Arch rivals Iran and Saudi Arabia ( SA) recently issued a trilateral statement after several rounds of hectic negotiations facilitated by China. They agreed to re-open their diplomatic missions in respective capitals within two months. Adopting a balanced approach in its dealings with both SA and Iran, a statement by the Pakistan Foreign Ministry on 10 March called the normalization of relations an “ important diplomatic breakthrough “ that would surely “contribute peace and stability in the region” With diplomatic ties being restored, Pakistan can now maintain balanced diplomatic ties with both states.

Pakistan has a vested interest in the region in maintaining cordial and brotherly relations with Iran and SA. In the past, these relationships have been deeply mired and impacted by cross-border terrorism and sectarian clashes. A balanced approach towards both countries is important for addressing such challenges.

Normalization of ties presents opportunities for trade and energy. Pakistan can benefit from increased economic cooperation with both countries. Considering the economic chaos that Pakistan is passing through in recent years, Islamabad should welcome an increase in cross-border trade with Iran and investment opportunities from SA along with joint ventures.

Iran has been an important trading partner of Pakistan and SA is a trade and economic ally, with a large Pakistani diaspora( around 2.7 million ) and a significant source of remittances( approx $ 5 billion ). Sectarian clashes exploited by extremist groups have created instability in Pakistan for a long. This situation has been grave by the regional rivalry. Iran and SA have sought to exert influence in Pakistan and use sectarianism as an easy tool to further expand their interests by using their fanatic elements and proxies. Normalization of ties between Iran and SA could make a positive impact as it may defuse sectarian tensions and reduce the influence of extremist groups in the country. Reduced regional tensions will substantially decrease the capacity of Jihadi elements to operate.
The Iranian President has welcomed SA’s invitation to visit Riyadh.

Improved relations between the two regional powers could also lead to a more stable and peaceful Middle East which would be beneficial for Pakistan as well as other countries in the region including Afghanistan.

Pakistan has a large stake in a successful Iran-Saudi deal. It has a long border with Iran, and up to 12 to 15 percent ( acc to some estimates ) of Pakistan’s population is Shiite. At the same time, because of its military cooperation with Riyadh, it’s been pressured to send troops to SA to help secure Saudi security interests. Pakistan has agreed to some of these requests and refused others, but the pressure makes it uncomfortable for Pakistani leadership and establishment. In the current situation, Pakistan will continue to be cautious in its dealings and relations with Iran because of the US. In the near future, Washington doesn’t want its partners doing business with Tehran. Pakistan is in the grip of an economic crisis and won’t want to upset the US ( Pakistan’s top export destination, a large source of bilateral assistance, and enjoys substantial influence in the IMF). In this trilateral arrangement, China will be the main beneficiary since it enjoys a strategic economic partnership with SA and Iran.

In 2015, China-Pakistan Economic Corridor (CPEC )was launched. Over $ 20 billion have been invested by the Chinese side. Both SA and Iran were invited to join connectivity projects. With the differences apart, both countries can participate and reap benefits.
To gain from this deal, Pakistan has to keep its house ( political and economic) in order first. Another argument is to tread carefully, despite the new diplomatic space generated by the Iran-SA deal till the situation further improves and international sanctions on Iran are lifted.

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