Hira Irfan
The lifting of economic sanctions from Iran has brightened the chances that Pakistan will complete its side of the work on Iran Pakistan Gas Pipeline. In light of the United Nation (UN) decision Pakistan has lifted all economic sanctions on Iran, releasing about $100 billion of country’s frozen assets and allowing Iran to export an extra 600,000 barrels of oil every day. It is a welcome step, even if it appears to have been reluctantly taken and has come rather late. As a bordering neighbour, Pakistan ought to have moved faster and deeper down the road to restoring normal economic ties with Iran than most other countries. This is especially true given the natural complementarities between the economies of the two countries. Iran has a surplus of energy but is food deficient, while Pakistan is food secure but energy deficient.
On the other hand, the fact that our own raft of sanctions, mostly issued through the Foreign Office, has now been lifted has cleared the way for parties on both sides to start re-engaging with one another. And this is precisely the point where the road towards the resumption of normal economic ties comes into view before us. With the dismantling of most sanctions on Iran, the Pakistan-Iran Joint Border Commission, in its 19th meeting in Quetta, vowed that it would now give legal cover to all trade between the two neighbors. The decision may give a welcome boost to Pakistan’s economy that is expected to save at least Rs10 billion annually due to decrease in oil smuggling.
Pakistan has wisely joined the bandwagon, and as an immediate neighbour of Iran in an unstable region it stands to benefit more than most countries from an increased likelihood of regional cooperation. The country is set to enjoy revived economic and commercial relations in various fields including trade, investment, technology, banking, finance and energy with this neighbouring country. For example, before the full force of the sanctions set in, Pakistan’s exports to Iran in 2010 were worth $ 182 million before falling to around $ 42 million by 2014. Now, with the lifting of sanctions, the two countries are working on a strategy to increase bilateral trade to five billion dollars in five years an enormous boost to both countries. The prompt lifting of sanctions is also a politically prudent move as it makes for a welcoming gesture towards Iran. It is important to place this in the context of Saudi Arabia’s renewed tussle with Iran, which as a rivalry threatens to consume the entire region in its midst. By extending an olive branch to Iran, whilst maintaining its historically friendly relations with Saudi Arabia, Pakistan is once again sending a clear and necessary signal that it will not pick a side in this quarrel, with all of its dangerous sectarian hues. Tough decisions are required to deal with the menace of seminaries spreading hatred and providing help and support to sectarian terrorists.
Desperate to take the much-awaited step towards reviving trade relations, Pakistan is mulling enforcing its five-year bilateral trade roadmap, already envisaged with an ambitious target of $5 billion, up from the present $270 million. Unlike the past, Pakistan now wants to move away from certain commodities and wants to expand its exports. The key potential trade areas Pakistan is eyeing are rice, horticulture, sports goods, surgical equipment, information technology, textile goods and construction material.
It is worth mentioning that increased economic activity between the two countries can be mutually beneficial. Iran’s connecting border with Pakistan through Balochistan is one of the prime spots for smugglers of oil products to pass through and if Pakistan wants to reap the maximum benefits of cross-border trade, this illegal trade must first be stopped. The black market is siphoning millions by the day, and international oil prices will not stay as low as they are forever; the government already relies on taxation on oil products for a large part of its revenue, and it can potentially decrease the amount of taxes if it increases revenue by putting a stop to smuggling across the Torkham border. With the fourth-largest oil reserves in the world, Iran is a trading partner that cannot be ignored, and Pakistan’s close geographical proximity makes it nearly certain that it will one of the countries that benefits the most after sanctions were lifted, but only if the government plays its cards right.
