WITH a war in the region, Pakistan has been at the centre stage of all conversations, negotiations and talks about and around the conflict.
For this, there has also been much praise and some heartburn (from some in the neighbourhood). However, Islamabad still needs to be careful; it continues to perform a tight rope balancing act domestically and internationally, as this conflict goes on. And if the hostilities continue, staying upright will be a trick and a half.
This is primarily linked to the country’s precarious economic situation and an ‘unpopular’ government struggling to gain a foothold with the people. And as some or many economic experts point out, there is little to fall back on if the world is facing uncertainty in terms of oil prices or other shocks. However successful this government may have been, as we are told continuously, in every aspect.
Consider the management of the petrol prices. The somersaults by the government have been quite remarkable. It began by being one of the first in the region to act decisively once the international prices went up by hiking the price by Rs55. At that point, the government defended its move by arguing that it was not possible to take any other decision, but for the next couple of weeks, it moved to a different tactic. The prime minister himself came on air to announce that he was not passing on the price, while a story in Dawn reported that he told his colleagues that he and the army chief had agreed to not pass on petrol price hikes for the near future.
Government representatives were at pains to explain this ‘subsidy’ could not go on forever but there was little clarity on how long this would last and what would come next. Then came a spate of meetings as Islamabad tried to convince the provincial governments to share the burden, from funding the subsidy to providing relief. But even then, few expected the bombshell. Late Thursday night, which just passed, three government ministers announced a raise in prices that overshadowed the previous hike.
The next day wasn’t easy for the people or for the government, it seems, because within 24 hours, the prime minister turned up on television again. He announced a new lower price, explaining that he had reduced the tax on the fuel.
The government was targeted for being indecisive — and rightly so.
The government was targeted for being indecisive — and rightly so. The explanation from government quarters that the tax could only be lowered after permission from the IMF (which apparently came a day later) is not really being bought. In addition, it has highlighted once again the government’s failure in reducing its expenses or widening the tax base, which forces it to impose high indirect taxes on fuel. This was emphasised by an interview of the petroleum minister in which he acknowledged that there should be accountability of those who agreed to these revenue targets and then failed to meet them. In fact, questions are being raised whether the government is a house divided or if there are serious reservations within about some key people.
It is hard to say how serious the blame game is. But it is worth asking whether recriminations will intensify if oil prices go up further and other economic shocks make the tight rope walking even more difficult. After all, news about the possible impact on exports, balance-of-payments and inflation is yet to become visible.
Add to this, the people and the situation becomes even more wobbly. Can the petrol price be the final straw on the camel’s back? No one can predict for sure but the fear is always there that the next economic shock will lead to chaos on the streets. That the powers that be share this fear is evident from their overreaction to any protest. Just consider that the Federal Constitutional Court has taken notice of the Imran Rehai Force, a kooky idea of Chief Minister Sohail Afridi that even the PTI didn’t take seriously. However, the court wants to know more about it and there are guesses galore about why this is so.
But the economic balancing act is simply not limited to the domestic headaches. Even internationally, the country, with its weak economy, moves to please many Pied Pipers, struggling to ensure no tune is ignored. There is the Fund and the US, at one end, then friends in the Gulf on the other, as well as those further east.
The recent fracas was over the UAE loan, which Islamabad has ‘decided’ to return if reports are to be believed. A loan that was given in the 1990s and now is being returned because the UAE is apparently no longer interested in rolling it over is being linked to Islamabad’s policy of maintaining relations with the Gulf Arab states as well as Iran. There are reports that the UAE (and perhaps others) are not happy that Islamabad is trying to balance its various relations, especially maintaining an even keel with its immediate neighbour Iran.
Upsetting anyone in the Gulf comes with its own economic costs, while relations with Iran can impact the Shia community within the country. Along with this, there are concerns about what it will mean for Pakistan if there is a different regime in Tehran.
Indeed, if any of the friends or benefactors in the Gulf take offence at the support for Iran or Pakistan’s refusal of any demand, the economic situation for the government can become more difficult. And the longer the conflict goes on, the more complicated this delicate balancing act can become. Especially, if the US also decides to take a second look at Pakistan’s role. Indeed, the conflict in the Middle East may be tough for the world but it is taking its own toll on Islamabad. The sooner it ends, the better it is for the country.
The writer is a journalist.
Published in Dawn, April 7th, 2026
