New Delhi, April 29 Pakistan’s diplomatic efforts to somehow bring US-Iran conflict to an end is not only about geopolitical positioning but also about addressing a pressing economic need, according to a new report.
Successful mediation can reduce the risk of further shocks to oil and gas prices, ease pressure on the electricity sector, stabilize relations with Gulf states, and open a broader economic horizon with Iran, says a report in www.calcalistech.com.
The report says that Pakistan is an energy importer that depends heavily on its ties with the Gulf states and is still operating under an IMF bailout programme.
Pakistan entered the mediation effort while relying on a $7 billion IMF programme, and its central bank has set a target of increasing foreign exchange reserves to around $18 billion by the end of June.
“This is a large economy with significant potential, but one that remains highly sensitive to external shocks,” said the report.
According to official data, oil accounted for 16.64 per cent of the country’s imports in the first quarter of its fiscal.
“This means that any increase in oil prices or disruption to shipping directly affects inflation and the currency. For a government attempting to stabilize prices and restore economic confidence, volatility in the regional energy market becomes an immediate challenge,” the report mentioned.
In the liquefied natural gas (LNG) sector, Pakistan is also highly dependent on the Gulf, particularly Qatar, and the current war has highlighted this vulnerability.
Moreover, the country’s electricity shortage reportedly doubled to 3,400 megawatts, with parts of northern Pakistan experiencing power outages lasting up to seven hours a day, the report informed.
The Pakistani Ministry of Commerce acknowledges that, “due to the lack of formal banking channels with Iran, some transactions still take place through barter”. Thus, “Pakistan has a clear interest in preventing tensions between Washington and Tehran from escalating into a prolonged conflict,” the report added.
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