Pakistan-Iran Relations Amid Conflict: Security, Diplomacy and Economic Stakes

Pakistan-Iran relation amid the ongoing conflict has demonstrated that Islamabad’s security relationship with Tehran extends beyond the management of their shared border.

By facilitating dialogue between Iran and the United States, Pakistan has attempted to reduce the risk of a wider regional confrontation while protecting its own economic and strategic interests.

The diplomatic engagment represents two different approaches, one is  Pakistan’s historic and increasingly institutionalised relationship with Iran, and second is the severe economic consequences that prolonged conflict around the Strait of Hormuz could impose on an already vulnerable Pakistani economy.

Pakistan’s decision to assume a mediating role did not emerge in isolation. Iran and Pakistan share a long history of cultural, religious and people-to-people ties, while both states have repeatedly emphasised the importance of cooperation along their common border.

In their bilateral relation, Islamabad and Tehran have described the border as a potential “border of peace and friendship” and committed themselves to cooperation against cross-border problems such as terrorism, narcotics trafficking, human smuggling and other transnational threats.

They have also sought to expand bilateral trade, energy cooperation and connectivity, including a long-term target of $10 billion in bilateral trade. Economic interdependence is also critical to sustaining peace, as any sort of conflict would impose significant economic costs on both countries.

These ties became particularly relevant during the current Iran-US war. Pakistan moved beyond expressions of concern and actively participated in diplomatic efforts involving Iran and the United States.

Pakistan and Qatar facilitated negotiations that produced the Islamabad Memorandum of Understanding in June, while subsequent technical-level talks continued under their mediation.

The framework included mechanisms for communication between the parties and specifically addressed the safe passage of commercial vessels through the Strait of Hormuz.

Pakistan’s Foreign Ministry has subsequently reaffirmed that Islamabad remains engaged in efforts to restore dialogue and implement the understandings reached under the MoU.

Iran’s response also indicates that Tehran views Pakistan as a comparatively credible partner. During Iranian President Masoud Pezeshkian’s June visit to Islamabad, Pakistan’s leadership received explicit appreciation for its mediation efforts, while both sides discussed trade, energy, border security and regional connectivity.

 The engagement therefore carries a broader diplomatic significance which demonstrates that  Pakistan is attempting to preserve its traditionally close relationship with Iran while positioning itself as a constructive regional actor capable of communicating with competing sides.

However, Pakistan’s mediation cannot be explained by bilateral “brotherhood” alone. Economic security is an equally important driver.

The Strait of Hormuz is a critical chokepoint for global energy markets, carrying roughly one-fifth of global oil and LNG shipments under normal conditions. Recent disruptions have sharply reduced maritime traffic and pushed oil prices higher. For Pakistan, the consequences are particularly serious because its economy remains heavily exposed to imported energy.

The IMF estimates that 81 percent of Pakistan’s fuel imports come from the Gulf Cooperation Council region, meaning sustained disruption could raise both energy costs and the physical risk to fuel supplies.

The border dimension is consequently broader than physical security along Balochistan. Instability in Iran can generate cross-border militant activity, trafficking, refugee pressures and disruption of legitimate commerce.

At the same time, instability in the Gulf can transmit directly into Pakistan through energy prices and supply chains. Islamabad therefore has a strategic incentive to maintain communication with Tehran even while preserving relations with Washington and Gulf partners.

Pakistan’s mediation should thus be viewed neither simply as an expression of political solidarity with Iran nor solely as an attempt to enhance diplomatic prestige. It is a combination of historical partnership, border-security requirements and national economic interest.