Bilaterally, we will raise their mutual trade from the present $270 million a year to $5 billion in less then five years, Pakistani Prime Minister Nawaz Sharif said.
Will it turn into a multi-trillion dollar business zone, rivaling the EU? Many top economists and engineers are answering with a “yes.” There is a strong-prevailing sentiment following the just concluded Islamabad Summit meeting between Iranian President Hassan Rouhani and Prime Minister Nawaz Sharif.
President Rouhani’s two-day talks at the Summit with Nawaz Shrif besides business and investment, and Tehran joining the Chinese-built China-Pakistan Economic Corridor (CPEC) at Beijing’s urging, will also serve as “a cushion against any future US adventurism against any of our member countries,” a top source told the Khaleej Times. “Everyone knows how hard the just-lifted US sanctions Tehran hit Iran.
Similarly, though Washington is at present and friendly towards Pakistan, Islamabad is always fearful of American adventurism against itself over its nuclear prowess, the source also said.
Energy is the life of the industry which has been tied to Iran with a big expansion and supply plan. President Rouhani announced: “From now onwards, Iran is responsible for the provision of Pakistan’s energy and energy security. Based on our commitments in the areas of electricity and gas, we have fulfilled them and will do so in future, too.”
“Iran will inject around 12,00 megawatts of electricity. By 2018, and another 13,000 megawatts later, as our power generation is growing, the Pakistani nation should be assured that Iran, as a strategic partner for Pakistan will always explore its potential in the field of oil and gas to satisfy the needs of the Pakistani nation,” he assured.
The business community, industrialists, the financial sector and consumers have widely welcomed the decisions taken at the Iran-Pakistan Summit.
“The business community is pinning high hopes over the decisions of the summit’s success and the talks between Iranian President Hassan Rouhani and Prime Minister Nawaz Shaif,” Abdul Rauf Alam, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCC&I), said.
“The decisions have begin a new era by strengthening bilateral relations, particularly now when sanctions on Iran have been lifted, which has opened a new era and new avenues for enhancing interaction. The decisions will promote Iranian exports to Pakistan including export of electricity, natural gas, crude oil and petroleum products, and the Iran-Pakistan gas pipeline will go on stream,” he said.
Construction of the 1,800 kilometers of the Iran-Pakistan pipeline has been constructed on Iran’s side. The work on the Pakistan side of the pipeline, which was started during March 2013, has not been completed due to the sanctions.
“Its unfortunate,” Alam said. “Pakistan-Iran trade, just before the sanctions were imposed, was over $1 billion a year, which has come down to almost nothing. But after the summit, and the subsequent signing of a number of agreements it can go up to $1 billion again.”
Alam also said that the strengthening of the economic links with Iran is in the interest of Pakistan and the whole region, as it will pave the way for cooperation on regional and international basis, like the under-construction China Pakistan Economic Corridor which will definitely extend from these two countries to Iran and Afghanistan in Pakistan’s west to the Central Asian Republics (CARs), Turkey and EU in the north-and north-west.
A fast track revival, and raising the industrial output of the Pakistani economy, and overcoming the energy shortfalls are high priority areas for Pakistan, which can be tackled with Iranian help to achieve economic stability and raise the GDP to 5.5-7.0 per cent range from the present 3.0-4.0 per cent. Energy shortage eat up to two per cent of GDP annually, according to the latest World Bank report for 2015-16.
Hopes on both sides are very high because of the centuries old relations, their closeness as their borders meet at the shores of the Arabian sea, and United Arab Emirates-GCC counties just across the board, their cultural and business relations.
Iran is one the second biggest economies in the region, with its exports rising as high as $74 billion, while imports are recorded at $54 billion, according to the official Iranian Foreign Trade data for 2014.
The top Pakistani exports to Iran have been rice, raw cotton, and petroleum products. These items, put together, can help earn $1.283 billion annually. It includes rice at $1.6 billion, cotton at $123 million, and petroleum products at $100 million. Add to that, a huge volume of fruits and other products like halal meat.
Mehdi Sobhani, the consul general of Iran says: “The two countries have been enjoying good relations for years. But, unfortunately trade and economic relations are not on equal basis in this era of inter-dependence. Economic sanctions have been lifted, and now there will be no hindrance to expanding trade and economic relations. Pakistan can put an end to its energy crises after completing its own side of the project of the Iran-Pakistan Gas Pipeline as well as buying electricity from Iran.”