The Joint Comprehensive Plan of Action: Impacts on Pakistan

Abstract

The Joint Comprehensive Plan of Action (JCPOA) will impact the Iran–Pakistan relations in many ways including the prospects of the Pakistan–Iran gas pipeline and other energy issues which had earlier been halted due to sanctions and the American pressure. Trade will become flexible, and Pakistan will import oil and export rice, but there are issues than those pertaining to the sanctions which had governed bilateral trade that will continue to be an irritant. Iran would be more assertive on Balochistan, especially on the Jundullah and other rebel groups entering into its Sistan–Baluchistan province from Pakistan. Moreover, Afghanistan will present its own challenges as Iran might have more in common with India in terms of the access to Central Asia through the Chabahar port, thus balancing the Gwadar port or the China–Pakistan Economic Corridor (CPEC). An assertive Iran after the deal might see a worried and anxious Saudi Arabia and the Gulf Cooperation Council (GCC) presenting Pakistan with power balance challenges in the Persian Gulf.

Keywords

Iran Pakistan JCPOA GCC energy gas pipeline Afghanistan

Hailed as a “historic step,” the July 2015 nuclear deal between Iran and P5+1 countries came after a decade-long stand-off between Iran and the West. Many perceived it as the onset of a new era of cooperation between the two. However, at the time of writing, things look not so certain, as the US, France, and others have referred to Iran’s test launching of a nuclear warhead capable intercontinental ballistic missile as a serious issue, which they are also terming as the violation of a United Nations (UN) Security Council Resolution 1929 (LaFranchi, 2015). Earlier, on October 7, the Supreme Leader Ali Khamenei proscribed any further talks between Iran and the US (Bozorgmehr, 2015). However, the 13th Parliament of Iran saw the passage of the nuclear deal with 161 voting in support, 59 opposing it and 13 abstaining. The Guardian Council also approved it (Dawn, 2015f). The US Congress had earlier failed to derail the Iran nuclear deal as the Republicans could not get a veto-proof majority in either chamber of the bicameral legislature (Iqbal, 2015a). Khamenei’s hardened position on the US was reflected in his October 21 letter to Iran’s President Hasan Rouhani in which though he did endorse the nuclear deal, he also reiterated his distrust for the US. According to one observer:

Khamenei’s letter indicates that he would not approve the implementation of the [Joint Comprehensive Plan of Action] JCPOA unless the following conditions are met:

The US and European nations must draft a letter promising to end all possibility of “sanctions snapback”;

The West must lift—not “suspend”—all sanctions immediately and permanently.

The International Atomic Energy Association (IAEA) must issue an irreversible declaration ending any future investigation into alleged military dimensions of Iran’s nuclear programs;

Iran will do nothing to alter the heavy water (plutonium) reactor at Arak until the signatories of the JCPOA produce an alternative usage plan;

Iran will not begin shipping out of country any of its enriched uranium unless the signatories agree to deliver uranium to Iran (albeit at a lower level of enrichment);

Iran demands right to implement a phased plan of centrifuge expansion to 150,000 over a period of 15 years;

No sanctions are to be leveled against Iran because of alleged support for terrorism or human rights violations;

Iran must be free to explore all future advances in nuclear enrichment technology. (Franklin, 2015).

In the context of Iran–Pakistan relations, this deal would have an impact largely on the prospects of the Pakistan–Iran gas pipeline and other energy issues which had earlier gotten halted because of sanctions and the American pressure and which may now see the light of the day. The argument has been extended by some to other challenging bilateral issues. Trade could become flexible, and Pakistan could now import oil and export more rice, but there are issues than those pertaining to the sanctions which had governed bilateral trade. Iran would be more assertive on Balochistan, especially on the Jundullah and other rebel groups entering into its Sistan–Baluchistan province from Pakistan. Moreover, Afghanistan will present its own challenges as Iran might have more in common with India in terms of the access to Central Asia through the Chabahar port, thus balancing the Gwadar port or the China–Pakistan Economic Corridor (CPEC). An assertive Iran after the deal might see a worried and anxious Saudi Arabia and the Gulf Cooperation Council (GCC) presenting Pakistan with power balance challenges in the Persian Gulf.

In short, there are a number of issues between the countries, some related to external factors, some bilateral, and still some others which are not so mutually exclusive. Therefore, the impact of the deal and the subsequent lifting of the sanctions are spread across the bilateral spectrum, impacting some corners more than others while leaving still others untouched. This article seeks to see the Pakistan–Iran relations within the context of the nuclear deal and the possible lifting of sanctions.

