Although Iran and regions in Pakistan have a common history going back thousands of years, trade links between the two neighbours in recent times have been far below potential for the size of our economies: Pakistan is the world’s fifth most populous nation with a population of 233 million while Iran ranks 18 with over 87 million inhabitants. Their mutual trade, however, is a tiny fraction of the global international trade. The volume of bilateral trade between the two countries exceeded $2 billion this year for the first time in modern history – a tiny fraction of $32 trillion in international trade recorded in 2022. What’s more, the balance of trade was heavily tilted in favour of our western neighbour, owing chiefly to our energy imports. This period of relative stagnation of mutual trade may be about to end. Late last week, Prime Minister Shehbaz Sharif and Iranian President Ebrahim Raisi joined up to inaugurate a border market in the border village of Pishin in Balochistan with a view to facilitating cross-border trade between the two countries; and to formally commission the 100MW Gabd-Polan power transmission line supplying Gwadar with electricity from Iran. The development did not get nearly enough attention, which is probably appropriate given how recent decades have seen the two countries engage in intermittent bouts of lavish rhetoric concerning their mutual ties, followed by little action. But it bodes equally well for the economies of energy-starved Pakistan and energy-surplus Iran.
The Mand-Pishin border market is the first of six to be established along the Pak-Iran border under a 2012 agreement between the two sides. Its inauguration is a reflection of how the world around us is changing with lightning speed, liberating energies for closer regional cooperation to the benefit of the people of the region. It has no doubt been enabled by the Saudi-Iranian rapprochement brokered by our Chinese friends, which has broad implications for the region and the broader Islamic world. The initiative has obvious synergies with the China Pakistan Economic Corridor (CPEC), but the immediate dividends Pakistan can expect from it concern energy imports. Not only can Iran supply Pakistan with petroleum, gas, and electricity – each in high demand in our energy-importing country – it can also sell us these and other commodities in local currency. This should allow the government to lower the energy process, close supply gaps, and take some pressure off the country’s precious foreign exchange reserves. In other words, the new beginning has immense potential to ease Pakistan’s economic hardship in short order.
Moreover, the success of the initiative should pave the way for the resuscitation and acceleration of work on the prized Iran-Pakistan Gas Pipeline, which has been on the back burner for decades now to the detriment of both the brotherly countries. On a side note, here’s hoping the successful trade expansion with Iran encourages the managers of our economy to rethink their approach to regional trade: Pakistan is probably the only country in the world that neglects overland border trade with neighbours including India and Afghanistan. China is the only neighbour with which we have overland trade going, which poses its own unique challenges because of the trade route that meanders through some of the world’s highest mountain passes. An improvement in trade ties should also encourage higher volumes of travel and tourism between the two countries and better people-to-people ties harking back to the times when South Asia was part of the Persian realm before the British colonisers cut us off from that world. That disconnection should not be water under the bridge, especially because our cultural and religious affinity is scarcely weaker than it was back in the day. All in all, the prospect of improved trade ties with Iran are a win-win for both nations whichever way you look at it, and as such must be welcomed.