Alwaght- The Iranian-Pakistani relations that have their roots in centuries of historical, linguistic, and religious commonalities these days are witnessing their most complex period. This relationship, can be called a two-sided blade, on the one hand bears vast capacities for economic, security, and cultural cooperation and on the other hand faces structural obstacles and geopolitical competition. Now a question presents itself: How can these neighbors unlock these potentials in a short period of time and make their way through sanctions and insecurity to a trade volume of $10 billion.
Obstacles and challenges
The economic barriers between Tehran and Islamabad stem less from a lack of political will than from structural deficiencies and the crushing weight of international sanctions.
The first and most formidable obstacle is banking and finance. Ruthless American sanctions have effectively severed the traditional banking system. With no formal channels for currency exchange, traders are forced to rely on convoluted barter arrangements, or even smuggling, rendering large-scale transactions all but futile.
Second is the Peace Pipeline. The specter of American secondary sanctions has stalled this vital project. Fearful of Washington's retaliation, Pakistan has failed to complete its portion of the pipeline and now faces the risk of hefty penalties.
Third, physical infrastructure is woefully inadequate. The roads leading to the border, customs facilities, and rail networks are insufficient for the desired trade volume. Completing the Chagi–Sukkur railway and activating the Istanbul–Tehran–Islamabad rail corridor—which could slash transit times from 21 days to just 11, are urgent necessities.
Fourth, the two economies are structurally out of sync. Pakistan's exports are largely confined to agricultural products and textiles, offering little in the way of the advanced industrial goods Iran needs. This mismatch sharply constrains trade potential. The hard truth is this: for trade to flourish, the financial and settlement channels must be fixed first, followed by upgrades to border and transport infrastructure. Without that, grand agreements will remain little more than paper exercises.
On the military front, relations between the two countries are shaped by two major, and somewhat contradictory, challenges.
The first is the fragile security along their shared border. This long, restless frontier is the primary flashpoint for military tensions. Separatist and militant groups like Jaish al-Adl and the Balochistan Liberation Army operate on both sides, striking at trade convoys and border forces. To manage the threat, the two nations have exchanged liaison officers and stepped up security cooperation.
The second challenge is more intricate. Pakistan finds itself caught between rival allies. It has signed a mutual defense pact with Saudi Arabia and maintains close ties with Turkey, while simultaneously trying to position itself as a mediator between Iran and the United States. It is a precarious balancing act, one that could leave Islamabad in an exceedingly difficult spot should tensions escalate.
Iran-Pakistan ties in security terms should be described the most complex face of the two countries' interactions. Border and terrorism threats not only have destabilized the borders, but also directly hit economic infrastructures. Attacks on gas tankers and goods in Quetta-Taftan highway have left billions of rupees in goods and oil in uncertainty. Additionally, the two countries are suffering from insecurity in Afghanistan. While Pakistan has an offensive approach to Afghanistan developments, Iran insists on diplomatic solutions.
Pakistan's newfound role as a mediator between Iran and the US has created its own profound security contradiction. Islamabad embraced this role to elevate its standing with Washington, while simultaneously courting Tehran's trust, offering, for instance, to facilitate Iranian oil exports through its ports. During the recent US-Israeli confrontation with Iran, Pakistan pressed both sides and played a credible part in brokering a ceasefire, demonstrating that it can function as a "trusted actor" in the region. Yet analysts say this mediation has yet to translate into lasting strategic trust.
Politically, this mediation effort is the latest twist in a high-wire act. Pakistan is forced to balance competing forces: its strategic alignment with Saudi Arabia, its desire to preserve ties with the US, and the sensitivities of its own domestic audience, including a Shia minority that makes up roughly 20 percent of the population. Any major regional escalation would make this tightrope walk impossible, and would inevitably damage Pakistan's own internal security and cohesion.
The cultural ties between Iran and Pakistan, meanwhile, cut both ways.On one side, shared historical, linguistic, and religious roots offer a powerful foundation for rapprochement. Persian was the region's language of scholarship and courtly life for centuries; roughly 60 percent of Urdu vocabulary derives from it, and Pakistan's national anthem is almost entirely Persian. More than one million Persian manuscripts are preserved in Pakistan as cultural treasures. Contrary to popular assumption, about 70 percent of Pakistan's Sunnis follow the Barelvi Sufi school, which holds deep reverence for the Prophet's household, while the Shia population, over 46 million, constitutes one of the largest Shia communities in the world. At the macro level, both nations have declared unwavering support for the Palestinian cause.
On the other side, major obstacles block this cultural bridge. Saudi Arabia's deep cultural influence, bankrolled by extensive investments in mosques and schools, has significantly bolstered its soft power inside Pakistan. Sectarian violence and attacks by Salafi-jihadi groups have poisoned the religious atmosphere, while Iran's own cultural initiatives have suffered from frequent leadership shakeups, undermining their effectiveness. In 2018, over 100,000 Pakistani pilgrims traveled to Iran for religious tourism, a testament to the enormous potential. But to unlock it, Tehran must pivot its cultural strategy from dispatching its own envoys to empowering local actors on the ground.
Proposals and solutions
Undoubtedly, to fast unlock these potentials, the two have to move past traditional ways and embrace unconventional ideas. To this end, the two countries should launch "digital barter stock market." Instead of traditional, high-risk barter, there should be an online official platform that matches the import-export needs of the two sides transparently.
The second solution is establishing a "joint free zone" on the border. Actually, instead of separate zones, there should be a joint zone with unified laws and combined customs, where assembly companies are established. Negotiations have been held on the matter during Iranian president's recent visit to Pakistan.
Third, offset deals for major projects. In exchange for buying Iranian gas or oil, Pakistan could transfer equity stakes in its own ports or airports, granting Tehran operating rights over part of Gwadar Port, for instance. Such arrangements would lock in long-term mutual benefits and tie the two economies together in ways that are hard to unwind.
Fourth, a joint shipping line under the Pakistani flag. This would allow Iranian goods to reach global markets under a Pakistani cover, effectively bypassing naval sanctions.
Fifth, tap into the Pakistani diaspora across the Persian Gulf. Leverage the capital and commercial networks of Pakistani expatriates in the UAE, Saudi Arabia, and Kuwait to market and move Iranian exports.
Beyond that, the low-hanging fruit is abundant: immediately activate border marketplaces, operationalize the Istanbul–Tehran–Islamabad rail corridor, coordinate Gwadar and Chabahar ports as twin transit gateways, eliminate customs tariffs, simplify visa procedures for traders, and establish permanent follow-up working groups.
Certainly, these ideas require political will and functioning task groups, but are realizable in a short term of between 6-12 months and can raise the trade volume from current $3 billion to the targeted $10 billion.
