Outlook of Relations Between Iran and Pakistan – 2025

By ipsc

January 23, 2025

Fatemeh Khadem Shirazi
Researcher and University Lecturer
International Peace Studies Center (IPSC)

Pakistan is a strategic partner for Iran in key economic and security fields. The recent visit of the Chief of Staff of the Iranian Armed Forces to Pakistan, where he met with the Pakistani President, the Minister of Defence, and other civilian and military officials, could have multiple security implications. Discussions focused on regional security, counter-terrorism measures, and joint border management. Closer Iran-Pakistan relations, especially economic cooperation, may lead to several security outcomes. On one hand, this collaboration could strengthen bilateral ties and joint efforts against terrorist threats and separatist groups. On the other hand, it may negatively impact relations with other countries, particularly India.

This article seeks to address the following questions:

What are the shared security threats and challenges between Iran and Pakistan?
What role does China play in the Iran-Pakistan relationship?
What are the security implications of Iran-Pakistan economic cooperation?

Security and Economic Relations

Iran’s primary security interests lie in West Asia, particularly the Persian Gulf region, and secondarily in its northern and eastern borders. Pakistan’s main security concerns revolve around India and, to a lesser extent, Afghanistan. Any developments in the Persian Gulf or South Asia will affect both countries due to their regional proximity. Security dynamics play a crucial role in shaping regional alliances, but these are not static. Iran’s friendly or adversarial stance toward Persian Gulf countries, especially Saudi Arabia, will directly impact its relations with Pakistan.

Moreover, Iran serves as a connectivity hub in the South Asian corridor. Upon the completion of the 235-kilometer Zahedan-Kerman railway, it will fully establish a rail link between Europe and the Indian subcontinent. Additionally, Iran joining the TRASECA corridor has paved the way for Afghanistan and Pakistan to join, enhancing the southern route for goods transit from Europe. Iran joining this corridor has boosted regional convergence and streamlined transit protocols. Defence cooperation is another critical element in Iran-Pakistan relations, reflecting shared security perceptions. (1)

Economically, both countries have significant trade and energy ties. Pakistan relies on Iran for 40% of its domestic gasoline and diesel consumption, much of which is smuggled or traded through barter. Informal trade is also prevalent, with three regions in Pakistani Balochistan (Kech, Gwadar, and Panjgur) receiving electricity from Iran. Last year, their respective foreign ministers agreed to increase official bilateral trade from $2 billion to $5 billion.

On February 24, the Pakistani side announced the start of construction on an 80-kilometer segment of the Iran-Pakistan gas pipeline, stretching from the Iranian border to Gwadar at an estimated cost of $158 million. This further confirms the mutual economic dependency. Such cooperation should help both countries find long-term solutions to border instability and prevent potential escalation. (2)

Economic collaboration, particularly in energy, between Iran and Pakistan holds significant potential. Pakistan’s growing energy needs could be met by tapping into Iran’s vast natural gas reserves through projects like the Iran-Pakistan (IP) gas pipeline. Trade and commerce also offer promising opportunities, though sanctions against Iran and the lack of proper banking channels pose challenges. Establishing joint economic zones and improving transport infrastructure could enhance trade and regional security, especially in volatile border areas. Increased security cooperation and intelligence sharing could also stabilise these regions, reducing cross-border militancy and creating a safer environment for both countries. (3)

Threats and Challenges

The recent visit of Iran’s Chief of Staff to Pakistan signals a normalisation of bilateral relations. Despite geographical proximity and historical ties between Iran and Pakistan, in economic relations they face complex economic challenges. They share a 900-kilometre porous border, stretching from the heights of Mount Malek to Gwadar in the Arabian Sea, with only four official crossings. This border divides the Baloch people on both sides, complicating management and strengthening of economic relations.

In 2022, total official bilateral trade reached $2.3 billion, heavily favoring Iran. Iran’s exports to Pakistan amounted to $1.488 billion, primarily consisting of liquefied gas, electricity, and petroleum coke. Pakistan’s exports to Iran totalled $842.8 million, mainly iron pipes, medical instruments, and electricity meters. Despite a solid foundation for economic cooperation, regional tensions, border issues, and U.S. sanctions remain obstacles. (5)

Despite these challenges in April 2024, the late Iranian President Ebrahim Raisi visited Pakistan and signed eight new memorandums of understanding (MoUs) and agreements to increase bilateral trade to $10 billion within five years. (6)

Shared security challenges include terrorism, drug trafficking, and political instability in border regions. While Pakistan and Iran have cooperated to stabilise Afghanistan, Islamabad tends to support Sunni Pashtun groups, whereas Tehran backs the Persian-speaking Tajik and predominantly Shia Hazara communities. On Iran’s side of the border, Sunni Islamist militancy, led by groups like Jaish al-Adl (affiliated with ISIS) which was established in 2012 and the defunct Jundullah (linked to al-Qaeda), which have attacked Iran a number of times, poses a threat. In Pakistan, Baloch separatists, with secular nationalist roots dating back to the 1947 partition, seek an independent or autonomous Baloch government. (7)

Relations with China

China is perhaps the only country with significant political and economic leverage over both Pakistan and Iran. Following the U.S. withdrawal from the Iran nuclear deal (JCPOA) in 2018, Iran has grown closer to China. As Western sanctions have stifled Iran’s economy, China has become Iran’s largest oil buyer, and is the most vital part of this economic and geopolitical axis, and to an extend has helped Iran circumvent U.S. sanctions. Iran is also among the five countries that have joined the BRICS+ group, dominated by China, and supports de-dollarization efforts on international trade.

China maintains strong traditional ties with Pakistan, with the China-Pakistan Economic Corridor (CPEC) bringing the two closer. Over the past decade, China-Pakistan relations have evolved into an “all-weather alliance,” particularly in defence and investment. Arms sales are an important part of the ties between China and Pakistan, more than half of China’s arms exports from 2018 to 2022 went to Pakistan. Further the importance of Pakistan for China can in terms of the Belt and Road Initiative (BRI). The China-Pakistan Economic Corridor (CPEC), a flagship project of China’s Belt and Road Initiative (BRI), connects Kashgar in China’s Xinjiang to Gwadar Port, providing China access to the Arabian Sea and the Middle East. China is also Pakistan’s largest foreign investor, with major projects in Gwadar and the Saindak gold mine, making it a key partner in Balochistan’s development. (8)

Given the complex geopolitical landscape, mediation by shared partner countries is essential to prevent further escalation. Regional stability, particularly along shared borders, is critical for long-term interests. Pakistan and Iran must collaborate to rebuild mutual trust and jointly counter terrorist groups affecting both countries. (9)