US warns of 'potential risk of sanctions' on anyone considering business deals with Iran

Washington: The US has warned of a "potential risk of sanctions" for anyone considering a business deal with Iran, a day after Pakistan and Iran inked several agreements during Iranian President Seyyed Ebrahim Raisi's maiden visit to Islamabad to boost bilateral cooperation.

The latest warning comes days after the US imposed sanctions on suppliers to Pakistan's ballistic missile programme, including three companies from China even as the US also said it maintains good relations with Pakistan and described it as “an important security partner in the region.” During Raisi’s three-day visit that concluded on Wednesday, Iran and Pakistan signed eight MoUs while vowing to increase trade to USD 10 billion in the coming years.

Vedant Patel, Deputy Spokesperson of the US State Department, was asked about the agreements signed during Raisi’s visit and Pakistan government spokesperson’s assertion that it does not need a waiver from US sanctions to build its portion of a Pakistan-Iran gas pipeline.

“Just let me say broadly ... We advise anyone considering business deals with Iran to be aware of the potential risk of sanctions. But ultimately, the Government of Pakistan can speak to their own foreign policy pursuits,” Patel told the briefing on Tuesday.

According to Iranwire.com, Mumtaz Zahra Baloch, the Pakistani Foreign Ministry spokesperson, had told a press conference on March 21: “It is a segment of the pipeline which is being built inside Pakistani territory. So, we do not believe that at this point there is room for any discussion or waiver from a third party.” However, on March 25, Pakistan’s Minister for Petroleum Dr Musadik Malik said the government would seek exemption from US sanctions for the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project and decided to plead “vigorously.

“We will seek exemption from US sanctions. Pakistan cannot afford sanctions in the gas pipeline project,” he had said days after US Assistant Secretary of State for South and Central Asia Donald Lu said at a congressional hearing that Pakistan had so far not sought exemption for the 1,150-kilometre gas pipeline.

The proposed 2,775-km pipeline plans to link Pakistan’s energy supply directly to Iran’s abundant gas reserves.

However, the project has faced significant delays due to geopolitical pressures, sanctions on Iran and financial hurdles within Pakistan.

In February this year, the caretaker government in Pakistan decided to dust off the 2009 agreement, approving the construction of the first phase or 80-km stretch (of the total 780-km pipeline) from the Iranian border to Gwadar in Balochistan, the Dawn newspaper reported last week.

Meanwhile, Tehran has issued a deadline: finish the pipeline segment by March 2024 or incur financial repercussions amounting to nearly USD 18 billion — a sum that could prompt international arbitration, the report said.

According to SHANA, a Tehran-based information network, Iranian Oil Minister Javad Owji said that Pakistan is keen to fulfil its obligations in completing a part of the Iran-Pakistan Gas Pipeline Project.

Speaking on the sidelines of Raisi’s visit, Owji stated that the Pakistani side is willing to see the injection of gas into the pipeline and for this reason, Islamabad is drawing up contracts with various companies for the acceleration of this process.

Earlier last week, the US slapped sanctions on three Chinese companies and one from Belarus for supplying missile-applicable items for Pakistan's ballistic missile programmes, including its long-range missile programme.

China, an all-weather ally of Pakistan, has been the main supplier of arms and defence equipment to Islamabad's ambitious military modernisation programme.

Asked about the real reasons for these US sanctions, Patel said, “The sanctions were made because these were entities that were proliferators of weapons of mass destruction and the means of their delivery. These were entities based in the PRC, in Belarus, and that we have witnessed to have supplied equipment and other applicable items to Pakistan’s ballistic missile programme.” “They are following our October 23rd designation of other – three PRC entities who’ve worked to supply Pakistan’s missile programme. We’re going to continue to disrupt and take actions against proliferation networks and concerning weapons of mass destruction procurement activities wherever they may occur,” Patel added.

Meanwhile, at a separate news conference, when Pentagon Press Secretary Patt Ryder was asked about how the US sanctions against four companies will affect the US-Pakistan military-to-military relationship, first he said, he did not have any information to provide on that.

But quickly added: “Clearly, as you know, we maintain a good relationship with Pakistan. They're an important security partner in the region. And so, you know, we'll, again, continue to have those conversations and make sure that we can.” In Pakistan, The News International said, “The State Department's statement comes at a crucial standpoint in Pakistan's history as it works to advance its ‘brotherly ties’ with Iran by welcoming their president, months after their cross-border skirmishes in January.” “The statement also holds significance following Iran's standing at the global level, owing to its regional activities and recent clashes with Israel after it attacked its embassy in Damascus, killing two senior members of the Islamic Revolutionary Guard Corps,” it added.