Mushahid advocates revival of Iran-Pakistan gas pipeline project
Dr Suleri says renewable energy the only viable solution of spike in oil prices
ISLAMABAD (18 May 2016): Speakers at a high-level roundtable on Monday warned that the ongoing US-Iran conflict has triggered deep geopolitical and economic shocks, thus Pakistan needs to immediately reset its energy, fiscal and strategic planning frameworks to withstand the emerging global uncertainties.
The roundtable, titled, ‘Dynamics of Iran Conflict: Implications and Choices’, was organized by Sustainable Development Policy Institute (SDPI) here on Monday.
Pakistan must accelerate transition towards renewable energy, strengthen economic resilience, diversify imports and adopt targeted social protection measures to cushion the impact of rising inflation and energy prices.
Opening the roundtable, SDPI Executive Director Dr Abid Qaiyum Suleri said the rapidly evolving Middle East crisis had altered global energy systems, investment flows, air travel patterns and defence dynamics. The world is now attempting to reduce dependency on imported oil, he said, adding that the Gulf’s traditional status as a safe investment destination has also come under question.
Dr Suleri, however, warned that the global energy crisis is far from over as inventories has already been depleted and further disruptions could trigger another major spike in oil prices. “The only viable long-term solution is transition towards renewable energy,” he remarked.
In his keynote address, ex-Senator Mushahid Hussain Sayed termed the US-Iran conflict the most significant geopolitical development since the 1956 Suez crisis. He said it has fundamentally reshaped global alignments and weakened Western strategic cohesion.
The war exposed divisions within NATO, the Gulf Cooperation Council and Western alliances while accelerating the emergence of new middle powers, he said and added that Pakistan’s strategic relevance has increased considerably due to its balanced diplomatic engagement with both Iran and the United States.
He emphasized that Pakistan should capitalize on the evolving geopolitical environment by focusing on economic recovery, regional connectivity and strategic partnerships, particularly with China. Mr Hussain also advocated revival of the Iran-Pakistan gas pipeline project to ensure uninterrupted and affordable energy supplies for Pakistan.
Dr. Ehsan Mehmood Khan, Senior Advisor Emeritus, SDPI described the Iran war as the outcome of decades of interconnected geopolitical and ideological tensions in the Middle East rather than an isolated conflict. The conflict has transformed the strategic security environment, he said, adding that the United States and Israel pursued objectives including denuclearization of Iran, regime change and degradation of Tehran’s economic infrastructure, while Iran sought regime survival, preservation of nuclear capability and territorial integrity.
He claimed that despite heavy losses and destruction, Iran has emerged more resilient than anticipated, while the war had generated severe global economic shockwaves extending far beyond the battlefield.
Dr. Ehsan further said Pakistan had consistently demonstrated strategic diplomatic maturity throughout history. Referring to Gwadar, the 1963 Pakistan-China border agreement and Pakistan’s role in facilitating US-China rapprochement in the 1970s, he said these milestones reflected the strength of Pakistan’s statecraft and diplomatic vision. He remarked that Pakistan was performing effectively on the global stage, but now needed to display the same competence internally, particularly in economic management and governance.
SDPI Deputy Executive Director (Research) Dr Sajid Amin Javed warned that the conflict had already evolved from a military confrontation into an energy, food and financial crisis with potentially long-lasting consequences for developing economies. He said Pakistan’s hard-earned macroeconomic stabilization achieved over the last two years was coming under renewed pressure due to surging inflation, energy uncertainty and external vulnerabilities.
Quoting SDPI’s preliminary estimates, he said headline inflation in Pakistan could rise to 11 to 13 per cent, nearly double the target range projected by the State Bank of Pakistan. He maintained that Pakistan’s oil import bill could increase by between $6.2 billion and $11 billion under a conservative scenario, while GDP growth could slow by up to one percentage point due to rising fuel prices and gas rationing for industries.
Dr Javed said Asia remained the world’s most vulnerable region because nearly 70 per cent of its oil and gas supplies passed through the Strait of Hormuz. He also warned that Pakistan’s heavy dependence on Gulf-based LNG supplies and limited fiscal space had made the country highly exposed to prolonged regional instability.
He observed that repeated global shocks, including COVID-19, the Ukraine war and now the US-Iran conflict, were steadily eroding the response capacity of countries like Pakistan that already faced high debt burdens and limited fiscal buffers.
He suggested expanding targeted subsidies and cash transfers for vulnerable segments, improving inflation management communication by the central bank, empowering price control committees to prevent profiteering, and redesigning the upcoming federal budget to protect the salaried class and lower-income groups.
He also stressed the need for medium- and long-term investment in affordable renewable energy to reduce Pakistan’s structural dependence on imported fuels.
During the question-and-answer session, Dr. Javed proposed expanding social protection mechanisms and emphasized that monetary policy communication needed improvement so that inflation expectations among the public could be managed more effectively. He also suggested revising income tax slabs for the salaried class, arguing that the middle class should not become a casualty of the crisis.
Dr Suleri said Pakistan had gained certain geoeconomic space during the crisis, noting that the country secured completion of the IMF programme without additional negotiations and provided Rs80 petroleum levy relief without IMF resistance.
Senator Mushahid Hussain said Pakistan must overcome what he termed an “intellectual inferiority complex” and recognize its strategic importance in an increasingly multipolar world. He further said Pakistan’s strategic position had strengthened considerably after the conflict and the country should utilize the next three years to stabilize and rebuild its economy under favourable international circumstances.
© 2026 SDPI. All Rights Reserved Design & Developed by NKMIS WEB Unit
