Can Pakistan's peacekeeping role in Iran war give it an economic dividend?

Pakistan's role in brokering peace in the Iran war has won widespread diplomatic praise that could bring Islamabad some economic benefits.

Analysts question whether such gains can fix the deeper fault lines in its economy, Reuters reported.

Prime Minister Shehbaz Sharif and army chief Field Marshal Asim Munir attended talks between Iran and the US in Switzerland last weekend.

What role did Pakistan play in the Iran war?

Pakistan helped ease a conflict that threatened to disrupt the Strait of Hormuz, choke global oil supplies and shake the world economy. Sharif and Munir attended peace talks in Buergenstock, Switzerland, marking the culmination of Pakistan's months-long diplomatic effort. World leaders, including US officials, have publicly thanked Islamabad for its role.

US Vice President JD Vance greeted Munir warmly in the resort town, hugging him after a casual exchange. Both sides, along with several world leaders, credited Islamabad for helping prevent a wider economic shock. The breakthrough has raised Pakistan's international profile considerably.

Can Pakistan turn diplomatic goodwill into economic gains?

Analysts say Pakistan, a country of 250 million people, has an opportunity to convert this goodwill into economic gains. But they caution that any benefits are unlikely to resolve structural issues such as social and economic inequity, a narrow tax base and repeated IMF bailouts. Pakistan is targeting economic growth of 4.0% and inflation of 8.2% for the coming fiscal year, compared with 3.7% projected growth and 6.7% average inflation in the outgoing one.

"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. He added that a growth-oriented economic agenda combined with a reputation for peace puts Pakistan in a strong position to attract investment in infrastructure, technology and future growth sectors. Many analysts expect some financial support from the US, though no concrete windfalls have materialized yet.

What sectors could benefit from Pakistan's Iran war role?

Alex Vatanka of the Middle East Institute said Pakistan now has huge potential to become more integrated with the broader Middle East. This could eventually lead to wider economic partnerships in the region, including in defense.

Former finance minister Miftah Ismail said sanctions relief on Iran could also open up substantial trade between Iran and Pakistan, particularly through their shared Balochistan border.

Has Pakistan benefited from similar situations before?

After the September 11, 2001 attacks, alignment with Washington helped Pakistan secure debt rescheduling from more than a dozen bilateral creditors and renewed support from the IMF and other lenders. Pakistan failed to capitalize fully on that opportunity because of structural weaknesses, analysts say. Economic commentator Khurram Husain said the current moment resembles 2001, but with one key difference.

That earlier alignment came at the start of a long, ruinous war where Pakistan played a frontline role, Husain said. This time, Pakistan is acting as a peacemaker, which changes the nature of its leverage. That leverage now comes from being useful to multiple sides at once: Washington, Tehran, Gulf states, Turkey and China.

Ismail said the diplomatic role has boosted Pakistan's international prestige but has not changed the high costs, weak exports and external repayments that keep it dependent on the IMF. "Our house is in such disorder that foreigners can't really help us unless we help ourselves," he said. "Nothing here in this war changes that, and we will be continually dependent on the IMF."

What should Pakistan prioritize instead of short-term aid?

Asim Ijaz Khawaja of Harvard University said Pakistan should resist short-term financial concessions that do not raise productivity. He suggested Pakistan instead pursue academic exchanges and scholarships, preferential market access for textiles and IT services, technology transfer and green investment frameworks.

Britain's Middle East minister, Hamish Falconer, thanked Islamabad for its peacekeeping role and said the UK sees significant scope for deepening trade links, with a British trade minister expected to visit in the coming months.

Diplomats from two other Western countries said their governments are also exploring stronger economic ties following Pakistan's peace efforts, though they declined to be identified. Princeton economist Atif Mian said Pakistan should avoid treating diplomacy as another route to deposits, rollovers or IMF-style relief.

He argued the real prize is a "peace pivot" built on regional trade, energy links with Iran and deeper integration with the Gulf and Turkey through exports, technology transfer and joint industries.

Will these gains fix Pakistan's deeper economic problems?

Analysts agree that any new economic gains will not address Pakistan's underlying constraints. "If structural reforms are not implemented, the country is poised for an implosion in coming decades," said Adeel Malik, associate professor of development economics at Oxford University.

He pointed to deep grievances among young people and the shrinking middle class against Pakistan's ruling elite, warning the current system has made the country socially and economically insecure even as it extends the elite's hold on power.