India Intelligence Report

   US, Pakistan Energy Talks



The US and Pakistan will be talking about co-operating on energy this week in Washington with Pakistan expected to demand a nuclear deal along the lines of the civilian deal and the US saying that the needs of the sub-continent nations are different. Delegation members led by Pakistan Energy Advisor Mukhtar Ahmed will meet private sector energy companies and also visit “relevant” US laboratories and facilities.

This line of discussion was first announced by US President George Bush during his visit to Islamabad in March. At that time, he refused nuclear parity in sub-continent saying that India and Pakistan were “two different countries with different needs and different histories.”

Pakistan also reiterated that there was no conflict between Pakistan's proposed energy co-operation with the U.S. and its commitment to the Iran-Pakistan-India (IPI) pipeline. President Pervez Musharraf said “We would not like to compromise on our national interest because some other country's strategic interests are clashing with Pakistan's interests.” Without naming the US, he said if another country wanted to stop Pakistan from participating in the IPI project, it "should assist us in some form to bridge this (energy gap), assist financially because we would not like to incur loss to our industry.” An Iranian Minister was recently quotes asserting that Iran was “not desperate” to sell gas to India and Pakistan at discounted rates to offset domestic gas subsidies in both countries. Musharraf, who said his country was trying to expedite the project, criticized such grandstanding as “un-diplomatic.” He claimed that Pakistan did not expect Iran to subsidize gas, but asserted that he did not want “to allow Iran to fleece” his nation.

Musharraf spoke Iranian President Mahmoud Ahmadinejad and both set a deadline of two-months to close on fixing the price of gas for the project. In typical Musharraf style, he said that “If the Ministers and Secretaries are unable to reach an agreement on pricing formula, he and I will talk about it and try to resolve the dispute between ourselves.” At the least, it pointed to differences between nations on prices. At the most, it pointed to the need for political intervention to resolve fundamental issues.

Analysts think that Pakistan is using the IPI as negotiating tool to gain parity with the US.