Courtesy of Eurasia Review, an examination of Pakistan’s regional neighbors:

Pakistan

Pakistan’s Southern front is exposed to over 1200 kilometer long coastal line and on the three sides it has Iran, Afghanistan and Iran. It is also linked with China via historical Silk Route. The country is natural energy and trade corridor and can earn billions of dollars through ‘transit fees’ alone. The added advantage is that gas pipelines passing through the country can also help in overcoming looming gas shortage. However, all these potential can’t be exploited unless Pakistan enjoys cordial relationship with its immediate neighbors.

Ironically Pakistan and India have hardly enjoyed cordial relationship due to Kashmir issue, which has led to three wars. Both the countries spend billions of dollars annually on the procurement of traditional and non-traditional weapons and also have attained status of ‘atomic powers’. It may be true that in international trade Pakistan and India have remained rivals but also enjoy the potential to complement each other. Both the countries are linked by road and rail facilities and goods can very conveniently cross the border, freight cost could be very nominal. In the absence of formal trade, it is estimated that informal trade has attained a gigantic size. While the two governments are the losers, the beneficiaries are those involved in this informal trade, which can be termed ‘smuggling’.

Since Afghanistan is a landlocked country Pakistan has to offer it transit facility. Three ports of the country and three routes offer the shortest and cost efficient logistic facility; no other country can offer such an incredible facility. Though, India is constructing Chabahar port in Iran and also road and rail links up to Central Asia via Afghanistan, the port can hardly be as efficient as Pakistan’s Gwadar port. After the handing over of management control of Gwadar port to China and expected massive investment, yet another cost effective route is likely to become operational.

It is regrettable that certain elements present in Afghanistan as well as Pakistan have been grossly misusing the facility, which at time leads to suspension of the clearance of goods. It is believed that such undesirable activities continue with the connivance of customs authorities on both sides of the border. Some critics are of the view that many of the goods imported by Afghan traders hardly cross the border. This is evident from dumping of goods into Pakistan, which adversely affect local industries. If Pakistan suspends clearance of these goods, Afghan authorities immediately start making hue and cry.

It is also evident that after attack of Nato troops on Pakistan’s check post, clearing of goods for the troops stationed at Afghanistan was suspended. The facility resumed after the US authorities offered formal apology. During this suspension period Nato tried various routes but all in vain. Therefore, it is imperative on Afghanistan and Pakistan to avoid movement of wrongly declared goods. It is in the interest of Afghanistan that it formalizes trade with Pakistan at the earliest.

Since the border between the two countries is highly porous, it is very difficult to contain smuggling. Some experts say that eatables are smuggled into Afghanistan and in return arms and drugs are dumped into Pakistan. This allegation seems to carry some weight because Afghanistan produces nearly 95% of total drugs produced in the world and it has to reach United States and Europe. Some analysts go to extent of alleging that Nato containers are being used for drug shipments.

Historically, Pakistan and Iran have enjoyed very cordial relationship. However, after the imposition of economic sanctions on Iran trade between the two countries has gone down substantially. Pakistan virtually stopped buying oil and Iran-Pakistan-Iran (IPI) also faced very bleak outlook. India virtually abandoned the project and in exchange got nuclear technology for civilian use from the United States. While India has been granted exemption by the United States, Pakistan is scared of completing work on Iran-Pakistan gas pipeline.

Iran and Pakistan can reach an agreement leading to Iran supplying crude oil to Pakistan and getting wheat, rice and other food items in exchange. One could still recall that after the US-led attack on Iraq, the country was allowed to export oil and buy food and medicines in exchange. One completely fails to understand why Pakistan and Iran can’t trade under ‘oil for food’ program.

Pakistan and China are often termed ‘time tested friends’ but have also experienced some bad patches. This friendship was not liked by the United States during ‘cold war era’. It is mainly because United States wants to create Indian hegemony in the region and trying to put it also against China. Handing over of Gwadar port by the Government of Pakistan to China has offended both the United Sates and India. They say, “Pakistan has virtually given China access to warm water”. India is also accusing China of establishing ‘listening port’ facility at Gwadar, which is likely to prove a big stumbling block in the creation of Indian hegemony in the region.

Some critics also say that Pakistan under the influence of United States and Saudi Arabia is not allowed to develop strong trade ties with Iran. While the barter deal between Pakistan and Iran fizzled out, Saudi Arabia is still reluctant to supply crude oil to Pakistan on deferred payment. It is believed that both Saudi Arabia and United States want Pakistan to abandon gas pipeline project. No one can deny the fact that Pakistan needs gas and it has two available options: 1) Iran-Pakistan gas pipeline and 2) import of LNG.

India has been importing LNG and some of the groups having vested interest also want Pakistan to go for LNG terminal rather than Iran-Pakistan gas pipeline project. Some analysts say that external powers are creating unrest in Baluchistan only to sabotage the pipeline project. They also say that extension of pipeline to China or India will enable Pakistan to earn substantial amount as transit fee, which will effectively bring down the cost of gas being bought from Iran.