Pres. Raisi’s Islamabad Visit: Iran-Pakistan Ties Poised for Historic Transformation

Pakistan and Iran hold strong relations having their roots deep in history, culture, and religion, and this visit provides an important chance to shore up their ties.

This is the first visit of a foreign head of state to Pakistan since the nation's February general elections, something being highlighted by the Pakistan media.

Pakistani Interior Minister Syed Mohsin Raza Naqvi in a meeting with Iranian ambassador to Pakistan Reza Amiri Moghadam said that President Raisi’s visit marks a "turning point" in the relations of the two neighbors. "Pakistan values brotherly relations with its neighbor and brother Iran," he added.

According to a statement of the Pakistani foreign ministry, in this visit, a broad agenda is considered to further strengthen bilateral relations and cooperation in various fields of trade, communication, energy, agriculture and public relations.

Also, according to diplomatic sources, Iranian president have an intensive work schedule and meetings during this short two-day trip, which will begin with a meeting with Prime Minister Shahbaz Sharif and several ministers, including the speaker of the Senate and the speaker of the National Assembly, on the first day of the trip.

Raisi will also meet with Pakistan President Asif Zardari on Monday evening, and then on Tuesday he will go to Lahore, where he will meet with Punjab Chief Minister Maryam Nawaz Sharif and Punjab Governor Baligh Ur Rehman. The,Ln, he will visit Karachi, Pakistan's business capital, and meet Sindh Chief Minister Murad Ali Shah and Sindh Governor Kamran Tasuri.

The last program of Raisi will be visiting Mazar-e-Quaid in Karachi. Raisi's visit to Karachi is so significant that the city's officials announced Tuesday an official holiday.

Focusing on business ties boost 

Like a majority of foreign visits of the officials of President Raisi’s administration, business and facilitation of further economic and trade relations with neighbors is the top priority of the president's visit to Islamabad. Reports suggest that Tehran seeks to push up the trade volume from the current $2 billion to $5 billion in a short term. 

Last year, the opening of the Mand-Pishin border market and the power grid to Pakistan in May, as well as the signing of MoU on joint special economic zone in November, was an important development in the economic relations between Pakistan and Iran, and the continuation of this approach in the current visit ushers in a new era in the trade. 

According to Pakistani sources, a draft agreement on foundation of joint special economic zone of Rimdan-Gabd is ready and is likely to be signed in this visit.

The opening of Mand-Pishin border market and the 100 mw Gabd-Pelan power grid opened a new chapter in their bilateral cooperation. This is driven by the huge potentials of bilateral energy and oil projects between the two countries.

Undoubtedly, energy will be the most important part of the economic case on the negotiating table between the Iranian and Pakistani officials during Raisi's visit to Islamabad. Essentially, the current economic relations between Pakistan and Iran are based on energy trade. Pakistan is in need of energy sources, and among them, Iran's oil, gas, and diesel are the best available options for Pakistanis. 

In this area, the conclusion of the case of Iran's gas pipeline to Pakistan that has been on hold for over a decade is expected to be among the top agenda of Raisi's visit. Known as Peace Pipeline, this major project was signed in 2009 and was set to export 750 million square feet of gas annually to Pakistan for 25 years. This project consists of 1,150-kilometers pipeline inside Iran and 781-kilometer pipeline inside Pakistan. While Iran completed its share of project years ago, the Pakistani government has been unable to fulfill its obligations, mainly due to pressure from the US. However, according to this agreement, if Pakistan withdraws from its commitment, it will have to pay $18 billion as a penalty, and Iran issued a final warning to Islamabad last January. It was then that the government of Pakistan announced the beginning of the completion of the remaining 80 kilometers of the pipeline construction.

The construction of the remaining 80 kilometers of is estimated at a cost of 44 billion rupees ($253 million) in 24 months and it was passed in the 2024-2025 budget of the oil sector.

This Pakistani decision has one again brought Islamabad under the American pressures aimed at dissuading it from completion of the project.

According to Pakistani media, the administration of US President Joe Biden has invited Pakistani PM for high-level economic talks just a few days after Raisi’s visit. According to Business Recorder, the Peace Pipeline will be raised during the dialogue.

Pakistan is currently engaged in one of its most challenging economic battles as both its political and economic outlooks are changing due to rising global prices and it cannot afford to pay for rising oil prices. However, the new perspective for economic cooperation with Iran can have many benefits for Pakistan, and one of the important benefits of trade with Iran can be the discussion of barter.

Before this, Pakistan's hope was on cheap Russian oil, but the costs of Russian energy transportation is on the rise. To hit Russian oil revenues, recently the G7 countries have taken new measures to raise the risks and costs of Russian oil shipment to the world markets by increasing the insurance fees of oil transit from Baltic Sea to India to $20 per barrel for shipments after December 5.

Chabahar and Gwadar ports' bond

Transit cooperation makes another part of the existing and potential capacities for the development of economic relations. Gwadar, the port city of Pakistan, is not far from Iran's port of Chabahar. According to Pakistan, Gwadar and Chabahar should grow as sister ports and not rivals. With the growth of relations through railways, roads and sea links, these two strategic ports can supplement each other in boosting regional trade. A geopolitical bond between Chabahar and Gwadar carries the potential to remarkably bolster the regional trade and interactions.

Both Iran and Pakistan are members of the Shanghai Organization and both have close economic relations with China and are seeking to benefit as much as possible from China's great economic corridor, dubbed Belt and Road Initiative (BRI). On the other hand, in order not to fall behind its eastern rival, India has shown a desire to invest and develop Iran's Chabahar port, and agreements have been made between the two countries within North-South Corridor.

In such conditions, constructive dialogue is indeed important to make sure of win-win results of bond of Chabahar-Gwadar ports to help regional prosperity and stability.

Security and political issues also on agenda

In addition to business, political and security issues are also of great importance in bilateral relations of the two nations and will certainly be high on the agenda of the high-ranking Iranian delegation in Islamabad. President Raisi's visit comes a few months after missile attacks were trade between the two countries over the border and their relations went strained for a short time. First, Iran launched a missile strike on hideouts of the Jaish Al-Adl terrorist group in the border town of Panjgur of Pakistan. Less than 48 hours, Pakistan struck points inside Iran's Sistan and Baluchestan province in mid-January. However, the tensions lived only shortly and the two neighbors agreed to put an end to the political crisis.

Both countries have common interests in fighting terrorism, extremism and promoting regional stability. The region has always witnessed the activity of numerous terrorist and separatist groups, which has led to cross-border terrorism and threats to the stability and sovereignty of both countries. To counter these risks and ensure the security of the borders, Pakistan and Iran have shown more willingness to cooperate in the field of security, military and intelligence issues. 

The two neighbors share similar concerns when it comes to Afghanistan developments. It is crucial for the two countries to promote their military and intelligence coordination to address the common security challenges. 

Also, due to their proximity to the Arabian Sea, the two countries have common interests in protecting maritime security and shipping lines. To boost their maritime cooperation and address potential security challenges, Tehran and Islamabad have several times held joint naval drills.