Islamabad [Pakistan]May 31 (ANI): Pakistan is trying to address a growing foreign exchange deficit by buying energy from Iran, but could face serious challenges as terrorist attacks near Pakistan’s border cast doubt on a future deal, Nikkei Asia reported. Danger.
On May 21, five Iranian border guards were killed in a clash in the Iranian town of Sarawan near the Pakistani border.
The incident came days after Iranian President Ibrahim Rashid and Pakistani Prime Minister Sheikh Baz Sharif met in a border village to officially inaugurate a 100-megawatt transmission line that will bring electricity from Iran to southern Pakistan The port hub of Gwadar, which has already attracted some investment, reports on the progress of China’s Belt and Road infrastructure push, according to Nikkei Asia, a Japanese publication that provides Asian news and analysis to a global audience.
After the leaders met face-to-face for the first time in a decade, Iran’s foreign ministry condemned the “terrorist attack” as an “attempt to undermine cooperation and friendly relations between Tehran and Islamabad”.
The terrorist group Jaish ul-Adl has claimed the death of a border guard in apparent retaliation for what it claims were abuses against Shia Iran’s Sunni Muslim minority.
“The attack could seriously disrupt future energy deals between Iran and Pakistan,” said Alex Vatanka, founding director of the Iran Program at the Middle East Institute in Washington.
“You cannot have economic cooperation in an unsafe environment,” he added.
Pakistan has been plagued by terrorist attacks against the government for years.
Days after the incident involving border guards, another extremist group attacked an oil and gas production facility in northwestern Pakistan near the border with Afghanistan, killing four police officers and two private security personnel.
The attack on border guards, however, comes as Islamabad grapples with an economic crisis marked by soaring inflation, which hit a record 36% in April, and falling foreign exchange reserves.
Pakistan’s foreign exchange reserves have fallen to about $4.3 billion, barely enough to cover a month’s worth of imports, while foreign debt of $3.7 billion comes due this month. The International Monetary Fund’s key $7 billion rescue package for the country of 230 million people has been put on hold.
Islamabad counts on a future energy deal with Iran because it can pay in local currency, rather than its dwindling supply of dollars, and other important advantages such as lower costs and better transport.
“If such incidents are not prevented, energy cooperation between Pakistan and Iran will be impossible,” said Przemyslaw Lesinski, an Iran researcher at the Warsaw Academy of War Studies, referring to the border guard attack.
Pakistan does not import oil or gas from Iran, although nearly a third of the oil sold in Pakistan is said to be smuggled across the Iranian border, hurting sales to domestic refineries.
Islamabad wants to formalize oil imports from Iran so it can pay for supplies in local currency, according to a Pakistani government official who spoke on condition of anonymity. But unless Islamabad and Washington can reach an agreement, U.S. sanctions on Iran over its nuclear program could prevent a deal.
“Pakistan needs the consent of the US to proceed with this arrangement,” the official added.
Separately, Islamabad and Tehran are discussing restarting a cross-border pipeline project that could supply Pakistan with 750 million cubic feet of Iranian gas per day, about 20 percent of its needs, to Nikkei Asia, multiple Pakistani government officials said.
When construction began on the 2,700-kilometer route a decade ago, Iran built part of the pipeline on its side of the border. However, the project was stalled on the Pakistani side due to fears of possible U.S. sanctions and resistance from Iran’s main rival, Saudi Arabia, which is Pakistan’s main energy supplier.
Tehran has warned Pakistan that it must build a section of the pipeline on its soil by the end of next year or face possible multibillion-dollar fines in an arbitration court.
Pakistan, as quoted by Nikkei Asia, has asked Washington to waive any sanctions it may face for buying natural gas from Iran, local media reported. However, so far, no options have been disclosed. (Arnie)
(This is an unedited and auto-generated story from a Syndicated News feed, the body of content may not have been modified or edited by LatestLY staff)