Pakistan and Iran Strengthen Ties with $10 Billion Trade Deal

Pakistan and Iran have signed agreements to boost their bilateral trade to $10 billion, aiming to eliminate “terrorism” and promote peace and prosperity in the region. This development comes as both nations navigate complex relationships with regional and global powers. Iranian President Masoud Pezeshkian’s two-day visit to Pakistan resulted in the signing of agreements across various sectors, including energy and trade.

“We have set a target of $10 billion in trade and hope to achieve it as soon as possible,” Pakistan’s Prime Minister Shehbaz Sharif said during a joint press briefing. Sharif emphasized Pakistan’s support for Iran’s right to a nuclear program for peaceful purposes under the United Nations charter. He also condemned Israel’s aggression against Iran, stating there was “no justification” for the 12-day June conflict where the United States intervened on Israel’s behalf.

Pezeshkian echoed Sharif’s sentiments, expressing his deep belief that both countries can increase their trade relations from the current $3 billion to the projected goal of $10 billion in a short time. “My deep belief is that we can easily, in a short time, increase the volume of our trade relations from the current $3 billion to the projected goal of $10 billion,” he said. Pezeshkian thanked the government and people of Pakistan for supporting Iran during the 12-day conflict with Israel and the United States.

The agreements aim to formalize informal trade between the two countries, which analyst Ammar Habib Khan believes will likely increase more than formal trade. “Discussions have been held on how to formalize the informal trade that is already happening, whether it is oil, gas or something else,” Khan said. He also suggested that Pakistan’s normalizing relations with Iran might lead to the creation of a trade route between Pakistan and Europe, which “would be an efficient and logistically sound route.”

The two leaders also emphasized the need for better border management and cooperation to counter security threats. Sharif stated that Islamabad and Tehran have a common stance against “terrorism” and would take effective steps to eliminate it, opening avenues for prosperity in the region. “We have to protect our borders and take strict steps against terrorism to open the roads to peace and development in the region,” Sharif added.

The agreements also include memorandums of understanding in information technology, law and justice, climate change, and tourism. This development comes after a period of tense relations between Pakistan and Iran, particularly following tit-for-tat missile strikes in January 2024. Despite these strains, both countries have maintained diplomatic channels, with the Iranian foreign minister visiting Pakistan in May amid rising tensions with India.