The recent meeting between President Asif Ali Zardari and President Mahmoud Ahmedinejad, on the sidelines of the D-8 Summit, has greatly bolstered Pakistan-Iran relations. Immediately following the Summit, Abbas Ali Abdollahi, Consul General of Iran, proposed that Pakistan and Iran should establish a banking channel to promote bilateral trade.
The two countries have previously collaborated in the energy and investment sectors. Abdollahi suggested that the National Bank of Pakistan open its branches in Iran and in return, Bank Milli of Iran be allowed to open its branches in Pakistan. Additionally, he proposed that trade between Pakistan and Iran be permitted in local currencies instead of relying on the dollar and the trade route through railways and road be regularised. He regretted that bilateral trade was not up to its maximum potential. This concern came amidst heightened U.S sanctions to cripple the Iranian economy in light of the latter’s nuclear ambitions.
Abdollahi also voiced concern for the slow progress of the Iran-Pakistan gas pipeline project. Iran has already completed construction of the 1,200 km pipeline from Bander Abbas to Balochistan but international factors continue to hinder the completion of the whole project. In addition to this, the Consul General was confident that Iran could supply energy to Pakistan at a cost of 10 cents after initiatives from both the neighbors are signed to formalize trade documents.
The Iranian diplomat asserted the need to expand bilateral trade through economic integration, reduce transaction costs and increase port activities. The outgoing diplomat also urged to activate and develop a regional trading block from within the Economic Cooperation Organization (ECO) countries, particularly between Pakistan, Iran and Turkey.