FOR numerous reasons, mostly geopolitical, Pakistan’s volume of trade with its neighbours — with the exception of China — is very low. Trade ties with Iran have been particularly lukewarm, mostly due to the fear of attracting American and Saudi wrath. However, small steps are being taken to enhance the commercial relationship with Iran. Amongst these is the opening of the Mand-Pishin ‘border sustenance market’. The market, one of six such initiatives on the border of Balochistan and the Iranian province of Sistan-Baluchestan, was inaugurated by Prime Minister Shehbaz Sharif and Iranian President Ebrahim Raisi on Thursday to facilitate trade between the two countries. A 100MW transmission line that will bring electricity from Iran was also inaugurated. It is hoped these steps are followed up with more concrete efforts to deepen trade relations. The border markets will hopefully help promote much-needed economic activity in Balochistan, and should help formalise border trade. As it is Pakistani cities, particularly Karachi, Islamabad and Rawalpindi, are flooded with smuggled Iranian products. Formalising trade will help bring in tax revenue, while also opening up the Iranian market to Pakistani products.
Along with promoting trade ties, officials on both sides need to resolve the controversy over the Iran-Pakistan gas pipeline. While the Iranians have constructed the pipeline on their end, Pakistan has yet to build its part. As a result, Iran may take Pakistan to court, with this country facing a $18bn penalty for failing to complete the project. The matter was discussed in the Public Accounts Committee on Wednesday, with the PAC chairman remarking that “the US should pay the penalty” if it stops Pakistan from completing the pipeline, pointing to the widely held belief that the fear of offending Washington is preventing Pakistan from honouring its commitment.
Pakistan can ill afford to pay such a massive penalty. Reneging on the deal will reflect badly on our shaky international standing, and damage ties with Tehran. The state should make it a priority to address the pipeline issue, and assure Iran that it intends to honour the deal. If the price of gas is right, it would be a win-win situation for all, as Pakistan needs affordable hydrocarbons. The Saudis should have no concerns, as they themselves are mending fences with Iran, while our friends in Washington must be told that Pakistan has to honour the pipeline deal. If the US can look the other way when India and others buy oil from sanctioned Russia, it should have no issues if Pakistan buys gas from Iran, and enhances trade relations with it. Eurasian integration is the new buzzword, and if Pakistan fails to hop on the bandwagon of regional trade for fear of offending powerful actors, it will have only itself to blame.
Published in Dawn, May 19th, 2023
