The agreement between USA and Iran changes many dynamics. Professor Sohail Mahmood examines the impact and prospects for key neighbours, partners and rivals in this new series.

Strained relations between Pakistan and Iran are about to get warmer. Up until the 1970s Iran and Pakistan were close allies but later, relations deteriorated.

Siddiqa had argued that:
There is enough evidence that speaks volumes about Iran's centrality for Pakistan's security, especially up until the late 1970s. The Shah of Iran had provided material help to Pakistan during the latter's 1965 war with India and was looked upon to admonish New Delhi for any adventurism. In 1969, Pakistan celebrated the Iranian monarchy and Iran celebrated Pakistan Day.... The rise of the jihad culture changed Pakistan's socio-political dynamics. One of the important milestones in our history is the creation of the Sipah-e-Sahaba Pakistan that was encouraged and later established in the 1980s, not just to fight the jihad in Afghanistan, but also to start a sectarian conflict in Pakistan.

Zia was uncomfortable with those sects in Pakistan which were resisting his Islamic laws, especially as these affected them. The Iranian Revolution in January 1979 made Pakistanis belonging to these sects overconfident about pursuing their ideology and challenging Zia's laws. The state resisted harshly. By the mid to late 1980s, there were enough forces present to punish people based on their sectarian identity...The two decades of militancy certainly had an impact, but a more critical role was played by how Pakistan's strategic masters envisioned regional geopolitics in which Pakistan had a central role to play. It certainly had no place for other states, such as Iran, challenging Rawalpindi's control in its sphere of interest, like in Afghanistan. Having given favours like transferring nuclear know-how, Iran was expected to conceding to respect Pakistan's strategic ambitions. Tehran's intervention in Afghanistan irritated Rawalpindi....

In the 1970s, Pakistan began to develop two key components to gain military strength — proxies and nuclear deterrence. The proxies were used aggressively in Afghanistan and then elsewhere... The proxies came with an expensive ideological baggage. The murder of an Iranian diplomat in 1991 was part of the high cost, which the state was willing to pay. This was a rare case in which evidence was available to punish the killer, who was eventually freed in 2011.Nuclear deterrence, on the other hand, boosted Pakistan's confidence regarding its role as defender of the Muslim world. Thus, the GHQ's disappointment over Iran's role in Afghanistan and it building ties with India, all of which went against Pakistan's vision.

Today, the poor state of the road from Quetta to the Sistan border underscores Iran's marginal relevance for Pakistan. Iran, which was once Pakistan's major trading partner, has little economic role. The American embargo, the power of internal ideological partners and the regional power games have changed the ties to a degree that they will not improve without a major shift in thinking.

In the 1990's Pakistan and Iran had serious differences over the issue of Taliban control of Afghanistan. Javid Husain explained that:
Undoubtedly, Pakistan has had its own share of mistakes in handling the Afghanistan situation. Our policy of total support to the Afghan Taliban in 1990's after they had captured Kabul and our rejection of the proposals made by Iran, where I had the privilege of serving as the Pakistan ambassador, as late as the beginning of 2001 for a compromise solution in Afghanistan were strategic blunders. Pakistan continues to suffer from the adverse consequences of those mistakes.

Pakistan is playing neutral in the current Arab-Iran rivalry because of its dangerous spillover effects inside the country. For decades sectarianism in Pakistan had links to this bitter rivalry. Iran had supported extremist Shia groups in Pakistan while Saudi Arabia had supported extremist Sunni groups. Pakistan was a stage for the proxy wars between the two countries.

