300 MW of electricity supplies or simply transiting all Central Asia’s elect`ricity exports to Pakistan .
(2) Energy Potential of CASA 1000
(a) Hydropower supplies from Central Asia can only play a supplementary role when compared to natural gas supplies from Turkmenistan. Despite the pivotal role played by gas and challenges faced by hydropower, Kyrgyzstan and Tajikistan could serve as an additional source of seasonal peak-load supplies of hydroelectricity to Pakistan .
(b) Tajikistan alone could produce 527 billion KWh per year of electricity from its natural hydropower potential, which is still significantly underutilized. It is expected that Tajikistan’s hydroelectricity production will only reach 26.4 billion KWh in 2015.Even this modest output will allow Dushanbe to export up to 5 billion KWh per year by 2015. .
(c) Kyrgyzstan has the third largest hydropower potential (142 billion KWh) of the former Soviet Republics after Russia and Tajikistan. Hydropower largely dominates the electricity mix in this country and provides numerous opportunities for export. Electricity exports are expected to rise from 1.47 billion KWh in 2010 to 6.9 KWh in 2020, and the electricity surplus can be shipped via CASA 1000 to Afghanistan and Pakistan .
(4) Impediments/Challenges to Implementation of Project
(a) In Jun 2013 ADB , which had initially planned to provide as much as 40 percent of the overall funding announced, it would withdraw from the project citing security concerns. As the security situation in Afghanistan and Afghan Pakistan border remains tense, the specter of increased post -2014 violence is now hovering over the entire region .
(b) Should attack on Afghan security forces as well as departing foreign troops and aid workers intensify in the months to come, CASA-1000 may lose some of its prospective donors. In this context where none of four member states is able to shoulder the cost of project implementation, this scenario would deliver a mortal blow to central Asia’s incipient cross-border energy plans .
(c) At present both Kazakhstan and Uzbekistan remain firmly opposed to the implementation of any large scale hydropower projects by Kyrgyzstan and Tajikistan, capable of disrupting their water supply systems. During Kazak President visit to Uzbekistan in June 2013, the two Presidents representing central Asia’s downstream countries insisted on the need to conduct mandatory feasibility studies of all ongoing and future projects under the strict supervision of international experts. Thus, should Kyrgyzstan and Tajikistan wish to expand their power generation capacities, their will invariably be resistance from powerful neighbors .
(d) Large Investment at the tune of US $ 1 bn.
(e) Significant security and geo-political challenges.
(f) Involves four countries with constrained commercial borrowing capacity.
(5) Benefits
(a) Kyrgyzstan
i. Improving water management issues.
ii. Urgent rehabilitation of generation assets, electricity, gas and heat distribution.
iii. Winter energy support.
iv. Policy operations-for energy development strategy , tariff reforms and energy governance.
(b) Tajikistan
i. Fergana valley water resources and water shed management.
ii. Policy operations- budget control, tariff and governance reforms.
iii. Energy loss reduction.
iv. Winter energy management support.
(c) Afghanistan
i. Improve electricity supply and access in major towns on the North-East power system.
ii. Improve revenue collection and distribution agency.
iii. Rehabilitate power generation capacity (e.g. Naghlu, Mahipur)
iv. Demand side energy efficiency.
v. Irrigation rehabilitation.
(d) Pakistan
i. Alleviate energy shortages in Pakistan during the peak summer season.
ii. Provision of cheap electricity, will help in saving the national exchequer.
iii. Reduced dependence on expensive fossil fuels for electricity production.
(e) Misc Benefits
i. Economic benefits to all four countries.
ii. Difference in cost of electricity between the importing and exporting countries provide a strong economic and financial rationale for investment. Table below shows cost of electricity in importing and exporting countries.
S/No Country Cost of Electricity Generation
1. Afghanistan $25 – $350 per MWh
2. Kyrgyzstan $15 – $40 per MWh
3. Pakistan $65 – $150 per MWh
4. Tajikistan $10 – $ 40 per MWh
TTable-III
iii. Many international donors like: World bank , ADB , Islamic International bank and US state department have shown interest in investment in CASA-1000 .
iv. US has pledged sp of $15 million worth of financial sp to the Central Asia-South Asia electricity transmission and trade project.
6. Afghanistan’s Own Energy Potential
a. In 2009, the United States Geological Survey(USGS) , the Afghan Geological Survey and the Task Force for Business and Stability Operations began a two ‘year effort to identify Afghan mineral resources. In December 2011 the results of the surveys were released, covering 24 areas of prime mineral development for Afghanistan .
b. The survey estimated that the country contained potentially exploitable reserves of 1.596 billion barrels of oil and 36,462 billion cubic feet of natural gas. All of the known crude oil and the natural gas reserves are situated in the north of the country- at the Amu Darya Basin to the northwest and Afghan-Tajik Basin to the northeast .
c. The two basins cover roughly 200,000 square miles for those portions that lie within Afghanistan and USGS geologists concluded that the two geological basins hold 18 times the oil and triple the natural gas resources previously thought .
