By Senator Rehman Malik
Soar relations between US and Iran and its direct or indirect effects on Pakistan are very obvious. The sanctions on Iran by USA will have numerous negative impacts especially on Pakistan and Afghanistan being the immediate neighbours of Iran. It will also dent the peace process in Afghanistan.
Imposing sanction on Iran is sole act of USA where Pakistan cannot do anything. USA always makes such movements to carry out its own interests based on its geo-political agenda. Both countries are engaged in inter-states trade of many commodities mainly through land routes. Although both the countries enjoy cordial relations yet at the same time the volume of trade between the two countries is well below potential.
The recent visit of the Iranian Foreign Minister Javad Zarif kindled the potentials of increase of trade with Pakistan to $5 billion by 2012. Pakistan is in negotiation to enhance export of meat, fruits, textile, surgical items, sports goods, gems and jewellery in addition to rice. The key items imported from Iran to Pakistan include: iron ore, iron scrap, dates, detergents, transformers, chemicals, bitumen, polyethylene, propylene, etc. Iran is the second-largest market of Basmati rice of Pakistan, ranking after Iraq.
There is a Preferential Trade Agreement (PTA), which governs Pakistan Iran trade; this PTA has been operational since 2006. According to a short profile of Iran prepared by Pakistan Business Council, “of the top 50 items exported by Pakistan to Iran, only 12 items (24%) have a preferential tariff under the PTA” and “of the top 50 Iranian exports to Pakistan 22 items (44%)enjoy a tariff preference when imported by Pakistan”. Although there had been deficiency in the figures reported by both the countries relating to the inter-states trade in 2014 yet fact remains that both the countries remained engaged heavily with each other in terms of bilateral trade relations. One of the major factors contributing towards losing Iranian Market by Pakistan included lack of payment mechanism in the wake of international sanctions on Iran. The absence of banking channels had rendered Pakistan-Iran PTA virtually dysfunctional.
After the removal of UN sanctions on Iran in 2016, it was expected that the Iranian economy would be reopened for international trade and an influx of Iranian assets frozen overseas in the region of $100 to $150 billion. Like European companies and the countries worldwide, Pakistan was also looking forward to greater trade and the early completion of the Iran-Pakistan Gas Pipeline, which was hampered by the pervious sanctions on Iran.
Apart from commercial interactions with Iran, Pakistan shares religious linkage with Iran. According to a report, an estimated 150,000 pilgrims had gone to Iran and Iraq from Pakistan in 2017. With each passing year the number of pilgrims is also increasing. Back in 2014, Pakistan International Airlines (PIA) started twice a week flight operations to Mashad, Iran, by launching direct flights twice a week carrying pilgrims to the holy places in Iran. Recent announcement of US President to withdraw from the Joint Comprehensive Plan of Action (JCPOA), would have far reaching effects not only on Iran but indirectly on Pakistan being neighbour as well.
The Trump Administration has re-imposed sweeping sanctions against Iran with immediate effect. After November 4, 2018, the US would again put sanctions on Iran’s oil exports, shipping, port operations, central bank dealings, insurance and rest of its energy sectors. As we have witnessed a downfall of bilateral trade between two countries post 2010 international sanctions on Iran, Pakistan would once again be experiencing the same situation. On the contrary India sustained the effects of the sanctions on Iran vis-à-vis bilateral trade through putting a workable payment mechanism in place. While Pakistan’s trade with Iran took a nose down drive during this period, the trade between India flourished during the period of sanctions.
Apart from negative effects on the economy and trade with Iran, Pakistan would be facing other multiple challenges including that of visit of pilgrims from Pakistan to Iran. With the blockade of normal business channels with Iran, Pakistan would have to put extra resources to contain smuggling of goods such food items and other utilities from and to Iran. We will be forced to act like Tunisia during the sanction on Libya. The re-imposed sanctions on Iran would once again give rise to the emergence of black market/economy as the foreign exchange would fly between both the countries without any control depleting the foreign exchange reserves of the country. Iran had raised its concerns before me vis-à-vis across border attacks on its security forces of Pakistan. I as Interior Minister had series of meetings with the Iranian Supreme Leader Sayyid Ali Hosseini Khomeini, President, Interior and Foreign Ministers to neutralise the tension between both the countries. However, recently these relations came under pressure when Indian Agent Kulbhushan Yadav was detected to have been operating from Iran. However, with the announcement of President Trump to unilaterally withdraw from the agreement, Pakistan has once again been placed in a critical situation vis-à-vis its commercial as well as bilateral relations. The multi-million dollars Pak-Iran Gas Pipeline would once again be in jeopardise, which has already been delayed considerably. In fact USA has divided the world into pro and anti USA blocks. Similarly, the Muslim world has also been divided on the issues relating to Middle East and Arab world. The war that USA started in Iraq on the false allegations of WMD (weapons of mass destruction) ultimately engulfed the whole region and resultantly both allies of Iran and Saudi Arabia confronted each other in the region. It was, in fact, a big mistake on the part of USA to initiate war in Iraq. I fear that USA may create an ugly situation against Pakistan in collaboration with India and Afghanistan in order to cover up its failures in Afghanistan. The recent statements of President Trump against Pakistan were in fact repetition of which India had been harping on.
It is high time for Pakistan to formulate a comprehensive policy to confront the fall outs of the US sanctions on Iran on Pakistan. I feel that we need to take some important measures urgently in which our Government should try to evaluate the adverse effects of sanctions on Pakistan and Our Ambassadors in Iran and USA should be summoned to work out a strategy to handle this issue.
(The writer is a PPP Senator, former Interior Minister of Pakistan, and Chairman of think tank “Global Eye” and Senate Body on Interior and Narcotics.
With the blockade of normal business channels with Iran, Pakistan would have to put extra resources to contain smuggling of goods such food items and other utilities from and to Iran.)
By Senator Rehman Malik