CORPORATE WINDOW: Global peace dividends
If the ceasefire in the Middle East evolves into lasting peace, the resulting global peace dividends will be significant. Pakistan, in particular, could benefit from reduced business costs due to stable shipping routes, expanded opportunities for trade, investment, and economic cooperation with its Western neighbours and Gulf countries, and a likely surge in remittances as reconstruction efforts commence in the war-torn region.
However, much will depend on the responsiveness of Pakistan’s private and public sectors. The preparedness of businesses and the agility of the government in implementing necessary policy adjustments will be crucial in capitalising on this potential.
An informal survey of the market and policy circles reveals a concerning lack of interest in the opportunities these regional changes present, reflecting the challenges of a country striving to revive its struggling economy.
“We have a long history of missing obvious opportunities that came knocking,” remarked a former economic diplomat, expressing frustration over inertia in key public and private circles. “Whether it’s regional trade, leveraging our strategic location, tapping into rich mineral reserves, over 1,000 miles of warm seacoast, or harnessing highly favourable demographics, our expertise seems to lie in turning potential advantages into liabilities.”
A stable Middle East offers economic and diplomatic opportunities to Pakistan despite its current fragility
Commenting on the potential trajectory of the Middle East situation and Pakistan’s stakes, seasoned diplomat and former caretaker foreign minister Jalil Abbas Jilani expressed optimism about the ceasefire’s sustainability, particularly with the new US administration taking charge. However, he refrained from sharing his views on the economic opportunities peace might bring to Pakistan.
“The ceasefire brokered between Hamas and Israel is likely to be sustained. The Trump Administration is projecting the ceasefire as a significant foreign policy achievement and will closely monitor its implementation.
“President Trump is expected to ensure its success in establishing US credibility in the Middle East. The ceasefire has been welcomed by Arab countries. Israel has achieved its objectives of weakening Hamas and Hezbollah while causing extensive destruction in Gaza,” he stated briefly.
There were a few exceptions, but business leadership, in general, seemed more preoccupied with internal politics, particularly the direction of the government-opposition talks and controversies surrounding Malik Riaz and his overseas business projects, rather than focusing on the Middle East and its future.
The upper echelon of the business community, however, did appear to be consumed with deciphering President Trump’s executive orders, the responses from the European Union, Russia, and China, and their potential ripple effects on the global economy.
Dr Nadeem Javaid, former chief economist of Pakistan, acknowledged the complexity of the situation in the Middle East, cautioning against expecting a linear trajectory. However, he elaborated on the potential benefits peace in the region could bring to Pakistan and its economy.
“In my view, the recent ceasefire in the Israel-Palestine conflict is a welcome step, but lasting peace remains uncertain. Deep-rooted political divisions, the resilience of Hamas, and internal challenges within Israel make long-term stability difficult. While international mediators have played a crucial role, achieving a sustainable resolution will require addressing core issues such as Palestinian statehood, security guarantees, and regional power dynamics.
“For Pakistan, a stable Middle East presents significant opportunities. Improved regional security can strengthen economic ties, particularly with Gulf States, unlocking greater trade and investment potential. Saudi Arabia’s increasing investments, including in Pakistan’s Reko Diq mining project, highlight the potential for enhanced financial collaboration. Moreover, the recent $1 billion loan from Middle Eastern banks to Pakistan reflects growing confidence in its economic prospects,” Dr Javaid explained.
Energy security is another critical benefit. Normality in the region could help stabilise global oil prices, easing inflationary pressures on Pakistan’s economy. Moreover, peace could lead to enhanced labour migration, allowing Pakistani expatriates to benefit from better employment conditions in the Gulf.
“Although the ceasefire remains fragile, its success could reshape regional geopolitics, offering Pakistan new economic and diplomatic opportunities. Supporting peace efforts aligns with Pakistan’s strategic and economic interests,” remarked Dr Jawaid.
Moreover, an analyst, speaking privately, highlighted the potential risks had the truce not been reached, “The ceasefire significantly reduces the risk of the conflict escalating and drawing in Iran, Pakistan’s immediate neighbour. Such an escalation could have had severe repercussions for Pakistan, a country still grappling with the lasting impacts of two wars in Afghanistan over the past four decades. Furthermore, prolonged conflict could have driven up energy prices and disrupted global supply chains due to shipping disruptions in the Red Sea,” he stated.
Saudi Arabia’s Minister of Foreign Affairs, Prince Faisal bin Farhan bin Abdullah, speaking at the World Economic Forum Annual Meeting 2025 in Davos during a panel session on ‘Diplomacy amid Disorder’ last week, described the ceasefire as a pivotal opportunity for the region “to turn a page”.
Published in Dawn, The Business and Finance Weekly, January 27th, 2025