7. Interests of Regional / International Players
a. USA
(1) New Silk Road Strategy The ‘New Silk Road Strategy ‘promotes Afghanistan as a regional trade and transit hub. This strategy argues that the development of new transport and energy corridors will strengthen economic, political and social ties between Central Asia and South Asia and contribute to the economic and social development of Afghanistan. The concept of the ‘ New Silk Road Strategy’ in its present version was unveiled by Secretary of State Hillary Clinton in her speech ‘ India and the United States: A Vision for the 21st Century’, presented in Chennai India , on July 20 2011.In that address she gave explicit U.S. backing to TAPI as a part of this strategy .
(2) US ‘New Silk Road Strategy’ is also driven by a set of broader geo-political considerations. Its strategy aims to achieve three fold advantages: one, It will help to sustain the economy of Afghanistan by creating new jobs and providing transit revenues; two, will bring in stability in Central Asian states, through economic integration ; and three, will limit the role of Russia/China and Iran .
b. China
(1) On June 7 2012, Interfax reported that CNPC and Turkmenistan’s state gas company Turkmengaz have signed an agreement for China to receive additional supplies of up to 65 bcm per year of Turkmen gas. At present most of Turkmen gas imported by China comes from the Bagtyyarlyk field on the right bank of Amu Darya developed by CNPC under a product sharing agreement. According to the CNPC data, Bagtyyarlyk will provide 13 bcm per year of gas by 2014 and its production capacity is unlikely to be increased in the near future. This means that by 2015, up to 52 bcm of gas exported to China will have to come from other gas deposits in Turkmenistan .
(2) Unless new production capacities are established, there may not be enough gas for TAPI. This situation at least explains partially, Beijing’s reserve regarding ‘New Silk Road Strategy’. This concept puts all emphasis on the connectivity of Asian countries through Afghanistan ‘ an idea that is bound not to please Chinese who are wary of potential competitors for Turkmen gas. It is clearly not in Beijing’s interest to share Turkmenistan’s gas given its rapidly growing energy needs, unless Turkmenistan is able to rapidly increase its gas production .
c. Russia. Overall Moscow’s main strategy to address security concerns in Central Asia in the context of US/NATO withdrawal from Afghanistan is to intensify security and economic cooperation with Russia’s CSTO partners in the region. Paradoxically, this process has been catalyzed both by the prospects of US/NATO withdrawal from Afghanistan and by the related, even if temporary, increase in Western security interests and activity in Central Asia. Russia’s upgraded emphasis on Central Asia will be coupled with keeping a certain distance from Afghanistan-a distance large enough to exclude any direct security role for Russia, but limited enough to allow some economic role and security assistance to whichever government and political coalition are in power in Afghanistan after 2014 .
d. India
(1) India signed strategic partnership agreement with Afghanistan in Oct 2011 that provides for increased Indian security assistance to Afghanistan. President Karzai’s statement about the partnership is a telling indication of the fact that both India and Afghanistan intended to use it as leverage against Pakistan.
‘This Strategic partnership is not directed against any country. This strategic agreement is to support Afghanistan ‘. Pakistan is our twin brother, India is a great friend. The agreement we signed with our friend will not affect our brother’..However our engagement with Islamabad has not yet yielded the result we that we want. ‘.
(2) One of the infrastructure projects which needs mention is Zarang-Delaram Highway. It has been constructed with US 150 $ Million by Indian Army Border Road Organization. It stretches over 218 kilometers. It links Zarang Town at Iran border with Delaram adjacent to Kandahar-Herat Highway. It is also known as Route 606. This highway provides an alternative way to access the Arabian Sea and the Persian Gulf, instead of relying solely on Pakistani routes. India helped build this road to bypass Pakistan for its trade to Afghanistan via Iranian Chhabahar port. Construction of this road was completed in 2008 despite attacks by Taliban claiming lives of Indian and Afghan workers
(3) India acknowledges that while there is no overland route – the Silk Road doesn’t exist on the ground. India has been a strong proponent of a north to south ‘Energy Highway’ from Russia through Kazakhstan, Turkmenistan and Uzbekistan into Kashmir, bypassing Pakistan entirely by straddling the border between India and China, ultimately entering India proper. Indians fear that allowing any pipeline to pass through Pakistan would leave open sabotage or acts of terrorism on it in what is still a volatile region in the world .
e. Iran. While the future of U.S.-Iranian relations remains unclear, any improvement in the relationship would facilitate the success of U.S.-supported initiatives in Afghanistan: the ‘New Silk Road’ strategy, which seeks to improve Afghanistan’s economic ties with Central and South Asia, and the ‘Heart of Asia’ confidence-building process, which fosters high-level dialogue on security, political, and economic cooperation among Afghanistan and its neighbors. Both are catchwords for Washington’s policy of trying to shift more responsibility for Afghanistan’s reconstruction to the states of the region. But the international sanctions against Iran and the state of U.S.-Iranian relations are making it difficult for policymakers in Washington to implement this regional approach.
