Pakistan's Economy Faces Strain Amid Ongoing US-Iran Tensions

Impact of Geopolitical Instability on Pakistan

The ongoing geopolitical turmoil in the Middle East is beginning to take a toll on Pakistan's economy. Prime Minister Shehbaz Sharif has officially acknowledged that the recent conflict between the United States and Iran has hindered the country's economic reforms. During a federal cabinet meeting, he candidly discussed the dire financial situation and the international pressures facing Pakistan. He noted that the nation has been able to withstand these challenges with support from Saudi Arabia, with which Pakistan has a NATO-like defense agreement.

Call for Economic Stability

While addressing the cabinet on Wednesday, the Prime Minister expressed hope for an end to the conflict and a return to economic stability in the region. He mentioned that a task force is monitoring daily conditions and emphasized the need for collective efforts to address these challenges and eliminate hostilities.

Rising Import Costs

According to Arab News, Sharif stated, "God Almighty had placed our economy on a broad scale, and we were growing, but due to this sudden war, our efforts over the past two years have diminished. Neither you nor I are responsible for this." He highlighted that the conflict has led to a surge in crude oil prices, causing Pakistan's import bill to escalate from $300 million before the war began on February 28 to $800 million. He described the situation as challenging for the economy and mentioned that the government is taking measures to prevent fuel shortages.

Pakistan's Diplomatic Efforts for Peace

Sharif also noted that Pakistan has settled its $3.5 billion bilateral debt and expressed gratitude to Saudi Arabia's King Mohammed bin Salman for their support. Since the onset of the war, Pakistan has been urging both sides to cease hostilities and has acted as a mediator, engaging with leaders from both parties, particularly the Iranians. Initial talks took place in Islamabad, with a second round likely to follow there as well.

Challenges in Mediation

However, a US report suggests that Washington should be cautious about relying on Pakistan as a mediator, as its army chief, Field Marshal Asim Munir, may be protecting Iranian interests. Similarly, an Iranian lawmaker has indicated that Pakistan is not a suitable mediator for US-Iran negotiations.