By Muhammad Munaeem Jamal | 23 September 2026

A conversation in New York, a petrol bill in Karachi

A petrol station in Karachi offers a useful place to begin this story. A motorcyclist watches the fuel meter while an attendant fills his tank. He knows little about the diplomatic exchanges taking place thousands of kilometres away in New York. His immediate concern is the money he must spend before reaching home.

I have spent much of my working life in banking, where international payments connect distant economies through ordinary transactions. A disruption in the Gulf can eventually appear in an importer’s payment instructions. The same disruption may reach a Pakistani household through a higher electricity bill.

Pakistan’s involvement in negotiations between Washington and Tehran deserves attention for precisely this reason. The diplomatic story extends well beyond the meeting rooms of the United Nations.

On September 23, Reuters reported that American and Iranian representatives had resumed indirect contacts through mediators during the UN General Assembly. Iranian Foreign Minister Abbas Araghchi and American envoys Steve Witkoff and Jared Kushner communicated through intermediaries.

President Donald Trump described his envoys’ meeting with the mediators as productive. Neither side, however, announced a breakthrough in its negotiating position.

Pakistan has joined Qatar in efforts to facilitate negotiations. Islamabad now occupies a position where its diplomatic relationships intersect with its economic vulnerabilities.

The question is whether Pakistan can turn its access to both sides into a more secure economic environment.

Pakistan’s diplomatic role has a longer history than the New York talks

The latest contacts did not emerge from a single meeting at the United Nations.

On February 28, 2026, the United States and Israel launched strikes against Iran. Tehran retaliated against American and regional targets, and the conflict disrupted navigation through the Strait of Hormuz.

Pakistan announced a two-week pause in hostilities on April 8. The United States and Iran subsequently signed a memorandum of understanding on June 17, establishing a framework for further negotiations. The agreement covered maritime navigation and Iran’s nuclear programme, alongside other security issues.

A joint statement issued by Qatar’s Foreign Ministry on June 22 confirmed that representatives of Iran and the United States had participated in high-level discussions in Switzerland.

Pakistan and Qatar served as mediators. The participants agreed to establish a committee to oversee the diplomatic process and a mechanism for further technical discussions.

The arrangement gave Pakistan an institutional role in the negotiations. It did not grant Islamabad authority to determine the final settlement.

In July, Pakistan’s Foreign Office acknowledged that implementation of the memorandum faced difficulties. Its July 16 press briefing nevertheless reaffirmed Islamabad’s commitment to dialogue and maritime security.

The distinction matters. A mediator can carry proposals between opposing governments and help them identify areas of agreement. Each government retains control over its own concessions.

Pakistan can help Washington understand Tehran’s conditions. It cannot compel either government to accept them.

Why the Strait of Hormuz matters more than diplomatic photographs

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman. Commercial vessels use the narrow passage to carry energy supplies from Gulf producers to international markets.

For Pakistan, maritime security in the region is an economic necessity.

The International Monetary Fund’s April 2026 assessment of Pakistan estimated that 81% of the country’s fuel imports came from Gulf Cooperation Council countries.

The IMF also warned that higher regional fuel premiums and sustained disruptions to physical supplies could damage economic activity.

An oil-importing country faces several costs when maritime routes become insecure.

The first comes from the price of crude oil and refined petroleum products. A second comes from transporting those products. Shipowners and insurers may charge more when vessels face additional security risks.

Importers can encounter longer delivery times if shipping companies alter their routes or reduce services.

For Pakistan, the pressure can spread through the economy.

Higher fuel costs increase the expense of moving goods between Karachi and inland markets. Industrial firms may face larger energy bills, while households spend more on transport.

A diplomatic agreement that restores reliable shipping could reduce some of these pressures.

The size of any benefit would depend on actual oil prices and freight charges after an agreement. An announcement in New York cannot guarantee cheaper petrol in Karachi.

Iran wants relief from American pressure

Iran’s negotiating position reveals why reopening Hormuz remains difficult.

On September 22, a senior Iranian official told Reuters that Tehran could reopen the strait within seven days if Washington reduced military pressure and lifted its blockade on Iranian ports.

The official also called for a formal American commitment to diplomacy and a timetable for negotiations.

Iran is seeking changes in the security environment before restoring normal maritime traffic. Washington, meanwhile, wants an agreement that addresses its concerns about Iran’s nuclear activities and regional security.

Both governments must consider the sequence of concessions.

Should maritime restrictions end before a broader agreement? Should sanctions relief follow verified Iranian commitments? Who would monitor compliance?

The answers could determine whether the negotiations produce a durable settlement or another temporary arrangement.

Reports on September 23 also revealed differences over the nature of the New York contacts. American officials described discussions through mediators, while Iranian officials disputed reports suggesting that direct negotiations were underway.

For Pakistan, the practical task is to keep communication open without presenting diplomatic contact as a completed agreement.

Islamabad’s credibility depends partly on its ability to distinguish progress in negotiations from concessions that neither side has accepted.

Pakistan must balance its relationships with Iran and the Gulf

Pakistan shares a land border with Iran. Geography gives the two countries enduring interests in border security and commercial relations.

Pakistan also maintains extensive economic relationships with Gulf Arab countries. Their importance extends beyond imported petroleum.

The IMF’s April assessment estimated that the Gulf Cooperation Council accounted for 55% of Pakistan’s remittances. Total annual remittances amounted to approximately 9% of the country’s GDP.

A prolonged regional conflict therefore threatens Pakistan through two separate channels.

Disrupted energy supplies can raise import costs. Economic instability in Gulf countries can affect Pakistani workers and the money they send home.

