With two key federal cabinet decisions — going ahead with a government-to-government deal with Iran on gas pipeline and the transfer of strategic Gwadar Port operations from Singapore to China — Pakistan is apparently deepening its long-term economic and diplomatic relations with regional players ahead of the US endgame in Afghanistan next year.

Both initiatives are generally viewed to have been taken against the wishes of the United States that has pursued its own interests in the region and Afghanistan, notwithstanding Pakistan’s sacrifices and alliance with Washington.

Pakistan is reported to have suffered over $90 billion losses in over a decade of cooperation with the US in its war on terror in Afghanistan besides lives of over 30,000 people including about 4000 troops. Its return from US assistance to Pakistan including compensation for services it provided to coalition forces in Afghanistan remained less than $15 billion.

A growing realisation in Islamabad has been that the US support for resolving Pakistan’s energy, water and economic problems has not substantially gone beyond bureaucratic engagement and preparation of technical level reports except some staggered assistance in small projects and official trainings.

The US has been facilitating Indian presence and influence in Afghanistan as is evident from Indian investment of over almost $1.5 billion in Afghanistan against Pakistan’s paltry contribution of less than $350 million. While India made its footprint in Afghanistan’s health, education and defence cooperation with this investment, perhaps because of its own limitations Pakistan tried to build roads and infrastructure that could connect it with Central Asian Republics in the long run.

It is, however, another issue that Pakistan’s efforts to have energy access in central Asian States including Turkmenistan gas pipeline and more than 1000mw of electricity proposed to be brought from Kyrgyzstan and Tajikistan have fell far from fruition despite US cajoling.

As the US endgame in Afghanistan begins early next year, apart from strategic relationships with major Afghan tribes, Pakistan has to re-position its economic and trade priorities in the regional context. In the short term, hundreds of thousands of US containers full of military machinery, equipment and installations in Afghanistan have to be withdrawn and relocated through Pakistan’s trade corridor to the US.

While thousands of US, Pakistani and Afghan contractors — mostly related to retired military officers — would provide services in dispatching huge hardware built up over 12 year of war on terror to feed thousands of American troops, Pakistan must be pinning hopes on earning revenues through the transit facilities. Restructuring of some key local institutions may coincide with that timeline.

In the long run, however, Islamabad has to strengthen it ties with regional countries for economic and trade advantages. Closer cooperation with tribes bordering Pakistan and along the routes to Central Asian Republics’ energy sources has to be a well-thought out affair given the hostile forces at work on that front. Pakistan’s strategic geographical position is a God-gifted strength that has to be carried through the adverse geopolitical environment in true spirit of unity among various players of the Islamic Republic of Pakistan at a crucial political transition with the popular will and support of the people.

The unconventional cross-border infiltration that has irked Islamabad and Kabul at the same time has to be resolved through mutual cooperation and improvement and facilitation of conventional trade routes like Torkham, Chaman and Ghulam Mohammad border posts. The two countries had agreed about a decade ago to open up the third route of Ghulam Mohammad post but the objective remained unfulfilled because of continuous security problem. The two sides are again discussing this route now.

The past experiences of Pakistan-US relations clearly manifest a soul searching at home and possible policies towards self reliance and true long-term national interest and relationships with others on mutual respect and intertwined economic benefits and synergies.

In that direction, the US pressure on Iran-Pakistan Gas Pipeline should have been a non-factor to begin with when Pakistan’s more than half of growth potential remains hostage to energy shortages, affecting industries, households, businesses and job opportunities. The Iran-Pakistan pipeline when completed would account for less than 15 per cent of total current gas supplies. Even though Turkmen gas pipeline still remains a question mark, it could take care of another 15-20 per cent of total gas requirements in Pakistan by 2020.

But the key initiative remains subject to its implementation without further delay despite US opposition. The cabinet decision requires a $1.5 billion government-to-government agreement between their designated companies to construct a 785-km Pakistan segment of the pipeline to deliver 750 million cubic feet of natural gas per day (MMCFD) of Iranian gas by end of December 2014.

Under the cabinet decision, the contract would be signed between Iran’s Tadbir Energy and Pakistan Interstate Gas Company (ISGC) for Engineering, Procurement, Construction and Financing (EPCF) of the project. Iran would provide a $500 million financing payable in 20 years and its designated entity — Tadbir Energy — will lay the pipeline through its sub-contractors. The G-to-G contract would also help sidestep a time consuming procurement process.

Almost half of the remaining $1 billion financing would be arranged through a Chinese loan and about $500 million to be arranged by Pakistan through gas infrastructure development cess (GIDC) charged to consumers in monthly bills. The GIDC has, however, been suspended by Islamabad High Court but the government would have to find a way out through a higher forum.

A gas sales and purchase agreement (GSPA) signed by the two countries about two years ago required the project completion by December 31, 2014.

At the same time, the cabinet also allowed transfer of concession agreement for Gwadar Port from Port of Singapore Authority (PSA) to the China Overseas Port Holding Limited — a state-owned Chinese entity. The formalisation of the agreement is expected within a few days that would require China to make fresh investments for its commercial viability.

The Port has to open up a major trade corridor from mainland China to its western provinces bordering Pakistan and the central Asian republic — linking not only China through a historic short Silk route with Central Asia but also provide tremendous potential for trade and transit benefits to Pakistan.

The Singapore Port Authority that was awarded the contract for operation, maintenance and commercialisation of the port in 2007 had been facing problem including non-clearance of a piece at Shamba Ismail at the mouth of port by Naval authorities despite its local partners in the joint venture — National Logistic Cell and AKD Group.

China has its desired to invest close to $10 billion to develop the port and manage its operations. After its development by the Chinese government at a cost of $288 million, Pakistan’s only deep seawater port was handed over to the SPA under a 40-year concession agreement in Feb 2007 for its ‘management, operations, maintenance and development’.

At that time, the Chinese had decided to stay away from further participation in the port apparently because of suspected US presence in the region.