Iran-Pakistan Economic Relations

Islamabad, Pakistan — Ten years ago, the foundation for the Iran-Pakistan-India (IPI) Gas Pipeline project was laid at the Iran-Pakistan border. The project aimed to construct a 2,777-kilometer-long gas pipeline in Pakistan, which would transmit 40 billion cubic meters of gas annually. Pakistan, facing rapidly depleting local gas reserves, hoped to benefit from this transmission. The project was also seen as a potential avenue to improve Pak-India relations. However, despite the passage of time, the gas pipeline remains a distant dream.

During this period, separatist movements in Balochistan gained momentum, and the Baloch Liberation Army (BLA) grew stronger. The situation deteriorated to the extent that government institutions found it nearly impossible to operate in most parts of Balochistan without the protection of security forces. Additionally, Saudi-Iranian hostility and American sanctions on Iran further hindered the project's implementation. Meanwhile, Pakistan-India relations were already in decline, and they came to a halt following the attack on Balakot and the revocation of Kashmir's special status in 2019.

In October 2016, the narrator traveled from Karachi to Gwadar, reaching the Iran border via the Makran Coastal Highway, as documented in the December 2016 column. Given its proximity to the border, Gwadar relies on imports from Iran for essential commodities. Unfortunately, the situation has worsened to the extent that illegal trade of Iranian goods is now prevalent throughout Balochistan, parts of Sindh, and southern Punjab. Smuggling of Iranian petroleum and diesel, in particular, thrives in these regions. Reports from the Federal Board of Revenue (FBR) indicate that more than 2 million worth of Iranian diesel is smuggled annually. However, this illicit trade only benefits smugglers and corrupt government officials. It is worth noting that whenever there is a call for Iran-Pakistan trade, it is often dismissed on the grounds of American sanctions. Nevertheless, countries like Turkey, Iraq, and India have managed to maintain specific trade relationships with Iran despite these sanctions by implementing effective foreign policies that protect their interests. Pakistan, on the other hand, has not shown a similar determination to maximize the benefits of trade with Iran. Instead, some Pakistani officials have facilitated this trade for personal gain, exploiting both internal and external restrictions.

Recent news suggests that Iran and Pakistan plan to establish markets to promote trade in border regions. However, this plan, like the gas pipeline, has made little progress beyond statements and intentions since it was first proposed twelve years ago. The main obstacle remains the illegal trade of Iranian fuel in Pakistan, which has attracted various criminal networks looking to amass black money. The transit trade with Afghanistan and the trade of Afghan raw materials further facilitate the conversion of this black money into legitimate currency.

Translated by: Sakina Maham, Lahore.