Iran: The Missing Western Link in CPEC's Next Phase

Overview

CPEC's first phase built a major infrastructure corridor linking Pakistan with western China. Its next strategic challenge is to transform that corridor into a broader regional economic network. This Discussion Paper argues that Iran represents the missing western link in that transformation. Pakistan's connectivity strategy remains geographically incomplete without stronger westward links: Iran occupies a unique position connecting South Asia with the Middle East, Central Asia, Turkey and wider Eurasian transport networks.

Through Iran, Pakistan can diversify regional connectivity, strengthen access to neighbouring markets and improve the commercial reach of Gwadar and CPEC-related infrastructure. The challenge is not simply geographical. Infrastructure must be matched by efficient border management, trade facilitation, financial mechanisms and commercially viable industrial links.

This Discussion Paper treats the diplomatic opening created by Pakistan's mediation of the 2026 Iran war ceasefire as a secondary, and still fragile, factor. Concrete connectivity gains made through 2026, including a new Gabd-Rimdan transit corridor to Central Asia and a renewed $10 billion bilateral trade target, must be built to withstand renewed conflict and sanctions, not to depend on their absence. CPEC 1.0 built critical infrastructure; CPEC's next phase must connect that infrastructure to more markets, and Iran is the missing western link in that strategy.

Policy framework

The paper sets out five areas for action:

• Develop a Pakistan-Iran Connectivity Strategy.
• Consolidate the Gabd-Rimdan and Taftan gateways as commercial corridors.
• Build a realistic Gwadar-Chabahar complementarity framework.
• Link SEZs to the verified westward demand already committed.
• Build sanctions-resilient commercial mechanisms.