RECENT press reports have claimed that Pakistan plans to mobilise domestic funding for the multi-billion dollar Iran-Pakistan-India (IPI) gas pipeline project, in the wake of UN sanctions on the Islamic republic, which are likely to discourage global-lending institutions from supporting the project.

If this is indicative of a go-ahead decision, it is a welcome development for Pakistan desperately needs new and secure sources of energy.

However, most people remain sceptical about Pakistan's ability to withstand US pressure, which remains determined to discourage us. Over the past weeks, the US has begun to ratchet up pressure on foreign governments, international energy companies and major lending agencies to reduce involvement in Iran.

The EU recently announced that, not satisfied with merely implementing the UNSC resolutions, it had decided to impose its own sanctions which will cover Iran's energy sector and blacklist its shipping and air cargo companies. Canada, Australia and Japan have also joined the US in imposing sanctions directed at Iran's energy and banking sectors.

A few, such as China and Russia, have pointed out that the US has no right to unilaterally impose its own sanctions on their business entities, but this has not deterred the US. Iranians, meanwhile, have dismissed these measures as ineffective, but there is no doubt that the US-led campaign is having an impact on Iran's economy and developmental plans. It has slowed down Iran's prestigious economic project, which was expected to bring in more than $130bn, primarily because major western energy giants such as Shell, Total and Halliburton decided to pull out of the development of the South Pars gas field. China's Sinopec and Malaysia's SKS Ventures have tried to step in but don't have the same expertise.

Iran's antiquated technology means that while Qatar, which shares the gas field with Iran, exported gas products worth $62bn in 2008, Iran's gas exports brought in only about $6bn. Iran also lacks refining capacity and relies on foreign suppliers for nearly five million gallons of oil a day.

The newly imposed sanctions have also curtailed Iran's ability to ship vital goods as some of the world's most powerful insurance companies, amongst them Lloyds of London, have cut off Iranian shippers for fear that they could run foul of US laws. Ports and freighting companies have been forced to re-evaluate business with Iran, while fuel suppliers in Europe and the Middle East have been encouraged to refuse to fuel Iranian planes.

While President Obama claimed last week that “there is disquiet in Iran about the impact of the sanctions”, it is too early to judge whether they will make a major difference in the long run.

The US attitude towards the IPI project is both inexplicable and deeply regrettable. The US claims that it wants to promote normalisation between Pakistan and India and encourage regional economic cooperation; yet it opposes the project.

This not only deprives Pakistan of an assured source of energy but also sabotages a project that could strengthen peace in the region. Experts are convinced that oil and gas pipelines not only provide employment and revenue but also contribute to moderating opinions that could reduce extremism. This is why they advocate that the US “utilise pipeline construction as both an engine of cooperation and a tool of diplomacy”.

It is worth recalling that it was the prospect of a pipeline that helped in the thawing of relations between Algeria and Morocco. The Maghreb-Europe pipeline played an important role in influencing Morocco and Spain to set aside their differences over the status of the enclaves of Ceutta and Melilla.

The Greenstream project between Italy and Libya has also served to promote good relations. Unsurprisingly, energy cooperation is recognised by the EU as a “major tool for fostering cooperation”. And, within the Gulf Cooperation Council, the Dolphin Project was initiated partly because of the belief that it would strengthen cooperation between Qatar and the UAE.

Earlier this year, the inauguration of the Dauletabad-Serakhs-Khangiran pipeline connecting Iran's Caspian region with Turkmenistan's vast gas field mocked Washington's Iran policy. There are many examples, including the (in)famous 100km sub-sea pipeline running from the Egyptian port of Al-Arish to the Israeli city of Ashkelon.

The current US policy does not make for good politics, for the IPI project would do more to enhance cooperation between Pakistan and India than any number of exhortations for peace by US officials. It may even have a moderating influence on the Iranian leadership and strengthen lobbies that favour working relations with the US. This, however, calls for a massive lobbying effort with the US administration and Congress to overcome opposition to the only technically feasible and economically viable gas pipeline project currently available to us.

Regrettably, the Musharraf regime had no interest in energy-related projects or in standing up to the US. This government too has failed to lobby sufficiently hard with the US to convince it to either lift its opposition to the IPI, or offer other viable options. It may not even know that the US stand, based on domestic law (Iran and Libya Sanctions Act or ILSA) that threatens sanctions on any entity investing over $20m in Iran in any one year, did develop a “national interest” waiver under the Clinton administration, which was used to allow Total of France, Gazprom of Russia and Petronas of Malaysia to sign a $2bn contract with Iran in 1998.

Moreover, the act's language was intentionally kept vague, for it states that infrastructure projects will be deemed violations only if they “directly and significantly contribute to the enhancement of Iran's ability to develop petroleum reserves”. Given this 'loophole' in the law, the US cannot simply ask us to do nothing.

It is imperative for the Pakistani leadership to impress upon the US that its continuing opposition to the IPI project, while denying us viable alternatives, is neither legal nor moral nor in the interest of good relations. More importantly, ILSA has no sanctity in the eyes of international law and is not backed by any UN resolution.