PART V ‘ CONCLUSIONS AND RECOMMENDATIONS
8. Conclusions
a. Creation of Enabling Environment. Return of peace and selection of credible democratic government in Afghanistan is a sin a qua non for creation of enabling environment for generation of economic activity. Pakistan being a contiguous Muslim state should play its due role for return of peace to Afghanistan.
b. Pakistan-Afghanistan Relations. Pakistan and Afghanistan to reinvigorate their relations by creating new avenues of mutual interests. This can take both countries towards a path of economic revival and an era of friendship.
c. Divergence of Interests. Energy interests of regional powers run tangent to each other, specifically with regards to oil and gas resources of CARs. Post-2014 US draw down the competition for energy is likely to accelerate in the region. Thus, there is a need to find convergence of interests and initiation of mutually beneficial projects for all the stake holders of the region.
d. Energy Treaties Between Central and South Asia.
(1) Although there are numerous intra region alliances, which has resulted into limited cooperation among the member states. In view of new geo political and geo economic realities there is a need to create new broad based regional alliances.
(2) Although all regional institutions recognize the importance of energy, not one has effectively addressed energy cooperation. Competing interests, institutional weakness and insufficient membership render institutions such as SAARC, ECO and others unfit to balance energy needs and energy interests in the region. Central Asia Regional Economic Cooperation Programme (CAREC) does not directly deal with energy governance or energy cooperation issues. The construction of TAPI and CASA -1000 and transit of gas and electricity via Afghanistan will require a multitude of political, regulatory and investment decisions. These challenges need to be addressed by regional decision makers. It will be necessary to rely on internationally accepted energy transit regulations and mechanisms for investment protection.
e. Pakistan as Foot Bridge Between South and Central Asia. Pakistan can serve as foot bridge between South and Central Asia; basing on its geographical position. Pakistan and Afghanistan provide the shortest access to warm waters for the CARs, China and Russia.
f. TAPI- A Viable Venture. IP gas pipeline project is unlikely to materialize in near future because of sanctions on Iran and lack of requisite funding by international donor organizations. Notwithstanding Afghanistan security milieu post 2014, in this scenario TAPI can prove to be the lifeline for the economy of Pakistan and Afghanistan. Scope of the project can be extended even to China in the later stages. Due to being widely recognized as a viable project and in alignment with US ‘New Silk Road’ vision, it is likely to attract multiple international donor agencies.
g. CASA ‘ 1000 Provision of Cheap Hydroelectricity . Due to political reasons and large capital investment, Pakistan has not been able to push through hydro electric projects for provision of cheap electricity. Import of cheap hydroelectricity from Kyrgyzstan and Tajikistan will diminish the power short fall without burdening the economy.
h. Apprehension With The New Silk Road Vision. US New Silk Road strategy supports North-South corridor, by passing Iran and China. Although, materialization of this strategy will immensely benefit Pakistan, but due to concerns of the friendly neighboring states is likely to create a win-lose situation for Pakistan.
i. Indo-Afghanistan Partnership Vis-a’-Vis Pakistan-Afghanistan Economic partnership
(1) Post US drawdown India is likely to consolidate her investment in Afghanistan by increasing her economic footprint in Afghanistan. Keeping in view history of past relationship with Pakistan, Afghanistan is likely be pushed towards focusing greater economic effort on the relationship with India while alienating Pakistan. Indian efforts are focused on finding an alternate to Pakistan in reaching out to Afghanistan and CARs Oil and gas resources, transit route through Iran is a case in point.
(2) Indian presence in Afghanistan notwithstanding, Pakistan is geographically contiguous Muslim country with Afghanistan, having long history of cultural and ethnic ties on both sides of the border. Relationship between the countries may be marred with enmity, but they are natural allies having affinity towards each other; Contrary to the case of India which is a unnatural alliance, based solely on her economic interests. Implementation of projects like TAPI and CASA-1000 will not only bring energy and transit money for Afghanistan; it will create job opportunity for the country as well. These projects will also indirectly contribute to the improvement of ties between two countries.
9. Recommendations
a. Creation of Enabling Environment
(1) Sp Genuine Democratic Setup . Pakistan to support setting up of genuine democratic setup in Afghanistan after April 2014 elections. It can be achieved by sheding off ambivalent policy on Afghanistan and support a borad based government representing all ethnic groups.
