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EDITORIAL: The Pakistan-Iran five-year trade cooperation deal, with a $5 billion bilateral trade target, comes at a time when both countries could do with a boost to their economies.

They should be mindful, though, that they made a similar promise in late 2021, when they believed they’d be able to achieve the same target by this year. But with much of the toxic international politics that prevented Pakistan-Iran cooperation in the past out of the way now, there’s reason to be more optimistic this time.

Interestingly, beyond just trade talks, the two sides also discussed ways of conducting their commerce in the way Iran is trading with Russia and China. That means, of course, that they’d be inclined to follow the growing trend, especially in this bloc, of trading out of the dollar. And that, in turn, means that the country will be forced to upgrade and streamline its money markets and develop currency swap agreements, which is a long-run net positive.

At a time when moves to develop a sovereign wealth fund are gaining strong momentum, such diversification will only help arrest some of the volatility that Pakistan’s capital markets have become notorious for.

Besides, ignoring natural trade opportunities with a next door neighbour for so long is, very rightly, considered a cardinal sin in even the most basic-level economics. So, any effort to overcome obstacles, stimulate trade and develop currency arrangements is welcome, even if long overdue.

The most important thing to come out of the discussions was the joint desire to conclude the Iran-Pakistan (IP) pipeline that was perhaps the biggest victim of global politics of the time. This project can, and hopefully will, be a game changer for Pakistan. But the then/outgoing Foreign Minister, Bilawal Bhutto, would no doubt remember that this project finally took off on the last day of the government that his father presided over, and then fizzled out after the change of guard.

This time too, Islamabad and Tehran shook hands in the twilight of the government in this country, and it would be a shame if the past repeats itself yet again.

Let’s not forget that all the time Pakistan’s economy has been in a nosedive, Iran has been cultivating regional partnership to circumvent biting sanctions by the US and the EU. Pakistan must also look for markets closer to its shores.

In this building alliance, Pakistan is already very good friends with China, and is improving its relations with Russia. The relationship with Iran, though very warm and cordial, has been hurt by politics and never lived up to its true economic potential. But the world is changing. China is now a major global power. And Gulf countries, too, have buried the hatchet with Iran.

Pakistan should look to be ahead of the curve in this process. The breakthrough with Iran can turn into a major development, unlocking trade potential that both countries have ignored so far. It would also help cut smuggling and incidents of terrorism across the border. Hopefully, this process will be carried forward by the next government. This is both an economic and diplomatic necessity.