The Nuclear Deal

According to the terms of the deal, the US, the European Union, and the UN would lift sanctions imposed upon Iran, in return for the latter accepting long-term restrictions on its nuclear program. A UN weapons embargo would remain for 5 years and a missile technology purchase ban would stay for 8 years. The deal, apart from stipulating new provisions for inspection of its facilities (which include military sites), prevents Iran from producing enough nuclear material for a bomb for, at least 10 years. Under the terms of the deal, Iran would reduce the number of centrifuges from about 19,000 to 6,104; a total of 1,044 of these centrifuges would not be used for uranium enrichment, that is, only 5,000 of these centrifuges would remain active. For at least 10 years, the advanced design models cannot be used; research and development for efficient designs would have to be based on plans approved by the IAEA; the enrichment facility at Fordow would be made into a physics research center and for at least 15 years, it would neither produce nor store any fissile material. The stockpile of low-enriched uranium would be brought down from 10,000 kg to 300 kg. The Arak heavy water reactor is to be redesigned, with its original core removed and destroyed. Iran would not build a heavy-water reactor for the next 15 years—this would take care of the plutonium path. In case of non-compliance of the accord by Iran, sanctions would be reimposed (snapback clause) within 65 days (Al Jazeera, 2015; The Economist, 2015). A generalized assessment is that if this accord gets implemented in letter and spirit, then Iran would not be able to manufacture a bomb for the next 15 years, at least.

Pakistan–Iran Relations: Background

Historically speaking, Pakistan’s relationship with Iran has seen great variations over the past five decades. Roughly speaking, there have been four periods: the reign of Shah Mohammed Reza Pahlavi of Iran (1941–1979), when there was an upward trajectory of relations between Pakistan and Iran—the two key players of the US Cold War alliance politics—when Pakistan saw unequivocal financial and military support of Iran at the expense of India (Tahir-Kheli, 1977).

Iran was one of the first countries to recognize Pakistan; a friendship treaty was signed in 1950, and during the Cold War, when both were the allies of the US, they became members of the Central Treaty Organization or CENTO. For trade purposes, they gave each other the most-favored nation status; Pakistan got oil from Iran on generous terms, and the Iranian help for suppressing the insurgency in Balochistan. India moving closer to the erstwhile Soviet Union during the Cold War, and its support for Gamal Abdel Nasser of Egypt, also strengthened the Pakistan–Iran relations (Chubin & Zabin, 1974). There were proposals at one point (which did not fructify) that Pakistan, Iran, and Afghanistan should form a confederation of states (Waintraub, 2011). The three, nonetheless, along with Turkey formed the Regional Cooperation for Development (RCD) highlighting Iran’s centrality for Pakistan. As Ayesha Siddiqa says,

Generals like Ayub Khan, Yahya Khan, Nur Khan and others appreciated Iran’s worth for Pakistan. There is enough evidence that speaks volumes about Iran’s centrality for Pakistan’s security, especially up until the late 1970s. The Shah of Iran had provided material help to Pakistan during the latter’s 1965 war with India and was looked upon to admonish New Delhi for any adventurism. In 1969, Pakistan celebrated the Iranian monarchy and Iran celebrated Pakistan Day. (Siddiqa, 2015)

However, though Iran had supported Pakistan in its war with India in 1971, by the mid-1970s, the ties started getting strained as Zulfiqar Ali Bhutto got involved in “chasing Arab petro-dollars” and making the use of religion (Sunni Islam) to consolidate the state after the formation of Bangladesh. His other acts, which affected his country’s relations with Iran, included moves like inviting Libyan leader Muammar Gaddafi to the Islamic Summit in Pakistan held in 1976, despite the Shah of Iran’s forewarning of his absence in such a case (Hunter, 2014).

The Khomeini years in Iran (1979–1989) and the Zia period in Pakistan (1977–1988) saw the nadir of bilateral ties. Sectarian organizations adversely impacted the relations internally and both the countries were vigorously adopting diametrically opposed approaches over Afghanistan (Pakistan backing Taliban and Iran backing the Shia rebels). All this spelt much discord in the relations between the two (Christensen, 2011, p. 3). Pakistan, however, was one of the first countries to recognize the new Islamic Republic and did not support Iraq during the Iran–Iraq war (Hussain, 1993).

