What Pakistan, Iran achieved from Pezeshkian’s visit?

Iranian President Masoud Pezeshkian and Pakistani Prime Minister Shahbaz Sharif praying after planting a tree in PM House Islamabad on Sunday (PID)

Islamabad 4 Aug 2025: The recent two-day highly anticipated visit of Iranian President Masoud Pezeshkian to Pakistan on August 2, 2025 was important in many respects.

Not only did it result in several dozen agreements covering diverse fields, which are expected to enhance cooperation between the two nations, but it also re-emphasized the urgent need for increasing the bilateral trade volume to $10 billion annually.

The MoUs signed are about political, economic, scientific, and technical fields, including an agreement on the joint use of the Mirjava (Taftan) border gate.

There were usual heart-warming political statements from the two sides too. After meeting with Pakistan’s Prime Minister Shahbaz Sharif, Mr. Pezhikian in a press conference called Pakistan "his second home" and once again thanked Iran for its support during the 12-day war with Israel. In return, Mr. Sharif also thanked Iran for supporting Pakistan in its recent four-day war with India.

On Sunday morning, during the official welcome ceremony, Mr. Pezhakian wrote on his X-Page: "The brotherhood between Islamic countries goes beyond political relations, because we, neighboring countries, have a culture that is intertwined with each other. A clear example of this is the thoughts and poems of the great scholar of Lahore, Allama Iqbal. Upon arriving in Pakistan, I went to his tomb so that, along with reciting the Fatiha, special emphasis could be placed on developing these interactions."

$10 Billion Trade Target

Many rightly believe achieving a $10 billion trade volume between Iran and Pakistan is difficult and ambitious, keeping the international sanctions imposed on Iran.

Iran faces significant economic sanctions, particularly from the U.S., which restrict its ability to engage in international trade. This limits Iran's access to global markets and financial systems and makes trading with it for countries like Pakistan even more cumbersome.

These sanctions complicate banking transactions, making it difficult for Iranian businesses to conduct trade with Pakistan and other countries. This can hinder trade financing and currency exchange processes.

The sanctions affect a range of sectors, limiting what Iran can export or import, which could restrict the types of goods traded between Iran and Pakistan.

Easier Route to Europe

As per the available figure till March 20, 2025, Iran's exports to Pakistan come to around $2.4 billion worth of non-oil commodities. On the other hand, Pakistan's exports to Iran are significantly lower, estimated at around $73.45 thousand during 2024.

Though unofficial trade between the two countries is substantial and is estimated to be around $10 billion annually. This trade often occurs via third countries and is driven by various cost factors and the impact of sanctions on Iran. If the idea is to legalise this chunk of trade then it’s not clear how that can be achieved.

Joint border markets is one avenue both sides have talked about a lot but progress has been slow. Federal Minister for Commerce Jam Kamal has during the visit highlighted the recent reactivation of the Mand-Pishin Joint Border Market on July 30, calling it a major breakthrough for regional economic integration. 

However, he urged Iran to fast-track the operationalization of two more joint border markets at Chaghi-Kouhak and Gabd-Reemdan, which are seen as vital for the prosperity of bordering communities.

Pakistan has also announced the finalization of the Pakistan-Iran Free Trade Agreement (FTA), adding that it will provide a structured framework for expanding trade.

Irna reported that Iranian Minister for Industry, Mines and Trade Mohammad Atabak and Jam Kamal Khan held discussions to deepen economic ties, agreeing to increase bilateral trade from the current $3 billion to $8 billion annually. 

“Geography is an advantage. Pakistan and Iran must utilize this discount of distance. If we don’t, we lose both time and cost benefits,” Jam Kamal stated.

Both ministers agreed on the importance of identifying specific sectors such as agriculture, livestock, services, energy, and cross-border logistics for future collaboration.

Another challenge for the two Islamic countries are political and security issues in the region. Political situations in both the countries are a constant that hardly change. Also, more for Pakistan, which faces many security challenges at home like banned Baloch Liberation Army (BLA) and Tehrik Taliban Pakistan (TTP). The routes from Balochistan to Iran have seen several terrorist attacks, especially on Shia Zaireen and labourers.

Pakistan’s business community was quick to praise the ambition. The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) former president and BMP Chairman, Mian Anjum Nisar, told the newspaper Business Recorder the announcement of an $10 billion annual trade target was a step in the right direction for regional economic cooperation.

However, he warned that such targets would remain only on paper unless both countries move swiftly to remove longstanding trade barriers, implement practical steps on the ground, and most importantly, complete the Iran-Pakistan gas pipeline project that has already suffered years of costly delay.

Despite all the challenges, there are several opportunities too. Iran's oil and gas resources present opportunities for energy trade, which could significantly contribute to the overall trade volume. Both countries could explore participation in regional trade initiatives or economic corridors that could enhance trade relations.

Pakistan has called for early convening of the 22nd Joint Economic Commission between Pakistan and Iran, which is expected to be held soon. This will take any further progress on decisions taken during the Iranina president’s visit. No date was given though.

While achieving an up until now elusive $10 billion trade volume is a challenging goal given the current sanctions on Iran, it is not impossible. Success will depend on strategic partnerships, effective negotiations to navigate sanctions, and a commitment to enhancing trade relations from both sides. Ongoing diplomatic efforts and regional cooperation will be critical in overcoming these obstacles.