India, Pakistan and Iran have launched joint negotiations on a proposed multi-billion dollar natural gas pipeline that will  cross all three countries.

The United States opposes the pipeline, in part because it believes the pipeline will bolster Iran. Washington has fundamental disagreements with Tehran on several issues, particularly on its nuclear policies.

To help persuade India to suspend pipeline negotiations, the Bush administration has proposed supplying India with new nuclear reactors. But the proposal is running into opposition among key legislators on Capitol Hill.

The proposed 2,600-kilometer gas pipeline estimated - to cost $7.6 billion -- will carry natural gas from fields in Iran, through Pakistan, to India. Energy experts in the region proposed the pipeline a decade ago, but strained relations between India and Pakistan prevented negotiations.  Now, with the current thaw in India/Pakistan relations, the pipeline proposal has gained new momentum.

One thing is clear. India could use Iranian gas. India currently produces only half the natural gas it needs and imports 70 percent of its crude oil. Indian policymakers say their nation must tap new energy sources to sustain growth. Pakistan is said to be in favor of the project because it would earn an estimated one billion dollars annually in transit fees from the pipeline. Under one proposal, each year Iran would ship approximately 5 million tons of natural gas to India over the next 25 years. These shipments would be worth approximately $22 billion dollars.

The United States says Iran will greatly benefit from these huge gas sales. Washington fears the pipeline will reduce economic leverage on Iran in other areas, including an attempt on the part of Western nations to persuade Tehran to abandon its nuclear ambitions. To compensate India for suspending pipeline talks, the Bush administration has proposed supplying India with new nuclear reactors.

Washington - based Pakistani journalist Khalid Hasan says the proposal will likely face opposition in the U.S. Congress: ?This is likely to run into a great deal of resistance in Congress, not for any anti-India reason but because of proliferation concerns.?

Some legislators say the proposal violates existing domestic laws, not to mention international nuclear non-proliferation guidelines.

George Perkovich, vice president for nuclear studies at the Carnegie Endowment for International Peace in Washington, focuses on nuclear strategy and non-proliferation issues in South Asia. He says President Bush?s offer to supply India with nuclear reactors is part of its ongoing effort to upgrade the U.S.-Indian Strategic Partnership. In addition to cooperation on nuclear power and nuclear safety, the partnership has embraced the sale of American F-18 fighter jets to India. Even if the possibility of an Iran-to-India pipeline had never existed, Mr. Perkovic says India could have expected an offer of U.S. nuclear reactors.  

 ?I think the U.S., the Bush Administration, would have proposed nuclear cooperation with India even if there were no pipeline issue, says Mr. Perkovich.  ?But I think because there is a pipeline issue, it becomes natural to try to relate the two. In other words we say, we want to supply you with nuclear technology, and that(technology) should reduce your need for or interest in the pipeline. But I think that nuclear cooperation would have been thought of in any case.?

However, Washington-based Pakistani journalist Khalid Hasan doesn?t think the United States will let the pipeline deal jeopardize its good relations with India and Pakistan:  ?The fact is that this pipeline suits Iran, it suits Pakistan, it suits India. It will also be a major contributor to the goodwill of the peace process now underway between India and Pakistan. So, I think the national interests of all three countries will override any objections the U.S. might have.?

George Perkovich says the United States might wish to downplay the pipeline issue and let market forces and regional security interests take precedence. 

?I think the absolute best solution is to stand back and let the market and let the private enterprise (sector) decide whether the pipeline is a good idea or not, says Mr. Perkovich. ?There are so many economic questions that this pipeline may never happen. Still, it is ironic that a Republican administration would try to stop a project if private investors and relevant governments want to move forward.?

At the International Atomic Energy Agency meeting last month in Vienna, India voted for Iran to be referred to the U.N. Security Council because of its nuclear program. Tehran conveyed its disappointment with New Delhi, but said it had no plans to pull out of the gas deal with India.

India, Pakistan, and Iran have set December 31, 2005 as the deadline for reaching a framework agreement on the proposed project conceived a decade ago. And they have said work on the gas pipeline could begin as early as next year.