The US has recently made its already volatile relations with Iran much worse. First by pulling out of the Iran nuclear deal, signed in 2015 and also by moving its aircraft carrier, Abraham Lincoln, in the Persian Gulf from the Arabian Gulf on May 19, 2019. Now, the downing of a US RQ 4-A Global Hawk drone by Iran made the situation even worse.
Although the tensions between these two countries are happening far from our border, they will have a great impact on Pakistan as well. For instance, Iran has already scaled up its efforts to hire more youth from Pakistan, in its Liwa Zainebiyoun brigade, to fight for Iran’s government. This will indirectly fuel sectarian violence in Pakistan, hence affecting its internal security. Pakistan as already lost $120 billion in its war against terror and if sectarian violence increases in Pakistan, it will definitely discourage any investments coming inside Pakistan and hence slow down Pakistan’s progress even further.
Pakistan has repeatedly opted for neutrality between the two rivals, and in the past even set an example by not sending its troops for the Yemen invasion by the Saudi led coalition.
Wars, no doubt, have a devastating effect on a country’s economy. For instance, the recent standoff between Pakistan and India made Pakistan’s stock market go down by almost 2000 points.
Even if Pakistan succeeds to stay neutral, the effects of these tensions will have a negative impact on its economy. The effect on the flow of oil through the Strait of Hormuz has already been disturbed and as a result, the cost of oil has seen a sharp rise. The prices saw a sharp rise on the day when Iran shot down the US drone and many airlines are now being advised to avoid flying in Iranian airspace.
With the already weak state of Pakistan’s economy, the rise in the prices of oil will only make the situation worse.