Earlier this week, the US and Iran finally reached an agreement to stop the war. Pakistan, which played a central role in said agreement has been acknowledged and praised by the international community. But is this where it ends for the country? Or can the Shehbaz-led government convert the diplomatic visibility and influence into that rare opening that actually guarantees dividends?

Before we answer that question, however, it is important to acknowledge that the agreement, brokered after weeks of intense diplomacy between the United States and Iran, is not a peace treaty. It is an interim framework that has merely paused a dangerous confrontation and created a 60-day negotiating window during which the most difficult questions, including sanctions relief, nuclear restrictions, and regional security arrangements, will have to be addressed.

The fragility of the arrangement was evident even before its conclusion, with disagreements linked to Lebanon threatening to derail the process at a late stage, and Qatar eventually stepping in to facilitate implementation mechanisms and financial assurances.

That reality is the first lesson Islamabad should absorb.

Opening negotiations was the difficult part, but perhaps the harder task will be converting this diplomatic breakthrough into durable strategic gain.

Why did Pakistan get involved?

Pakistan did not involve itself in the process merely out of altruism; it had compelling reasons of its own. A prolonged Iran-US confrontation, or worse a regional war, would at a minimum have directly affected Pakistan’s security environment and economic stability. The country shares a nearly 900-kilometre border with Iran and remains heavily dependent on Gulf energy supplies. It is, therefore, vulnerable to oil price shocks and maritime disruptions, and any continuation of conflict in the Gulf would carry immediate consequences for inflation, energy security, and economic recovery.

Seen in that context, Pakistan’s mediation effort was less an act of charity than an exercise in strategic self-preservation pursued through diplomacy.

The first dividend is already visible as Pakistan has successfully reminded major capitals that it is capable of playing a useful role in moments of international crises.

In recent years, the country’s international profile has often been shaped by discussions of economic distress, political instability, or security concerns, but the mediation effort briefly altered that narrative. As a result, Pakistan was no longer being discussed as a problem to be managed but as a channel through which a problem could be addressed. This shift in perception mattered.

In Washington, utility often translates into access, and in Gulf capitals, states that can maintain dialogue across competing camps are valued assets. Broadly speaking, in diplomacy, relevance is measured not by wealth or military strength alone but by whether others need your participation when circumstances become difficult.

Pakistan has earned some prestige through its role, but that is only the residue of diplomacy, not a substitute for policy outcomes.

The prize

For Pakistan, the real prize lies in two interconnected domains — security and economics.

The security dividend is perhaps the most immediate, as reduced hostility between Washington and Tehran would lower pressure on Pakistan’s western frontier and decrease the likelihood of regional instability spilling across borders. It would also lessen the prospect of sudden energy disruptions that trigger domestic economic stress.

More importantly, successful mediation has created space for Pakistan to manage relations simultaneously with Tehran, Riyadh, Abu Dhabi, Doha, Beijing, and Washington without being forced into uncomfortable choices. That balancing act has always been difficult, but it remains one of the country’s most important diplomatic assets.

The economic opportunities are potentially more transformative, although far from guaranteed.

If sanctions are gradually eased and Iran begins reintegrating into regional and global commerce, trade routes across the wider Gulf region will inevitably adjust. For decades, much of Iran’s commercial interaction with international markets has been constrained by sanctions architecture and political restrictions. Any sustained opening will, therefore, create demand for new transit arrangements, financial channels, and logistical partnerships. This is a possibility Pakistan should be preparing for now.

For instance, this year’s conflict disrupted a commercial relationship that had long underpinned trade across the Gulf. For decades, the UAE, particularly Dubai, served as Iran’s principal commercial gateway to international markets, functioning as a major re-export, logistics, and financial hub for Iranian businesses. However, the conflict exposed the vulnerabilities of that dependence, after the UAE restricted Iranian businesses and banks operating on its territory, prompting debate within Iran about diversifying trade routes and reducing reliance on that corridor.

Though since the ceasefire and subsequent US-Iran negotiations, Abu Dhabi has moved cautiously to restore commercial channels and reassure markets, the relationship has not returned to its pre-war equilibrium. It is now increasingly characterised by a duality in which strategic suspicion born of conflict coexists with a desire to revive trade, investment, and shipping links. For Pakistan, this situation, which has compelled Iranian businesses and policymakers to reassess supply chains, logistics corridors, and commercial partnerships has created opportunities.

Pakistan must, therefore, position itself as one of those alternative routes rather than remaining a spectator.

This is where Gwadar assumes greater significance.

The geographical advantage

For years, discussions about Gwadar have oscillated between excessive optimism and skepticism, but the reality is somewhere in between. Geography has already given Pakistan an advantage, with Gwadar sitting at the intersection of key maritime and overland corridors and lying relatively close to Iran’s southeastern region. This has given Pakistan a natural opening for Iranian businesses exploring alternative gateways for trade, logistics, and warehousing.

But geography alone never creates commerce.

To become a credible corridor, Pakistan will need a strategy and, more importantly, the capacity and will to seize emerging opportunities. Without these fundamentals, Gwadar will remain a strategic concept. The same logic applies to the China-Pakistan Economic Corridor.

For much of its existence, CPEC has been viewed primarily through the lens of China-Pakistan bilateral cooperation, but a more economically open Iran would create the possibility, however distant, of extending regional connectivity westward. Energy exchange, transit trade, logistics hubs, and industrial processing networks linking Pakistan, Iran, and parts of Central Asia could then become easier to imagine in a less hostile geopolitical environment.

Yet there is a credibility challenge that Islamabad must confront honestly.

During the conflict period, Pakistan issued several Special Regulatory Orders intended to facilitate emergency commercial interaction with Iran. These measures generated considerable interest among traders and business groups on both sides of the border and created expectations that Pakistan was preparing for a broader framework of commercial engagement once tensions subsided.

The problem, however, is that implementation of these SROs has not matched announcement, according to diplomatic and business sources.

These circles are essentially pointing to gaps between regulatory intent and operational execution, with measures announced on paper often moving slowly through the administrative system.

This may appear to be a bureaucratic issue, but it is in fact a strategic one.

Geography alone won’t do it

States do not become trade corridors through geography alone; rather, they become trade corridors through reliability. If Pakistan wishes to attract commercial activity that might otherwise flow through established Gulf channels, it must convince investors and traders that commitments made in Islamabad will be implemented in practice. Otherwise, opportunities will simply migrate elsewhere.

The potential demand is already visible.

During the US blockade, reports emerged of hundreds of Iranian vessels carrying essential goods waiting off Karachi and nearby waters. On one hand, the episode offered a glimpse of what Pakistan’s maritime geography could potentially support under different circumstances, but on the other is a reality under which most of the ships anchored near Karachi are yet to be cleared for return to Iran.

An Iranian business delegation from Mashhad is currently in Pakistan to explore imports of Pakistani meat products and related commercial arrangements. On its own, the visit is not transformative and will not alter bilateral trade statistics overnight, but such interactions matter precisely because they are practical rather than symbolic.

Large economic relationships instead of emerging from grand announcements, rise through hundreds of smaller commercial decisions involving importers, exporters, logistics operators, banks, and regulators. This is where Pakistan has frequently struggled.

The country has often demonstrated an ability to generate strategic moments through diplomatic success while underperforming in converting them into sustained economic gain.

That is why there is concern that although the Islamabad Memorandum may have created a window of opportunity, whether or not that window is exploited will depend less on events in Tehran or Washington than on decisions taken in Islamabad.

Pakistan may have done the difficult work of opening the door, but the harder task now is to ensure it does not itself remain outside describing its achievement while others walk through and collect the benefits.