IF the US is serious about mending fences with Iran, then firing missiles at fighters allied with Tehran in Syria may not be the best way to go about it. In President Joe Biden’s first major offensive overseas action, over 20 fighters belonging to militias loyal to Iran were killed when American missiles struck facilities in eastern Syria. While the Pentagon has termed the attack “a message”, Damascus has called it “American aggression”. The strikes came as an apparent reaction to the targeting of a base in Iraq hosting American forces on Feb 15, reportedly by pro-Iran militias. The fact is that the entire region, particularly Iraq and Syria, is a proxy battlefield where the US and its allies regularly square off against Iran and its loyalists. And while many Shia militias in Iraq take orders from Tehran, there are numerous armed factions that operate independently. Therefore, the need here is to proceed with caution, and prevent any sort of escalation, with both sides required to exhibit restraint.
It is entirely possible that the Biden administration has flexed its muscles through the missile strike, letting Iran know that while it is ready to talk, it still has offensive options on the table. Iran, meanwhile, has called upon Washington to lift sanctions before it returns to its commitments under the nuclear deal, which Mr Biden’s predecessor unilaterally pulled the US out of. The Islamic Republic has been scaling back on its commitments ever since the Trump administration started intensifying its ‘maximum pressure’ campaign on Iran. Therefore, at this point there is both great opportunity and great peril for the region. The opportunity lies in the fact that the new incumbent of the White House is using a less confrontational tone with Iran, and if both sides reach a halfway point progress can be made in returning to the deal and improving relations. However, peril lies in the fact that if the US chooses to talk through its considerable firepower, as it did in eastern Syria, and Iran opts to respond in a similar tone, the confrontation will worsen. The US can send a more positive signal to Iran by letting it know that sanctions relief will be guaranteed if it returns to its commitments, while the Iranian leadership should also lower the temperature and talk to the Americans, for the sake of its struggling economy.
LNG deal
PAKISTAN has clinched a good deal for the long-term supply of LNG from Qatar. Under the new contract, Qatar will provide an additional 200mmcfd at around 10.2pc of Brent for 10 years starting next year. The expected reduction in port charges by Doha would further push down the price to 10.13pc of Brent.
The government says the new bargain entails the lowest-ever publicly disclosed price under a long-term contract in the world, which is 31pc less than the 15-year contract signed by the previous administration. This is almost the same price at which Qatar is supplying LNG to China. The new price is also 15pc-16pc less than the average spot purchases of 11.9pc of Brent in 2020.
The current rate has been locked for the first four years of the life of the contract after which it can be renegotiated. The monthly supply of the two cargos will replace the demand of an expiring and two existing long-term, but more expensive, contracts. Islamabad also has the option to shift its summer demand to winter without any changes in the agreed gas price.
The debate on the gas sector during the last two years has mostly focused on the price of imported gas at the expense of much-needed reforms. Now that the PTI government has proved that the 2015 deal with Doha has cost the country quite a bit, it’s time to move on to address the real challenges facing the gas market and overhaul it.
With indigenous gas reserves depleting fast because of decades of inefficient use, Pakistan’s increasing reliance on imported LNG to meet demand has exposed many fault lines in this sector. The situation calls for immediate liberalisation of the LNG market to ensure energy security and affordability through greater involvement of the private sector. The private sector can deliver LNG more efficiently and at a reasonably lower price than the public sector.
Though the government has in the recent months taken steps to encourage private investment in new LNG terminals and virtual pipelines, bureaucratic snags continue. Policymakers, it seems, are still unable to grasp the changes that the country’s increasing dependence on imported LNG has brought about in the last few years. Continued government controls over the market mean growing gas shortages for domestic industry and other consumers.
The authorities are unable to bridge the supply gap, which is estimated to grow to 3.68bcfd in the next five years and 5.39bcfd in 10 years because of financial reasons and slow decision-making processes. At the same time, the two public-sector gas companies have together accumulated a debt of Rs550bn-Rs600bn owing to their inability to recover costs, massive subsidies given to powerful industrial lobbies, exceptionally high system losses and theft. If we don’t start the process of gas market liberalisation by finalising the Third Party Access rules and Inter-User Agreement, winter shortages next year may worsen.
Sri Lanka cremations
SRI LANKA has in a welcome move reversed its order that mandated all those dying of Covid-19 be cremated. The government had issued this controversial order last year based on fears expressed by some people that burying Covid-19 victims could contaminate groundwater and spread the infection. The Muslims in Sri Lanka, who constitute nearly 10pc of the population, had protested this order and said that they should be allowed to bury their dead as per Islamic rites but the government had turned a deaf ear to these demands. The Muslims had correctly pointed out there was no scientific basis for the fears that led to the ban on burial, and no other country in the world had enforced such a policy.
Prime Minister Imran Khan, it has now been reported, spoke to the Sri Lankan president and prime minister on the matter during his recent visit and urged them to respect the sentiments of the Muslims. It was primarily due to the prime minister’s persuasion that the Sri Lankan government decided to lift the ban and allow Muslims to fulfil their religious requirements. The news has made international headlines. Mr Khan deserves praise for taking this initiative and resolving an issue that was deeply troubling for Muslims in another country. What must have helped the Sri Lankan government reverse its order was the fact that the prime minister had a successful tour of the country and was able to generate significant goodwill. It is also safe to assume that Sri Lanka would be happy to have Pakistan on its side on various issues and especially those that figure in international forums. Both Islamabad and Colombo deserve credit for resolving the matter amicably and making it a win-win for all. It is foreign policy wins like these that add gravitas to governance and improve relations between countries. The prime minister has done well and the Muslims of Sri Lanka are better off and relieved due to his initiative.
