Pakistan has always believed that geography can compensate for weakness. It sits at the intersection of South Asia, Central Asia and the Middle East, possesses nuclear weapons, maintains relationships with superpowers who have shared cold ties, and has spent decades convincing bigger powers that it is too strategically important to ignore. That belief has shaped the country’s foreign policy for generations. It allowed Islamabad to partner with Washington while drawing closer to Beijing, to accept Saudi money while keeping open channels with Tehran, and to repeatedly present itself as an indispensable intermediary in moments of international crisis.That balancing act is once again defining the country’s place in the world. In the span of a few months, Pakistan has attempted to mediate between Washington and Tehran, hosted the highest-level US-Iran talks since the 1979 revolution, sought fresh economic support from Beijing through Prime Minister Shehbaz Sharif’s visit to China, and relied on Gulf allies to shore up foreign exchange reserves that remain dangerously fragile beneath the surface. At the same time, separatist violence in Balochistan is escalating, political legitimacy at home remains deeply contested, and the economy continues to survive through a cycle of IMF programmes, rollovers and emergency deposits.
For decades, Pakistan has managed to turn geography into leverage and instability into relevance. But as pressure mounts simultaneously from Washington, Beijing, the Gulf and within its own borders, an uncomfortable question is beginning to emerge: How long can a state built around perpetual balancing continue before it finally loses its footing?Ironclad friendship?When Donald Trump visited Beijing, he came as the head of arguably the world’s biggest superpower. When Vladimir Putin wrapped up his state visit to China just days before Sharif’s departure, the Chinese foreign ministry described talks between the two presidents as “in-depth, friendly and fruitful,” with “important new common understandings” reached on the Russia-China comprehensive strategic partnership.When Shehbaz Sharif arrived, he came at the invitation of Premier Li Qiang, China’s head of government rather than its head of state. Xi received him. But in Chinese diplomatic protocol, where the choreography of meetings is a language in itself as evident in both the Trump and Putin visit, the sequencing was not lost on anyone.The official language around the visit was warm in the way that official language between the two countries always is. Pakistan and China are “all-weather strategic cooperative partners,” bound by friendship that is, in Sharif’s own words, “higher than the Himalayas and deeper than the deepest ocean.” But behind the poetry lies a relationship whose structure deserves more scrutiny than it usually gets.China values Pakistan strategically, but not in the way that Pakistan imagines. Beijing benefits from access to Gwadar Port and the Arabian Sea, from a land route that theoretically shortens its energy supply lines from the Gulf, from a reliable vote in multilateral forums, and from a buffer state on India’s western flank that keeps New Delhi occupied.The key word in all of this is “buffer.” China does not particularly want Pakistan to become powerful, independent, or capable of charting its own course. A Pakistan that is dependent on Chinese loans, reliant on Chinese diplomatic cover, and structurally incapable of aligning too closely with Washington is precisely what Beijing requires. The “ironclad friendship” is partly real and partly a management arrangement. Pakistan is a useful client.
The China-Pakistan Economic Corridor is the clearest illustration of how this works in practice. Launched in 2015 with $62 billion in promised investment and billed as a transformative “game changer,” CPEC is now, a decade on, dangerously adrift. Of the $28 billion earmarked for infrastructure and energy in the first phase, many projects remain stuck on paper. Six transport projects got under way, but thirteen are languishing. Of the nine proposed Special Economic Zones, only four are currently under construction. The Main Line 1 railway project, the costliest component of CPEC at $6.8 billion, has been delayed repeatedly by misunderstandings between the two sides over financing terms. Chinese investment in CPEC reportedly fell 74 per cent in 2023 from the previous year, suggesting Beijing has been quietly stepping back even as both governments continue to issue statements about expanding cooperation.The security problem in Balochistan sits at the heart of CPEC’s dysfunction. Since 2021, there have been at least 14 attacks targeting Chinese nationals in Pakistan, killing 20 people and injuring dozens more. Most have occurred in Balochistan, whose communities feel excluded from the province’s resources and resentful of what they regard as exploitation dressed up as development. The BLA has made Chinese infrastructure workers a deliberate target.China remains diplomatically supportive because CPEC is too visible a failure to abandon publicly.Mediator without a dealPakistan’s biggest diplomatic story of 2026 is its attempt to broker peace between the United States and Iran. When the US-Israeli strikes on Iran began on February 28, Islamabad moved quickly. It condemned violence on all sides, activated its unique institutional access as the country that represents Iranian interests in Washington, and worked the phones through weeks of back-channel diplomacy. By April 8, Sharif was posting on X to announce that the US and Iran had agreed to an immediate ceasefire “everywhere, including Lebanon.” He invited delegations from both countries to Islamabad to begin formal negotiations. Pakistan, it seemed, had found its moment.The Islamabad Talks of April 11 and 12 were the highest-level direct negotiations between Washington and Tehran since the 1979 Islamic Revolution. JD Vance led the American side. Iran sent its parliament speaker. The talks lasted 21 hours across three rounds, and then collapsed. Vance told reporters that Iran had “chosen not to accept our terms,” with Iran’s nuclear programme being the central sticking point. Iran’s delegation said the Americans had failed to earn their trust. Both sides left with their positions unchanged, and Trump subsequently imposed a naval blockade on Iran two days later, which Tehran described as a violation of the ceasefire agreement.A planned second round, which would have brought Jared Kushner and Steve Witkoff to Islamabad, was cancelled by Trump himself, who posted on Truth Social that if Iran wanted to talk, “all they have to do is call.” As a Bloomberg report put it, the stalled talks had revealed “the limits of Pakistan’s mediation drive.”Then on May 25, Trump announced that Muslim-majority countries involved in mediating the peace process, including Pakistan, Saudi Arabia, Qatar, Turkey and Jordan, should join the Abraham Accords as a condition of Washington’s continued engagement. Pakistan’s defence minister, Khawaja Asif, rejected the idea immediately, saying his country would not join any agreement that “contradicts our fundamental ideologies,” and questioning how Pakistan could sit with people who could not be trusted to uphold a ceasefire for a single day in Gaza.Republican Senator Lindsey Graham called Pakistan’s role as mediator “more than problematic” and alleged that Iranian military aircraft were being housed on Pakistani bases.Pakistan has been in binds before, but this particular bind is unusually tight. Washington wants something from Islamabad that Islamabad’s domestic politics cannot possibly deliver. No Pakistani government could survive normalising relations with Israel, particularly not at a moment when Islamabad has been publicly positioning itself as a champion of Palestinian rights and when street-level Islamic sentiment remains a serious political force. At the same time,Pakistan cannot afford to lose American goodwill, which matters for IMF negotiations, for the broader management of its debt situation, and for its continued relevance as a regional actor.Paying loans with loansWhile Sharif was in Beijing celebrating 75 years of Pakistan-China ties, his government was managing the aftermath of a financial squeeze that told its own story. Earlier this spring, the UAE declined for the first time in seven years to roll over its $3.5 billion deposit with Pakistan’s central bank, asking for the money back in full. Pakistan repaid it, drawing on foreign exchange reserves that stood at around $16.4 billion. Saudi Arabia subsequently stepped in with a fresh $3 billion deposit to help stabilise things.Close to half of Pakistan’s official foreign exchange reserves consist of Gulf deposits that are not liquid in any meaningful sense. They are diplomatic collateral, not usable cash. They count towards the reserve figure but are not available to pay for imports or service other debts. The country’s actual financial position is considerably thinner than the number suggests. The existing $7 billion IMF programme requires the UAE, Saudi Arabia and China to maintain $12.5 billion in deposits with the State Bank until September 2027, a condition that makes clear just how dependent Pakistan’s apparent stability is on the continued goodwill of its major creditors. Sharif himself has acknowledged, with unusual candour, that foreign loans “come with strings attached.”
The economics of CPEC add another layer. A third of Pakistan’s $100 billion foreign debt is owed to China. The energy projects built under CPEC’s first phase have generated circular debt and capacity payment obligations that strain public finances every year. Plans to raise $250 million in Panda Bonds have stalled due to what one report called “mismanagement.” Exports fell eight per cent in the first nine months of the last fiscal year, and foreign investment has declined sharply. The visit to Alibaba’s headquarters in Hangzhou and the signing of investment MoUs will be announced as evidence of a dynamic economic partnership.International pacemaker without internal peaceOn the same day Sharif was in Beijing attending a reception celebrating 75 years of diplomatic ties, the Balochistan Liberation Army was preparing the operation that would kill over 20 people on a train outside Quetta the following morning.This gap between aspiration and reality is not new. Pakistan has a long history of identifying diplomatic niches where its geography and relationships give it leverage, maximising that leverage with considerable skill, and then watching domestic frailties and geopolitical realities cap what can actually be achieved. In the 1980s it was the frontline state of the Cold War, hosting millions of Afghan refugees and channelling American weapons to the mujahideen, only to be largely abandoned once the Soviets withdrew and the consequences arrived. In the 2000s it was the indispensable partner in the war on terror, extracting payments from Washington while elements of its own security apparatus maintained links with the very groups being hunted. Each time, Pakistan found a role, performed it credibly for a while, and then watched external circumstances and internal contradictions close the window.
The domestic picture in 2026 is not one that inspires confidence in Pakistan’s ability to sustain the mediator role it has claimed. The Tehreek-e-Taliban Pakistan continues to attack security forces in the north-west. The Baloch separatist insurgency is growing in ambition and lethality, with the BLA having graduated from roadside bombs to hijacking trains and now targeting military personnel in the provincial capital itself. The TLP, the Islamist party that paralysed the country with street protests in previous years, was banned in October 2025 after deadly clashes with police, but banning a movement does not dissolve the sentiment behind it.The PTI remains a potent political force despite Imran Khan’s imprisonment and his party’s exclusion from the levers of government, keeping the political system in a state of managed instability. Human Rights Watch’s 2026 country report on Pakistan catalogued the deterioration of democratic institutions with clinical precision.So, what’s next for PakIt is against this backdrop that the Abraham Accords demand lands with particular cruelty. Normalising relations with Israel is not merely diplomatically awkward for Pakistan; it would be seen by a substantial portion of the country’s population as a betrayal of core identity. The defence minister said as much.So Pakistan finds itself, as it so often has, in a position of elaborate strategic exposure. It has made commitments it cannot fully honour. It has raised expectations it cannot fully meet. It is caught between a Washington that wants ideological alignment and a Beijing that wants a compliant dependent. It is trying to hold together a peace process that has already broken down once and may break down again. It is servicing debts with fresh debts. And its army trains are being blown up in the provincial capital by separatists who see the country’s grand infrastructure projects as exploitation dressed up as development.Pakistan’s talent for survival is genuine. It has navigated crises that would have finished lesser states. But surviving is not the same as succeeding, and the space between the two is where Pakistani ambition has always, eventually, run out of room.
