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PERHAPS it’s a little early to say this, but let’s say it anyway: the recent thaw in Iran’s growing isolation is a very positive development for Pakistan. But there are grounds to be cautious.
The sanctions on Iran do not grow out of one law or act.
In fact, there is a wall of sanctions built up with 26 executive orders issued by the president of the United States over three decades, 10 specific statutes, or legislative acts passed by Congress, 28 federal register notices which are amendments to existing acts and five federal regulations issued by the Treasury department.
Then there are five UN Security Council resolutions, and the EU sanctions on top.
In addition, a regular series of advisories and other interpretative guidance notes issued from time to time have served to sharpen the focus of the sanctions, specify individuals and government and commercial entities and all manner of dealings with Iran as subject to sanctions law and general licensing requirements.
On a day when public opinion around the world was busy digesting the implications of a possible thaw between the US and Iran, the Treasury department announced “the largest ever settlement outside of the banking industry for apparent violations of US sanctions on Iran, Sudan and Cuba”.
The company in question settled for $100 million, but has also been investigated ruthlessly and fined $253m for other violations like bribery of foreign officials to gain unfair competitive advantage.
This ruthless zeal with which the sanctions are pursued, coupled with the vast array of legal instruments through which they are enacted, pose a formidable challenge for the future. In the next six months, as the P5+1 powers move ahead towards a final settlement with Iran, plenty of opportunities will present themselves for a spanner to be thrown into the delicate machinery of talks.
For one, there will be a push to forever raise the bar to which the Iranians are to be held accountable as prior conditions to easing the sanctions.
Pakistan’s interests in all this are fairly straightforward. Iran’s reserves of natural gas are the best replacement for Pakistan’s own dwindling gas supplies, which is fuelling the power crisis.
Allowing Iranian gas to travel to Pakistan, and then continue on to other destinations is a vital national interest for us, and any softening of the sanctions is good news towards allowing this.
In return, Pakistan must be allowed to smoothly make payment for this natural gas, something the sanctions currently prohibit. “You can build the pipeline,” a US government official once told me when discussing the sanctions. “You can even receive the gas through it. But when you make the payment for it that will trigger the sanctions.”
Those clauses in the myriad sanctions laws that prohibit dealings with Iranian financial institutions and the central bank must be loosened, or at least a new exemption must be allowed for Pakistan to make purchases under a gas purchase agreement that predates the sanctions law.
Given the enormity of the challenges facing the thaw, perhaps Pakistan can help play a positive role in putting some momentum behind the talks. The recent visit by Sartaj Aziz to Tehran, for the Economic Cooperation Organisation talks, struck all the right notes.
But more is going to be required. This is the moment when Pakistan should agree to a road map for a full normalisation of ties with all its neighbours. I say agree because first and foremost we have to agree amongst ourselves on this point.
Karachi, Lahore, Rawalpindi and Islamabad need to capture the opening presented by this moment and come together on this single platform. Full normalisation of ties with all neighbours — what a simple proposition, and a rare opportunity has presented itself for making it possible.
It’s important to capture the promise of the moment, and the biggest obstacle we have to face is ourselves.
Our message to the world needs to be this: we seek peaceful and unencumbered ties with Afghanistan, India and Iran, and seek our long-term national security within a stable and economically integrated region. The challenges to getting there should not be underestimated. Here in Washington, D.C. for instance, the mood changes as soon as you mention Iran in any conversation. Even mention of the Iran gas pipeline proposal causes the spine to stiffen, and the conversation grinds to a halt.
“Out of the question,” comes the response. “Pakistan shouldn’t expect anything from these talks to change that.”
The same officials are willing to consider a few other propositions that would otherwise be unthinkable for them. For instance, coal power is something the Obama administration is allergic to, but an interagency dialogue is currently looking for a way they can authorise funding for a coal conversion project at Jamshoro power station, using funds from the Asian Development Bank.
Where will the coal come from, you might ask. Here too, they are willing to entertain a difficult thought: Chinese investment in Thar coal. So a clean energy administration, which increasingly views China as a strategic competitor in Asia, is currently looking for ways to make a coal-fired project happen in Pakistan with possible help from China.
They’re not likely to find a way though, the opposition domestically is too strong, but the fact they’re willing to even entertain the thought is enough at this point.
But Iran stiffens the spine and dries up the conversation. Considering Iran holds one of the best propositions for the region’s energy security in the future, it is important that Pakistan play a helpful role in pushing the thaw further.
The writer is a business journalist and 2013-2014 Pakistan Scholar at the Woodrow Wilson Centre, Washington D.C.
Twitter: @khurramhusain