Zia’s policy of Islamization, setting up of the Nizam-e-Mustapha (rule of the Prophet) and cementing ties with Saudi Arabia, particularly after the Afghan War, in turn “also led to the transformation of the country’s traditional Islam under Wahhabi-Saudi influences, the undermining of its Persian-influenced Mogul culture, and the elimination of the legacy of British rule” (Hunter, 2014). Shireen Hunter says that the factors which had caused the transformation of the Iran–Pakistan ties from close friendship to thinly disguised hostility in the 1980s and 1990s were:

Political and cultural changes in Iran and Pakistan, especially the spread of a more strict, Saudi-inspired version of Sunni Islam in Pakistan; Increasing Arab influence in Pakistan, especially that of Saudi Arabia and the UAE; Growing sectarian tensions in Pakistan between the more strict Sunnis and the Shias; Developments in Afghanistan, notably the Soviet–Afghan and Afghan civil wars, the rise of the anti-Shia and anti-Iran Taliban with Pakistan’s help; the intensification of competitive aspects of regional politics following the Soviet collapse. (Hunter, 2010, p. 143)

Thus, it is argued

… by the early 1990s, from Islamabad’s perspective, roles had reversed. In any case, Islamabad saw the Shah embroiled in his own battle with Iraq on the Shatt-al-Arab and not on the same page with Pakistan. The Shah himself was disillusioned with an ally, which was focused more on its battles with India than helping Tehran add to its geopolitical strength. In any case, Iran’s 1979 revolution and confrontation with the US made it totally unusable from Pakistan’s strategic perspective. (Siddiqa, 2014)

However, geographical proximity, absence of any major territorial disputes, Pakistan’s growing need for energy, and the existence of pockets of pro-Iran sentiments in Pakistan, coupled with Iran’s weak hand in its diplomatic relations across the board, have enabled the two states to avoid an outright conflict and to pursue some cooperative policies, thus retaining a facade of friendship, especially after the September 11 years (2001 till the present) (Hunter, 2010, p. 144). Meanwhile, with the end of the Cold War, Indo-Iranian relations started improving. In 1993, the Prime Minister P.V. Narasimha Rao went to Iran and 2 years later, in 1995, the President Hashemi Rafsanjani of Iran came to India. The Pakistan–Iran ties, on the other hand, started witnessing rifts as the former recognized the Taliban government in Afghanistan in 1996 and Iran denounced it, thus bringing to the fore differences in their regional perspectives.

More recently, at the time of the Arab Spring, media reports indicated that around 2,500 Pakistani ex-servicemen were stationed in Bahrain to quell the Shia uprisings in 2011—the Pakistani denial notwithstanding (Mashal, 2011). This policy of “obliging the Saudi monarchy” was not well received in Tehran. Bilateral relations between the two countries significantly improved toward the end of the Pakistan People’s Party (PPP)-led government’s term in Pakistan (2008–2013), a period characterized by an extreme deterioration of Pakistan’s relations with the US after the killing of Osama bin Laden in May 2011 and the NATO airstrikes on the Pakistani army’s posts at Salala in the same year (Sial, 2015). In February 2013, the two countries had signed a bilateral security agreement to combat and prevent cross-border terrorism and organized crime; smuggling and illicit trade, including drugs and weapons; and other activities posing threats to the security of either country (Dawn, 2013). Nawaz Sharif’s return to the political scene in 2013 was seen as a positive sign for Saudi Arabia, keeping in view his personal relations with the Kingdom. However, nine bilateral cooperation agreements signed between Pakistan and Iran in Tehran during his visit in May 2014—first since the December 1997 visit by Sharif to attend the eighth OIC summit—included provisions for countering terrorism and enhancing border security, including the establishment of a High Border Commission; prevention of money laundering and financial support for terrorist groups; and exchange of financial information on money laundering and for the exchange of prisoners (Husain, 2014; Islamic Republic News Agency [IRNA], 2014).

Pakistan’s Reaction to the Deal

Even before the deal was signed, Pakistan’s public position on Iran’s nuclear posture was that the issue should be resolved through “diplomacy and dialogue” (The Nation, 2012). Pakistan has hailed the nuclear deal, saying it “had consistently maintained that the Iranian nuclear issue should be peacefully resolved through dialogue” (Haider, 2015a). The opposition PPP also welcomed the deal with former President Zardari calling it “a triumph of diplomacy and negotiations over coercion and hostility” (Haider, 2015b).

A Pakistan public opinion survey regarding Iran going nuclear revealed four trends:

Anti-Americanism: The view that the American attitude is one of curtailing the Islamic countries from acquiring nuclear weapons; it also supports more weapons production by Pakistan to deal with the US pressure and sympathy for the development of the Iranian nuclear program;

Balance of power in the Middle East: The Iranian nuclear weapons would balance the power dynamics in the Middle East by breaking the Israeli monopoly but the development would not impact Pakistan;

Sectarianism: Seen as a Shia bomb, the Iranian nuclear bomb could prompt Sunni countries, such as Saudi Arabia and the UAE, to have their own nuclear weapons … not seen as desirable as it could put pressure on Pakistan; and

Nuclear weapons nonproliferation: Believing it to be world of nuclear haves, it was felt that the “countries with a nuclear weapons capability that capitulate to outside pressure leave themselves vulnerable” (Waintraub, 2011, p. 18).

