Pakistan and Iran are accelerating efforts to transform their shared border from a historically volatile frontier into a hub for trade and investment, as both countries advance plans for a special economic zone and pursue a target of $10 billion in bilateral trade.

Building a new economic partnership

The renewed push comes at a potentially significant moment for the region. Following the recent U.S.-Iran peace agreement, officials in Islamabad and Tehran are looking ahead to the possibility of sanctions relief that could unlock economic opportunities long constrained by geopolitical tensions.

During talks in Islamabad on 18 June, Pakistan's Investment Minister Qaiser Ahmed Sheikh and Iranian Ambassador Reza Amiri Moghadam agreed to fast-track implementation of the Rimdan-Gabd Special Economic Zone along the two countries' shared border. The project forms part of a broader framework agreed between Pakistan's Board of Investment and Iran's Supreme Council of Free Trade, Industrial and Special Economic Zones.

Both sides reaffirmed their commitment to increasing bilateral trade to $10 billion in the coming years, a target first outlined in agreements signed last year across multiple sectors.

Beyond trade targets

For years, Pakistan and Iran have struggled to translate political goodwill into substantial economic integration.

Security concerns along their porous border, sanctions on Tehran, banking restrictions and inadequate transport infrastructure have all constrained commerce between the neighbouring countries.

Those obstacles remain.

Officials acknowledged that cross-border trade has fallen sharply in recent months. Before the latest regional tensions, between 700 and 800 trucks crossed the border each day. Both governments are now discussing measures to increase that number to as many as 2,000 trucks daily.

The meeting also addressed Iranian containers stranded at Karachi Port for around 100 days, including shipments containing medicines, highlighting the practical challenges that continue to hamper trade.

A regional connectivity strategy

Both countries believe geography could provide a significant opportunity.

Ambassador Moghadam said Iran was prepared to facilitate greater Pakistani access to Central Asian markets, while Sheikh highlighted the strategic location of the Rimdan-Gabd corridor near major ports and maritime routes.

Iranian Commercial Attaché Murad Nemati argued that stronger connectivity linking Karachi, Gwadar, Bandar Abbas and Chabahar could help connect South Asia, West Asia and Central Asia through new trade and logistics networks.

For Pakistan, the significance extends beyond bilateral trade. As traditional transit routes through Afghanistan face recurring political uncertainty, policymakers increasingly view connectivity with Iran as part of a broader strategy to diversify access to regional markets.

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Whether that vision becomes reality will depend less on headline trade targets and more on implementation. The success of the Rimdan-Gabd project, progress on border infrastructure and the pace of any sanctions relief for Iran will ultimately determine whether the latest diplomatic momentum can be transformed into lasting economic integration.

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Iran Pakistan Pakistan economy Central Asia United States Shigeru Ishiba