Pakistan at the Crossroads: Security, Economic and Strategic Fallout of the US-Israel-Iran Conflict

Pakistan, by virtue of lying at the heart of Asia, is significantly vulnerable to events going on in the region. In the wake of the US-Israel attack on Iran, Pakistan stands at critical crossroads and can face the negative impacts of the aforementioned conflict in the region.

Assassination of Ayatullah Ali Khamenei

In the early hours of February 28, the United States and Israel launched “Operation Epic Fury” against Iran. In the wake of the operation, both the US and Israel targeted at least nine cities across the country. The operation claimed the lives of senior leadership of the Iranian government, including the Supreme Leader of Iran, Ayatollah Ali Hosseini Khameini, who remained in the said position for nearly. Iran swiftly retaliated to the unprovoked aggression, targeting US interests and allies across the Middle East with missile attacks reported in Israel, Jordan, and Saudi Arabia, as well as attacks targeting US military facilities in Qatar, Kuwait, the United Arab Emirates, and Bahrain.

Negative Impacts of Ongoing Conflicts on Pakistan

The widening conflict involving Iran and Israel, coupled with persistent instability along the Afghanistan border, carries serious economic and security consequences for Pakistan. Even though Islamabad is not a direct party to the Middle Eastern war, the spillover effects are already being felt through energy markets, regional labor dynamics, and internal security pressures.

1. Economic Pressures and Rising Oil Prices

One of the most immediate impacts is the surge in global oil prices. Any escalation in the Gulf—especially tensions involving Saudi Arabia—creates volatility in energy supply chains. Reports of attacks or threats to critical infrastructure, including facilities linked to Saudi Aramco, heighten fears of supply disruption, which drives prices upward in international markets.

For Pakistan, this is particularly damaging because fuel imports constitute one of the largest components of the country’s import bill. Higher oil prices translate directly into:

• Increased pressure on foreign exchange reserves
• A widening current account deficit
• Higher transportation and electricity costs domestically
• Inflationary shocks affecting food and essential commodities

Since the economy is heavily dependent on imported energy paid for in dollars, any substantial rise in crude prices weakens the rupee and increases fiscal strain.

2. Risks to Overseas Employment and Remittances

Additionally, the potential spillover of regional conflict into Gulf economies poses a severe threat to Pakistan’s financial stability, primarily due to the heavy reliance on its expatriate workforce. Should instability trigger a slowdown in host countries, millions of Pakistani workers could face immediate layoffs or significant income reductions. This would deal a devastating blow to remittance inflows, which serve as a vital economic lifeline for the nation.

Historically, the Gulf region, specifically Saudi Arabia and the UAE, has been the bedrock of these transfers. For perspective, remittances from Arab countries typically account for over 50%  of Pakistan’s total annual inflows, often exceeding $15 billion to $18 billion per year.

A contraction in these funds would remove the crucial buffer that stabilizes Pakistan’s balance of payments. Beyond the direct financial loss, a mass return of workers would exacerbate domestic unemployment and heighten social pressures, leaving the government with fewer resources to manage a growing labor force and a widening trade deficit.

Security Implications for Pakistan

Pakistan is currently navigating an unprecedented convergence of internal unrest, economic vulnerability, and external military escalation amid the US-Israel and Iran conflict.

1. Civil Unrest and Hybrid Warfare

Just hours after the assassination of Iranian Supreme leader, nationwide protests erupted, which became violent. The protests have claimed at least 20 lives—including 10 near the US Consulate in Karachi, 8 in Skardu, and several others while they were marching to the “Red Zone” in Islamabad. These demonstrations, fueled by religious sentiment can prove detrimental to the internal security of the country. Meanwhile, Pakistan’s digital infrastructure also came under under fire. On March 1, major news broadcasters were briefly hijacked by hackers who then broadcast subversive messages against Pakistan armed forces and displayed pro-Mossad content aimed at sowing chaos in the country.

2. The Western Frontier: Operation Ghazab Lil Haq

Amid all this chaos, Pakistan is also engaged in an “open war” with Afghanistan. In response to unprovoked border strikes, the Pakistan armed forces have launched Operation Ghazab Lil Haq (Righteous Fury). This large-scale counter-offensive employs airstrikes, drones, and precision-guided munitions to neutralize TTP and Jamaat-ul-Ahrar (JuA) safe havens. Though the military reports significant success in destroying Taliban infrastructure in Kabul and Kandahar, the TTP has responded by calling for retaliatory attacks across Pakistan. This has forced a nationwide high-alert status, placing civilians under severe security restrictions and further stretching the military’s operational capacity.

3. Exploitation by Militant and Separatist Actors

Regional instability has created a dangerous vacuum for separatist groups, specifically the Balochistan Liberation Army (BLA) and other nationalist networks. As Tehran becomes consumed by its own existential security threats, border governance along the Pak-Iran frontier is weakening. These porous regions now offer greater operational freedom for militants to intensify their activities. With Pakistan’s military focus diverted toward the Afghan border and internal rioting, security resources are being dangerously thinned across multiple theaters, allowing these actors to exploit the lack of regional coordination.

In sum, the coming days for Pakistan can be challenging amid rising tensions involving the United States, Israel and Iran. However, its history reflects an enduring capacity to navigate complex geopolitical storms with prudence and balance. While regional escalation may generate economic and security pressures on Pakistan, its diplomatic experience, and institutional resilience provide it with the tools to manage external shocks effectively.