Implications

Energy

Pakistan’s energy crisis hardly needs any elaboration; one estimate puts the natural gas shortage at 2,000 million cubic feet per day (mmcfd) (Yousaf, Bhutta, & Gishkori, 2015). Indeed, the most commented-upon implication of the nuclear deal is that of the revival of the Iran–Pakistan gas pipeline (Dawn, 2015c). The country is facing a severe long-running power crisis and expects to meet its energy demands by completing the stalled Iran–Pakistan gas pipeline project and thereby getting gas directly from Iran through the pipeline or by purchasing oil from Middle East cheaper than before “because of the deal” (Rashid, 2015). It is estimated that the Iran–Pakistan gas pipeline would supply 750 mmcfd of gas at rates cheaper than the liquefied natural gas (LNG) that Pakistan plans to import from Qatar. Pakistan had stopped work on the pipeline under the US and Western pressure as well as due to fears of being cut-off from the international finance system (Yousaf et al., 2015).

In anticipation of the lifting of sanctions, Islamabad and Tehran began moving forward with two major energy projects: a natural gas pipeline and an electricity transmission line. In March 2013, the US$7.5-billion Iran–Pakistan (IP) pipeline was launched with great expectations, “but the project immediately hit quicksand in the form of international sanctions on Tehran, which meant cash-strapped Pakistan struggled to raise the money to build its side” (Dawn, 2015b). Iran has completed its part of the 1,800-km pipeline which would link its South Pars gas fields to Nawabshah, close to Karachi. Pakistani officials, including Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, have expressed optimism over the project, which has a new deadline of end-2017.

Under the agreement, Pakistan had to lay its own portion by December 2014, and failure to so would entail a daily penalty of one million dollars to Iran until completion. Pakistan’s alternative plan to avoid penalty entails seeking the Chinese help in terms of financing the building of the pipeline from Nawabshah to Gwadar (about 800 km) and later, subject to the lifting of sanctions, extend the pipeline to Iran. Once that is built, Pakistan would “only have to build another 80 kilometres” of pipeline to link up to Iran, and could eventually extend the project as far as its northern border with China” (Shah, 2015). Beijing, on its part, started work on the portion of the pipeline between Nawabshah and the port of Gwadar, as part of its US$46 billion economic corridor project—the CPEC—which would connect western China to the Middle East through Pakistan, close to the Iranian border. Iran supports the CPEC and the pipeline stated to be a “collateral beneficiary” of the CPEC (The Express Tribune, 2015b). Despite the penalty provision, Iran has until now not pressed any late fees on Pakistan for not completing the project on time (Yousaf et al., 2015). The nuclear-related sanctions would, however, be lifted when Iran would meet its key measures stipulated in the deal and reach an “implementation day” (Dawn, 2015e). Pakistan and Iran are also reportedly negotiating an additional supply of electricity to Pakistan which Iran has agreed to finance a US$60 million project entailing the laying of a 100-km electric line to supply 1,000 MW of electricity to overcome its power shortage (Farrar-Wellman & Frasco, 2015). Currently, the areas on the Pakistan–Iran border are getting around 100 MW of electricity daily (The Express Tribune (2015a).

Nuclear Proximity

Iran’s right to acquire nuclear technology has been openly supported by Pakistan (Farrar-Wellman & Frasco, 2015). Reports of Pakistan helping Iran in the acquisition of nuclear capability have been there for the last three decades. These include Pakistan’s premier nuclear scientist A.Q. Khan’s visit to Bushahar in 1986; the arrival of the first P-1 centrifuges in Iran and later that of 500 basic centrifuges and drawings for advanced centrifuges in 1994; arrival of more than 2,000 components and subassemblies for the first and second generation centrifuges in Iran in 1995; and A.Q. Khan’s confession in 2004 of helping Iran (Fitzpatrik, 2007; Zarif, 2009).

At the official level, however, Pakistan has denied any involvement in the Iranian nuclear program (Xinhuanet, March 15, 2010). The government has claimed that any transfer of nuclear technology to Iran was done at the individual level, “for their personal financial gain” and without the involvement of “any government or military personality” (Ganguly, 2004; Musharraf, 2004; Squassoni, 2004). This however is unlikely given the nature of Pakistan’s clandestinely acquired nuclear weapon program and the military’s exclusive control over the decision-making process in the country.

