Siavosh Yaghoobi, ambassador of the Islamic Republic of Iran, spoke to a band of India's young capitalists on the roof of the Hotel Oberoi on June 12. Boxed in by the view of Mumbai's coastline, he shied away from the political turmoil currently shaking Tehran, to focus on Indo-Iranian economic relations.

Gavin O'Malley spoke to Yaghoobi about the proposed $4.5 billion, 2,500-km Indo-Iranian gas pipeline and a variety of other issues, including Jammu and Kashmir.

Given that India-Pakistan relations have begun to improve, does Iran see this as an opportune time to advance the mired Iran-Pakistan-India gas pipeline plans?

This joint effort of the gas pipeline is somewhat independent of India's political considerations and security considerations, for us.

We just consider it a project. From two years ago up to now, we are working very hard in order to facilitate a study of onshore and offshore [pipelines].

We are expecting that the results of those two studies might come out by October so that the countries can decide whether to go with a sea option or a land option.

What is Iran doing to resolve the Pakistani 'transit challenge,' as your deputy foreign minister for economic affairs, Mohammad Hossein Adeli, described it?

There is not any challenge in this regard. Pakistan will also be a consumer of the gas, which is going to pass through [their country]. It's an opportunity for Pakistan and India and Iran, so for all it's a win-win situation.

In any project there are security concerns, and I think this concern could be addressed simply by the pipeline on its own. Pakistan may use something like 40 per cent of the gas, which is going to pass through it.

Pakistan, Iran and India are the guarantors of the security of that pipeline.

[On May 26, Pakistani Petroleum Minister Naurez Shakoor said Islamabad was willing to give all necessary security guarantees to New Delhi with regard to the Indo-Iran gas pipeline to be laid through its soil.]

France, Russia, and Britain have all ignored American sanctions imposed after 1979 that prohibit foreign investments above $20 million in Iran. Do you believe India is prepared to do the same?

This is an Iran-India-Pakistan project, and I think also European and perhaps some Asians countries are ready to come forward. [US] sanctions wouldn't be a concern.

But, in the early '90s, India abandoned negotiations with Iran for the sale of a diminutive 10 MW nuclear research reactor after the US expressed unease. 

Such a thing did not exist at all. It wasn't anything like that. But, let me tell you, Iranian and Indian relations are not dependent on any external political considerations.

During the recent G-8 summit in Evian, a resolution was adopted stating: 'We will not ignore proliferation implications of Iran's advanced nuclear programme.' How do you respond?

We are just studying [the resolution]. We are considering how to react to the [International Atomic Energy Agency's] demands. But you know some of these countries, which are asking us to sign [non-proliferation agreements], like the Americans; they haven't signed it themselves.

The recent Indo-Iran strategic partnership involves, 'cooperation in defence in agreed areas,' between the two countries. Could you elaborate?

According to the document, after five years from the implementation and goal setting, the relationship should enter into the defence phase.

There has been a lot of interaction between the two countries, and perhaps there is also a roadmap for defence cooperation, but let me tell you that our cooperation would not be [directed] against any third party.

Just recently, some 3,000 Iranian protesters demanding democratic and secular reforms took to the streets of Teheran. How representative is their view in Iran?

Let me tell you that Iran [has been] experiencing democracy from the time of the revolution, and this type of demonstration you could only see in Iran, because we are enjoying this democratic system, which in our area is quite unique. It's a part of the process of democratisation in Iran.

The people are free to express their point and their desire and their feelings. We have a lot of demonstrations. The people can also raise their voice in Parliament. It's all a part of the process.

How do you view the current state of the Kashmir issue?

I hope that the current initiatives which have been taken by Prime Minister Vajpayee and also by Pakistan could continue and bear some fruit.

Theories abound that accuse Iran of covertly trying to disrupt pluralistic-representative institutions from taking hold in Iraq because that could threaten Iran's Shia religious power structure? Officially, what kind of government would Iran like to see develop?

This is all propaganda. From the very beginning we were asking for a democratic system in Iraq, which could be decided by the Iraqi people themselves. So, we fully support democratic representation in Iraq.

How is your space programme coming along?

In Iran? The space programme? Nothing significant to report.

Gavin O'Malley, a graduate student of business journalism at City University of New York, is spending six weeks at rediff.com.