resident Ebrahim Raisi and his cabinet have wrapped up a three-day visit to Pakistan aiming to enhance bilateral trade to an ambitious level of $10 billion in five years. The announcement elicited a reaction from the United States which cautioned Pakistan about economic sanctions.

Raisi’s visit was considered significant in the backdrop of certain events in the recent past. These included actions by Irani security forces on the Pakistani side and vice versa as well as the latest developments in the Middle East where Iran used drones and missiles to strike inside Israel.

For the first time in history the volume of bilateral trade exceeded $2 billion in 2023, a statement by a former Iranian ambassador has said.

The main focus of the visit appeared to be enhancement of trade. The two sides agreed to “expeditiously finalise” a free trade agreement, a joint statement issued after the conclusion of the visit said.

The two countries also agreed to facilitate a regular exchange of economic and technical experts, as well as delegations from chambers of commerce in both countries to enhance economic cooperation.

The two sides also signed eight agreements and memoranda of understanding for cooperation in various areas, including trade and security.

“A fruitful discussion was held between the two sides, including security and investment during the meeting,” Prime Minister Shahbaz Sharif said. The Iranian president said that there was much room for growth in existing relations between the two countries. He added, “We have decided to increase the volume of trade to $10 billion in the first phase.” He said there was great potential for bilateral trade.

“The visit of the Iranian president comes at a critical time. It is important but there was little hope of a breakthrough in trade,” says Shahbaz Rana, a senior economic correspondent. “There has been no significant development since the previous government’s announcement of setting up border markets on both sides although there is much potential.”

Such reaction from Washington was expected given that the US is aiming to impose more sanctions on Tehran after the latter’s drone strikes on Israel. There was no breakthrough on the Pakistan-Iran Gas Pipeline Project. 

On the other hand, a spokesperson for the US Department of State, addressing a question during a media briefing while the Iranian president was on Pakistani soil, cautioned Islamabad with regard to economic sanctions. “We advise anyone considering business deals with Iran to be aware of the potential risk of sanctions,” he said.

He also reminded Islamabad of its trade and economic ties with Washington. The US is currently Pakistan’s largest export market as well as one its biggest investors. “We have been a leading investor in Pakistan for the past 20 years. Pakistan’s economic success is in our interest. We look forward to continuing our partnership,”he stated. Islamabad was thus advised to keep Iran at an arm’s length because of its standing in the international community, particularly its adverse relationship with Israel.

Experts say such reaction from Washington was to be expected in the present scenario. The US has said it is planning to impose additional sanctions on Tehran after the latter’s strikes inside Israel.

“The Shahbaz Sharif government has taken a bold step in receiving the Iranian president at this moment knowing that this could annoy Washington,” says Nusrat Javed, the senior journalist and political analyst. He adds, “This can also be a message to Washington that Pakistan cannot ignore its own interests.” The situation is comparable to former prime minister Imran Khan’s Russia visit the day the country attacked Ukraine.

Predictably, no breakthrough was announced on the Pakistan-Iran Gas Pipeline Project.

“Pakistan needs to enhance trade with its neighbors,” says Raza Rumi, the senior political analyst. He says bilateral ties are important for both Iran and Pakistan. To gain something significant, he says, Pakistan needs to improve its international diplomacy. “It is unfortunate that Pakistan has been unable to enhance ties with its neighbours. It needs to shun insecurity and have a proactive foreign policy,” he says.

The writer is a staff member. He can be reached at vaqargillani@gmail.com