As Ayesha Siddiqa puts it candidly

Pakistan’s state remained ambiguous towards Iran, which it considered the source of an internal irritant, yet a “brotherly Islamic state,” whose military arm ought to be strengthened. The transfer of nuclear know-how, which is a recorded fact, was the brainchild of the generals’ ambitions to counter the US by propping up forces that would counter American hegemony in the region. Islamabad also helped Tehran in missile and other technology transfers from China. Even as late as 2002, a senior general of Pervez Musharraf’s team warned a high-level visitor from Iran about Pakistan and Iran’s common threat, the US, and that it would target Pakistan’s nuclear programme after it is done with Iran. (Siddiqa, 2014)

Fears have been expressed by Munir Akram, a former Pakistani Ambassador to the UN, that

with Iran neutralised, Pakistan remains the only nuclear-capable Islamic nation. Pakistan has fought off numerous US attempts, initially to prevent and, after 1998, to retard Pakistan’s nuclear and strategic programs. Pakistan’s “establishment” is confident that future attempts would fail also. But, it would be a mistake to become complacent. (Akram, 2015)

Pakistan’s public declarations notwithstanding, being surrounded by two nuclear powers, namely, India and potentially Iran, is not a happy proposition for Islamabad. This is particularly because of the rift with Iran in the border areas (Balochistan) and Afghanistan. Even more serious is the sectarian angle. Pakistan certainly cannot take any comfort in the idea that an Iranian bomb would be seen as emboldening of the Shia minority inside the country that is allegedly supported by Iran. This sectarian rift also becomes a cause for pressure from Sunni-majority Saudi Arabia in general and for the acquisition of nuclear capability in particular.

Arab World

The concerns of Saudi Arabia and its GCC partners are rooted in letting Iran have enrichment capabilities that was denied to them, especially the US–Saudi memorandum of 2008 that asked Riyadh to stop its pursuit of sensitive technologies (US Department of State, 2008).¹ Furthermore, the post-deal lifting of sanctions could allow Iran to expand its influence in Iraq, Syria, Lebanon, and Yemen; assume a role in Afghanistan and Central Asia; and intervene on behalf of the Shia minorities in the GCC countries. The Arab countries have already become concerned at the emergence of a collaborative relationship between Iran (their rival) and the US (their patron) whose security umbrella they enjoy in the post-deal scenario (Akram, 2015).

Saudi Arabia initially opposed the deal, as it feared that the agreement would strengthen its adversary Iran economically, especially when sanctions are lifted. It expressed support for the deal, after King Salman’s meeting with the President Barack Obama in Washington in September 2015 (Presutti, 2015). It may be early to see how it would impact upon its relations with Pakistan which has been supporting the deal from the beginning. The reason is that the relations between the two countries have seen a downturn after Pakistan refused to send troops to Yemen in 2015, where Saudi Arabia is fighting the Houthi rebels backed by Iran. In the past, Pakistan had sent its troops as part of the US coalition forces during the Kuwait crisis against Saddam Hussein. Moreover, in the 1960s and 1980s, Pakistani troops were stationed in the Kingdom, Saudi fighter pilots had received training from Pakistani counterparts, and in 1969 fought against the Yemeni forces (Farooq, 2014). The Saudis, on their part, generously funded Pakistan during the Afghan war (1979–1989), and during the natural calamities, including the 2005 earthquake and the 2010 floods. More recently, in February 2014, Saudi Arabia suitably rewarded Pakistan after its U-turn on its Syria policy leading to its support for the former and according to one observer, “US$1.5 billion was transferred to Pakistan’s state bank by an unnamed ‘brotherly country’ giving the rupee its largest boost in years” (Farooq, 2014).

Despite these, the domestic public opinion in Pakistan has opposed any military assistance to Saudi Arabia in its Yemeni campaign. On April 10, 2015, the Parliament passed a unanimous resolution limiting Pakistan’s role in the crisis to mediator and demanded that the nation maintain its neutrality. Debalina Ghoshal says, “Days before Pakistan’s decision to maintain neutrality in the crisis, the Iranian Foreign Minister Mohammad Javad Zarif visited Islamabad to dissuade the country against joining Saudi Arabia in the attacks on Yemen” (Ghoshal, 2015).

