And so the Iran-sanctions effect begins presenting itself. UN restrictions barring Pakistani goods from the neighbouring market, compromising $30 million in selected fruit-export losses, are just the trigger for a very undesirable domino-effect. Trade cuts in times of high deficits are bad enough, but the alternate such compulsions invariably give rise to is a much bigger blow to the exchequer. Already there are reports of part of the 3,000 tonnes of stranded kinnow now being smuggled into Iran. Pakistan is no stranger to this menace. More often than not, it refuses to self-correct even after temporary restrictions are lifted.
In addition to compromising immediate revenue, such ad-hoc practices distort export, growing and transportation markets in the producing country. It takes a long time to mitigate subsequent losses. When these decisions are enforced due to geo-political complications in far-off parts of the world, which have no direct bearing on local or regional demand-supply dynamics, the problem is often compounded beyond correction. And since the timing of the ban (if it is temporary in the first place) is determined by forces far beyond our control, there is little likelihood of reverting to the old arrangement even in better times. The importing market adjusts, to other exporters with price arrangements that, for obvious reasons, would make little sense renegotiating should Pakistan be suddenly freed from UN shackles. This way, not only do we lose money, but also deliberately place ourselves behind the curve in regional trade mechanics.
Sooner or later, Tehran-specific pressure will come crashing down on Islamabad’s refusal (so far) to back down from the Iran-Pakistan gas pipeline project. As we have recently explored, the tone from Washington has stiffened considerably of late. And though it hasn’t reached the or-else level yet, the time is not far when it will demand a definitive posture of Pakistan. Whichever way it bends, the government must ensure the Pakistani market does not suffer. Already, earning is the government’s soft spot. Its own economic mismanagement has forced it into a fiscal straightjacket. Our trade diplomacy is about to be put to its severest test yet.