Borrowed confidence: Pakistan’s billion-dollar diplomacy amid economic collapse

-Arun Anand

 

The irony of being Pakistan is that it had to pay one billion US dollars for Donald Trump’s Board of Peace seat while it seeks 2.2 billion US dollars in UAE aid. Pakistan is reeling under impoverishment, yet it spends like a country swimming in surplus. It is as if the nation is borrowing oxygen while promising to plant forests abroad. That single contradiction captures the state of affairs in Pakistan today.

It is not anger alone, and it is not confusion alone. It is disbelief mixed with exhaustion. How does a country negotiating loan rollovers, begging for IMF relief, and struggling to keep its foreign reserves afloat suddenly find room for billion-dollar diplomacy? How does a state that asks its people to tighten their belts behave as though its own belt has no limits? The handout photograph from the Pakistan Military Academy at Kakul tells a different story. Prime Minister Shehbaz Sharif stands beside Field Marshal Asim Munir, watching young cadets march in perfect rhythm. Their boots strike the ground with discipline, their posture straight, their future seemingly secure. The image is meant to convey strength, order, and control. It is meant to say the state is steady and confident. But outside that parade ground, Pakistan feels anything but steady. It feels fragile. It feels tired. And tired nations cannot afford grand performances.

Pakistan’s external debt has crossed 125 billion dollars. More than half of the government’s annual revenue now goes into servicing loans. In 2024 alone, the country paid over 24 billion dollars just to keep creditors satisfied. That amount is larger than what Pakistan spends on education and health combined. Foreign reserves hover between 8 and 10 billion dollars, barely enough to cover two months of imports. This is not financial comfort. This is emergency breathing space. This is a nation living month to month, negotiating survival in instalments. At the same time, Pakistan remains tied to a 7-billion-dollar IMF program that dictates its electricity prices, fuel costs, and fiscal discipline. Interest rates are still painfully high, close to 20 percent, choking businesses and discouraging investment. Electricity tariffs are among the highest in South Asia, forcing families to choose between cooling their homes and feeding their children. Fuel prices shape food inflation, and food inflation shapes despair. Development spending continues to shrink, not because it is unnecessary, but because debt leaves little room for growth. And yet, in the middle of this financial suffocation, Pakistan has found roughly one billion dollars to become a permanent member of US President Donald Trump’s newly formed “Board of Peace,” a diplomatic initiative aimed at advancing a lasting ceasefire and reconstruction in Gaza. For oil-rich nations and financially stable economies, a billion dollars is a strategic investment. For Pakistan, it is borrowed confidence. It is a promise made on credit.

The government presents this as moral leadership. It says Pakistan is standing with Gaza and asserting its diplomatic relevance. Morally, the intention is difficult to oppose. Pakistan has always supported the Palestinian cause, and public sentiment overwhelmingly favors justice and peace for Gaza. But morality without economic realism becomes dangerous. A country drowning in debt cannot pretend to be a lifeboat for the world. Compassion does not disappear when finances are tight, but responsibility must grow sharper. This is where the contradiction becomes painfully human. Over forty percent of Pakistan’s population now lives near or below the poverty line. International estimates show that more than twelve million Pakistanis slipped into poverty during recent inflation shocks. Food inflation once crossed forty-five percent, and although official numbers show moderation, market prices remain stubbornly high. Ask any household, and they will tell you that groceries still cost more than they can comfortably afford. Cooking oil, flour, rice, pulses, and vegetables have all become careful calculations rather than casual purchases. Electricity bills now swallow entire salaries. Gas shortages in winter push families back to burning wood and coal. Healthcare costs delay treatment, turning small illnesses into lifelong burdens. Education expenses force parents to choose which child can continue studying and which must stay home. Youth unemployment remains underreported, and graduates increasingly view migration as the only exit from economic suffocation. This is not laziness. This is survival instinct. Child malnutrition remains alarmingly high, hovering near thirty-eight percent. Millions of children remain out of school. Clean drinking water remains inaccessible to tens of millions. These are not abstract figures. These are silent emergencies unfolding in homes where hope has become fragile. In this reality, a billion-dollar diplomatic seat feels distant and disconnected. It feels like a luxury bought with borrowed money while the kitchen remains empty.

People are not rejecting peace. They are rejecting hypocrisy. They are asking how a state that cannot stabilize electricity bills can stabilize international conflict. They are asking how a government that struggles to subsidize flour can afford to subsidize diplomacy. They are asking why their suffering must become the financial foundation for elite prestige. This is not selfishness. It is fatigue. It is the tiredness of people who have been asked to sacrifice for decades while seeing little improvement in return. Foreign Minister Ishaq Dar has defended the move, saying Pakistan’s membership aligns with its support for the Gaza Peace Plan and may help translate hope into concrete steps toward a permanent ceasefire. The language is noble, but the economic reality remains brutal. A country that cannot control its own inflation, debt, and unemployment cannot project sustainable influence abroad. Influence does not come from paying to sit at tables. It comes from stability that others respect.

