The Republic of Iran has started diverting its imports through Pakistan by using its sea and land transport networks, replacing the UAE trade route after the opening of the Pakistan-Iran transit route agreement. According to the Fars News Agency, a state-run news agency from Iran, Iran and Pakistan have officially started using the common trade route as an alternative to the UAE route, which Iran has been using for many years now.
This move brings into action a corridor linking some of Pakistan’s most strategic ports, namely Gwadar, Karachi, and Port Qasim, with Iranian border points Gabad and Taftan.
Jebel Ali’s reign over Iran trade starts to fall apart
Iranian products have traditionally flowed into the UAE via Dubai’s Jebel Ali port. The ability to accommodate large vessels, efficient logistic infrastructure, and an advantageous geographical location close to major shipping lanes made it a natural center for trading activities involving Iran and subject to international sanctions. The UAE has even created an entire parallel economy based on Iran trade, helping to make Jebel Ali one of the busiest ports in the world.
The Iran-Pakistan trade corridor represents a direct challenge to this relationship. The geopolitical tensions, regional crisis events, and instability that have defined trade routes through the Middle East recently have rendered the United Arab Emirates trade route less reliable for Iran. The activation of the Pakistan trade corridor is evidence of a strategy employed by Iran before its route to the UAE breaks down further.
Pakistan has much to benefit from the activation of the trade corridors.
The activation of the trade corridor between Iran and Pakistan holds much economic significance for Pakistan. Not only does it serve as the centerpiece of CPEC but it is also gaining one more advantage due to its position as a transit point, thus making it economically viable. Karachi and Port Qasim, which are the busiest commercial ports of Pakistan, get extra volume in the form of the transit trade from Iran.
However, the corridors between these ports and the Gabad and Taftan border crossings will generate additional demand for logistics, cargo, and transport services on Pakistan’s western highway system, an area that has traditionally underperformed economically relative to its physical capacity.
Context of the source is important – Fars News Agency is associated with IRGC
It is worth noting that the Fars News Agency, which revealed the new economic connection between Iran and Pakistan, is a state news agency which has strong links with the Iranian Revolutionary Guard Corps. This needs to be considered by those who want to look at the news story itself. The policy measures taken, such as the Ministry of Commerce transit guidelines and the identified ports for use, are verifiable official policy decisions.
A strategic realignment with far-reaching effects
The move by Iran away from its use of UAE as an import transit port to the new Iran-Pakistan Trade Route goes beyond mere logistical changes. It is indicative of a wider strategic realignment in terms of the geography of trade in the region, where Pakistan emerges as an important transit port, while UAE’s importance wanes fast as the critical conduit through which Iranian imports must pass.
