Pakistan and Iran’s economic cooperation has been on a positive trajectory. Recently inaugurated economic projects will boost border trade between the two countries and attract financial investment in poverty-stricken Balochistan. Besides, these projects improve border management, which is imperative to curb illegitimate trade and prevent arms and drug trafficking.
Realistically, without improving the socio-economic conditions, thwarting the drug and arms trafficking, and above all, eliminating the sanctuaries of the militant groups across the border, eliminating the ideological and physical support to the insurgency Baloch districts of the province is wishful thinking. To encounter these challenges, Islamabad needs the sincere help of Tehran.
Prime Minister Mian Shahbaz Sharif and Iranian President Ebrahim Raisi jointly inaugurated the Mand-Pishin border market and the 100-megawatt Polan-Gabd Electricity Transmission Line on May 18, 2023. The inauguration of the border market is a first step towards establishing six border markets, which will be constructed along the Pakistan-Iran common border. Indeed, these border markets increase local job and business opportunities, boost local businesses, expand the volume of cross-border legal trade, etc.
Prime Minister Shahbaz and President Raisi seem determined to further economic cooperation between their nations. However, Iran’s regional and global outlook directly impacts its relations with Pakistan. For instance, Pakistan-Iran gas pipeline project has been in limbo for a decade due to the United States’ sanctions on Iran. The chances of lowering the tensions between Tehran and Washington are limited in the near future due to an unending controversy over Iran’s civilian nuclear and long-range ballistic missile programs and China-Iran Strategic Cooperation Agreement signed on March 27, 2021.
The Agreement constituted a long-term economic and security partnership for the Chinese $400 billion investment in exchange for a steady oil supply over 25 years. Though the official details of the agreements were not declassified, the Western media claimed that “$400 billion of Chinese investments to be made in dozens of fields, including banking, telecommunications, ports, railways, health care and information technology, over the next 25 years. In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil.”
Another equally influential determinant in Pakistan-Iran bilateralism is the Arabian Gulf geopolitics. In this context, the geopolitical contest in the region between Iran and Saudi Arabia makes it difficult for Islamabad to maintain balanced or neutral relations with both of them. Nevertheless, the recent rapprochement between Tehran and Riyadh will benefit Pakistan.
The current reconciliation between Saudi Arabia and Iran reveals the increasing influence of China in the region. Unlike the United States, China has used its economic power rather than force and intimidation to exert its influence in its neighborhood and beyond since 2013. Its economic ventures in the Middle East and North Africa (MENA) increased China’s political role. Consequently, it was able to broker a peace deal between Iran and Saudi Arabia on March 10, 2023. Both sides agreed to resume their diplomatic relations by reopening their embassies in Riyadh and Tehran.
The peace in Yemen, Iraq, and Syria would have socio-economic dividends for the entire region, including Pakistan, which has suffered from sectarian cancer. Precisely, a peaceful environment in MENA positively impacts Pakistan-Iran relations.
One of the most significant spoilers of Pakistan-Iran relations is non-state actors, such as terrorist groups and smugglers. On May 21, 2023, a terrorist group killed five Iranian border guards in the restive southeastern province of Sistan-Baluchistan. Tehran believes the killers have sanctuary in Pakistan. Iran foreign ministry spokesman Nasser Kanani asked Pakistan to “crackdown on terrorist groups” and “try to improve the security of the common borders.” He added these terrorist groups aim to disrupt the security of the common border and the security of the people living on the border of the two countries.
Iran’s province Sistan-Balochistan has a unique geography with an ethnic and religiously heterogeneous society. Though Chabahar port signifies its geo-economic significance, it borders restless Balochistan-Pakistan and war-torn Afghanistan, which multiplies security challenges. Besides, the ethnic-religious divide, i.e., a minority of Sistani are Shia Muslims, and the majority of Baloch people are Sunni Muslims, specially Deobandis, contribute to the politico-economic instability of the province. Despite immense efforts, Tehran has failed to adequately resolve Sistan-Balochistan’s residents’ socio-economic problems. The unending religion-ethnic divide has caused a low-intensity asymmetric conflict between the government of Iran and Baloch-Sunni militant organizations named Jundallah, Jaish ul-Adl, and Ansar Al-Furqan. The ongoing militancy negatively influences Pakistan-Iran bilateral relations.
Pakistan has struggled to establish its writ in Balochistan and secure the Iran-Pakistan border. Realistically, Pakistan can only control unlawful activities on the common border with the cooperation of Iran. The need for mutual efforts to curb illegitimate activities on the common border was reaffirmed by Prime Minister Shahbaz Sharif and the President of Iran during their recent meeting.
To conclude, the launch of the electricity and border markets marks a new phase of economic cooperation between Pakistan and Iran, which germinates optimism about the socio-economic development of the people in the adjacent districts of the border, including the Gwadar area.
