PAK-IRAN Economic Relations after Removal of Sanctions on Iran by US

(Hassaan Sudozai, Karachi)

Iran-Pak gas pipeline a new life for Pakistan energy sector.

 Iran is the neighboring Islamic country of Pakistan. After the independence of Pakistan in August 1947, Iran had the unique distinction of being the first country to internationally recognize the sovereign status of Pakistan. Currently, both countries are economic partners. This cooperation lasted throughout the Cold War, with Iran supporting Pakistan in its conflicts with arch-rival, India. In return, Pakistan supported Iran militarily during the Iran–Iraq War in the 1980s. Since 2000, relations between the two states have been relatively normalized, and economical and military collaboration has strengthened the relationship. Both countries are founding members of the Economic Cooperation Organization (ECO).

Both Countries enjoy brotherly relationships since the first day of Pakistani independence. Recently, the two days visit by President Hassan Rouhani of Iran was of very significant importance because of the emerging geopolitical and economic situation in Gulf and Asian region. President Rouhani has signed many economic agreement with Ministry of Finance and also urged Pakistan that PAK-IRAN Gas Pipeline should be completed as soon as possible from Pakistani side. Six MoUs has be signed between both countries, which would boost their bilateral trade to $5 billion within the next five years, from the dismally low bilateral trade of $1 billion between the neighboring countries. Ports of Gwadar and Chahbahar has been named as Sister Ports which will help to increased trade activity in the region. As Chahbahar enjoyed same location as Gwadar has and can served as a gateway to land locked Central Asia.

I-P Gas Pipeline can be a new wave of Cool breeze for Pakistan as Pakistan is facing serious energy crises now a days, IP in start was IPI (Iran-Pakistan-India) but India withdraw due to American pressure, as this gas pipeline became a casualty of tensions between the US and Iran. Although Iran had completed section of the pipeline from its side, Pakistan could not construct the much-needed portion of the pipeline on its side due to the UN sanctions. After removal of sanction, Pakistani Government looking forward to complete its home section.

After being operational, IP would supply up to 750 MMcfd (Million meter cube of Gas daily) to Pakistan, which will give another life to Pakistani industry sector. As hundreds of industries face shortages of energy. The project will support around 4,000 MW power generation capacity, which will help in overcoming the crippling power shortage crisis. The construction of pipeline will also create job opportunities in backward areas of Baluchistan and Sindh. Pakistan also can earn transit fee if the pipeline is extended to third country (India or china).

As new economic opportunities have opened after the removal of sanctions on Iran, as a result of joint Comprehensive Plan of Action between P5+1 (namely China, France, Russia, the United Kingdom, and the United States; plus Germany) and Iran. Both countries are members of ECO which is second largest organization on economic basics and by area its world largest economic organization. Pakistan and Iran can boast up they exports through ECO to the other members. Pakistan can exports Textile, Agriculture, Sports and surgical goods to other ECO members while Iran may exports Oil and Oil products, Electric appliances to other members.
Also Pak-Iran bilateral trade now can boast up after removal of sanctions, the Iranian requirements of Pakistani textile products including T-Shirts, Denim Jeans and Home Textiles are very high. There is also a great demand for meat therefore Pakistani meat exporters should avail this opportunity. Pakistan is already exporting meat to Iran. Dairy sector can be another area to be explored for this purpose.

There is very much need of increasing no of daily fights between Islamabad, Lahore, Karachi, Quetta and Tehran, Mashhad, Isfahan, Shiraz. National and private airline sector of both countries should collaborate to build air connection and frequent fights enable businessman to travel easily. Road and railway links are also needed to improve between neighboring countries. Gwadar and Chahbahar can provide an opportunity of direct shipping between Iran and Pakistan so that shipping of goods can be handle in very less time.
 

Hassaan Sudozai
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