Iran and Pakistan turn away from confrontation and toward tradehttps://en.majalla.com/node/315456/politics/iran-and-pakistan-turn-away-confrontation-and-toward-trade
Iran and Pakistan turn away from confrontation and toward trade
Against the backdrop of geopolitical realignments, the burgeoning partnership between Iran and Pakistan can potentially recalibrate the balance of power in South Asia and beyond.
AFP
Iran's President Ebrahim Raisi (R) is greeted by Pakistan's Prime Minister Shehbaz Sharif upon his arrival in Islamabad on 22 April, 2024.
Iran and Pakistan turn away from confrontation and toward trade
The recent visit of Iran’s President Ebrahim Raisi to Pakistan was an important development for the geopolitical and diplomatic dynamics of the Middle East and South Asia—two regions where tensions often simmer and occasionally boil over.
The meeting was held against the backdrop of escalating hostilities between Iran and Israel, as clandestine military clashes gave way to direct military confrontation.
Tehran's efforts to foster closer ties with Pakistan were part of a strategic recalibration in the region as the regional and world order continued to shift.
The visit spanned three days. President Raisi held high-level talks aimed at not only reconciling the differences between the countries but also promoting enhanced cooperation between the two Muslim-majority neighbours.
The summit came after recent strains in relations, including a dangerous escalation earlier this year that saw an exchange of cross-border strikes.
Iran's military incursions into Pakistani territory – ostensibly targeting militant groups such as Jaish al-Adl – elicited swift reprisals from Islamabad, making an already volatile situation worse.
The subsequent tit-for-tat exchanges of fire threatened to plunge the region into a protracted conflict, prompting fears of destabilisation and wider repercussions.
Tehran's efforts to foster closer ties with Pakistan are part of a strategic recalibration in the region as the regional and world order continues to shift.
Flashpoint in Balochistan
There are complex dynamics at the centre of the tensions over the Balochistan region, which straddles the Iran-Pakistan border and has long been a flashpoint for insurgents and separatists.
Balochis aspire for autonomy and independence, and any moves toward this have been met with harsh repression from both Tehran and Islamabad.
The involvement of militant groups, such as the Balochistan Liberation Front (BLF) and Jaish al-Adl, adds another layer of complexity to the multifaceted challenges at work in the region.
Nonetheless, after the prospect of conflict, both Iran and Pakistan have demonstrated a commitment to de-escalation and dialogue. There were swift efforts to defuse the crisis earlier this year.
President Raisi's visit to Islamabad showed the tangible diplomatic progress already made and provided a platform for constructive engagement and the pursuit of mutual interests.
According to Giorgio Cafiero—the CEO of Gulf State Analytics, a Washington, DC-based geopolitical risk consultancy— Raisi's visit showed how wider geopolitical change across the Middle East meant that Tehran wanted to move on with its neighbour.
"At a time in which Iran-Israel hostilities have entered a new chapter with the 'shadow war' now over and state-to-state military confrontations taking place this month, Tehran seeks to secure a better relationship with Islamabad," he said.
"Raisi's visit to Pakistan will be important in terms of efforts to advance the bilateral relationship, as both sides have interests in putting (January's) unprecedented episode behind them."
Central to the discussions were initiatives aimed at bolstering bilateral cooperation from security and judicial cooperation to trade and technology, as well as cultural exchange.
Eight memorandums of understanding (MoUs)were signed during Raisi's visit, revealing the depth and breadth of the envisioned collaboration.
Iran's President Ebrahim Raisi (2L back) and Pakistan's Prime Minister Shehbaz Sharif (R back) witnessed the signing of MoUs for cooperation in different fields between Iran and Pakistan at the Prime Minister House in Islamabad.
Moves to establish a free trade area around the Rimdan-Gabd border to foster economic integration were particularly significant, coming so soon after the military stand-off and establishing a new trajectory for relations.
Bilateral ambition
Targets for stronger bilateral trade ties were ambitious, at $10bn, in line with the improvement in the cross-border political climate.
On the eve of his trip, President Raisi wasted no time extending an olive branch to Pakistan, emphasising the need to bridge the gap between political rhetoric and economic reality.
Describing the current level of bilateral trade as "unacceptable," Raisi articulated a vision of elevating trade volumes to unprecedented levels. The new trade target doubles the previous goal of $5bn set last August.
It will not be easy, with only $2.3bn in trade recorded between the countries last year. There are also obstacles in terms of geopolitical constraints and deficiencies in infrastructure.
The legacy of the international sanctions imposed on Iran has cast a shadow over bilateral trade, limiting the scope of economic engagement and constraining investment. And the security situation in the border regions, where militant groups and separatists are most active, has also hit trade flows.
Sanctions impact
Economic growth has also been constrained by an absence of robust banking and payment mechanisms caused by the sanctions. It has created a reliance on informal methods, adding layers of complexity to transactions.
The previous lack of concerted action and strategic alignment between the countries has hampered efforts to overcome these barriers, even with a preferential trade agreement dating back to 2005.
At a time in which Iran-Israel hostilities have entered a new phase with state-on-state action taking place, Tehran seeks to secure a better relationship with Islamabad.
Giorgio Cafiero, CEO of Gulf State Analytics
No free trade announcement...yet
Discussions regarding a comprehensive free trade agreement were ongoing before Raisi's visit, but the agreement remained elusive and was not concluded while he was in Islamabad.
That shows the entrenched challenges and competing interests that continue to shape Iran-Pakistan economic relations.
Nonetheless, President Raisi's bold pronouncements on trade were a clear departure and brought a sense of urgency and purpose into bilateral economic efforts.
The ambitious targets recognise the untapped potential between Iran and Pakistan, over and above geopolitical problems and historical animosities.
Addressing a range of factors, including structural impediments to trade, greater cooperation in key sectors, and a supportive environment for investment and economic integration, is crucial for realising Raisi's vision.
Dealing with security problems and upgrading infrastructure will be part of that, as will solving the payment problems. The extent to which Iran and Pakistan succeed will be the litmus test for the durability of their newfound partnership.
Iran's President Ebrahim Raisi (L) walks along with Pakistan's Prime Minister Shehbaz Sharif (R) to inspect his guard of honour in Islamabad on 22 April 2024.
By harnessing the transformative potential of economic cooperation, Iran and Pakistan have an opportunity to chart a new course defined by mutual prosperity and shared interests.
Security cooperation and wider geopolitics
Joint efforts to combat militants and terrorism will require coordination and will lead to closer ties.
Raisi's visit has broader implications for the region's geopolitical landscape. Against the backdrop of shifting alliances and geopolitical realignments, the burgeoning partnership between Iran and Pakistan has the potential to recalibrate the balance of power in South Asia and beyond.
As traditional alliances are tested and new geopolitical fault lines emerge, the strategic convergence between Tehran and Islamabad offers a glimpse into the evolving dynamics at work.
Raisi spoke up for Palestine during his time in Pakistan. In one of the most important moments of his time in the country beyond bilateral matters, Iran's president commended his neighbour's unwavering support for the Palestinian cause, highlighting the widespread pro-Palestinian sentiments and demonstrations that have reverberated throughout Pakistan.
As he spoke of matters relating to a conflict elsewhere, Raisi showed how his nation and its near neighbour have moved on from January's flashpoint toward cooperation and collaboration.
As Iran and Pakistan embark on this rapprochement, the world watches with anticipation, mindful of the broader implications for the Middle East and South Asia.