Rais explained that:
Pakistan's decision not to join the Saudi-led coalition in its Yemen war has not been received well in Riyadh and the UAE. They expected us to be on their side...Pakistan did the right thing in not choosing any side in the Arab-Iran rivalry, which in recent decades has transformed into a sectarian conflict that has historically been embedded in their clashing national identities. This is not for the first time Pakistan made this choice. We stayed neutral during the Iran-Iraq war and adopted the same posture during Iraq's invasion of Kuwait and during the first Gulf war to liberate Kuwait. We have been badly hurt by the Arab-Iran rivalry as both sides have been attempting to extend it through their religious proxies to other Muslim lands. The secret sectarian militias in our country have sources of funding, aspirations, advice and counselling in the rival capitals. Taking sides will have been internally divisive. We must stick with our good old policy of neutrality in wars between Muslim states.

Given, the development an opportunity for Iran exists to improve relations with Pakistan and India. For example, Iran is considered to be one of the top energy sources in the world having 158 billion barrels of oil reserves. With 34 trillion cubic meters of gas, Iran also has one of the world's largest gas reserves.

Iran and Pakistan had an agreement on building an $ 8 billion gas pipeline, but the project had been halted because of the sanctions on Iran and US pressure. Originally, India was part of it but also backed off because of the sanctions.

In August 2015 there had been talk again to include India in the project. An Indian delegation was expected to visit Tehran in September 2015 to discuss the possibilities of rejoining the pipeline project. Thus, Pak-Iran gas pipeline project which had been halted from quite some time was now going to be completed. Iranian gas and oil supplies to Pakistan will now be forthcoming through the pipeline. Iran had already built the pipelines up to the Pakistan-Iran border and now it was for Pakistan to complete the pipelines. . India would get much needed gas through Pakistan land route. Pakistan would also import gas and oil from Iran through this land pipeline. However, the India-Pakistan phase of bad relations may yet delay the project.

Another, big regional gas pipeline project was the Turkmenistan-Afghanistan-Pakistan-India (TAPI) project has been stalled because of the some disagreements between the contractors. The TAPI project was about $10 billion and was expected to be a major boon for the Afghan economy. When complete, the pipeline would be capable of transferring 33 cubic meters of gas, with a predicted life-line of 30 thirty years. The pipeline would pass through Kandahar and onward to Pakistan. Afghanistan would receive$400 million annual revenue through transit fees associated with the pipeline and the gas it transfers to Pakistan and India. The stalled TAPI now project presents an opportunity for Iran and Pakistan to focus on their own gas pipeline project now. The Chinese are now interested to finance the Iran-Pakistan gas pipeline project and extend it north to their own country.

Trade was another sector that could vastly improve. Iran's trade with Pakistan was only over $ 1 billion dollars whereas it is over $10 billion with India and Turkey each despite the nuclear sanctions.

In August 2015 the Iranian Foreign Minister Javad Zarif visited Pakistan and stated that Iran intended to increase economic cooperation with Pakistan, along with expanded regional cooperation and carrying out "joint efforts in the fight against extremism and terrorism". Also, Iran had wished for a positive outcome from the talks between the Afghan government and the Afghan Taliban which was being mediated by Pakistan, which will assist in brining g peace to the region. Prime Minister's Adviser on National Security Sartaj Aziz said that Iran and Pakistan had agreed on increasing bilateral collaboration in the energy sector. Progress on the Iran-Pakistan gas pipeline was emphasized. Pakistan had also welcomed the agreement on nuclear deal, hoping that it would lead to peace on an international level. This was Zarif's second trip to Pakistan in a four month period. .Speaking at the special meeting of the Foreign Affairs Committee of National Assembly, Zarif had called for unity in the Muslim world and said no country including India can undermine the importance of Pakistan for Iran. Zarif said that Iran was very much interested in developing energy cooperation.

Pakistan and Iran have also been working on an electricity sharing project. Iran was already providing 74MW of electricity to Pakistan's border towns. It was planned that the supply of electrify would be increased to 100MW. Transmission line for another 100MW project was under construction for providing electricity to Gwadar. The two countries were now negotiating a 1,000MW agreement for which feasibility studies had been completed. It was decided that a Pakistani delegation would soon visit Tehran for negotiating and finalizing power purchase agreement for 1,000MW, a spokesman for water and power ministry had said.