The Arab monarchies’ relations with Iran have been mired in their suspicion and fears vis-à-vis the Shia state of Iran. Shahi Javed Burki says,

It is this opposition that is likely to have consequences for Pakistan, particularly after the National Assembly vote against sending troops to Yemen which has drawn an angry response from the leaders of the Gulf States … how would the Arab monarchies react to the agreement? They may decide to aid the forces of sectarian extremism in some of the countries in which they have influence. Pakistan is one such country. There are numerous madrassas in Pakistan that receive funds from the Arab states. Several of these are involved in sponsoring extremist activities in Pakistan. That this was happening was recognised by the Pakistani authorities when they drafted the National Action Plan to counter terrorism. However, because of quarters that were benefitting from the flow of money from the Arab world, the government was slow to act; it did not take the promised action. (Burki, 2015)

The assessment is a little simplistic. Much would depend on how far Iran stays away from the weaponization after the deal as well as how much Saudi Arabia feels assured that Iran is off the nuclear bomb. If the Saudis are convinced otherwise, would they seek the nuclear bomb and cultivate Pakistan for that purpose? Reports are abound about the Saudi role as well as interest in Pakistan’s “Islamic Bomb” “especially when the country was under sanctions” (Khan, 2012, p. 383). These include Bhutto’s promise of a “security umbrella protection” to cope with the Western sanctions after the 1998 Chagai nuclear tests (beginning in 1998, Saudi Arabia began supplying Pakistan with 50,000 barrels a day of free crude oil, worth nearly US$2 billion); the visit of the Saudi Crown Prince Sultan to Pakistani nuclear facilities in 1999; the Saudi plans to replace Chinese missiles with later versions of the Pakistani missiles; and a secret nuclear agreement of October 2003 after the visit of the then Crown Prince Abdullah to Pakistan (Riedel, 2011).

To use Riedel’s term, “unacknowledged partnership” has never been proven, making experts wonder at a strange relationship in this regard, where though Pakistan has reportedly sold nuclear secrets to Iran (Libya and North Korea) through A.Q. Khan transactions, it has also “faced allegations of promising Saudi Arabia a nuclear umbrella against Iran” (Tanzeem, 2015). An Israeli military intelligence officer has been reported to have said that if Iran acquired the bomb, “‘the Saudis will not wait one month. They already paid for the bomb, they will go to Pakistan and bring what they need to bring’—to Pakistan deploying nuclear weapons on Saudi soil in some form of extended deterrent fashion” (Bowen & Matthew, 2015, p. 700). Pakistan, expectedly, has denied these reports. These are highly conjectural questions but given the backdrop of the Pakistani–Saudi relations, the nuclear deal per se, whether implemented to the last word or not, would have a marginal impact on those relations in the long term. Pakistan has well balanced its relationship with both Iran and Saudi Arabia and in all probability, the situation would remain the same.

Trade

Soon after the deal, Prime Minister’s Special Assistant for Foreign Affairs Syed Tariq Fatem hailed the ending of the economic sanctions on Iran, saying that this would open “massive trade” opportunities for the country (Iqbal, 2015b). Pakistan’s trade with Iran—US $1.3 billion in 2008–2009 fell to US$217 million during 2013–2014 (The Express Tribune (2015a). Another report said that Pakistan’s exports to Iran fell from US$182 million in 2010 to US$43 million in 2014. Notwithstanding the fact that Iranian imports had fallen to US$186 million in 2014 from US$884 million in 2010, the trade target for next 5 years has been set at US$5 billion (Khan, 2015). The international sanctions on Iran; illegal trade; inconvenient and indirect modes of business transactions—mostly done through the UAE—as the two countries have no banking channels; non-implementation of agreements partly due to external factors, such as the Saudi and US pressure on Pakistan; and Pakistan’s lack of clear policy priorities in terms of trade and the economy as well as a policy inconsistency are the main reasons for the low volume of bilateral trade between Pakistan and Iran (Sial, 2015). The Joint Economic Commission (JEC), set up in 1986, held its 19th session in Islamabad in December 2014 when both the countries signed five agreements

related to the establishment of a Joint Investment Committee, cooperation between Pakistan’s Small and Medium Enterprises Development Authority and Iran’s Small Industries, and the establishment of a sister-port relationship between the ports of Karachi and Chabahar, in addition to cooperation in the field of investment, and economic and technical assistance. (Pakistan Today, 2014)

Pakistan also reportedly “invited Iran to become part of the CPEC [China–Pakistan Economic Corridor]” and “help strengthen border markets, upgrade railways, build warehouses and open/upgrade border crossing points” (Muhammad, 2015). Calling the nuclear deal a “game changer,” optimists however stretch it to other extreme and argue,

with Iran gradually rejoining the international economic system, Pakistan can once again begin to plan on creating a regional association that would include the non-Arab Muslim states such as Afghanistan, Turkey and the Central Asian nations. The Chinese will be receptive to the idea … A system of roads linking this region to the CPEC should become not only possible but economically attractive. (Burki, 2015)

