PAGE Blog Business Weekly Magazine
Pakistan and Iran being close neighbors can supplement each other in achieving economic goals
Over $10bn trade potential exists between the two nations
Interview with Mehdi Sobhani, Consul General of Islamic Republic of Iran
Discussing the economic relations between Iran and Pakistan, Mehdi Sobhani said in an interview that sanctions caused a decline of two way trade between Iran and Pakistan from $1 billion to $200 million, but after lifting of sanctions it is good opportunity to increase bilateral trade between the two countries, the two countries can supplement each other in promotion of economic interests especially in energy sector, however channelizing the banking system on the two sides would be a pre-requisite for achieving the desired results. The materializing of the banking channels is now quite possible after lifting of the US sanctions on Iran.
PAGE: Did you talked about establishing the banking channels between the two countries?
CONSUL GENERAL: Yes we are in negotiations with the Pakistani side for establishing banking channels, at the moment two of Pakistani banks have their own offices in Iran. These banks can be upgraded in bank’s branches while the matter of establishing of Iranian banks in Pakistan is in process. The new era after the sanctions has opened new opportunities for the two countries.
PAGE: Iran-Pakistan gas pipeline project is another important factor in promoting economic relations between the two countries, what is happening on that project at the moment?
CONSUL GENERAL: The Iran-Pakistan gas pipeline project is a turning point in the relations between two countries. It is the symbol of friendship between the two nations. This is not a secret that Pakistan is facing an acute energy shortages, the gas coming through this pipeline can meet one-third of energy requirement of Pakistan and 20 percent of its electricity needs.
PAGE: Business community in Pakistan expects a major growth in two way trade between Iran and Pakistan after lifting of sanctions, what are your comments?
CONSUL GENERAL: We too, like the Pakistani society, look forward to enhancement of trade between Iran and Pakistan after lifting of sanctions. The sanctions caused fall in our bilateral trade exchanges from one billion to 200 million dollars. The two countries can supplement each other in trade and economy. But a pre-requisite for that will be channelizing of a banking system, which has now become possible after lifting of sanctions.
It is important to note that despite being immediate and close neighbor the trade volume between the two countries does translate the available economic strength and need to be rectified, for example the trade volume between Iran and Turkey is around $20 billion, with India $15 billion, Emirates $17 billion and with China $52 billion, while in case of Pakistan the trade was even reduced from one billion dollar to merely $200 million as a result of sanction.
In fact the two nations have a trade potential to increase bilateral trade to the tune of over $10 billion by paving the steps required to boost trade volume.
PAGE: Recently Pakistan delegation headed by prime minister Nawaz Sharif visited Iran, would you like to speak on this important visit?
CONSUL GENERAL: The initiative by the Government of Pakistan for mediation between Iran and Saudi Arabia was positive and drew massive appreciation from the authorities in the Islamic Republic of Iran. It showed that Pakistan has an important position in the Muslim world.
Pakistan’s Prime Minister and Chief of the Army Staff met high authorities in Iran including President, First Vice President, Army Chief Secretary of National Security Council and Minister for Defense. We believe the Government of Pakistan is pursuing peace and security in the region and, at the same time, it wants to maintain its good relations with Iran and Saudi Arabia without committing to either. Of course nobody expected Pakistan to engineer a quick thaw between Riyadh and Tehran in the present setting. However it was a smart move on the part of Pakistan.
PAGE: Iran-Pakistan gas pipeline project — is one of the major business partnership between the two countries, would you like to comment on this project which has already been delayed for certain reasons, do you think that delay due to sanctions has affected the viability of this gas project?
CONSUL GENERAL: We have fulfilled our commitments as per agreement and hope Pakistan would also complete its share of the pipeline on its side, so that the pipeline could become operational. This pipeline has no linked with sanctions. We signed the agreement at a time when we were under sanctions and started work on its implementation when we were under hardest sanctions.
Whoever opposes this pipeline is opposed to Pakistan’s progress and development and is against the friendship between the two nations. In fact, the sanctions were not applicable on gas exports, we were exporting gas to Turkey — gas export was not subject to sanctions.
PAGE: There was a time when india was also one of the partners in this pipeline project and it pulled itself out of the project, would you like to comment on this?
CONSUL GENERAL: Actually this should be answered by an Indian diplomat; however, we believe that the gas pipeline project is highly significant for meeting energy needs of the region being the peaceful energy project has the potential push up the regional economy, anyone who denies these projects in fact denies his own benefits.
PAGE: In your opinion what impact will be on two way trade between Pakistan and iran after lifting sanctions, what steps are required to promote border trade between the two countries?
CONSUL GENERAL: The basic requirement for promotion of bilateral trade between our two countries is establishment of a banking system and easing of rules and regulations. Opening of branches of Iranian banks in Pakistan and vice versa can break the deadlock.
Some of Pakistani banks have their offices in Iran. These offices can be upgraded to bank branches. We must put our words into practice. The prospect of trade between two countries is as much as 10 billion dollars. There are talks about road and rail links between Iran’s Chabahar port and Pakistan’s Gwadar port and ferry service from Karachi to Gwadar to Chabahar. Free trade zones being planned at Chabahar and Gwadar can also be linked together. This is a good beginning but much more can be done.
PAGE: China-Pakistan economic corridor is the hot issue at the moment, huge investment is expected in development of infrastructure, how Iran looks at this economic opportunity, which will have a definite impact on regional economic links in this part of the world?
CONSUL GENERAL: Any plan which involves economic growth and financial stability of Pakistan, we definitely welcome that. China-Pakistan Economic Corridor can be linked to Chabahar port that is in close proximity of Gwadar. Moreover Iran can be a link in China’s one road-one-belt initiative in which Pakistan is a key player with infrastructure projects that could link with Iran. Pakistan must act to exploit the opportunities that Iran offers for agriculture produce, urea production plants and petrochemical facilities as well as infrastructure development projects.
The Pakistan-Iran relation should move to the strategic level as soon as possible and your bilateral relations with any other state should not be an obstacle.
PROFILE: Mehdi Sobhani, Consul General, Islamic Republic Of Iran, Karachi
Graduated from International Relations from International Relations College of Ministry of Foreign Affairs, Mehdi Sobhani did his MA Diplomacy & International Organizations from International Relations College of Ministry of Foreign Affairs. He did his PhD in International Relations from University of Tehran.
He has an extensive Diplomatic Experience to his professional credit. He joined the Ministry of Foreign Affairs in 1992 and posted as Officer of Armenian Desk 1993, Second Secretary, Embassy of the Islamic Republic of Iran, Baku (Azerbaijan) 1996-2000, Assistant Director Commonwealth Bureau II 2000-2001, Director Commonwealth Bureau II 2001-2003, Deputy Head of Mission of the Islamic Republic of Iran, Kiev (Ukraine) 2003-2005, Deputy head of Embassy of the Islamic Republic of Iran, Ashgabat (Turkmenistan) 2005-2010, Assistant Director General West Asia, Ministry of Foreign Affairs 2010-2012.
At present he is the Consul General of the Islamic Republic of Iran, Karachi, from 2012.
His temporary assignments include in Turkey, Russia, Germany, France, Central Asian countries and Caucasia. He is the writer of research articles on Iran’s foreign policy and a book on Political Economy of Militarism and US military intervention in Afghanistan (Tehran University publications).
On the back of his vast diplomatic experience in the energy rich Central Asia region, he has a deep insight on energy issues.
