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    Home - Business & Economy - The ugly war next door
    Business & Economy

    The ugly war next door

    Naveed AhmadBy Naveed AhmadMarch 8, 2026No Comments7 Mins Read
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    G.R. Baluch
    Ambassador (Retd) G.R. Baluch

    Wars fought at a distance can often be analysed with intellectual detachment. Wars fought next door are different. They intrude into national calculations with immediacy, urgency, and often unsettling consequences. The ongoing war between Israel and the United States on one side and Iran on the other has assumed precisely such proportions for Pakistan. It is not merely another episode in the long chronicle of Middle Eastern conflict. It is a strategic upheaval unfolding in Pakistan’s dangerous proximity. The intensity of the military campaign launched by Israel and backed by the United States, the pre?eminent global military power, has dramatically altered the strategic landscape of West Asia. The scale and precision of the attacks have devastated segments of Iran’s strategic infrastructure and reportedly decapitated elements of its leadership hierarchy, including the killing of its most prominent political and spiritual leader, Ayatollah Ali Khamenei, alongside senior figures in Iran’s military establishment. Whether the war remains limited or evolves into a wider regional confrontation, the geopolitical landscape has already shifted. For Pakistan, the implications are immediate and multidimensional. Geography alone ensures that Islamabad cannot view this conflict from the safe distance of geopolitical commentary. Pakistan shares nearly nine hundred kilometres of border with Iran, much of it running through the rugged terrain of Balochistan where tribal and familial linkages straddle both sides of the frontier. At the same time Pakistan’s economic lifeline, oil imports, trade routes, and remittance flows, runs through the very region that is now engulfed in war. This is therefore not simply a regional crisis.

    It is a strategic stress test for Pakistan’s economic resilience, diplomatic balance, and national security preparedness. The most immediate impact of the war for Pakistan lies in the economic domain, particularly in energy security. Pakistan’s economy remains heavily dependent on imported oil and liquefied natural gas, most of which originates in the Gulf region. These supplies travel through the Strait of Hormuz, one of the world’s most critical maritime chokepoints. In times of stability the Strait of Hormuz functions as the artery of global energy flows. In times of war it becomes a potential chokehold. Iran has repeatedly threatened to disrupt shipping in the strait in response to military aggression. Even the perception of instability in these waters can send global oil prices soaring and dramatically increase insurance costs for shipping. For Pakistan, whose economy is already strained by inflation, fiscal deficits, and fragile foreign exchange reserves, such disruptions could prove severe. A sharp rise in oil prices would immediately inflate the country’s import bill. Energy shortages could disrupt industrial production, raise transportation costs, and intensify inflationary pressures across the economy. Pakistan must therefore move swiftly to cushion the potential energy shock. A national programme of energy conservation should be introduced immediately. Government offices, public institutions, and private corporations must reduce non essential energy consumption. One practical step would be the temporary adoption of work from home arrangements across government departments and large segments of the private sector. Remote work reduces fuel consumption associated with daily commuting and lowers electricity demand in commercial centres. Similarly universities and colleges could temporarily shift to remote or hybrid learning models, drawing on the digital infrastructure developed during the pandemic years. Such measures would reduce transportation demand without disrupting academic activity. Pakistan should also move toward establishing strategic petroleum reserves capable of sustaining the country through temporary disruptions in global supply.

    At the diplomatic level Islamabad should negotiate deferred oil payment arrangements with friendly Gulf states particularly Saudi Arabia and the United Arab Emirates. Energy discipline though often overlooked in strategic planning can significantly enhance national resilience during periods of geopolitical turbulence. Pakistan’s second economic vulnerability lies in the fate of its overseas workforce in the Gulf. More than five million Pakistanis live and work in the Gulf Cooperation Council countries. Their remittances form one of the most critical pillars of Pakistan’s economic stability and regularly provide tens of billions of dollars to the national economy. Yet the Gulf itself now lies within the potential arc of the expanding conflict. Iranian retaliatory capabilities include missile and drone systems capable of striking targets across the region. Military bases, oil facilities, ports, and airports across the Gulf could become targets if the war widens. Should such strikes occur economic activity across the Gulf could slow significantly. Oil production disruptions, shipping interruptions, and financial market instability could affect employment opportunities for expatriate workers. For Pakistan the ripple effects would be immediate. Remittance flows could decline sharply and large numbers of expatriate workers could return to an already fragile domestic labour market. Pakistan must therefore adopt a proactive strategy to safeguard its diaspora workforce. Islamabad should intensify diplomatic engagement with Gulf governments to ensure the safety and employment security of Pakistani workers. Contingency plans must also be prepared for the reintegration of returning expatriate workers. Investment in small enterprise development, vocational training, and reintegration programmes will be necessary if large numbers return. Pakistan should also strengthen incentives encouraging expatriates to send remittances through formal banking channels while exploring labour markets in East Asia, Southeast Asia, and parts of Europe to diversify employment opportunities abroad. Pakistan’s border with Iran introduces another layer of complexity. The province of Balochistan shares deep tribal linkages with Iran’s Sistan Baluchestan region. These connections have historically facilitated cultural exchange but have also produced security challenges. If Iran experiences prolonged instability the border region could become vulnerable to militant infiltration, smuggling networks, and refugee flows. Pakistan must therefore strengthen its western frontier through a combination of security and development initiatives. Border fencing should be accelerated and supported by advanced surveillance technology.

    At the same time the development deficit in Balochistan must be addressed through sustained economic investment. Infrastructure development, employment generation, and political inclusion remain essential components of long term stability. Beyond economic and security concerns lies perhaps the most delicate challenge: diplomacy. Pakistan shares deep cultural ties with Iran. At the same time its strategic relations with Saudi Arabia and the Gulf states remain vital. Pakistan also maintains relations with the United States and a strategic partnership with China. Navigating these overlapping relationships in the midst of a regional war will require exceptional diplomatic balance. Pakistan’s diplomatic posture should therefore be guided by three principles: neutrality, de escalation, and constructive engagement. Islamabad must avoid being drawn into regional rivalries while advocating strongly for diplomatic solutions. Pakistan should work with major powers including China, Russia, and the European Union to encourage negotiations between Iran and its adversaries. Emerging diplomatic initiatives including new dialogue platforms could provide additional channels for de escalation. While Pakistan may not possess the leverage to end the conflict alone it can contribute to diplomatic momentum toward negotiations. The most consequential long term question concerns the future of Iran itself. If Iran’s political system collapses and is replaced by a government aligned with outside strategic interests the regional balance could shift dramatically. Iran has historically served as a geopolitical buffer separating Israel’s strategic sphere from South Asia. A transformed political order in Tehran could potentially bring new intelligence and strategic dynamics closer to Pakistan’s borders. Given Israel’s close strategic relationship with India such developments would inevitably alter Pakistan’s security calculations. Pakistan must therefore maintain robust protection of its strategic deterrent and critical infrastructure while strengthening strategic dialogue with friendly powers to preserve regional balance. The Israel United States war on Iran represents far more than a regional confrontation. It is a geopolitical rupture whose consequences could reshape the strategic architecture of West Asia. For Pakistan the war presents immediate economic vulnerabilities, security challenges, and diplomatic dilemmas. Energy disruptions, declining remittances, border instability, and shifting regional alignments could converge simultaneously. Yet crises often reveal the true quality of national statecraft. Pakistan must respond not with reactive improvisation but with strategic foresight, disciplined economic planning, strengthened border management, and balanced diplomacy. Above all Pakistan should continue to support diplomatic initiatives aimed at preventing the conflict from expanding further. For a country located so close to the theatre of war prudence today may determine stability tomorrow.



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