Iran's President Masoud Pezeshkian visited Pakistan in August 2025 and agreed with Pakistan's Prime Minister Shehbaz Sharif to expand trade and work together against armed groups operating along their shared border.

The two countries set a goal to trade $10 billion worth of goods and services with each other annually. Pezeshkian traveled first to Punjab, Pakistan's business center, before visiting the capital Islamabad—a choice that signaled Iran wants to strengthen not just diplomatic ties but actual economic relationships.

Why This Matters

Right now, Iran and Pakistan trade far less than $10 billion per year. International sanctions on Iran make it hard for Pakistani banks and businesses to work with Iranian companies. There are also poor roads and infrastructure on both sides of their border. So reaching this $10 billion goal would require finding new ways around these barriers.

One possible route is through Balochistan province, which sits between Iran and Pakistan. There's been a plan for a gas pipeline there for years, but Pakistan has been hesitant because of fear that dealing with Iran could bring U.S. penalties. We don't know yet if this visit produced any concrete plan to move that forward.

Security Challenges

The two countries also discussed fighting militant groups that operate near their border. This is a serious issue. In January 2024, Iran attacked militant positions inside Pakistan. A few days later, Pakistan struck back inside Iran. That exchange scared people who worry the two countries might go to war.

Pezeshkian called Pakistan "an unwavering ally," which was a deliberate choice of words after those strikes. It signaled that the two countries wanted to move past that crisis. But it's unclear if they actually agreed to share intelligence or plan joint operations to fight the militants together. Public statements haven't confirmed those details.

Both countries face threats from different armed groups operating in the same border region. Iran is worried about a Sunni militant group called Jaish al-Adl. Pakistan faces Baloch separatist groups. The threats overlap, which gives them a reason to cooperate—but they don't fully trust each other yet, which makes it harder.

The Bigger Picture

Iran is under pressure right now. International sanctions are hurting its economy, and other countries are scrutinizing its nuclear program. Pakistan is also struggling financially and is getting help from the International Monetary Fund. Both countries want to build stronger ties with nearby nations to improve their situations.

Iran and Pakistan are both members of an international organization called the Shanghai Cooperation Organisation, which lets countries work together without routing money through Western banks. This gives them a framework for business deals without relying on traditional financial systems.

Iran brought its Foreign Minister along on this visit, which meant Tehran treated the trip as serious and important, not just ceremonial. Whether this translates into actual results will depend on whether the two countries can work out the technical and financial details behind closed doors. For now, both leaders have publicly committed to the plan.