Pakistan has 180 days to avert sovereign default
ISLAMABAD: In the midst of escalating tensions between Pakistan and Iran, Iranian Foreign Minister Hossein Amir Abdollahian proposed a potential solution regarding the completion of the Iran-Pakistan gas pipeline project. The proposal suggested that China and Russia could finance the project if Pakistan faces resistance due to US sanctions on Tehran.
The Iranian foreign minister presented this proposal during delegation-level talks with Pakistan’s caretaker Foreign Minister Jalil Abbas Jilani, held during his day-long visit to Islamabad. Discussions also addressed the recent military operations between the two countries, emphasizing the need for security and intelligence cooperation. Both sides reaffirmed their commitment to bolstering security cooperation and economic development in border areas.
Meanwhile, Iran has extended the project deadline by 180 days, with a threat to move to the Paris-based International Arbitration if Pakistan fails to respond positively. This arbitration could lead to a penalty of $18 billion, adding to Pakistan’s economic concerns amidst the ongoing tensions.
To prevent arbitration, Iran has offered to send a technical and legal team to Pakistan to devise a strategy for the project’s completion. However, previous attempts to address project delays have faced obstacles, including tensions between the two countries and challenges related to US sanctions on Iran.
The Iran-Pakistan gas pipeline project has encountered delays since 2014, with Tehran issuing notices to Islamabad regarding project completion deadlines. Pakistan has cited US sanctions as a hindrance, but Tehran has contested this justification, pointing out exemptions granted to other countries like Iraq, Turkey, and India.
With the project governed by French law and subject to the Paris-based Arbitration Court, the resolution of disputes remains crucial. Despite the complexities and challenges, both countries aim to navigate the diplomatic and economic landscape to ensure the project’s success and mitigate tensions in the region.
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