July 28 - Aug 03, 2008

Historically, Balochistan and Iran enjoys cordial trade ties. The coastal belt of Balochistan is stretched for over 770 km- from the mouth of Hub River near Karachi right up to Gwadar Bay near Chahbahar. The coastal region still relies on goods traded from Iran. In the fiscal year 2004-05, the border trade volume between Pakistan and Iran was Rs7.5 billion, but it increased to Rs16 billion during 2005-06 due to the various measures taken by the two sides.

In May 2007, the Governor-General of the Iranian Province of Sistan, Dr Habibullah Dhamardha visited Pakistan and met with Balochistan Governor at the Governor's House in Quetta. While addressing a joint press conference with Balochistan Governor, Dr Habibullah Dhamardha said the border trade between Pakistan and Iran witnessed an increase of almost 100 per cent in last three years and both the countries had prepared a list of items to reduce duty and taxes for further enhancement of trade volume. The two sides agreed to bring the border trade to $1 billion, which is 200 per cent more than the present trade volume between the two countries.

Former Governor of Balochistan informed that Pakistan had prepared a list of 465 items while Iran included 400 items in the list on which customs duty and taxes would be reduced in near future. The two sides also agreed to improve Railway line between Quetta-Zahidan and to establish air link between the two provinces. They also discussed launching of a ferry service between Gwadar and Chahbahar ports. The two countries have decided to improve infrastructure for free movement of goods, besides simplification of issuance of visa.

Referring to Gwadar port, the Iranian governor said that Iran would review the available opportunities at Gwadar port and would take benefit of it. Gwadar Port offers tremendous prospects for regional trade, as it lies outside the traditional areas of conflict. Pakistan is developing additional infrastructure, which will serve both bilateral and transit trade with Central Asia. Gwadar will emerge as a natural access port to Asia for trade and commerce. The port complex will provide facilities of warehousing, transshipment, transit and coastal trade, commercial and industrial openings for international export-import trade.

Iran is already supplying electricity to various towns of coastal Balochistan and it plans to expand its supply to other areas. Presently, 35 MW power is being imported from Iran through Mand interconnection on 132 KV, Tuftan 2 MW on 20 KV and Mashkehl 2 MW on 20 KV. The QESCO started supplying electricity to the people of Mekran after getting supply from the Iranian power transmission line system on September 8, 2003. The QESCO constructed the power transmission lines and finally connected it with Iranian grid system. It spent Rs 138 million on building the power transmission system. Iran is supplying electricity through its 132KV line.

Last February, the state-run Tavanir, an Iranian power company, under an agreement signed with Pakistan, will provide100-megawatt power for Gwadar port city through a 170-km long 220 KV double circuit transmission line between 220 KV Polan sub station at Iran side and 220 KV Gwadar sub-station. Under the accord, a 100-km long line will be constructed in Pakistan and remaining 70 km in Iran. The power supply to Gwadar port is yet to be started. The project will cost US$86 million, out of which US$26 million will be borne by the company.

Chabahar in southwestern Iran is the nearest Iranian port to the Indian Ocean providing direct access to Turkmenistan and other Central Asian countries and to the oil-rich Middle East. The port is considered as the economic gateway to world due to its location on the Oman Sea shore outside the Strait of Hormuz. With advanced facilities and equipment, the Chahbahar port complex is among the leading ports of Iran. By virtue of its geo-strategic location, Gwadar has an easier access than Chahbahar for both Afghanistan and CARs. Gwadar, having naturally sheltered port conditions on two sides, is the most viable for trade and commerce as compared to Chahbahar. The port is located outside the potential war zone. It can have a land access to the whole of Asia and it has also easy sea access to the Gulf ports.

Chahbahar in Iran is likely to become a stronger competitor of Gwadar port to the transit trade for Afghanistan, Central Asia and even China. Cooperation not the competition between the two ports: Chahbahar and Gwadar can further strengthen economic and trade ties between Pakistan and Iran. The both ports should emerge as supporter instead of competitor in regional trade. It is India, which is developing the infrastructure in and around the Iranian port of Chahbahar to frustrate Pakistan's efforts to turn Gwadar into a regional hub for international trade. India's stake in Chahbahar port is aimed at gaining access to land-locked Afghanistan and CARs and bypassing Pakistan in transit trade with Iran and other countries. Despite relatively higher financial costs, Chahbahar provides India a competitive alternative to Gwadar and poses a challenge to Pakistan in diverting the trade through Chahbahar to Gwadar port. India cannot take the advantage of Chahbahar for a long period, as the cost of doing trade through this port is much higher than possible trade through Gwadar with Central Asia and Afghanistan.

Iran should not allow India to turn Chahbahar a base for playing her geopolitical game. Iran should cooperate in developing Gwadar, as it would benefit the two countries reciprocally. Both sides should extend help and cooperation in developing communication links and provide cold storage and other related facilities to each other. Establishment of railway link with Gwadar to Taftan in Iran via Saindak has been planned. A parallel road from Gwadar to Saindak, running parallel to the Iran-Pakistan border will make it the shortest route to reach Central Asia from the warm water of Arabian Sea.

Mekran coastal highway will also link Karachi with Iran opening a new and shorter trade route between the two countries. The highway, once linked with the rest of the road networks in the country, will become an important part of Pakistan's communications sector. The dual-carriage coastal highway has been completed at a cost of Rs10 billion. The extended section from Gwadar to Gabd connects the Mekran coastal highway to Iran.