What does Pakistan stand to gain from helping broker the US-Iran deal?
Islamabad, Pakistan – At the alpine resort of Burgenstock in Switzerland last weekend, United States Vice President JD Vance stood alongside Pakistani Prime Minister Shehbaz
Islamabad, Pakistan – At the alpine resort of Burgenstock in Switzerland last weekend, United States Vice President JD Vance stood alongside Pakistani Prime Minister Shehbaz Sharif and Qatari Prime Minister Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani. Standing a few metres away was Pakistani military chief Asim Munir, whom Vance pointed to as he began delivering remarks. “Since Field Marshal Asim Munir welcomed us with the prime minister in Islamabad [in April], I have joked that I have two very, very important people in my life, an Indian and a Pakistani. The Indian is my wife, and the Pakistani is Field Marshal Munir,” he said to laughter in the room. The vice president, whose wife, Usha Vance, is the daughter of Indian immigrants, added that he had spoken to Munir more than anyone else over the previous three months. “We would not have been here without his statesmanship and military leadership,” Vance said, mirroring compliments also offered by US President Donald Trump. The praise has not been limited to Washington. Iranian President Masoud Pezeshkian arrived in Pakistan’s capital, Islamabad, on Monday for a state visit, his first foreign trip since Iran was attacked by the US and Israel on February 28, and offered thanks for Islamabad’s help in bringing Washington and Tehran to the negotiation table. The visit underscored how the past four months have repositioned Islamabad in Tehran’s calculations. Pakistan has spent much of that period acting as an indispensable intermediary between the US and Iran, facilitating backchannel contacts, hosting talks in Islamabad and managing the political risks of opening transit routes to Iran while balancing its Gulf relationships.
The peace framework agreed on June 18 and the 60-day negotiations now under way are partly the result of that effort. The question now confronting Islamabad is more immediate: What does Pakistan actually gain? The economic picture For Pakistan’s fragile economy, the answers cannot come soon enough. The country recorded gross domestic product growth of 3.7 percent over the past financial year, its fastest pace in four years, while remittances rose 8.2 percent to $30.3bn. The fiscal deficit also narrowed sharply. But Hina Shaikh, a Lahore-based economist with the International Growth Centre, said the picture behind those numbers is less encouraging. “Pakistan’s mediation may yield only narrow economic gains, mainly in the form of reduced energy import costs as the Strait of Hormuz reopens and potentially renewed momentum on the Iran-Pakistan gas pipeline if sanctions relief sustains,” she told Al Jazeera. “The recent growth is mainly a result of a drop in oil and gas imports due to the Hormuz closure rather than any expansion in production,” she added, referring to the shutdown of the critical waterway during the US-Israel war on Iran. Pakistan remains in a $7bn loan programme with the International Monetary Fund, its 25th arrangement with the lender since the 1950s. It was approved in 2024. Western governments have spoken positively about developing deeper economic ties with Pakistan, but diplomatic goodwill does not automatically translate into investment or structural relief, according to analysts. Pakistan has been here before. After the September 11, 2001, attacks on the US, alignment with Washington brought debt rescheduling and multilateral support, but they did not fix the structural weaknesses that continue to weigh on its economy: a narrow tax base, weak exports and chronic current account pressures.
The BriefWire