Pakistan reluctant to accept Iranian gas, oil to ‘please US’

A secret diplomatic cable released by WikiLeaks revealed on Tuesday that not only had the US “forced Pakistan to reject Iran’s concessional oil offer”, Islamabad was avoiding many a trade link with the neighbouring country in order to please the US. WikiLeaks revealed that President Asif Ali Zardari was urged by a US official not to agree to Iran’s offer, as that would be tantamount to providing Iran a foothold in Pakistan.
Not only was the Iranian offer sidelined by the government, Pakistan also did not establish trade relations through banks that were not under US and United Nations (UN) sanctions, sources said. Conscious, or even fearful, of the country’s so-called ally the US, the State Bank of Pakistan (SBP) was forbidding the local banks to accept letters of credit (LCs) from Iranian banks, which was badly affecting Pakistan’s export to the neighbouring country, they added. In this situation, the major manufacturers/exporters in Pakistan were at a great disadvantage because they mostly refused to ship goods directly to Iran because of the higher risk involved, said the sources.
According to the sources, though the US and UN had imposed a ban on five major banks of Iran because of the country’s insistence on carrying on with its nuclear programme, Pakistani banks did not even accept LCs from sanction-free banks in Iran. Despite repeated requests from foreign and local exporters, the banking issue was not resolved by the authorities concerned in Islamabad, the sources added. As the central banks of all neighbouring countries, who are Pakistan’s competitors, were facilitating their exporters in terms of trade with Iran, Islamabad’s exports to Iran would suffer more in future for losing potential markets in Tehran, they added.
The sources said Iranian importers were either approaching other suppliers or importing via Dubai by opening LCs from banks located in the United Arab Emirates, and thus goods were also shipped to Dubai. On arrival, new documents were being prepared for these goods which were then being shipped in launches to small ports in Iran, the sources added. Sources also said that the Pakistan-Iran Gas Pipeline Project was facing delays because of “Islamabad’s negligence.” Iranian Consul General Muhammad Hussain Bin Asadi has already complained that trade opportunities between Iran and Pakistan were not being utilised. He has questioned why Pakistan was not doing its part when Iran had completed its portion of the gas pipeline.
Iran has completed its portion of the gas pipeline and power transmission line, but there is no activity from the Pakistani side despite the severe energy crisis in the country at the moment. The government was showing little interest in importing gas and electricity from the neighbouring country on reduced rates because of pressure from the US, the sources claimed. The commercial attaché of Pakistan in Tehran, in his recently issued report, has also highlighted the issue, saying that because of the banking problems there was a continuous decline in the country’s exports to Iran, especially major items such as cotton cloth, yarn and textiles.
Besides the banking issue and delayed energy project, another interesting revelation by Wikileaks was that a cable filed on October 22, 2008 by former US ambassador to Pakistan Anne W Patterson stated that President Zardari had told Richard Boucher, who was Assistant Secretary of State for South and Central Asian Affairs at the time, that Iran’s proposal was an offer he could not refuse, but Boucher reminded him of the deputy secretary’s caution of not allowing Iran to establish a presence in Pakistan.