• Four simple reasons why it was in Pakistan’s interest to broker a peace-deal between USA and Iran. Reasons are economic and geopolitical. At this point USA has emerged weaker, China and Russia stronger. 

A Two-week Cease-Fire was announced between USA and Iran. Pakistan is said to have played an important role in the temporary stoppage of attacks. Some Indians are getting unnerved, the Pakistanis are gloating. Most are missing a reality that this article explores.

1. Although contours of the Saudi Pakistan Defence Agreement are unknown it is logical to assume that the least such an agreement would provide is that each country would help defend the other country in case of an external attack.

If Iran’s attacks on Saudis continued, the Saudis would be compelled to respond. Once it became a two-way war, Pakistan might be forced to aid Saudi’s war efforts. Means Pakistan would have to fight Iran.

Since Pakistan and Iran share a border and with the fight with Afghanistan on (China brokered ceasefire says report of 9/4/26), the Pakistani Defence Forces would be very hard pressed to meet all commitments. Hence, peace efforts.

2.  Remittances into Pakistan could fall

Remittances contribute to Pakistan’s economy, enhance household consumption and fund country’s balance payments.

According to IOM UN Migration, “Remittance flows continue to play a significant role in Pakistan’s economy, accounting for 9.4 per cent of the country’s GDP in 2024 (World Bank, 2025a). Remittances serve a critical role in enhancing household welfare in Pakistan, significantly boosting access to basic needs and reducing economic vulnerability (Shair et al., 2024). Furthermore, remittance inflows continued to play a significant role in supporting Pakistan’s balance of payment, roughly equalling the value of net imports of goods and services (Asian Development Bank, 2024).”

“On the other hand, another key driver of remittances is the recovery of job markets in the high-income countries of the Organization for Economic Cooperation and Development (OECD), following the onset of the COVID-19 pandemic (World Bank, 2024a). Additionally, the Gulf Cooperation Council (GCC) countries, the most common destination for Pakistani migrants, experienced a regional economic growth rate of 1.7 per cent in 2024, an improvement from 0.3 per cent in 2023 (World Bank, 2025b). “

Remittance inflows averaged $ 3 billion a month from January to May 2025 with the number being $ 3.7 billion in May 2025. The largest remitting countries were Gulf regions, USA, Europe and Australia.

In Fiscal year 2024 “Saudi Arabia was the largest source of remittance inflow, contributing USD 7.4 billion, or 25 per cent of the total remittance volume. The United Arab Emirates, which were ranked second, were responsible for USD 5.5 billion per month, representing 18.7 per cent of the total inflow. USD 4.5 billion (15.3%) was remitted from the United Kingdom, while USD 3.5 billion (12%) was transferred from USA. Other notable sources included Oman (USD one billion), as well as Italy (USD 0.9 billion), Qatar (USD 0.9 billion), Kuwait (USD 0.8 billion).”

With Saudi Arabia being the largest remitter, war in Saudi implies labour would return to Pakistan leading to a drop in remittances and compound balance of payments stress.

“According to outflow data from the Bureau of Emigration and Overseas Employment (BE&OE) of Pakistan, Saudi Arabia, the United Arab Emirates, the United Kingdom, Qatar and Kuwait are among the top destinations for Pakistani workers.” 

Four of the above countries of the GCC or Gulf Cooperation Council (established in 1981 GCC includes Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) were countries attacked by Iran during current conflict with USA. Since most workers are low-skilled it could add to domestic unrest.

If war escalated lakhs of Pakistani labour would return to Pakistan adding to national unrest.

Source data. To read PDF search ‘REMITTANCE INFLOWS TO PAKISTAN JAN 2020 – MAY 2025’ and you can download file from International Organization for Migration.

According to a July 2025 Xinhua report, “Remittances sent by overseas Pakistani workers rose by 26.6 percent to a record 38.3 billion U.S. dollars in fiscal year 2024-25 (FY25), up from 30.3 billion dollars in FY24.”

“The sharp rise was driven by higher inflows from key host countries including Saudi Arabia, the United Arab Emirates (UAE), the United Kingdom, and the United States, according to official data.” Also read Arabnews.com report

For remittances to continue from Saudi, UAE there needs to be peace in the region. At the same time, Pakistan cannot afford to displease USA and UK.

Read TOI report, “Exports miss Target, Current Account Deficit Widens FY25

3.  Remittances in FY 25 exceed Merchandise Exports

According to IANSlive report, “Remittances from overseas Pakistanis exceeded Merchandise Exports i.e. $ 38.5 vs. 32.3 billion.”

Tells you how important Remittances are to Pakistan’s balance of payments. Instability in remitting countries i.e. GCC adversely effects Pakistan more because merchandise exports are in adequate.  

As per a July 25 report Diplomat.com, Pakistan Achieves First Current Account Surplus in 14 Years “Pakistan’s Prime Minister Shehbaz Sharif welcomed the achievement, saying that the main reason for the current account surplus was due to “a significant increase in remittances and exports” Hindu report

4.  Wooing USA post Operation Sindoor

Post Op Sindoor Pakistan realized the importance of having USA on its side whilst cementing relations with Iron Brother China. It needs USA benevolence too.

Thus, it needed to show the Americans how it could be a useful ally. What better way that negotiating a cease-fire with Iran!

Peace means Iranian Oil continues to flow to all-weather friend China.

Peace means Pakistan can take on the Afghans on the basis that other fronts are covered. Brokering a deal with Iran means it has earned USA support.

Peace means a stronger China. For Pakistan, USA is like Kamdhenu, a cow!

Indians must be aware of Pakistan’s economic condition, not be too affected by Pakistan’s attempts for economic survival or feel insecure and overreact to current Pakistani moves. Be aware, cool, in balance and accept that it is enemy number 2. 

Also read

1. An Analysis of the Saudi Pakistan Strategic Defence Agreement

2. Real intent behind Saudi Pak Defence Agreement