The month of May brought significant military and diplomatic gains for Pakistan this year, as well as the last. The euphoria of a military triumph over India last May was followed this year by the key diplomatic role that enabled a ceasefire in the US-Israel war on Iran, with Pakistan’s efforts still underway to help the two sides reach a consequential peace deal.
Previously somewhat peripheral to global affairs, Pakistan has assumed centre stage, as its efforts to bring peace to the Middle East receive universal acknowledgement, with governments, media, and policy analysts around the globe calling this newfound positioning Pakistan’s pathway to a world middle power status. Hence, in a rapidly evolving multipolar world, Pakistan might be an emerging middle power.
As traditional power structures face increasing strain, countries with relatively moderate foreign policies and smooth diplomatic outreach intuitively gain relevance in terms of conflict management and strategic mediation. For Pakistan, this evolving landscape has presented an opportunity to strengthen its role as a constructive middle power in an emerging multipolar order.
The Fiscal Conundrum and the Need for Reform
Despite the recent military and diplomatic successes, for Pakistan to reach and sustain a middle power positioning, it needs to reform the deficiencies and deformities of its various entrenched systems and institutions to score better on multiple domestic fronts, with economic and technological prowess being among the key ingredients shaping modern-era middle powers.
As a country teetering on the edge with multifarious economic and governance challenges amid rising poverty, Pakistan already faces threats to its barely achieved macroeconomic stability, aggravated by the US-Iran war-stimulated external shocks.
The latest IMF Staff Report on Pakistan under the Extended Fund Facility aptly highlights the size of Pakistan’s fiscal conundrum, while reiterating the need for administrative reforms. Acknowledging that the current disbursements from the multilateral agency will place more burden on the economy’s already “documented, taxed and inflation-hit segments,” the report lays bare the hidden-in-plain-sight weaknesses of our fiscal structure, a very narrow tax base that successive governments have repeatedly failed to broaden being one of them.
Moving towards the central mediator role that Pakistan has assumed will not lead to an automated elevation towards a middle power positioning without economic weight and good governance
Much of the projected increase in revenue collection documented in the IMF Country Report does not come from the expansion of the formal tax net but from higher petroleum levies, and “intensified enforcement and improved recoveries from sectors already in the documentation framework.”
In other words, those who are easiest to tax will be taxed more to meet the IMF benchmarks, instead of taxing those who have always been difficult to tax. As warned in so many analyses and economic commentaries in the media, this approach of over-taxing the already-taxed is inducing stabilisation fatigue in the economy. Sustainable fiscal reforms require politically and personally challenging measures that should be aimed at documenting sectors that are undertaxed or effectively untaxed, as our self-guided fiscal crisis is more about tax burden distribution.
Ambitious revenue targets set by the IMF will continue to have grave destabilising economic and social repercussions for the whole country unless policymakers are willing to start taxing the politically protected sectors. Despite repeated claims by successive governments to broaden the tax base, our fiscal consolidation remains dependent on squeezing more from the same pool of taxpayers.
Domestic Disparities and Economic Strain
All of this taxing injustice is regrettably imposed on a people with almost 40% of the population loitering in punitive poverty. Our literacy rates are among the lowest, with health and nutrition indicators no more encouraging either. Joblessness is on the rise, which might currently be a global trend but affects an already unemployed and underemployment-prone population like ours much more. The high unemployment statistics also reflect a stark discrepancy between the educational outcomes we propagate and the demands of various labour industries in the country.
As gender and regional disparities continue to thrive too, Pakistan has further spiralled down to a lower ranking on the Human Development Index and Gender Parity Index. There is increased reliance on imports, including large food imports, due to low farm productivity, hindered further by the effects of climate change, fertiliser supply-chain disruptions due to the Iran war, and other ensuing challenges.
A global middle power is defined as a mid-level sovereign state that is neither a superpower nor a small power, “lacking the global dominance to dictate international affairs on its own, but being able to exert significant, meaningful influence on the world stage through diplomacy, economic weight, coalition-building, and multilateralism.”
Moving towards the central mediator role that Pakistan has assumed will not lead to an automated elevation towards a middle power positioning. And even if it does, the status will be fleeting and fragile, since Pakistan as a middle power may never fully grow into the newly acquired stature without economic weight and good governance to back its metamorphosis.
Foreign Policy Success Versus Domestic Polarisation
Despite an increasingly polarised and orderless global milieu, Pakistan has done well on the international front through diplomatic flexibility that also seems to have become one of Pakistan’s most significant strategic tools. One may ask here, why is it not possible to display similar fraternity and flexibility, magnanimity, and grace on the domestic front, and why the polarised, performative, and pauperising environment at home cannot be dispelled to attain democratic milestones that will lead to economic and technological proliferation, hence, helping us reach and sustain a sturdy middle power status?
What is making Pakistan even more relevant internationally is its capacity for multi-alignment, where Islamabad has maintained relationships simultaneously with the US, China, Iran, and the Gulf states. Building trust with the US while sustaining ties with China, and entering a defence pact with Saudi Arabia while maintaining constructive engagement with Iran—all require maturity and manoeuvrability.
Such credible balancing acts, if managed at home, can curtail the highly polarised and toxic political environment that has vandalised Pakistan for years, inflicting democratic, social, and economic damages, besides hindering progress in so many other domains. What we manage as foreign policy initiatives must also be implemented as a national policy priority for Pakistan to be able to fully reflect the middle power status that we aspire to.
If we can communicate so efficiently across geopolitical divides to end other countries’ wars, why cannot we communicate across indigenous splits and divisions, especially the ones isolating our provinces and identities, for the betterment of our own country?
And as we do so well in terms of foreign policy goals, our continuous dependence on foreign lending, deposits, and debt roll-overs has also been instrumental in delaying structural reforms that could make us more self-sufficient, boost growth and domestic savings, while decreasing our susceptibility to internal and external shocks.
Phasing out our reliance on short-term financial inflows from ‘friendly nations’ or on geopolitical rents has never been more urgent than now, as an unpredictable global security environment and lurking geopolitical uncertainty make countries more self-serving, with many, including the USA, withdrawing aid and support initiatives from agencies and states. The UAE asking us to return the $3.45 billion Pakistan owed it in April 2026 is a case in point.
If middle powers are known to play a crucial role in the international system by promoting multilateralism, cooperation, and the peaceful resolution of conflicts while leveraging their diplomatic skills to also contribute to global stability, the middle powers must first begin by reflecting the same peace and prosperity at home.