China-Iran pact boosts Pakistan’s trade hub dream
China-Iran pact boosts Pakistan’s trade hub dream. Islamabad’s rhetorical shift to all things ‘geo-economic’ has been influenced by China’s $400 billion plan for neighbouring Iran, learned citing asiatimes.
When China and Iran recently announced their landmark 25-year economic and security agreement, Pakistan’s military leadership was coincidently touting its new “geo-economic vision” for more infrastructure development and integration in South Asia.
While the US$400 billion China-Iran pact’s details are still opaque, including in regard to spending priorities, it’s clear that Pakistan is poised to be a big winner from the deal through new Beijing-built infrastructure.
Pakistani sources say Beijing fully pre-briefed Islamabad on the Iran deal, which they say explains the sudden shift in Pakistan’s decades-old security-centric rhetoric and policies. It likely also played a role in Pakistan’s recently announced surprise agreement with India to reaffirm the two sides’ habitually breached 2003 ceasefire in contested Kashmir.
Speculative reports suggest that the $60 billion China-Pakistan Economic Corridor (CPEC), a key spoke in China’s US$1 trillion Belt and Road Initiative (BRI) in South Asia, will extend and connect into western Iran in-line with new big-ticket Chinese infrastructure plans in Iran as per the new trade-promoting pact.
That, of course, will depend on whether Pakistani security authorities can significantly improve security conditions in restive Balochistan province, through which the CPEC’s envisioned transport links eventuate at the Gwadar port that opens onto the Indian Ocean.
Baloch nationalist militants, long opposed to Pakistan’s central government rule, have in recent months and years attacked Chinese nationals and projects in Balochistan, hampering building progress and prompting authorities to ramp up security for China’s interests at Gwadar in particular.
A Balochistan government senior official who requested anonymity told Asia Times that the China-Iran deal could improve security conditions in Balochistan’s restive regions, including those that border on Iran. There are currently as many as two million ethnic Baloch in Iran; the insurgents have historically received support from various outside actors.
“We hope and trust that the incursion of miscreants from the Pak-Iran border at Sistan-Baluchistan province would end as a result of infrastructure and connectivity developments in Iran,” he said.
He said that the Gwadar port and other CPEC projects in Balochistan would “pick up pace” if the security problems were resolved. “The CPEC’s security input could come down massively if the situation normalized to some extent,” he said.
Mushahid Hussain Syed, a Pakistan Muslim League-Nawaz (PML-N) senator, told Asia Times that China-backed economic activities in Iran would contribute to stability in Balochistan and by association the CPEC’s progress.
“With a proactive Chinese role in Iran – both being good friends of Pakistan – Pakistan’s Western flank will be secured, hopefully helping stability in Balochistan and strengthening the role of Gwadar port in promoting regional connectivity with China, Afghanistan, Iran, and Central Asian Republics,” Mushahid said.
“The China-Iran strategic agreement is good for the region and positive for Pakistan’s interests as it strengthens regional economic connectivity of which Pakistan is the emerging hub due to the CPEC and the Belt and Road Initiative (BRI),” Mushahid said.
He suggested that Gwadar port, the multi-billion-dollar centerpiece of the Beijing-financed CPEC, will be pivotal for transit and trade with the wider region including Afghanistan and Central Asian nations such as Turkmenistan, Uzbekistan and Tajikistan.
That’s clearly what Islamabad hopes. Pakistan’s Chief of Army Staff General Qamar Javed Bajwa recently touted the government’s new economics-oriented vision during the inaugural Islamabad Security Dialogue, which was held nearly coincident with the formal announcement of the Iran-China pact.
Bajwa’s narrative is in line with Beijing’s regional trade-promoting aim, which was further underlined in its new strategic trilateral coordination between Azerbaijan, Pakistan and Turkey. Still, whether Beijing foresees Pakistan as the hub of its Iran pact is debatable.
Some analysts believe Gwadar could lose its current status at the center of the BRI’s flagship South Asia corridor if China gives new priority to Iran’s rival Chabahar port, which is situated a mere 72 kilometers west of the Pakistani port.
Apart from Chabahar, Beijing is expected to help develop several other ports in Iran, including the strategically situated Bandar-e-Jask, which is located around 350 kilometers from Chabahar. The latter port is also just outside of the Gulf of Hormuz, through which most of China’s energy imports transit.
To be sure, there are big geopolitical risks to the China-Iran pact. While the $400 billion deal will notionally aim to foster greater regional connectivity, if Beijing-led integration is also perceived as building an anti-US bloc in South Asia, then Washington and Delhi could work to undermine the scheme, both overtly and covertly.
Beijing had earlier drastically reduced the amount of oil it imported from Iran, in line with US sanctions imposed on Tehran’s fuel exports after the previous Trump administration pulled out of the nuclear deal. Any move by China to significantly ramp up those imports in defiance of US sanctions could put the two superpowers at new loggerheads.
When the basic contours of the deal were first leaked last year, a State Department spokesperson warned Beijing, “The United States will continue to impose costs on Chinese companies that aid Iran. By allowing or encouraging Chinese companies to conduct sanctionable activities with the Iranian regime, the Chinese government is undermining its own stated goal of promoting stability and peace.”
Whether Washington’s view has changed under the new Biden administration is not immediately clear amid signs the two sides may seek to resume the nuclear pact scuppered by Trump. Analysts note the US has many leverage points to complicate and deter the China-Iran deal’s sanctions-busting implementation.
“For Iran and China, this accord also helps to jointly counter American pressures on both countries,” Mushahid said. He added that greater regional integration would also promote peace in Afghanistan and help to diminish tensions across the strategic region.
“Pakistan, China and Iran are all committed to peace in Afghanistan. Pakistan is happy over India’s exit from Iran and China’s entry into Iran and hopes this emerging Iran-China strategic cooperation can become a ‘CPEC Plus’ for the region,” he said.
Mushahid claims that Pakistan’s rhetorical shift from “geopolitics to geo-economics” has been facilitated largely by renewed hopes around the CPEC after the announcement of the China-Iran partnership.
“Pakistan has the opportunity to have a region-based foreign policy, which will also provide an enabling environment for Pakistan’s transition from a national security state to … a hub of regional connectivity, linking South Asia with China, Afghanistan and Central Asia,” he said.