Connectivity: The New Buzzword to Promote Trade between Pakistan, Iran and Turkey

Developing Just Leadership

Waseem Shehzad

Rajab 17, 1442 2021-03-01

News & Analysis

by Waseem Shehzad (News & Analysis, Crescent International Vol. 50, No. 1, Rajab, 1442)

Pakistan, Iran and Turkey, members of the Economic Cooperation Organization (ECO), are a natural fit to establish railway links. A priori requirement for such connectivity, however, is that they must have functioning railway tracks.

Of the three, Pakistan has unfortunately lagged behind in railway infrastructure development. The track laid from Peshawar in the north to Karachi in the south during the British raj has not been expanded much. In some sections, existing tracks have been allowed to deteriorate falling into disuse. The Peshawar to Torkham line at the Afghan border is one such example. Comprising 34 tunnels and 92 bridges and culverts built in 1926, today it lies in ruin. Large parts of the track have been pilfered by people and sold as scrap metal.

There appears to be some movement to change this lack of interest in railway infrastructure, thanks largely to Chinese help. As part of its Belt and Road Initiative (BRI), China is willing to invest huge sums in developing such infrastructure. The $60-billion China-Pakistan Economic Corridor (CPEC) is the most important component of this connectivity project although it has its share of skeptics.

Apart from building power generation plants, industrial zones and the all-important Gwadar Port in the south, roads and railway lines are also part of the development project. Plans to upgrade the existing track and construct a parallel dual track are at an advanced stage. It will include upgrading of signals, and buildings bridges/underpasses from Peshawar to Karachi. The 1,872-km railway track will cost $6.8 billion. China and Pakistan will build it on a cost-sharing basis.

It has three components. Phase-1 of the Main Line-I (ML-I) will be completed by December 2024 and will cover the construction of the 527-km long track between Peshawar, Rawalpindi and Lahore. Construction work was due to start in January of 2021 but has been delayed primarily due to disagreement over interest rates on financing.

Other phases of construction will follow once initial hiccups have been overcome. The north-south Peshawar to Karachi line will branch westward from Hyderabad to Quetta and on to Taftan at Iran’s border. Further, Islamabad has already approved a study for rail link-up between Peshawar with the Afghan city of Jalalabad.

Pakistan’s north-south tracks will be used for freight as well as passengers. Not only will there be many more trains plowing the north-south corridor in Pakistan, they will also run much faster: from 65 km/hour at present to 110 km and in some sections even as fast as 165 km per hour. Travel time between Lahore and Karachi will be reduced to 10 hours.

This is the internal network in Pakistan. The external links are equally important. Pakistan railways will connect with Iran’s already vast network that will be further expanded through Chinese investment of some $120 billion over the next 10 years. The aim is to ultimately link this with Turkey’s vast railway network and onward with Europe. Turkey has already built a tunnel under the Sea of Marmara connecting its Asian part with its European part in Istanbul.

The scope of these railway connectivity projects is breath-taking. Once completed, the time it will take to travel the 6,540 km from Pakistan to Turkey to ship goods will be reduced from 21 days by sea to mere 10 days by freight train. It is ironic that such railway connectivity had not been initiated earlier given their common borders and close political, cultural and commercial links between the three countries. On February 28, it was announced that the first freight train from Istanbul will start on March 4 and traversing Iran, it will arrive at the Iranian border crossing at Zahedan before entering Pakistan.

It needs recalling that Pakistan, Iran and Turkey were members of the Regional Cooperation for Development (RCD) in the sixties and early seventies. It fell apart because of changes in the political landscape in the three countries. The RCD has now been supplanted by the 10-member ECO, founded in 1985 by the original RCD trio that also incorporated the Central Asian republics that emerged after the collapse of the Soviet Union in 1991. All members benefit, especially the landlocked ‘stans’ as well as Afghanistan where Iran is working on laying new railway tracks. At present, Afghanistan has only 25 km of functioning railway track!

Existing trade figures and their future potential will provide a better sense of what can be achieved. Pakistan-Iran trade currently at around $369 million annually (2019-2020 figures), has the potential to grow to $5 billion fairly quickly.

Similarly, Turkey-Pakistan trade hovers around $800 million range (with the balance in Turkey’s favor). It can quickly grow to $8-$10 billion. The railway connectivity will greatly facilitate such expansion. Further, Pakistan will be able to export perishable commodities—fruits and vegetables—to Europe much more quickly via this route.

For Islamic Iran, that lies at the centre of the connectivity project, there is also great attraction. Even if US sanctions are not lifted, it can bypass them by trading with regional countries using local currencies. Such arrangements are already in place with several Central Asian republics as well as Turkey.

There is immense potential in the proposed rail connectivity project. What is needed is the political will and efficient implementation of projects that have already been approved. If acted upon, the sky is the limit in trade, as the saying goes.

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