Copyright Business Recorder, 2023

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zaya zaya Aug 12, 2023 10:15am
"Besides, ignoring natural trade opportunities with a next door neighbour for so long is, very rightly, considered a cardinal sin in even the most basic-level economics. So, any effort to overcome obstacles, stimulate trade and develop currency arrangements is welcome, even if long overdue." The Past is forgotten Sanctions prevented Iran and Pakistan had no choice, its still the same as far as Iran Pakistan is concerned, the group China and Russia with Iran is a different story, less weight obstructions from the usa, its declined ability, but not against Pakistan/Iran. Keep up wishful thinking!
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KU Aug 12, 2023 11:22am
If the Americans have the right to say, ''America comes first'', then we too have the same right. The rapidly changing international trade, fluctuating global food prices, and OPEC speculations are frightening scenarios for Pakistan in the coming days. We need to open all kinds of trade with Iran and other neighbors if the people of these countries are to be given any hope for the future. Alternately, civil unrest will become a reality and illegal migration to the West and EU will be a certainty. The moral policing by the US and EU also needs to be questioned when trade and investment by India in sanctioned countries takes place. Equally glaring is their track record of human rights violations and religious genocide.
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HashBrown® Aug 12, 2023 02:37pm
@zaya zaya, "Keep up wishful thinking!" It wasn't so long ago that people said the same thing about Pak-Russian relations. Even a decade ago they were virtually nonexistent but the world continues to evolve. There's absolutely no reason why the same won't happen regarding Iran, especially when cultural/religious bonds are already there.
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zaya zaya Aug 13, 2023 04:29am
@HashBrown®, with due respect, there wont be a Pak/Russia relationship as the Geopolitics and Hegemonic aim of usa will keep Pakistan tied unless and until Pakistan achieves real independence like india, which is NOT bound by usa sanctions, only its window dressing to show usa being tough on india. Pakistanis love to build castles in the air and then start living in them too. There are Iranian agenda and there are Russian agenda as well as the Chinese and usa agenda; Pakistan agenda does not count, but it will when it takes a stand and suffering first; the process of awakening may have been started, the work is done, people have to show intent and act on it. As long as the game is in old hands the situation will continue, the 65% young have a lot to offer and and there is brilliance among them, not allowed to rise.
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HashBrown® Aug 13, 2023 10:08pm
@zaya zaya, "with due respect, there wont be a Pak/Russia relationship as the Geopolitics and Hegemonic aim of usa will keep Pakistan tied unless and until Pakistan achieves real independence like india" No offence but when you use hindustan as an example of independence you lose all credibility. All the strategic benefits that Delhi gets from Washington are in return for it being a vassal state in the subcontinent and obediently opposing China whenever Uncle Sam demands - independence has nothing to do with it. Also, you're about five years too late when you suggest that "there won't be a Pak/Russia relationship" - it's actually been flourishing for a number of years now. Energy cooperation, joint defence drills, bilateral delegations, all these have been going on quite publicly. It doesn't help to obsess about other countries' agendas, especially when it blinds you to the fact that Pakistan has been pursuing its own agenda too - with more success that you seem to have realised.
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zaya zaya Aug 14, 2023 06:05am
@HashBrown®, "especially when it blinds you to the fact that Pakistan has been pursuing its own agenda too" Thanks for the response, I am aware of Pak Russia attempts at building relations, including Military exercises, however, it is One step Forward and Two steps back, as usual; Pakistan is not good at closing the deals, hence it ends up stuffing it up in international negotiations (Waste Management with Turkey bailout, Recko Diq, ICJ and more) to quote a few. But, I must encourage you in your passion that one day the nation will rise through the young and not the old goats of my era, stay hopeful, Naaumedi is not good. regards
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Bashir Aug 14, 2023 10:04am
But that will put a big dent on company's smuggling revenues!
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Tahir Alvi Aug 15, 2023 07:02pm
Pakistan should start trade-related activities with India asap and boost with others. The best way to normalize the relationship is to start trade with nations, it ultimately removes a lot of misconceptions and negative factors. EU is the best example of it, they cut each other throats for centuries but now they realize that war is not a solution to any problem. Unfortunately, in South Asia, we are going against the grain, and this is causing significant suffering for the population.
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HashBrown® Aug 16, 2023 12:25am
@zaya zaya, Rest assured sir that I'm an old goat myself, and I share your disgust with our political elite. But behind the dozen or so imbeciles that we constantly see on our news channels there are capable and qualified Pakistanis working hard to cement overseas relations. Remember also that bilateral relations aren't so much about closing deals - in fact in many ways they're the opposite, open-ended and constantly evolving. Pakistan's diplomats have worked hard behind the scenes to cultivate our current rapprochement with Russia, and the effects are already showing - in time we will see the same with Iran.
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Saqib Aug 18, 2023 12:30pm
@zaya zaya, Exactly, This young Majority of Pakistan has taken the baton in its hand and that will lead us out of this quagmire!!!
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Saqib Aug 18, 2023 12:31pm
Good Discussion in the comment section!!!
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Saqib Aug 18, 2023 12:39pm
When we say smuggling ,it might be in terms of lost revenues but that's a basis livelihood for the south western part of pakistan as people there have very few options.Also you have to resolve issues with Baloch first if you want anything big to happen with Iran but that can't happen with the barrel of gun pointing towards the people of Balochistan not to mention the whole of the Pakistan!!!!
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HashBrown® Aug 18, 2023 06:07pm
@Saqib, "Also you have to resolve issues with Baloch first if you want anything big to happen with Iran but that can't happen with the barrel of gun pointing towards the people of Balochistan not to mention the whole of the Pakistan!!!!" 100% agree with you bhai.
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