For the time being, both the sides agreed to offer freight train services on the 1st and 15th of each month, subject to the availability of cargo. Pakistan also proposed concessionary fares between Zahedan and Quetta by the time freight traffic picks up pace (Muhammad, 2015). Pakistan has been upgrading its current border post with Iran and preparing to open a second one in the anticipation of a greater trade (The Express Tribune (2015a). The Preferential Trade Agreement signed between the two in 2006 has not been upgraded to a Free Trade Agreement due to Iran’s reluctance (Khan, 2015). Pakistan now believes, in the words of Sartaj Aziz, Sharif’s Adviser on External Affairs

… as soon as the sanctions are lifted we can very rapidly start the implementation of those agreements and at the same time trade possibilities will expand; right now there are lot of payment difficulties between Iran and Pakistan and more importantly Iran’s integration in the region in terms of economy will also lead to political advantages. (Dawn, 2015b)

Afghanistan

Iran has sufficient influence in northern Afghanistan. The Soviet–Afghan War (1979–1989) almost coincided with the Iran–Iraq War (1980–1988). Coming as it did shortly after the Iranian Revolution, when Iran had moved away from the West, Pakistan’s strategic importance to the West rose as it became a conduit to the Afghan rebels based in Pakistani territory, complemented by the Saudi financial help. Iran, however, remained passive on the fringes of the Afghan War—despite bearing the burden of Afghan refugees—because of its ideology after the revolution and the war with Iraq and thus it did not want to antagonize the Soviet Union. Iran provided some help to the Shia groups fighting the Soviets, which generated resentment among the Afghan and Pakistani Sunnis, resulting in Iran’s losing ground in Afghanistan on the political, religious, and cultural fronts. Even after the Soviet withdrawal—prior to September 11 attacks—the two countries remained on the opposite sides in the Afghanistan scenario. Pakistan lent its all-out support (indeed created) to the Taliban; on the other hand, Iran (as well as India and Russia) was backing the Northern Alliance. Despite Pakistan’s assurances to the contrary, in September 1998, the Taliban killed Iranian diplomats in Mazar Sharif.

The Iranian interests converging with that of the US in Afghanistan is an open secret. Iran also has specific interests, such as the security of its eastern provinces, refugees, and cross-border drug trafficking, apart from its interests in the Afghan resources. Iran and Pakistan, therefore, tried to avoid getting the Afghan factor into their ties. There are indicators of collaboration like Iran’s (especially Foreign Minister Javad Zarif’s) role in the 2001 Bonn Agreement or in the formation of the Afghan National Unity government in 2014 (Moradian, 2015). If the nuclear deal helps the two transform this relationship into a pro-active one with Kabul’s help, the US dependency on Pakistan would definitely be reduced. Carrying the argument more forcefully, Christine Fair has argued

Rapprochement with Iran would better position us to take a harder line on Pakistan, a necessary prerequisite to avoiding a near total reversal of our gains in Afghanistan … The nuclear agreement could give the United States and its international partners a way of sustaining its military presence in Afghanistan, and increasing the pressure on Pakistan to cease and desist from employing jihadi proxies under its expanding nuclear umbrella. India and Iran would welcome this development. (Fair, 2015)

Some hopes of rapprochement between Afghanistan and Pakistan were seen as the Afghan President Ashraf Ghani tried to normalize ties by taking the initiatives forward, seeking to raise trade from US$1.6 billion to US$5 billion by 2017. Things, however, went back to square one after a spate of Taliban attacks and bomb blasts in the Afghan capital in August 2015. The ties are still under pressure as Pakistan has refused to allow a transit of Indian goods (Hashim, 2015). It remains to be seen how far the nuclear deal can bring the two to any peace or harmony in their policies toward Afghanistan, especially when India, Iran, and Afghanistan are planning a trilateral corridor along with the India–Iran bilateral Chahbahar port and, “Afghan businesses are investing in the attached free trade zone where Iran has allotted land for Afghan investors” (Parashar, 2015).

Balochistan

Yet another irritant in the bilateral relations is the province of Balochistan which straddles across the two countries; for almost a decade and a half, the region has been particularly volatile. Prior to the revolution in Iran, Tehran and Islamabad had collaborated to crush the rebellion in the Pakistani province. The present border violence is also because of the drug smuggling (3,000 Iranian border guards killed) but more recently, the nature of violence has become sectarian (Erdbrink, 2014). Pakistan has been battling its own ethnic insurgency since independence, rooted in the politics of discrimination, exploitation and repression. Similarly, the Balochs in Iran have long suffered from “racist persecution, and the combination of ethnic and religious differences has led to their being harshly victimised by successive Iranian Shia governments, from that of the Shah to those of the Presidents (Mohammed) Ahmadinejad and Hasan Rouhani” (Rehman, 2014). Iran has accused Pakistan of backing the Iranian Baloch rebels, particularly the Jundullah group and its leader, Abdulmalek Regi, who was captured and later killed by Iran in February 2010. Tehran has held that Pakistan has failed to check the presence, movement, and operations by the Iranian rebels on its soil.

