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Navigating Barriers IRAN AND PAK

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16 views3 pages

Navigating Barriers IRAN AND PAK

Uploaded by

zaorezmuhammad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Navigating Barriers: Analyzing Trade Restrictions Between Pakistan and Iran

Muhammad Zaorez
Department of Mechanical Engineering, PNEC
TECH REPORT WRITTING AND PRESENTATION SKILLS
LT CDR AATZAZ AHSAN
September 24, 2024
Abstract

This paper examines the trade restrictions between Pakistan and Iran, exploring the historical
context, economic implications, and geopolitical factors influencing these limitations. By
analyzing trade data and policy documents, the study aims to highlight the effects of these
restrictions on both economies and regional stability.

Introduction

Trade relations between countries often serve as a barometer for their diplomatic ties and
economic health. In the case of Pakistan and Iran, historical connections and cultural
affinities have long been overshadowed by a series of trade restrictions that hinder economic
collaboration. Despite sharing a border and numerous economic interests, the bilateral trade
between these two nations remains limited due to various political, economic, and
geopolitical barriers.

This paper aims to analyze the complex landscape of trade restrictions between Pakistan and
Iran, exploring their origins and implications. The research will delve into historical contexts
that have shaped current trade policies, including international sanctions, domestic economic
conditions, and regional geopolitical dynamics. By examining the economic impact of these
restrictions, the study seeks to highlight how they affect not only the two nations but also the
broader regional stability and cooperation.

Understanding the intricacies of trade restrictions is crucial for policymakers and economists
alike, as they seek to navigate these barriers and foster more robust economic ties. This paper
will ultimately contribute to the discourse on how improved trade relations could benefit both
countries, promoting economic growth and stability in a volatile region.

Historical context

Iran was the first country to recognize Pakistan and since then both countries enjoyed sharing
and working on mutual interests like joing forces against the communist uprising by joining
CENTO and fighting against terrorist uprising in their bordering areas, until Iran was finnaly
removed from the good books of USA following the fall of Muhammad Raza Shah
Pahlavi. The new Islamic Republic of Iran came out to be a serious headache for the Al-
Mighty America. Iran was gaining a prominent position in the middle east by expanding its
proxies networks which meant that new enemies were on their head; to cope up with this
problem, Iran decided to nuclearize its assets. Wouldn’t it be ironical that the country that was
gaining rapid success in expanding their roots out of their borders suddenly became equipped
with the deadliest weapon a country can have?
As it was expected the USA reacted with sanctions on Iran and every country that tried to
have economical relation iwth one of the largest oil producing country in the region.
The compounding effects of international sanctions led Iran’s economy to contract by 20
percent and unemployment to rise to 20 percent

Current Trade Restrictions

Trade between Pakistan and Iran has a complicated history, shaped by both shared interests
and major obstacles. In April, the late Iranian President Raisi visited Pakistan and expressed a
desire to boost bilateral trade to $10 billion. The financial year 2017 was a high point for their
trade, with Pakistan exporting $29.79 million to Iran and importing only $0.22 million.
However, U.S. sanctions drastically changed this situation, leading to a sharp decline in trade.
The United States has warned Pakistan about the potential for sanctions after Pakistan
announced plans to strengthen security and economic ties with Iran. Iranian President
Ebrahim Raisi's visit was the first by an Iranian leader to Pakistan in eight years. During the
visit, both countries agreed to boost their trade from $2 billion to $10 billion a year over the
next five years and to cooperate in energy projects, including the long-delayed Iran-Pakistan
gas pipeline.
The U.S. State Department cautioned Pakistan against pursuing business deals with Iran,
reminding them of the risks of sanctions. Experts believe the U.S. warnings aim to deter
Pakistan from expanding trade with Iran, as Pakistani banks are hesitant to engage directly
with Iranian banks due to these sanctions.
Despite these challenges, Pakistan is exploring alternative ways to increase trade, such as
using a barter system and developing border markets. The pipeline project is still on hold in
Pakistan because of concerns about U.S. sanctions, although Iran has already invested in its
side of the project.
Moreover their are other problems that include illegal smuggling of Iranian goods and fuel.
The illegal smuggling has reduced the revenue generation by the government and the areas
where smuggling is significant in number like Gwadar, Chaubahar, Pasni etc has evaded the
tax payment to the country by using the smuggled goods and oil, where the oil cost 150
RS/LITRE. The youth that sees that smugglers being the leading figures of their local areas
prefer this illegal act and lifestyle of living rather than living a normal life that further creates
a chaotic environment in the locality.

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