Pakistan announced in the start of the year that it will begin constructing the Pakistani section of the gas pipeline from Iran to Pakistan, at the same time as the construction of the Iranian refinery in the port city of Gwadar. The agreement, which will help the Pakistani government deal with the country's energy shortage, will bypass the sanctions imposed on Iran's energy industry, and is expected to provide Iran with nearly seven billion dollars.
According to a Pakistani source, the agreement - which is generating fierce resistance from both within the country and beyond its borders - includes a secret appendix that allows for the paving of the pipeline to China. The US administration opposes this project as it hurts the US efforts to force Iran to abandon its nuclear program. Washington has even threatened to impose economic sanctions on Pakistan if it approves the deal. The latest warning came from Wendy Sherman, US Undersecretary of State and the US representative to the nuclear talks, who said at a Congressional hearing on October 4 that "Pakistan definitely understands our stance and why our sanctions are necessary on the matter of the pipeline."
Saudi Arabia, which is also concerned of the collapse of the sanctions imposed on Iran as a leverage for abandoning its nuclear program, is also exacting pressure on Nazar Sharif, Pakistan's Prime Minister. Pakistan shares close ties with Saudi Arabia, which, according to reports, funded Pakistan's nuclear weapon program for years. Sharif even spent six years in exile in Saudi Arabia thanks to the negotiations held by the Saudi royal family to free him from prison in Pakistan after the country's military revolution on October 1999.
Sharif insists that the pipeline will not violate the international sanctions imposed on Iran, and says that according to the contract signed by the previous government in Islamabad, Pakistan is committed in the contract to continue the construction of the pipeline, or face an Iranian penalty of three million dollars per day. Iran actually believes that the renewed talks with the world powers will eventually allow Pakistan to get a 'green light' from the US regarding the controversial agreement, as part of the "betterment package" being demanded, and it may be right.
Should the Iranian pipeline be expanded to the China, as Pakistani officials are claiming, among them businessmen working in the US, Iran would be able to provide natural gas to China, without needing to launch the Iranian shipping company's gas containers, which are also affected by the Western sanctions. They claim that the sale of gas to China and Pakistan could allow Iran to influence the interests of these states, with regards to both relations with Israel as well, and, of course, will enable Iran to continue funding the nuclear program in the shadow of the existing sanctions.