Iran deal — opportunities and challenges

Being an immediate neighbour, Pakistan is to benefit from the re-entry of a sanction-free Iran into the world markets

The recently concluded nuclear deal between Iran and six world powers, when it would finally take effect sometime early next year, is likely to give an added flip to global demand for goods and services, while at the same time, it would also hopefully induce a major boost to the regional economy. And being an immediate neighbour, Pakistan, too, is likely to benefit from the re-entry of a sanction-free Iran into the world markets. The prospects for Pakistan are immense, but the challenges too are equally formidable. Therefore, it is very important that we approach these welcome developments in a business-like manner but in complete self-interest, both in economic as well as political terms, while pursuing a balanced foreign policy that is based on the principle of friendship with all and enmity towards none. Sounds impossible, but that is the task ahead because in the immediate run we would be required to strike a balance between our close traditional relationship with the Arab world and its self-perceived Middle Eastern rival, Iran.

Luckily, our decision to take a neutral position in the ongoing Saudi-led Arab world attacks on Yemen’s Houthis, who are allegedly being backed by Iran, has won us significant goodwill in Tehran without annoying the former to any worrisome degree. But it is going to remain a tightrope walk in the months and years ahead. Even before the sanctions were imposed on Iran, our economic relations with our south-western neighbour were hardly anything to write home about. Politically as well, the relations were not ideal. In fact, until about the US invasion of Afghanistan in November 2001, the two countries were on the opposite sides of a 10-year-long low-intensity war that was going on between Taliban-ruled Kabul on the one hand and the Northern Alliance on the other. The ongoing sectarian killings in Pakistan have also remained a matter of discord between the two countries for decades.

Well, the past was another century. The present is today. And today an energy-starved Pakistan is happy that the lifting of sanctions against Iran would revive the construction of the Iran-Pakistan gas pipeline without any further delay. Beijing is currently financing the construction of a gas pipeline from Nawabshah to Gwadar, which would then be linked to nearby Iran through an 80-kilometre long pipeline that eventually would be extended through the China-Pakistan Economic Corridor (CPEC) to our northern border near Kashgar in China. Iran’s major imports have been wheat, semi-finished iron, corn and rice. Its major exports include crude oil, gas and refined oil.

To start with, we could negotiate with Iran an export-import arrangement with wheat, rice, cement and gas making up the bulk of our two-way trade. Iran is expecting an investment of $100 billion after the lifting of sanctions, China is already growing at an accelerated rate, India is following it closely and Beijing has committed $46 billion worth of investment in Pakistan for the CPEC. Consequently, the entire region in the immediate vicinity of Pakistan would seem to be on the threshold of an economic take-off.

However, in order to make the most of the Corridor, Pakistan would need to establish normal trading relations with India as well. After lifting of sanctions, the land-locked Central Asian markets could be easily accessed through Iran by traders worldwide, as well as by India. But a transit route through Pakistan would still be a more viable option for India. And if this route were to be connected to the CPEC, the entire region would benefit immensely with Pakistan reaping the most. Therefore, our policymakers, especially those who view our economic policies through the inappropriate prism of self-imagined security threats, should realise that it would be a lot less painful to neutralise countries inimical to Pakistan by creating their vested interest in mutual economic relations than choosing to remain in perpetual confrontation with them.

Published in The Express Tribune, July 18^th, 2015.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.