There were hasty celebrations over the Islamabad MoU signed on 17 June 2026. It indeed put Islamabad in a prominent spot on the stage of world diplomacy for a while, before the first strike came within 48 hours. Now again, there are discussions on peace agreement between the US and Iran. I have my reasons to dismiss any possibility of a lasting peace – at least for the foreseeable future. Before presenting my reasons in support of my argument, first consider another thing.
This war is mutating: in June 2025, it was called the Iran-Israel war, then it mutated into the Israel/US-Iran war. In round two, which commenced on 28 February 2026, it was still the Israel/US-Iran war, which mutated into the US-Iran war after the 17 June MoU – Israel became a distant bystander and Gulf nations, particularly Saudi Arabia, began to be dragged into it. It then halted short of becoming an Iran-Saudi war after Saudi jets struck Yemen's Sanaa airport on 13 July 2026 to block an "unauthorised" inbound flight from Iran.
It activated the Houthis after a pause of over four years. A commentator from Arab media remarked that the Saudis pushed for strikes on Iran when the Strait of Hormuz remained closed – it spiked oil prices, which benefited the kingdom with the ability to export via the Red Sea. They rushed for the ceasefire after the Red Sea opening at Bab-el-Mandeb came under threat from the Houthis. Conspicuously, Pakistan remained distant from Saudi Arabia's Yemen campaign – with a dormant Strategic Mutual Defence Agreement (SMDA) in the background.
For the US, things are more complicated. And this is where my scepticism about the war not ending anytime soon comes in. A prolonged war means higher oil prices, strikes on its bases in the Gulf, material damage to its Arab allies, and rising financial and human costs of the war, coupled with diminishing political and military influence around the world. Leaving is another bad option. That would mean packing up from the Gulf and risking the end of the petrodollar – an option with the ability to crush the US economy and the world financial system. The very weapon through which Washington dictates terms to the world will be gone.
Add to this Iran's new demands: a 5 to 7% tax, or call it a fee, on the value of all goods that pass through the Strait of Hormuz. This roughly amounts to over $300 billion annually. This means Iran earns more than the annual oil sales of Saudi Arabia simply by approaching vessels (except those belonging to China) that pass through its side of Hormuz – the entry route is on Oman's side, which Iran will be monitoring. This makes Iran an undisputed, uncontested hegemon of the Middle East. And by the same token, one wouldn't be surprised if the Houthis do the same at Bab-el-Mandeb in the foreseeable future. Nor would it be a surprise if other straits – Malacca and Gibraltar – were to follow suit.
Leaving is another bad option. That would mean packing up from the Gulf and risking the end of the petrodollar.
Are the Arabs willing to swallow this? What kind of security and economic future will the Middle East have? And on top of everything, how will Israel feel about it, with an emboldened Hezbollah and Hamas on its doorstep? If this peace deal is consolidated on Iran's terms, the Middle East as we know it now will be history within a few years. And what does it mean for Europe and its war in Ukraine? And what does it mean for other manufacturing nations like India, when oil prices are perpetually up by 5 to 7% after paying the Hormuz tax to Iran – remember, it doesn't apply to China.
So how do the US and its allies plan to prevent this from happening? Launch a ground attack on Iran in the Second World War fashion, as President Trump has trumpeted? Are they willing to risk great human losses? Are the Arab nations willing to risk destruction of oil and water infrastructure if a decisive ground invasion takes place? What option is most viable? A nuclear attack on Iran? And then what would be the likely response from Iran's allies – the so-called Eurasian axis, in Trump's own words, that includes Russia, China and North Korea? And Pakistan?
In American discussions, Pakistan is considered part of this very Eurasian axis, regardless of how Islamabad's elites like to imagine themselves in the US camp. If it were so, Pakistan would not have abstained from joining Saudi forces against the Houthis, or when Saudi Arabia was attacked from Iraq. There is an obvious hesitation, or rather a distancing, from being part of any such adventure on Pakistan's part – at least, there are no visible signs for us to think otherwise. However, other signs suggest a different story.
In June this year, Pakistan showed its formal intent to join the Russia-backed International North-South Transport Corridor (INSTC) with Moscow, linking the 7,200-kilometre trade network to Pakistan's Gwadar Port. It was welcomed by Russian Deputy Prime Minister Alexey Overchuk. In July, media reports from the Middle East pointed out that Iran and Pakistan are building a trade facility at their border for a cargo of 2,000 trucks daily. Following this, Iranian Minister for Industry, Mine and Trade Dr Mohammad Atabak attended the tenth meeting of the Pakistan-Iran Joint Trade Committee (JTC) in Islamabad on 5 August, where both sides reaffirmed their commitment to enhance bilateral trade to USD 10 billion and fast-track economic cooperation across multiple sectors.
Read these developments alongside a striking report of the Pakistan Army switching to China's WeChat, instead of WhatsApp. The ISPR has dismissed this claim, saying the Pakistan Army does not rely on any messaging app for its official communication. However, it is public knowledge that the Pakistan armed forces switched to the Chinese BeiDou navigation system instead of GPS some years ago – something Iran also did after the June 2025 war with the US/Israel. This indicates Islamabad's split engagements: reliance on Chinese military hardware and software, alongside building alliances across the wider Middle East and North Africa (MENA) region – Kuwait, Somalia, Libya – and a mutual defence agreement with Saudi Arabia, which now includes Turkey too, in the most recent Mecca Agreement, signed on 7 August 2026. In the next piece, I shall deliberate on this trilateral defence pact in the context of the Iran war and the ground invasion, which in my estimate might take place in autumn this year.