Pakistan is preparing to host American and Iranian delegations in Islamabad for critical negotiations to end the 39-day war. The stakes for Islamabad are extremely high.

This development has been made possible by a fragile two-week ceasefire secured by Pakistan’s last-ditch efforts.

Already, there have been ceasefire violations undermining the prospects of a permanent settlement of the conflict. As things stand between Iran and the U.S., there is no common ground between them other than agreeing to engage in talks. Even if they agree to continue talks after the first round in Islamabad, that will be no small achievement. Indeed, it will be an encouraging outcome. Conversely, if talks derail and fighting resumes, it will put Pakistan in a very precarious situation.

Pakistan’s high-risk, high-reward diplomacy between the U.S. and Iran is the outcome of two factors. The foremost among these factors is Pakistan’s Strategic Mutual Defense Agreement (SMDA) with Saudi Arabia, which it signed last year. If talks falter and the war resumes, Pakistan may be compelled to enter the conflict on the Saudi side.

Prior to clinching a temporary ceasefire, Pakistan condemned the Iranian drone and missile attack on Saudi Arabia’s Jubail industrial hub and petrochemical complex and vowed to defend the Kingdom. The tone and tenor of the statement were somber and frustrating.

Due to Pakistan’s neutral stance on the U.S.-Israel war against Iran, its relations with the United Arab Emirates (UAE) have already taken a hit. Notwithstanding Pakistan’s fragile economic situation, which is kept afloat by loans from friendly countries and the International Monetary Fund (IMF), the UAE has asked Pakistan to repay a $3.5 billion loan.

In 2015, Pakistan refused to become part of the Saudi-led coalition against Yemen. If the conflict prolongs and Saudi Arabia invokes the SMDA and asks Pakistan to defend the Kingdom against Iran, Islamabad will be compelled to join the war. If Islamabad refuses, it will permanently damage its strategic, economic and friendly ties with Riyadh.

Conversely, if Pakistan enters the war on the Saudi side, it will come with its own set of security complications. The Pakistani military is already overstretched fighting two full-fledged insurgencies in Balochistan and Khyber Pakhtunkhwa. Furthermore, Pakistan’s relations with India and Afghanistan are strained. Despite a fragile ceasefire with India, which has largely held since the May 2025 military exchanges, tensions have not subsided. Recently, China has mediated to defuse tensions between Pakistan and Afghanistan, but the former has maintained that it will continue to hit terrorist infrastructure in Afghanistan if cross-border terrorist attacks continue. Amid this tense situation, Pakistan cannot afford to have a volatile border with Iran.

No country can afford hot borders on three sides while fighting two full-blown insurgencies in two of its four provinces. More importantly, any instability in the Iran-Pakistan border area will create gaps that insurgent and terrorist groups will exploit.

At the same time, if Pakistan is pushed into the war, it will have serious consequences for the country’s sectarian harmony. Pakistan has paid a huge price in blood and treasure to put the genie of sectarian militancy back in the bottle. If Pakistan joins the war against Iran, the latter can use its militant proxies, such as the Zainabiyoun Brigade, whose militants were recruited, financed, trained and used by Iran to sustain the Bashar al-Assad regime in Syria. These battle-hardened militants can increase the pain and cost for Pakistan if it joins the war against Iran on the Saudi side.

Pakistan is home to 40 million Shias. Shias comprise 15-20 percent of the population, making them the largest sectarian minority in the country. Pakistani Shias hold Iran and its religious leadership in high esteem and view the country as the spiritual fountain of the Shia faith. Soon after the death of Iranian Supreme Leader Ayatollah Khamenei was confirmed in the Israeli bombing on February 28, violent protests broke out in Pakistan’s major cities, including Lahore, Karachi and Islamabad.

Over the years, Pakistan has walked a tightrope in balancing its delicate ties between Iran and Saudi Arabia, keeping in view its own domestic constraints and complexities. This delicate balance would be put to a serious test if talks fail to progress and the ceasefire is not extended.

The conflict has already taken a serious economic toll on Pakistan’s fragile economy. Since the start of the war, Pakistan has raised the price of petrol by 42 percent to a historic high of 458 Pakistani rupees per liter. This is despite the fact that Iran has allowed Pakistan-bound oil shipments to pass through the Strait of Hormuz.

The country is already grappling with electricity outages to manage the fuel crisis. The hike in fuel prices has raised transportation and commodity costs. This situation will complicate Pakistan’s talks with the IMF for budget preparations.

So, while Pakistan is currently basking in the media spotlight, things could go horribly wrong. The stakes for Pakistan are extremely high.

Although a fragile ceasefire is in place and both sides have announced that they will participate in the upcoming face-to-face talks, uncertainty persists. Following ceasefire violations by Israel, Iran’s Ambassador to Pakistan Reza Amiri Moghadam deleted his April 8 post on X announcing the arrival of the Iranian delegation in Islamabad for the talks.

If talks progress positively and the war ends with a permanent solution, Pakistan will emerge as a crucial player in West Asia. The development could unlock more security agreements. If economic sanctions are lifted from Iran, Pakistan could resume work on the Iran-Pakistan gas pipeline, along with increasing the volume of bilateral trade. More importantly, good relations with Iran will help Pakistan neutralize the hideouts of the Baloch separatist groups in Iran’s Sistan and Balochistan province.

If the Iranian delegation arrives in Islamabad, Pakistan will host the U.S.-Iran talks on April 11, with a mix of satisfaction and joy for pausing the war and nervousness over repercussions should the talks fail.

If talks derail or both sides fail to reach a common ground, spoilers can exploit the situation to push the conflict to its next phase. It will be a nightmare scenario for Pakistan’s political and military leadership, but the country will honor its commitments to Saudi Arabia under the SMDA, the costs notwithstanding.