ARGUABLY, Pakistan’s mediation role in 1979 between the US and China, the US-Taliban Doha Agreement in 2020 and the recent Islamabad MoU have further increased its global strategic importance. Converting Pakistan’s diplomatic visibility into greater strategic autonomy will further reinforce its stature in the international arena. The US-Iran war has impelled states to revisit their foreign policies. The possible lifting of sanctions against Iran is being closely monitored by regional players. Given this situation, where does Balochistan stand? The province shares a 910-kilometre border with Iran, presenting multiple opportunities as well as challenges. An open Iran, much like China when it opened to the world in 1979, would provide unprecedented opportunities for regional and international markets. Presently, neighbouring countries enjoy trade relaxations. Shahzada Zulfiqar, a renowned journalist from Balochistan, argues that, “Due to sanctions on Iran, many people from Balochistan were reluctant to visit the country. If sanctions are lifted, people will visit Iran, paving the way for greater interaction among traders and stronger people-to-people ties. Previously, illegal Iranian goods were seized, but such a phenomenon is likely to end in the near future.”
It is a good omen for Balochistan that the Federal Board of Revenue (FBR) has issued a notification establishing a formal procedure for transit, cargo movement and cross-shifting with Iran. The order is expected to boost the transit trade regime by permitting the cross-shifting of cargo at Pakistani ports and off-dock terminals. This initiative would increase border and port business in Gwadar, benefiting the Makran coastal region. The concept of Gwadar and Chabahar as sister ports is also gaining momentum. China’s interest in these ports is increasing by leaps and bounds. In any future conflict in the region, Gwadar and Chabahar ports could serve as strategic routes for transferring energy and oil supplies directly to China. The lifting of sanctions and stronger Pakistan-Iran cooperation would promote a formal economy, industrial zones, regulated markets and transport corridors linking Pakistan, Iran, China and Central Asia. The 25-year Strategic Cooperation Agreement between China and Iran, signed in 2021, envisages US$400 billion in investment, including US$280 billion for Iran’s energy sector. Pakistan could benefit through energy transit, concessional Iranian oil and gas and by extending the China-Pakistan Economic Corridor (CPEC) to Iran, unlocking significant regional economic opportunities.
Pakistan intends to supply 60 per cent of Iran’s imported meat requirements. Interestingly, Balochistan contributes 52 per cent of Pakistan’s sheep, 41 per cent of its camels and 22 per cent of its goats. Agriculture and livestock are closely interconnected. Balochistan is also known as the “fruit basket of Pakistan.” The province produces 70 per cent of the country’s dates and 34 per cent of its apples. The Makran Division alone produces 425,000 tons of dates annually. As mentioned in a previous article, the province has 11.77 million acres of uncultivated land—an area comparable to the size of Switzerland. Collaboration with Iran to cultivate these 11.77 million acres would be a game changer for Balochistan and the wider region. An unrestricted Iran appears to be a lucrative market for Balochistan’s livestock and agricultural sectors, creating ample employment opportunities. Modernizing these sectors and addressing the impact of climate change would further increase economic dividends.
Meanwhile, local business leaders in Gwadar maintain that the recent border closures have caused a severe crisis in the local economy, while the future lifting of sanctions could also adversely affect the local population. They argue that the local economy largely depends on informal trade, which has long been a matter of survival for the region. The closure of the informal Kutani border crossing has significantly reduced local purchasing power. As one trader noted, “A shopkeeper whose daily sales used to be Rs. 20,000 to 25,000 is now down to just Rs. 3,000 to 4,000.” The entire Gwadar district has only two official petrol pumps—Caltex and PSO—which are unable to meet even a fraction of local demand. Once sanctions are lifted, Iran is unlikely to continue exporting oil through informal channels. Instead, Iran would sell oil legally to international markets, ending the supply of cheap informal fuel to Balochistan. The Iranian currency is also expected to stabilize. Consequently, the prices of everyday commodities imported into the Makran Division, such as chocolates, cooking oil and biscuits, are likely to increase significantly. Balochistan’s per capita income, at around US$1,000, is the lowest in the country. Rising prices of Iranian goods would further increase the hardships faced by local people.
Nur Mohsin, President of the Gwadar Press Club, argues that informal fuel has remained vital for the Makran Division. The region lacks industrial zones, factories and significant agricultural opportunities across its desert border districts. Informal fuel trade has enabled poor residents to invest between Rs. 50,000 and Rs. 200,000 to purchase and sell between 500 and 1,500 litres of fuel for their livelihood. The formalization of oil trade would transform it into a government-to-government, dollar-based shipping economy, excluding the local poor. This could result in rising unemployment in the border districts. The province requires greater economic capacity, stronger business community linkages and the establishment of formal banking channels with Iran. At present, residents of the Makran Division must travel to Quetta or Karachi for visa processing. The establishment of an Iranian Consulate in the Makran Division would significantly ease the visa process. In short, enhanced collaboration between Iran and Pakistan following the lifting of sanctions would prove highly beneficial for unlocking Balochistan’s geo-economic potential, resulting in greater investment, job creation and long-term prosperity.
—The writer is an expert on Balochistan and regional politics.
