As the U.S. and Pakistan struggle to patch up frayed ties, plans for a Pakistani-Iranian natural gas pipeline further threaten the fragile partnership.
Pakistan desperately needs new energy sources and has made it clear that it plans to forge ahead with the pipeline to bring in natural gas from Iran, despite warnings from the U.S. that Islamabad could be hit with economic sanctions if it follows through with the project.
"If built, [it] could raise serious concerns under the Iran Sanctions Act. We have made that absolutely clear," Secretary of State Hillary Rodham Clinton said at a congressional hearing last month. "We believe that actually beginning the construction of such a pipeline, either as an Iranian project or as a joint project, would violate our Iran sanctions law."
The imposition of sanctions "would be particularly damaging to Pakistan because their economy is already quite shaky," she said.
Pakistan's leaders appear unmoved. At a news conference last week, Foreign Minister Hina Rabbani Khar said talk of sanctions wouldn't deter Islamabad from ramping up its cooperation with Iran.
"We cannot afford to be selective about where we receive energy from," Khar said.
More than half of Pakistan's manufacturers use natural gas to power their factories, and no other country relies as heavily on natural gas to fuel its cars, buses and trucks. About 21% of the country's vehicles run on compressed natural gas.
Yet Pakistan produces only 30% of the natural gas it needs. Neighboring Iran, meanwhile, has the world's second-largest natural gas reserves, topped only by Russia. The proposed 1,300-mile pipeline would deliver to Pakistan more than 750 million cubic feet of gas per day from Iran's South Pars gas field in the Persian Gulf.
The U.S. has touted an alternative pipeline project that would transport natural gas from Turkmenistan through Afghanistan and into Pakistan and India. But with Afghanistan mired in a 10-year-old war with Taliban insurgents, experts in Pakistan doubt that pipeline will ever be built.
"A lot of people might be huffing and puffing, but no one is coming up with a viable alternative," said Safiya Aftab, a columnist with the Friday Times, a Pakistani weekly newspaper. "Running a pipeline through Afghanistan in the current conditions is not going to happen."
The U.S. is trying to persuade Pakistan to drop the Iranian pipeline project at a time when its government is taking stock of its relations with Washington after the errant American airstrikes that killed 24 Pakistani soldiers near the Afghan border in November.
Pakistanis have also been deeply frustrated with the continuation of U.S. drone missile strikes against militants in Pakistan's tribal areas, and with Washington's decision not to inform Islamabad before launching the commando raid that killed Al Qaeda head Osama bin Laden in the military city of Abbottabad in May. Islamabad's government is under heavy pressure from a vehemently anti-American public to reduce its dependence on Washington and assert its own agenda.
The effort to scuttle the pipeline venture is part of Washington's bid to economically squeeze the Iranian government, which it believes is intent on building nuclear weapons. A similar imposition of sanctions on Pakistan could devastate the country's economy, already weakened by years of militancy and overburdened by debt to international lenders.
Such a move might cause irreparable harm to Washington's relationship with Pakistan, a difficult but vital ally in the fight against terrorism. Pakistan is also viewed as having a key role in facilitating talks with Afghan Taliban insurgents who use Pakistani territory as sanctuary.
"I think it would be the straw that breaks the camel's back," said Zafar Hilaly, a former Pakistani ambassador to the U.S. "If sanctions are imposed, then I don't think we could have a Pakistani government that is even remotely disposed toward the U.S."
Analysts in Pakistan say Washington's warnings about the pipeline are premature because the project is far from being realized. Iran has nearly completed the pipeline on its side of the border, but Pakistan hasn't started yet and is struggling to find financing for the $1.2-billion segment on its territory.
"Pakistan can't build it until they get funding," Aftab said. "That's where they are running into problems."