Despite a 2013 February security agreement between the two countries envisaging cooperation in combating terrorism and drug smuggling, on February 6, 2014, the terrorist group Jaish-ul Adl—alleged to have been operating from Balochistan—kidnapped five Iranian border guards; on March 17, the Iranian government threatened to send its security forces into Pakistan if it did not act to free the guards (Khan, 2014). As many as 14 Iranian border guards were killed on October 25 in the border region near the city of Saravan. Moreover, in November 2013, the Jaish-ul Adl shot dead an Iranian prosecutor in Zahedan, which was followed by a bomb blast in December that killed three Iranian Revolutionary Guards (Rehman, 2014). In late March 2014, Iranian border guards deported dozens of Pakistani families from Sistan and Baluchistan provinces even though they possessed valid travel documents or Rahdari (Rehman, 2014).² Later, on May 6, the two countries agreed to establish a hotline between the Frontier Corps in Pakistani Baluchistan and the Iranian border security forces to counter the cross-border militancy (Khan, 2014). Border violence flashed again in October as Iran accused the Pakistan-based insurgents for attack on the government installations; it first warned and then retaliated by killing one Pakistani paramilitary officer (Baloch, 2014). Occasionally, the two have also summoned each other’s ambassadors over the border killings and rebel infiltrations (Dawn, 2014).

Conclusion

India is the obvious concern for the Pakistani foreign policy. The impact of Pakistan’s improved relations with Iran in the context of the nuclear deal, upon India may be mixed whose bilateral trade has always tilted in favor of Iran. The sanctions had impacted the Indo-Iranian trade adversely, especially in the field of crude oil import (Mallapur, 2015). As the sanctions get lifted, Indian businesses would have to compete with those of the European, American, Chinese, and Russian firms. Iran may also act tough now that the pressure on it is reduced, as doubts persist on the restart of the Farzad-B gas project that had started in 2008 (in which it has invested US $90 million on exploration), but which was halted due to the sanctions (BBC News, 2015; Mallapur, 2005). Pakistan would be worried about the Chahbahar port that India is building in Iran to gain access to Central Asia and Afghanistan—which, some say, is also to balance Gwadar port built in Pakistan.³ While India gets access (land–sea route) to Iran, Afghanistan, and Central Asia, Iran gets trans-shipment to Central Asia and Afghanistan bypassing Pakistan. Iran, Afghanistan, and India have also signed an agreement on tariff reduction on the goods to Central Asia, an obvious cause of worry for Pakistan (Ziauddin, 2015). At the moment, there is no land access through Pakistan regarding trade purposes. While it is difficult to predict the impact of the deal on the course of the Indo-Iranian relations, New Delhi’s bid to re-engage Iran through high-level visits and President Rouhani’s assurance to Prime Minister Narendra Modi on the sidelines of the BRICS Summit are positive indicators. However, optimism on the revival of the India–Pakistan–Iran pipeline is over-placed which would be affected by issues of insurance, security, and cost of the pipeline, price of gas, and competition offered by the pipeline from Turkmenistan (Madan, 2015). Pakistan would continue to remain, or show concern, in this context.

Footnotes

1.

Yoel Guzansky has argued that Saudi statements later insisted on its “right” to enrich uranium and that “Saudi Arabia has exerted effort to diversify its [civil nuclear] program” (Guzansky, 2015, p. 99).

2.

According to the 1956 agreement between Iran and Pakistan, Pakistanis who obtain the Rahdari or “red permit,” are allowed to travel to Iran to visit their relatives living on the other side of the border. In terms of this permit, Pakistanis can travel up to 60 km inside Iran, while Iranians can cross to the Pakistani border town of Taftan.

3.

As per an India–Iran agreement signed in May 2015 to develop the Chahbahar port, the former will invest US$85 million on (1) a container terminal (2) a multi-purpose cargo terminal. India has already invested US$100 million on a 220-km road in the Nimroz province of Afghanistan and finalized a 99-km railway line plan from Bamiyan to the Chahbahar port.

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The Joint Comprehensive Plan of Action: Impacts on Pakistan–Iran Relations