Another area of possible joint cooperation was in the area of peaceful nuclear power generation in which Pakistan can provide Iran with needed assistance. Plus, an increased role of Iran in Afghanistan after the lifting of the sanctions was over the horizon. Pakistan can cooperate with Iran to bring peace, stability and security in Afghanistan. Pakistan welcomed the very recent nuclear deal between the P5+1 and Iran. It is hoped that Iranian relations with Pakistan will improve significantly now. This nuclear deal is definitely a good development for the region as it lessens the tension and opens up Iran to the world.

For various reasons the Nawaz Government has lost authority in Pakistan. The Chief of the Pakistan Army is slowly getting in the driver's seat in Pakistan and the Army's concerns matter. The Army chief was directing foreign policy not the Nawaz Government.

Luavut Zahid explained that:
Who cares about the foreign minister anyway? An interesting problem that Pakistan's foreign policy faces is the hidden hands that know when to pull the right strings. "The military as an intuition has always been stronger than the civilian leaderships. We have some betterment now but there isn't a huge substantial change. We can't say that the military is running our foreign policy, but their shadows are very obvious," Shahzad notes. Whether it's Pakistan's perpetually fractured relations with India or its tumultuous exchanges with Afghanistan — it wouldn't be a stretch to say that the military's scent is all over the foreign policies that this country chooses to execute. As has been the case with many other avenues, where the civilian government failed the establishment stepped up.....On the other hand, Sartaj Aziz feels that the perception that the military is calling the shots from the background is an ignorant one. "To start with the defence establishment has a deep interest in these portfolios because their defence capacity, their entire strategy depends on it. The civilian government is in charge, however," he said.

Haider explained:
The army sits at the high table and it dictates its terms. The civilians can either take it or lump it. That they choose to meekly submit to the army's advice is what ensures the form of democracy...The army is smart enough to let the civilians be seen to be in the driver's seat even as it navigates the bus. This way, if and when something goes wrong, people will hold the civilians responsible. In other words, the army can rule without being subjected to direct responsibility for any action. Whoever said that one could not have one's cake and eat it, too, obviously was not thinking about the Pakistani army. The civilians are taking the hit on economy. But not many would pause to realize that it is these very policies, foreign and security, as directed by the army, which continue to trap the country in a poor economic cycle. Not just that, military-directed policies also shrink the space for the civilians to handle foreign and security policies and threats through means other than military....it is essentially a takeover without a physical takeover and it is underpinned by perceptions management through a clever use of social media.

Pakistan is wary of developing ties between its arch rival – India and neighbor Muslim country- Iran and also Iran's role in Afghanistan. The Pakistani military establishment doesn't approve of close military links between India and Iran. The Nawaz Government may indicate its displeasure on Iranian Navy exercising with arch rival India. However, Iran will likely dismiss Pakistan's concerns and go ahead with the exercises. Pakistan will only ignore the issue then. So, any Indian plan of US-Iran-India-Australia-Japan naval exercises and cooperation will face no hurdles, at least from the Pakistani side as the Pakistan Army doesn't want to provoke any one. The Pakistan Army has its hands full facing the innumerable challenges inside Pakistan and the country's borders.

In the backdrop of possible lifting of sanctions from Iran by the international community Pakistan and Iran may well cooperate on the new China-Pakistan Economic Corridor (CPEC) project worth about $48 billion as it would link up Iran to China.. The CPEC was a significant development in Pakistan. Cameron Munter, former US Ambassador to Pakistan said on August 29, 2015 that the CPEC would increase Pakistan's importance in the region and not just it but the entire region would gain from the corridor.

On September 2, 2015 it was reported that Iran had agreed to consider linking with the CPEC in an effort to strengthen border markets and upgrade road and railway networks. During a meeting of the Pak-Iran Joint Working Group and Technical Committee on Trade, in the August 2015, the two countries had discussed trade and investment-related issues and how to frame a five-year strategic plan to enhance bilateral trade.

