Pakistan’s peacemaker role could boost economic ties with Gulf nations, West, say analysts

Pakistan's role in brokering a peace deal in the Iran war has led to widespread ‌diplomatic acclaim that could bring Islamabad some economic benefits. Prime Minister Shahbaz Sharif and army chief Field ​Marshal Asim Munir attended talks between ⁠Iran and the US in the Swiss town of Buergenstock last weekend, the culmination of Pakistan's months-long role in one of the world's most ‌consequential diplomatic negotiations.

"This guy. What's up, man?" US Vice President ‌JD Vance said upon seeing Munir in the resort town before giving the army chief a hug. Both sides, along with several world leaders, have thanked Islamabad for helping ease a conflict that could have disrupted the Strait of Hormuz for a long period, choked global oil supplies and shattered the world economy. The breakthrough has raised Pakistan's profile and analysts say the country of 250 million people has an opportunity to convert that ‌goodwill into some gains for an economy marked by decades of boom and bust.

Pakistan is targeting economic growth of 4.0% and inflation of 8.2% for the coming fiscal year, compared with 3.7% projected growth in fiscal 2026 which ends in June, and 6.7% average inflation in the July-May period of the outgoing year."

 “A nation that delivers stability at home and helps advance stability abroad becomes a more credible destination for investment," said Khurram Schehzad, adviser to Pakistan's finance minister.

“A growth-oriented economic agenda, coupled with a reputation as a force for peace and stability, places Pakistan in a uniquely favourable position to attract investment into its people, infrastructure, technology and future growth sectors."

Many analysts are expecting some largesse from the US, although there have been no signs of any such windfalls yet. Alex Vatanka, senior fellow and director of the Iran programme at the Middle East ​Institute in Washington, said one gain for Pakistan was the "huge potential to be a more integrated part of the broader Middle East," and eventually forging broader economic partnerships in ‌the region that would also encompass defence. Another possibility was that sanctions relief on Iran could allow "huge trade between Iran and Pakistan," particularly through their Balochistan land border, said Miftah Ismail, a former finance minister.

Focus on academic exchanges, IT services

After the September 11, 2001 attacks and the US invasion of Afghanistan, alignment with Washington helped secure debt rescheduling from more than a dozen bilateral creditors, renewed support from the IMF and other multilateral lenders, and ⁠US assistance.

Khurram Husain, an economic commentator and journalist, said the current situation was similar to post-9/11, but with one crucial difference: that moment came at "the start of a long ruinous war in which Pakistan had to play a frontline role" while this time "Pakistan is playing the role of a peacemaker." That distinction means Pakistan's leverage this time comes from being useful to multiple sides ​simultaneously – Washington, Tehran, Gulf states, ‌Turkey and China.

Asim Ijaz Khwaja, a professor at Harvard University and director of the Harvard Center for International Development, said Pakistan should resist short-term financial concessions that do not raise productivity. Instead, he said, Pakistan should seek academic exchanges and scholarships, preferential market ‌access for textiles and IT services, ‌technology transfer and green investment frameworks.

‘Peace pivot’

Hamish Falconer, Britain's minister for the Middle East, thanked Islamabad for its ⁠peacekeeping role during a visit last week and told Reuters the UK saw "huge scope for deepening trade links" with Pakistan and that a British trade minister was expected ‌to visit in the coming months. Diplomats from two other Western countries have also said their governments are exploring strengthening economic ties following Islamabad's peace efforts. They did not wish to be identified further.

Atif Mian, professor of economics, public policy and finance at Princeton University, said Pakistan should avoid treating diplomacy as another route to deposits, rollovers ⁠or IMF-style relief. The real prize, he said, was a "peace pivot" – external and domestic – built on regional trade, energy links with Iran, and deeper integration with the Gulf and Turkey through exports, technology ​transfer and co-dependent industries.

Reuters