After the war

NOW that the war is winding down, an important question needs to be asked. Will the rulers of Iran remember with gratitude the role Pakistan played in helping secure a dignified ending for them?

Iran is set to emerge as a great power in this region now, having absorbed the might of what the Zionist alliance could throw at it (short of nuclear weapons) and yet kept their cities functioning, the Strait of Hormuz under their control and forced the superpower to break off from the wishes of the Israel lobby and push for a settlement with Iran instead. Having absorbed the full might of the superpower’s bombing and emerged intact and in control is no small feat. It is a demonstration of their hard power, and once the US retreats from the region, which it will have to now, Iran is set to emerge as a power to be reckoned with.

I have friends who tell me the US actually won this war. If so, this might be the very first example in history of a victor war paying reparations to the vanquished!

Since 1979, Iran has been shackled behind a wall of sanctions and bludgeoned with war. Now those walls are set to come down, the war is set to fizzle out, and we don’t know what will emerge from behind this curtain. We wait to find out. Whatever shape it takes, it will be an economic powerhouse, and we can allow ourselves the hope that engaging with this economy will be an important growth vent for Pakistan. That much-vaunted overland access to Central Asia now becomes a real possibility. Thus far geography was stacked against the idea. Now that has been resolved. But the economics are still stacked against it because overland trade is very expensive. Nevertheless, if there is any trade potential with Central Asia, a route through Iran should be explored.

Whether Tehran remembers us kindly and whether Washington decides to reward us handsomely are matters beyond our control.

Many in Pakistan are salivating at the prospect of dollars from abroad landing in huge quantities into the country, as a kind of quid pro quo for the work done to bring the two parties together. And it might yet happen. It is possible (though not yet certain) that Pakistan could today be standing on the very cusp of yet another growth spurt of the sort we saw in the 1960s, the 1980s and again in the 2000s. At least in the 2000s, when it happened it happened fast. Until 2002, the economy was moribund and fresh into a new IMF programme, having just completed one.

The inflows began in 2002, with a trickle and debt restructuring. In 2003, growth ticked up and the central bank warned in one of its research reports that they needed to raise interest rates quickly because inflation would follow equally fast. Of course that did not happen and the economy picked up pace. In FY05, it registered a record high growth rate of nine per cent. And the rest is, as they say, history.

If history is any guide, there is now a distinct possibility that Pakistan’s economy could jump-start rapidly on the back of a large dollar inflow. The inflow does not need to be in cash. It could be market access, swap lines, debt rescheduling on favourable terms, and so on. But given how much idle capacity is lying in waste right now, a jump-start could see growth rise to 9pc and perhaps even into double digits, within two years.

If this were to happen it will radically change the mood of despondency that is gripping the country. These episodes usually produce a short-lived sense of euphoria before the after-effects start to grip. These usually come first as inflation — nascent, incipient, easily swatted away with a few words. Then the balance-of-payments difficulties grow. At some point, the foreign exchange reserves stop growing and turn the corner to decline. Then comes mounting pressure on the exchange rate, which the state initially resists.

If such a situation comes about, be prepared to hear all about the growth miracle. But remain watchful. Nothing in the underlying structure of the economy has changed. At least nothing so significantly as to make this time different from all the other times.

If those running the country are smart, they will make strong efforts to ensure the benefits of this growth reach the common citizenry early, and fast. But if they are not smart, they will make hay while the sun shines and tout the growth numbers as their winning move. These are the same people now who were heavily critical of the Musharraf growth years, arguing that ‘pressures on the common man increased rather than decreased’ in the decade of the general’s reign.

So we return to where we began, with the question of gratitude. Whether Tehran chooses to remember us kindly, and whether Washington decides to reward us handsomely, are matters beyond our control. We may get the inflows or we may not. The opening to Iran may widen into something real or it may narrow the moment the next crisis arrives in the Gulf. These are other people’s decisions, taken in other people’s capitals, for reasons of their own.

What lies within our control is the only thing that has ever mattered, and it is the one thing we keep postponing. A dollar inflow buys time and nothing more. The tax base remains as narrow as it was, the power sector bleeds as it always has, the loss-making enterprises go on losing. None of these will be fixed by a grateful neighbour or a generous patron. They will be fixed by us, at home, or they will not be fixed at all.

The war is winding down and a window may be opening. We have stood at this window before. Each time we have admired the view and done little else. Let us hope, this time, that we do more than look.

The writer is a business and economy journalist.

khurram.husain@gmail.com

X: @khurramhusain

Published in Dawn, June 18th, 2026