islamabad, pakistan – The United States has warned of the risk of sanctions after Pakistan pledged to increase security and economic cooperation with Iran during President Ebrahim Raisi’s visit.
Raisi, the Iranian president who visited the South Asian country for the first time in eight years, came as the neighboring countries announced they would increase bilateral trade from the current $2 billion a year to $10 billion over the next five years. I ended my three-day visit on Wednesday.
Pakistan's Ministry of Foreign Affairs announced that the two countries further agreed to cooperate in the energy sector, including power trade, transmission lines, and the Iran-Pakistan gas pipeline project.
The gas pipeline project has been stalled for more than a decade due to political turmoil and international sanctions.
The US State Department on Tuesday warned the Pakistani government against doing business with Iran.
“I would advise anyone considering doing business with Iran to be aware of the potential risk of sanctions. But ultimately, the Pakistani government can speak out about its own foreign policy pursuits.” Spokesperson Vedant Patel said at a press conference.
Foreign policy expert Muhammad Faisal said the US threat of sanctions was only aimed at deterring Pakistan and “increasing the cost of doing business with Iran”.
“Pakistani banks are reluctant to do business directly with Iranian banks, so the expansion of formal trade and banking activities between the two countries will be slow,” he told Al Jazeera.
An extensive list of business-related activities with Iran could trigger US sanctions, and the regulations also prohibit doing business with Iranian financial institutions.
The pipeline was scheduled to stretch more than 1,900 kilometers (1,180 miles) from Iran's southern Pars gas field to Pakistan to meet Pakistan's growing energy needs.
Iran said it has already invested $2 billion to build a pipeline on its side of the border and is ready for export. However, Pakistan has not yet embarked on this plan due to concerns about US sanctions.
Last month, Pakistan said it would seek a waiver from the United States to build the pipeline within its territory.
U.S. efforts to limit revenue from Iranian oil and oil products date back decades. Additionally, hundreds of individuals within Iran, from the central bank to government officials, are suspected of having substantially supported armed groups such as Iran's Islamic Revolutionary Guard Corps, Palestine's Hamas, Lebanon's Hezbollah, and Yemen's Houthis. Sanctions were placed on organizations and people.
The US and UK imposed new sanctions this month in response to Iran's unprecedented attack on Israel, but the scope of the punitive measures is limited and there are questions about how effective the sanctions regime is overall. It is occurring.
“Islamabad is aware of these constraints and both sides, with the involvement of local chambers of commerce, are exploring ‘out-of-the-box’ solutions to expand bilateral trade through barter systems and border markets. “We are doing so,” Faisal said.
Pakistan has little influence.
During his visit, Raisi met with the country's top leadership, including Prime Minister Shehbaz Sharif and Army Commander Asim Munir.
The visit comes as the two countries seek to repair strained relations after tensions escalated in January when Iran launched attacks on Pakistani territory believed to be a stronghold of the militant group Jaish al-Adl. It was conducted.
Within 48 hours, Pakistan's military struck what it described as a “hideout used by terrorist groups” in Iran.
But the implied threat of sanctions comes at a difficult time for Pakistan, which is in economic straits and seeking financial support from its allies, including major partners such as Saudi Arabia, the United Arab Emirates and the United States. It is considered a rival of Iran.
Sharif traveled to Saudi Arabia this month to meet Crown Prince Mohammed bin Salman and is scheduled to return to the country next week.
Kamran Bokhari, senior director at the Washington, D.C.-based New Lines Strategic Policy Institute, said Pakistan cannot afford to be dragged into the middle of a conflict between the United States and Iran.
“These two countries have their own conflicts, and I think Iran has the upper hand at the moment because of the situation in the Middle East,” Bokhari told Al Jazeera, referring to Israel's war in Gaza.
“The United States wants to contain Iran, and the tools the United States has are sanctions. Currently, Pakistan needs the goodwill of the United States and the West to deal with its economic crisis,” he said. “Any movement should be avoided,” he added.
Faisal said Pakistan needs to identify what is best for its national interests if it is to navigate its relationship with Iran and the United States and “stay engaged with both,” but trade and energy cooperation with Iran is a key issue. He said the focus should be on expansion.
The future of Pakistan-Iran relations depends on Pakistan's ability to leverage its limited influence, Bokhari said.
“If the United States says to Pakistan, 'We can't do business with Iran,' we should ask the US government, 'Can you help us with what we need in return?'” Bokhari said.