(2) Increase Confidence Building Measures. Shifting of calculus from vulnerability from each other towards cooperation and friendship. Increased people to people contacts by initiating a students and teacher exchange programme. Holding joint cultural festivals manifesting the homogeneity of Pakistan and Afghan culture. Extending hands in rebuilding of Afghanistan by providing technical expertise in the fields of construction, IT and agriculture.
(3) Treaty of Friendship. Initiation of ‘Treaty of Friendship and Cooperation’ with Afghanistan. An all encompassing treaty involving full spectrum engagement i.e., trade, sports, education, military and culture.
(4) Border Security Mechanism. By agreeing on joint border security mechanism, will directly address the security concerns of both governments and indirectly will help boost confidence towards each other.
b. Convergence of Interests.
(1) China. Pakistan should mitigate the Chinese concerns with regards to their energy interests. Initiation of projects like TAPI should not make China vulnerable Chinese concerns can be removed by participation of Chinese in the project and extension of pipeline to China’s Western provinces in later stages.
(2) Iran. Iran concerns that Pakistan will abandon IP gas project in view of international sanctions and with opening of North-South corridor be addressed by :-
(a) In view of easening of sanctions on Iran, Pakistan to pursue International community specially US for removing the bar from oil and gas exports from Iran.
(b) Necessary funding for the project be solicited from China or Russia and Pakistan should make US and other stake holders realize, that her energy concerns are genuine and will follow all legal means to diversify its energy imports.
c. Multilateral Energy Cooperation. Uninterrupted flow of energy through Afghanistan is unachievable without a legally-binding energy transit regime, which could be provided via ECT .It could become the most appropriate and efficient institutional energy cooperation framework in the region. It has all the necessary instruments and institutions to promote regional energy cooperation and facilitate completion of transit infrastructure projects, such as TAPI and CASA1000. Thus, Pakistan and Afghanistan should become full members of ECT, which could become an appropriate ‘umbrella’ providing for ‘Regional Rules of the Game’.
d. Project Specific Recommendations.
(1) TAPI. Provided peace and stability return to Afghanistan, Pakistan and Afghanistan to support US oil consortiums to build and finance the pipeline. In view of American ‘New Silk Road Strategy’ it is likely to get political and diplomatic baking required for initiation of the project.
(2) CASA-1000.
e. Indian Influence
(1) Economic Ties with CARs. By developing road to Chhabahar port India will try to reduce the Afghanistan trade through Pakistan. There is need to develop a road through Balochistan connecting Gawadar port to CARs to counter the Indian designs of encirclement through west.
(2) Geographical Contiguity of Pakistan and Afghanistan. No matter how much India has invested in Afghanistan, fact remains that Afghanistan and Pakistan are contiguous states with sharing rich historical and cultural ties. Afghanistan be made to realized that while friends can be changed neighbors cannot. Afghanistan is a land locked country, sharing road links with Pakistan. This can be used as leverage for Afghan transit trade of India through Pakistan.
(3) Tri-lateral Cooperation. Provided bilateral relations between India and Pakistan are improved and India performs a positive role in Afghanistan and shuns her nefarious designs of encirclement. The prospect of tri-lateral cooperation holds immense promises and opportunities for three countries. and agreements. The international community, including the United States, can assist by providing a forum for dialogue, but successful collaboration and development of trade and commerce in Afghanistan will depend on the active leadership of Indian and Pakistani governments.
f. Curbing Terrorism/Militancy.
(1) Peace can bring the pipelines but pipelines cannot bring peace. It is a sine qua non for any economic activity to sustain through both Afghanistan and Pakistan. It is the right time for incumbent Afghan government to include Taliban and other rival factions’ as part of national reconciliation process and make them stake holders in the government. This will provide the enabling environment for post US Afghanistan to revive economically .
(2) For Pakistan all the trade and energy cooperation through Afghanistan has to pass through restive regions of FATA and Balochistan. Current dialogue process is a step in the right direction. Further to it , whenever peace returns to these parts of Pakistan , it is mandatory that for any economic activity through this area people of the area get their part of the pie. By providing the locals royalty of the oil /gas pipelines, will make them stakeholder in the process and will indirectly ensure the security of the economic corridor through the area.
Conclusion.
10. Pakistan is a energy scarce country. Post US Afghanistan presents both challenges and opportunities. It depends on us, how much prepared we are to take on the challenges and exploit the opportunities .The way to success lies not only in keeping our own national interest supreme but at the same time work with all the stake holders in the region for mutual benefits. Pakistan and Afghanistan are blessed with unique geography and can act as Foot Bridge between South Asia and Central Asia, what is required is a sincere and dedicated effort by both the governments. If that is there Pakistan and Afghanistan can become the economic hub and can radically transform the lives of its people.