Pakistan’s involvement in the INSTC offers trade opportunities but challenges its diplomatic balance with Russia, the U.S., and India.

Pakistan’s decision to accept Russian President Vladimir Putin’s invitation to join the International North-South Transport Corridor (INSTC) presents a complex challenge: navigating its relationships with both Russia and the United States while safeguarding its national interests. The world has transitioned from regionalism to globalization and is now back to a renewed focus on regional alliances, a surprising and enlightening shift. This trend underscores the growing importance of diplomatic and political ties with neighboring countries as a foundation for economic development.

Regional organizations such as the African Union, the Association of Southeast Asian Nations (ASEAN), and the European Union have played pivotal roles in addressing issues that transcend borders and have shaped regional and global affairs. The INSTC is another significant regional initiative—a multimodal transportation network that links major Asian economies, including India, Iran, Azerbaijan, and Russia. By connecting these nations through seaports, rail, and road routes, the corridor drastically reduces the distance between India and Moscow from 15,000 km to 7,200 km, slashing transportation costs by 30%. Moscow’s invitation to Pakistan to join this ambitious project aims to enhance trade and regional connectivity further. However, Pakistan’s participation is fraught with challenges, particularly in light of U.S. sanctions on Iran and Russia.

As the global order shifts, a new era of connectivity may emerge, one that moves beyond traditional geopolitical alliances and fosters cohesion among emerging economies. Pakistan’s involvement in the INSTC can potentially increase trade with Central Asian countries and balance its foreign policy between the U.S. and Russia, adhering to its long-standing policy of non-alignment.

However, Pakistan’s foreign policy is riddled with complexities, especially concerning its relationships with neighboring India—the world’s fifth-largest economy—and Afghanistan, now under a fundamentalist regime supportive of Tehrik-i-Taliban Pakistan (TTP). Pakistan’s entry into the INSTC could ease tensions with India, creating opportunities for economic collaboration, mainly through the Iran-Pakistan gas pipeline, also known as the “Peace Pipeline.” This project could prove mutually beneficial, granting Pakistani exporters access to Central Asian markets through trans-regional connectivity. Moreover, joining the INSTC would allow Pakistan to diversify its trade routes beyond the Suez Canal, shifting its economic partnerships to new frontiers. By linking up with Russia, India, and Iran, Pakistan can capture new markets, expand export opportunities, and attract foreign investment.

However, the challenges are daunting. Trade routes are vulnerable to geopolitical tensions, regional conflicts, and the diplomatic intricacies of involving global powers. For uninterrupted trade, it is essential to standardize regulations and secure transportation channels against potential threats, ensuring the smooth transit of goods within the INSTC.

The INSTC project presents significant challenges for Pakistan. The key stakeholders and the corridor’s origin and destination are crucial factors driving Pakistan’s involvement. Yet, India, an essential partner in the project, could pose opposition, while the U.S. economic sanctions on Iran further complicate Pakistan’s position. India’s investment of $120 million in the Shahid Beheshti terminal at Chabahar Port, supported by a ten-year long-term agreement, is seen as a counterbalance to Pakistan’s Gwadar Port, developed under the China-Pakistan Economic Corridor (CPEC). The fraught relationship between Pakistan and India, marked by three wars since their partition and ongoing conflicts over Kashmir and water resources, adds another layer of complexity. Pakistan’s India-centric foreign policy, aimed at countering Indian regional hegemony, has historically driven its defense and military advancements.

If Pakistan can secure its place within the INSTC, it could pave the way for resolving mutual disputes with India through negotiation and trade diplomacy driven by shared economic interests. The corridor could provide a forum for strengthening Pakistan’s geopolitical position, enhancing diplomatic relations with its neighbors, promoting joint ventures, and fostering regional stability. India, however, is making concerted efforts to marginalize Pakistan from global politics, as evidenced by its proposal for the IMEC Corridor at the G20 Summit in New Delhi and its investments in Chabahar to bypass Pakistan in accessing Central Asia. Additionally, India was the only country to oppose Pakistan’s participation in a virtual dialogue for non-member states. Despite these challenges, the INSTC offers Pakistan an opportunity to establish itself as a critical player in regional economic and political decisions, potentially paving the way for a swift entry into BRICS with Russian support.

Meanwhile, the U.S. continues to pressure Pakistan to avoid trade agreements with Iran, citing its sanctions. However, India, a strategic partner of the U.S., has recently signed a long-term trade agreement with Iran and proposed further investments in Chabahar to bypass Pakistan in transferring goods to Central Asia and Europe. This case underscores the double standards and offers Pakistani policymakers valuable lessons. First, Pakistan should prioritize its national interests and economic needs over U.S. pressure. Second, it could explore alternative trade agreements with Iran by using local currencies or engaging in barter trade. Finally, strengthening relationships with other nations, such as China and Russia, could reduce Pakistan’s reliance on the U.S.

Expectations, however, must be tempered. India has consistently avoided cooperation with Pakistan and sought to impede its progress in multiple international forums. At the 2023 SCO Seminar, India exploited its chairmanship to block Pakistan, underscoring its reluctance to cooperate or engage in meaningful dialogue.

In the face of these challenges, a successful integration into the INSTC could solidify Pakistan’s role as a pivotal regional connectivity hub, linking South Asia, Central Asia, and the Middle East. This enhanced connectivity promises to boost trade flows, attract investments, and facilitate cultural exchanges, promoting regional cooperation and stability. Moreover, it holds the potential to contribute significantly to Pakistan’s development goals, helping the nation progress from lower-middle-income status to upper-middle-income status in the coming years.