A family in Karachi may depend on a relative employed in Saudi Arabia or the United Arab Emirates. The household’s financial security can suffer if regional economic activity slows or employment opportunities decline.

Pakistan has an interest in maintaining workable relations with Tehran while protecting its economic connections with Gulf Arab states.

Its partnership with Qatar offers a diplomatic channel for pursuing those interests.

The joint mediation framework also distributes responsibility. Pakistan does not have to present itself as the sole representative of regional interests or as the guarantor of an agreement between Washington and Tehran.

Islamabad can support negotiations while leaving the final decisions to the governments directly involved.

Can Pakistan gain more than diplomatic recognition?

Diplomatic visibility has value, but the economic benefits require closer examination.

Pakistan’s participation in negotiations gives its officials an opportunity to communicate directly with influential governments. It also allows Islamabad to demonstrate that it can contribute to regional conflict management.

Neither outcome automatically produces an investment agreement or a reduction in Pakistan’s external financing needs.

The most immediate potential benefit is the restoration of maritime stability.

A sustained reopening of Hormuz could improve the reliability of energy deliveries. Lower transport risks could ease costs for importers, although international oil prices would continue to depend on global supply and demand.

Pakistan could also benefit from a less volatile economic environment in Gulf countries, where many Pakistani workers earn their livelihoods.

A separate question concerns future trade with Iran.

Reduced regional tensions could create opportunities for more predictable cross-border commerce. Actual expansion would depend on the terms of any sanctions settlement, banking arrangements and the infrastructure available to traders.

I would be cautious about treating diplomatic goodwill as an economic contract.

A photograph of Pakistani officials meeting American or Iranian representatives tells us little about whether an importer can obtain a bank guarantee or whether a legitimate payment can pass through the international banking system.

Economic benefits become measurable when agreements change the conditions under which businesses operate.

The banking problem that a peace agreement cannot ignore

My experience with cross-border payments makes the financial dimension of an Iran settlement particularly important.

International trade requires more than an agreement between buyers and sellers. Banks must assess sanctions restrictions and identify the parties involved in a transaction. They must also establish whether the payment can move through an acceptable settlement channel.

Iran’s access to international banking has been constrained by sanctions and financial compliance concerns.

A diplomatic settlement could change some of those restrictions, depending on the commitments Washington makes and the legal measures it adopts.

Yet a political announcement would not immediately restore every banking relationship.

Financial institutions would need to examine the applicable sanctions rules. They would also assess their own compliance obligations before processing transactions involving Iranian counterparties.

For Pakistani exporters and importers, the distinction between permitted trade and executable payment matters.

A transaction may be commercially attractive but difficult to complete if banks cannot establish a compliant payment route.

Any serious economic assessment of a US-Iran agreement must therefore examine its financial provisions alongside its maritime commitments.

Pakistan’s economic recovery needs more than a ceasefire

The timing of the diplomatic effort matters because Pakistan’s economic recovery remains exposed to external shocks.

On September 23, the Asian Development Bank projected economic growth of 3.7% for Pakistan in fiscal year 2027. It forecast average inflation of 8.3%.

The ADB’s September economic outlook, reported by Dawn, identified the Middle East conflict as a significant downside risk. Higher energy costs and expensive logistics could increase inflationary pressure. Disruption to Gulf labour markets could also affect remittances.

A successful diplomatic settlement could reduce some of these external pressures.

It would not resolve Pakistan’s domestic economic problems.

Electricity-sector inefficiencies and weak revenue collection would still require policy attention. Industrial competitiveness would remain a separate challenge.

The government would also need to maintain fiscal discipline while protecting households from the effects of higher living costs.

Peace in the Gulf could create more favourable conditions for economic management. Pakistan would still have to use those conditions effectively.

What should Islamabad seek from the diplomatic process?

Pakistan’s immediate interests can be expressed through concrete outcomes rather than broad declarations of diplomatic success.

The first concerns safe maritime navigation. Commercial shipping needs a stable operating environment that does not depend on temporary exemptions or unpredictable military developments.

The second concerns the protection of economic activity in Gulf countries. A regional settlement that reduces the risk of further attacks would support the environment in which Pakistani workers and businesses operate.

Islamabad also has an interest in maintaining channels of communication with Iran and the United States after the current negotiations conclude.

Those relationships could help Pakistan address future disputes without relying entirely on emergency diplomacy.

None of these objectives requires Pakistan to assume responsibility for enforcing a settlement between larger military powers.

The central diplomatic challenge is to contribute to an agreement while preserving sufficient independence to maintain relations with all the principal parties.

A peace deal would be a beginning, not an economic windfall

The New York negotiations have brought Pakistan’s diplomatic role into international view. They have also exposed the limits of what mediation alone can achieve.

Washington and Tehran must decide whether they can accept a workable sequence of security commitments and economic concessions. Qatar and Pakistan can facilitate that process, but neither mediator can substitute for an agreement between the parties.

For Pakistan, the consequences will become visible in more ordinary places.

Importers will examine freight costs. Banks will assess payment restrictions. Families will watch fuel prices and the stability of employment in Gulf countries.

I return to the motorcyclist at the Karachi petrol station.

He has no reason to judge diplomatic success by the number of meetings held in New York. The price displayed on the fuel pump will tell him something more immediate about the economic environment in which he lives.

Pakistan’s diplomatic involvement may help create the conditions for greater stability. Whether those conditions translate into lasting economic benefits will depend on the agreement itself and the decisions Islamabad makes after the negotiators leave the room.