ECONOMIC LENS
Pakistan’s hidden opportunity in US-Israeli war on Iran?
By Golzar Aghaei
Economic policy specialist
Pakistan is not a direct beneficiary of a war between Iran and the United States/Israel; the evidence presented in this piece consistently shows that the conflict would create risks in energy, trade, border security, and financial areas for Islamabad, while any gains would be indirect, limited, and conditional. Pakistan faces macroeconomic fragility, heavy energy dependence, and recurring IMF reliance, but it can still seek limited diplomatic advantage from regional turbulence if it preserves room for maneuver.
Pakistan’s current position
Pakistan enters any external shock from a position of macroeconomic fragility. The country remains exposed to inflationary pressure, energy dependence, and recurring external financing needs. Recent research describes Pakistan’s inflation as persistently high, with one study reporting 30.78% inflation in 2023 and another noting 37% in 2024. IMF dependence is also a recurring feature: one source notes 23 IMF packages between 1958 and 2023, including the $6.5 billion 2019 program and the $3 billion 2023 Stand-By Arrangement.
Energy remains a central vulnerability. Pakistan’s economy is described as highly exposed to imported fuel and fuel price shocks, while studies on Pakistan’s macroeconomic stability and climate stress repeatedly emphasize the importance of energy imports, oil prices, and inflation in shaping growth and stability. In this context, any war that threatens Persian Gulf shipping, raises insurance costs, or intensifies oil volatility would worsen Pakistan’s macroeconomic position rather than improve it.
Who benefits from war, and where Pakistan fits
The clearest beneficiaries of the US/Israeli war against Iran do not include Pakistan but rather actors seeking tactical pressure on Iran and actors that profit from volatility in energy and shipping markets. Global energy and transit actors are a mixed case: they may see temporary gains from price spikes, but they also face higher insurance, transport, and supply-chain risk.
Pakistan does not appear as a direct war winner. Instead, the limited upside for Pakistan is political and diplomatic. From this vantage point, Pakistan’s “benefit” lies in diplomatic optionality, not in war itself. Second, the more conditional benefit is that regional instability can strengthen the logic of connectivity and energy diversification projects if tensions later ease; the Iran-Pakistan gas pipeline and CPEC are examples of projects whose value rises under détente, not under war. This means any economic upside is really a peace dividend deferred, not a war dividend.
Domestic beneficiaries inside Pakistan
Within Pakistan, the discourse identifies a few domestic factors that may gain politically from external crisis. The military and security establishment appear as the strongest internal beneficiaries because heightened external threat tends to reinforce their central role in policy and state management. Bureaucratic and political actors dependent on external finance also benefit from the leverage created by crisis since Pakistan’s reliance on IMF and foreign support increases the bargaining power of certain domestic intermediaries. In addition, security-oriented political factions may use external tension to justify securitization and internal mobilization.
Why the fading India shadow matters
The “diminishing shadow” of war with India matters because it slightly widens Pakistan’s strategic space. When Indo-Pak tensions are less dominant, Pakistan can shift attention from a purely security-driven posture toward geo-economics, connectivity, and diversified diplomacy. In other words, a softer India threat allows Pakistan to treat the Iran crisis as a diplomatic balancing problem instead of a full-spectrum existential security emergency.
The war between Iran and the United States/Israel creates risks for Pakistan’s energy security, trade flows, border stability, and financial resilience. The only plausible benefits are indirect: more room for neutrality, mediation, and future connectivity projects if tensions later de-escalate. The easing of Pakistan-India war anxieties modestly improves this flexibility, but it does not convert conflict into an economic opportunity. Pakistan’s real gains lie in stability, cheaper energy, and regional integration.
This paper is the second in a series on the political economy of the US-Israeli war. In the following issues, we will examine in detail the role of each beneficiary country. Turkey will be the second country examined in detail (Report 3).