There is also a quieter irony embedded in this decision. Pakistan is seeking financial relief from the UAE while joining a board that includes the UAE as a fellow member. It sits at the same table as both borrower and partner. That dynamic matters. It shapes who speaks confidently and who speaks cautiously. Pakistan enters not as an equal power but as a financially dependent participant seeking validation. That weakens its position rather than strengthening it. This is why the decision feels more like performance than policy. It is diplomacy designed to appear bold rather than diplomacy grounded in capacity. Pakistan is trying to look influential while financially vulnerable. That contradiction is visible to the world and painfully felt at home.

The danger lies not only in this decision but in the precedent it sets. If Pakistan pays to belong today, it will be expected to pay tomorrow. If prestige becomes something that must be purchased, then foreign policy becomes a marketplace. And Pakistan, operating on loans and rollovers, cannot afford to shop for recognition. This is how debt becomes policy, and policy becomes hostage to creditors.

Support for Gaza could have been delivered through humanitarian aid, diplomatic advocacy, political lobbying, and moral alignment. These actions require far fewer resources and carry genuine moral weight. A billion-dollar permanent membership feels excessive, especially for a country still recovering from the brink of default. It feels less like peace-building and more like prestige-buying. Prestige, for a poor nation, is the most expensive addiction.

The photograph from Kakul remains striking. It shows discipline, youth, and national pride. But strength today is not measured by how polished a parade looks. It is measured by fiscal discipline, economic credibility, and public trust. A parade cannot hide unpaid bills. A uniform cannot cancel inflation. A ceremony cannot replace stability. Pakistan does not lack compassion. Its people donate generously during floods and disasters. They stand with Gaza emotionally and politically. They carry deep empathy for suffering beyond their borders. What they cannot accept is being asked to fund international symbolism while their own lives grow smaller. They want dignity at home before prestige abroad.

This decision feels like a country trying to sound powerful while negotiating survival in private. It feels like borrowed confidence. It feels like standing tall on financial tiptoe. The tragedy is not that Pakistan wants peace. The tragedy is that it is trying to buy relevance instead of building stability. Stability is the only form of power that lasts. Everything else is temporary.

Leadership is not just about showing up internationally. It is about protecting your people domestically. When a government can control inflation, create jobs, stabilize energy prices, strengthen schools, and support hospitals, then its voice abroad carries authority. Until then, diplomacy risks becoming theatre. Peace is priceless. Gaza deserves justice, dignity, and reconstruction. But a nation drowning in debt cannot pretend to be a global rescuer. You cannot pour from an empty cup. You cannot save the world while starving at home. You cannot borrow for survival and spend for prestige without consequences. Pakistan stands today between symbolism and survival. The government has chosen symbolism. The people are choosing endurance. History will decide whether this moment was courage or miscalculation. For now, it feels like a fragile economy carrying a heavy costume, trying to perform strength while quietly asking for breath.

How Pakistan has got itself entangled in the Middle East

-Arun Anand

Pakistan has a knack for arriving at the wrong place at precisely the wrong time. When Russia attacked Ukraine in February 2022, its then prime minister, Imran Khan, was seated in the Kremlin, smiling and shaking hands for cameras. And when Saudi Arabia and the United Arab Emirates, Islamabad’s most important Middle Eastern patrons, found themselves at odds over Yemen last week, it was once again caught in the crossfire. This time Emirati President Sheikh Mohammed bin Zayed Al Nahyan was on his hunting trip to Pakistan. These moments are not mere coincidences but rather symptoms of a deeper strategic malaise of a military-dominated foreign policy that repeatedly entangles Pakistan in conflicts it neither controls nor fully understands.

Over the past decade, Pakistan has drifted from being a peripheral player in the Middle East to an increasingly exposed one. As the shift has been shaped by transactional military diplomacy as signified by recent Strategic Mutual Defence Agreement with Saudi Arabia, the result is a country wedged uncomfortably between rival power centers with China and the United States on one axis globally, and Saudi Arabia and the UAE on another at the regional level. While each of its allies expects loyalty, no one offers insulation when loyalties collide.

That collision is now visible in Yemen and most likely in Libya. On December 30, Riyadh announced that it targeted a weapons shipment at Yemen’s Mukalla port, claiming the arms originated from the Emirati port of Fujairah. Riyadh alleged that weapons were destined for the Southern Transitional Council (STC), a UAE-backed separatist group seeking to carve out an independent state in southern Yemen.

It made Pakistan to tread an uncomfortable line. Though Islamabad expressed “complete solidarity” with Saudi Arabia, reaffirming its support for the kingdom’s sovereignty and Yemen’s territorial integrity, what it did not do was just as revealing. Pakistan avoided naming the STC, sidestepped Abu Dhabi’s role in nurturing Yemeni separatism, and refrained from any criticism that might upset the Emirati leadership.

