Pakistan stands at a familiar crossroads.

At several points in its history, the country has achieved notable foreign policy successes only to see them dissipate without translating into durable economic gains. If current geopolitical shifts following tensions between Iran and the United States create strategic space for Pakistan, the real test lies not in diplomacy, but in execution.

The most immediate opportunity lies in energy cooperation with Iran. Reviving the long-delayed Iran–Pakistan Gas Pipeline must now be treated as a strategic necessity. At full capacity, the pipeline can deliver up to 1 billion cubic feet of gas per day, enough to cover roughly 20–25% of Pakistan’s gas shortfall. This could save $2–3 billion annually by reducing reliance on expensive LNG imports.

Beyond meeting domestic needs, Pakistan should position itself as a transit corridor by extending this infrastructure towards western China under the China–Pakistan Economic Corridor framework. Even a modest transit fee of 2–5% on potential energy flows could generate between $500 million and $1.5 billion annually. Combined with downstream industrial activity, this initiative alone could add up to 1.5–2% to Pakistan’s GDP. Few opportunities since 1947 have offered comparable economic spillovers.

Electricity imports from Iran present an equally practical intervention. Current imports of around 100 MW can be scaled to 1,000 MW or more, particularly for underserved regions such as Balochistan and parts of Sindh. At that level, over one million households could gain reliable power, while energy costs in these regions could fall by as much as 40%. The economic and social impact would be immediate.

While the direct freight savings from transporting oil via pipeline through Iran instead of tankers may appear modest, the broader economic impact is far more substantial. When accounting for reduced war-risk insurance premiums, avoidance of freight volatility in the Strait of Hormuz, and improved supply chain efficiency, Pakistan could realise total economic benefits of $1–2 billion per year, alongside greater energy security and industrial stability.

Energy cooperation, trade normalisation, and transit integration could generate $10–15 billion annually, equivalent to roughly 3–5% of Pakistan’s GDP. Few policy directions offer this scale of impact with such clarity

Energy cooperation, trade normalisation, and transit integration could generate $10–15 billion annually, equivalent to roughly 3–5% of Pakistan’s GDP. Few policy directions offer this scale of impact with such clarity

For China, the equation is even more strategic than financial: although pipelines may be marginally more expensive than sea transport, bypassing vulnerable chokepoints such as the Strait of Malacca significantly reduces geopolitical risk. This enhances supply security for a substantial portion of its energy imports, delivering strategic value that far outweighs any incremental transport cost.

Trade normalisation with Iran is another low-hanging fruit. Despite geographic proximity, official bilateral trade remains limited at $2–3 billion annually, with an additional $3–5 billion routed informally through third countries. With a comprehensive free trade agreement and proper banking channels, trade volumes could realistically reach $10–15 billion within five years.

The sectoral upside is substantial. Pakistan could export $1–2 billion worth of rice annually by capturing even a third of Iran’s import market, which stands at 2–4 million tonnes. Textiles could contribute $2–3 billion, while pharmaceuticals and processed goods could add up to $1 billion. Direct trade would reduce inefficiencies, increase margins, and deepen economic interdependence.

The employment impact would also be significant. Expanded energy supply, increased trade, and transit infrastructure could together generate between 500,000 and one million jobs. These would span logistics, agriculture, manufacturing, and services, precisely the areas needed to absorb Pakistan’s growing workforce.

Beyond economics, there are strategic lessons to be drawn. Iran’s emphasis on self-reliance, cost-effective deterrence, and indigenous capability development offers a model of resilience under constraint. While Pakistan’s context differs, the underlying principle, maximising strategic output with limited resources, remains highly relevant.

At a broader level, the regional balance is shifting. Both China and Iran have demonstrated an ability to pursue relatively independent foreign policies. For Pakistan, deeper engagement with these countries is a logical step. However, this must be pursued with balance to ensure that new alignments enhance, rather than constrain, economic and diplomatic flexibility.

Ultimately, the case is economic. Taken together, energy cooperation, trade normalisation, and transit integration could generate $10–15 billion annually, equivalent to roughly 3–5% of Pakistan’s GDP. Few policy directions offer this scale of impact with such clarity.

The central lesson is simple. Foreign policy successes are fleeting unless anchored in economic outcomes. Diplomatic visibility does not build industries, create jobs, or stabilise currencies. Only sustained economic integration can do that.

Pakistan today has a rare opportunity to convert geopolitical relevance into economic revival. The question is not whether the opportunity exists, but whether we have the clarity and discipline to act on it.

© The Friday Times