EARLIER this month, Pakistan’s foreign minister, Bilawal Bhutto-Zardari, met his Iranian counterpart, Dr Amir Abdollahian, to review their countries’ relationship.
While the threat of international sanctions remains a key concern for Pakistan, it does not preclude Pak-Iran economic cooperation. The pipeline today itself is not subject to UN sanctions, and the US has granted exemptions to countries such as Turkey, India, and Iraq in petrochemical trade with Tehran. In any case, Pakistan and Iran may also conduct their trade by way of barter to ensure that US sanctions are not triggered.
Iran’s place as a regional power and its oil and gas reserves should prompt Islamabad to improve ties with Tehran. In our neighbourhood, Beijing accounts for 25 per cent of Tehran’s imports and is the number one buyer of Iranian oil today. India was the second-biggest customer of Iranian oil until 2019. Nonetheless, India remains ready to re-engage with Iran, with an anonymous Indian official stating that “once the sanctions are lifted, we can look to resume oil imports from Iran”.
Even if the sanctions persist, there are avenues to explore. In addition to petitioning the US for exemptions, Pakistan can trade directly with Iran by way of barter: for instance, trading some of its rice and meat surpluses with Iran in exchange for Iranian gas and energy. A similar solution can apply to trade with Afghanistan, which, in the wake of the crushing US sanctions, has been left in a state of economic turmoil. Barter would also free Pakistan from its reliance on the US dollar, easing pressure on our foreign exchange reserves. Pakistan can also seek to import petrochemicals from Azerbaijan and Turkmenistan by way of Iran. It can directly pay royalties for this use of Iran’s pipeline network or provide Iran with a percentage of the gas so imported as royalties. Parallels can be drawn with existing arrangements whereby Pakistan trades with Turkey and other Central Asian states by way of land routes through Iran.
Pakistan and Iran have shared sociocultural and geostrategic interests. While Pakistan must continue to foster improved ties with states further afield, such as the US or the EU bloc, it must nonetheless cultivate reliable partnerships — in similar vein as the Pak-China relationship — with other friendly states in the region. Greater engagement with Iran — particularly on shared issues such as energy security or counterterrorism efforts — is thus necessary to ensure a safer and more prosperous Pakistan.
The writer is former legal adviser to Pakistan’s foreign ministry, and faculty, Lums Law School.
Published in Dawn, July 1st, 2022