They agreed on the need of implementing the bilateral Preferential Trade Agreement (PTA), including promotion of transparency and establishment of a mechanism that issues prior notification.

Expected freight train operations also came up for review and the Iranian side was reminded that in the Zaheden meeting in May 2015, Pakistan had stressed the need for beginning the services on a regular basis.

In the subsequent meeting in August, both sides had agreed to offer freight train services on a twice monthly basis, subject to availability of cargo. Pakistan had proposed concessionary fares between Zahedan and Quetta. It was also suggested that representatives from the respective ministries, responsible for agricultural matters, should participate in meetings of the Joint Working Group on Trade to facilitate decision-making regarding trade in agro-products. It was said that Iran was also interested in linking itself with the CPEC to expand its border markets with regional countries

.
The future prospects of improved relations are now bright as Pakistan and Iran both want to engage each other. As Iran gets out of its isolation and abandons it Islamic revolutionary fervor, relations will improve. Pakistan is cognizant of the new situation in the region and had played its hand well. It did not take sides in the on-going Arab- Iran tussle over Yemen. That was indeed a wise decision as Pakistan faces an existential challenge from within. It is threatened by extremism inside its borders. The bold move of the Pakistan Army to rid the country of the terrorism menace one and for all is an important development. Pakistan Army isn't just focused on India but is now tackling the homegrown threats of crime, extremism, terrorism and corruption. A historic opportunity presents itself for both Iran and Pakistan to make the most of changed circumstances. Hopefully, Pakistan and Iran will move closer and forge a new partnership with each other, especially in the economic domain.

This will obviously benefit both countries and is in their respective national interests.

Quoted sources :

Ayesha Siddiqa, "Iran Pakistan relations", The Express Tribune, November 27th, 2014
Javid Husain, US warning to Pakistan, The Nation, September 01, 2015
Rasul Bakhsh Rais, The Arab reaction, September 2, 2015, The Express Tribune, September 2nd, 2015.
MATEEN HAIDER & IRFAN HAIDER, "Iran to expand economic cooperation with Pakistan: Javad Zarif", Dawn, AUG 13, 2015
Abdul Haq Omari, "TAPI Project Stalled Due to Disagreement Between Turkmenistan Contractors", TOLO News, February 11, 2015, http://www.tolonews.com/en/afghanistan/18169-tapi-project-stalled-due-to-disagreement-between-turkmenistan-contractors, accessed February 12, 2015
MATEEN HAIDER & IRFAN HAIDER, "Iran to expand economic cooperation with Pakistan: Javad Zarif", Dawn, AUG 13, 2015
Luavut Zahid," Pakistan's foreign policy conundrums: Not all bad news?" Pakistan Today, August 29, 2015 , http://www.pakistantoday.com.pk/2015/08/29/features/pakistans-foreign-policy-conundrums-3/, accessed August 29, 2015
EJAZ HAIDER, "Master of the Game" , NEWSLINE, AUGUST 5, 2015
http://www.newslinemagazine.com/2015/08/master-of-the-game/, accessed August 25, 2015
see https://video.search.yahoo.com/video/play;_ylt=A2KLqIMyztpVEhIALjc0nIlQ;_ylu=X3oDMTByZWc0dGJtBHNlYwNzcgRzbGsDdmlkBHZ0aWQDBGdwb3MDMQ--?p=Pakistan+Relations+With+Iran&vid=776a9e56de811643ce48ea978f5bb9 accessed August 24, 2015
CPEC will elevate Pakistan's importance in the region: Munter, The News international, August 29, 2015
Peer Muhammad, Iran agrees to consider being part of CPEC, The Express Tribune, September 2, 2015

Dr Sohail Mahmood is a Professor of Political Science and is widely published on the politics and governance issues of South Asia and the Middle East.