The United States has warned on the risk of sanctions against Pakistan after the government in Islamabad signed security and economic deals with Iran during a visit by President Ebrahim Raisi to the South Asian country.
The warnings came as Washington imposed sanctions last week on suppliers to Pakistan’s ballistic missile program, which included four based in China and Belarus. Patel said on the sanctions that the US will continue to “disrupt” and take action against proliferation networks and weapons of mass destruction.
The first Iranian president to visit the South Asian country in eight years, Raisi concluded his three-day trip on Wednesday as the neighboring countries said they would increase bilateral trade to $10bn a year over the next five years, from the current $2bn.
Pakistan’s foreign office said the two sides additionally agreed to cooperate in the energy sector including trade in electricity, power transmission lines and the Iran-Pakistan gas pipeline project.
The gas pipeline project has languished for more than a decade because of political turmoil and international sanctions.
However the US Department of State on Tuesday cautioned the Pakistani government of engaging in business deals with Iran.
“We advise anyone considering business deals with Iran to be aware of the potential risk of sanctions. But ultimately, the government of Pakistan can speak to their own foreign policy pursuits,” spokesperson Vedant Patel said during a news briefing.
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Foreign policy expert Muhammad Faisal said the United States threats of sanctions are merely meant to dissuade Pakistan and “increase the cost of doing business with Iran”.
“Any expansion of formal trade and banking activity between the two nations will be slow, as Pakistani banks are reluctant to do direct business with Iranian banks,” he told Al Jazeera.
A wide-ranging list of business-related activities with Iran can trigger US sanctions, and the regulations also bar business dealings with Iranian financial institutions.
The pipeline was to stretch more than 1,900km from Iran’s South Pars gas field to Pakistan to meet Pakistan’s rising energy needs.
Iran said it has already invested $2bn to construct the pipeline on its side of the border, making it ready to export. However, the project is yet to take off from the Pakistani side due to fears of US sanctions.
Pakistan indicated last month that it will try and seek a waiver from the US to construct the pipeline on its territory.
Washington’s efforts to restrict Iran’s income from oil and petroleum products go back decades. It has additionally sanctioned hundreds of entities and people in Iran – from the central bank to government officials – accused of materially supporting Iran’s Islamic Revolutionary Guard Corps and armed groups such as Palestine’s Hamas, Lebanon’s Hezbollah and Yemen’s Houthis.
The US and the United Kingdom this month imposed a new round of sanctions on Iran after its unprecedented attack on Israel, but the punitive measures were limited in scope and there have been questions over how effective the sanctions regime has been overall.
“Islamabad is cognizant of these constraints and both sides have been exploring ‘out-of-the-box’ solutions for expanding bilateral trade through barter system and border markets with the involvement of local chambers of commerce,” Faisal said.
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