However, it should be known that diplomatic hedging has its limits. On the very morning Saudi Arabia carried out strikes against what it described as Emirati-linked weapons shipments, Pakistan’s prime minister, Shehbaz Sharif, along with senior cabinet members, including Deputy PM and Foreign Minister Ishaq Dar, was meeting Sheikh Mohammed bin Zayed at his family’s palatial estate in Rahim Yar Khan. The optics were ironic with Pakistan professing solidarity with Riyadh while hosting the very leader Riyadh was pressuring militarily. There have been unsubstantiated reports that Saudi Arabia declined a request for a meeting by Pakistan’s powerful army chief, Field Marshal Asim Munir, thereby reinforcing the impression that Islamabad’s balancing act was wearing thin.

This episode underscored a broader truth that Pakistan was no longer merely navigating Gulf rivalries but was being shaped by them. And nowhere is this more dangerous than in Gaza. As US President Donald Trump pushes his vision of post-war Gaza governance under an international body, he has publicly sought Pakistan’s commitments to contribute troops to his envisioned security or stabilization force for the territory.

For Islamabad, the proposition is fraught with peril as deploying Pakistani troops to the war-battered Palestinian region would not be a neutral peacekeeping mission. As the Gaza stabilisation force would almost certainly involve disarming Hamas, enforcing cease-fire arrangements, and operating under an American or Israeli security framework, such a role would place Pakistan at odds with popular sentiment at home, where sympathy for the Palestinian cause runs deep. Moreover, it would also damage the country’s standing in the broader Muslim world, where participation in what many would view as an externally imposed security regime or forced disarming of what many consider a Palestinian resistance group would be seen as complicity with Israel.

However, if Pakistan Army assumes such a role, it won’t be its first as it has a history of renting its role to the regional players. Pakistani military officers played a role in assisting Jordan’s Hashemite monarchy during the 1970 Black September crisis by helping violently crackdown on Palestinian fighters. The Pakistani contingent in Amman was overseen by Brigadier Mohammad Zia-ul-Haq, who would later seize power in 1977 and rule as a military dictator. That episode left a lasting scar on Pakistan’s image among Palestinians and repeating such a role in Gaza would be exponentially more damaging.

Yet Gaza is not the only front where Pakistan’s Middle East policy is unravelling. On December 21, Army Chief Asim Munir signed what was touted as a $4.6 billion defense deal with Khalifa Haftar in Benghazi, from where the Libyan military strongman controls eastern part of the country through the Libyan National Army (LNA). The agreement reportedly included the sale of JF-17 Block III fighter jets and Super Mushshak trainer aircraft, making it the largest arms deal in Pakistan’s history.

Though the deal on paper signifies Pakistan’s strategic reach, however, in reality, it was a diplomatic misstep of the highest order. Firstly, Libya is a divided country with rival governments governing it in parts. There is Abdul Hamid Dbeibeh’s internationally recognised Government of National Unity (GNU) in Tripoli and then the other, Haftar’s Benghazi-based unrecognised Government of National Stability (GNS). Secondly, Libya remains under an international arms embargo imposed by the United Nations in 2011. Therefore, any major weapons transfer and that too to an unrecognised entity risk undermining of the international law.

This deal does not only fly in the face of UN sanctions; it also puts constrains in Islamabad’s regional policy. By publicly aligning itself with Haftar, Pakistan effectively chose sides in a complex regional proxy contest as the military strongman is backed by the UAE and Egypt whereas the GNU, by contrast, enjoys the support of the United Nations and Saudi Arabia. Islamabad’s outreach to Benghazi thus undercuts its relationship with Riyadh, at precisely the moment when Saudi goodwill is most needed.

These choices cumulatively result in what can be described as a strategic overextension without any strategic clarity. It is evident that Pakistan is trying to achieve a role of indispensability in the region, but forgets that it does not possess the diplomatic leverage for the same. It can offer nothing than renting its military against a price. Its military leadership appears to believe that visibility equals influence, that being “in the room” guarantees relevance. In practice, it has made Pakistan vulnerable to pressure from stronger powers with clearer agendas. And at home, the risks are just as severe. In a country grappling with severe economic crisis, political instability, and militant violence, such a diplomatic overstretching cannot be afforded.

As such, Pakistan is on a path of pursuing a foreign policy driven less by national consensus than by the ambitions of a security establishment which is eager to project power abroad, even as stability at home remains elusive. And if Pakistan continues down this path and gets entangled in Gulf rivalries, is pressured to send troops to Gaza, and aligns with contested actors like Khalifa Haftar, it risks becoming a pawn that a mediator its elite envisions. In the Middle East’s unforgiving geopolitical chessboard, pawns are easily sacrificed.