Saturday, August 06, 2005

Iran: Tehran Struggles To Push Ahead With India Pipeline

.....Potential Blow To Iran

The collapse of the Indian natural-gas deal would be a sharp blow to Iran. Such a development could have an impact in three areas. One possibility is that Iran could try to salvage the deal by offering India a lower price for its gas. Pricing disagreements were one of the main sticking points in March.

Another possibility is that Iran's efforts to diversify beyond oil might collapse. That being said, Armenia and Turkey are already customers for Iranian gas; Tehran has signed agreements with Oman and Kuwait; and it has signed gas-related memorandums -- or at least discussed the topic -- with Austria, Bulgaria, China, Greece, Italy, South Korea, and Taiwan.

The third possibility, probably much more remote, is that Iran would renounce activities that concern the international community, including support for terrorism, interference in neighboring states' affairs, and the pursuit of weapons of mass destruction.

Failing that, Iran would find it very difficult to compete with the United States in terms of bargaining power. If the Indian model -- even without nuclear concessions -- were applied successfully in more cases where Iran was trying to do business with other countries, then Iran would find itself increasingly isolated.


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