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As US-Iran deal inches closer, what has playing mediator cost Pakistan?
By Hasan Ali Contributor
@hali1189
June 12, 2026, 3:36 p.m. ET|Islamabad
Pakistan Prime Minister Shehbaz Sharif said Friday that the United States and Iran had reached “a final, agreed upon text” for a peace deal, and that his country is “working closely with both sides to finalize the next steps.”
Islamabad’s mediation efforts have won it respect in the geopolitical arena as the U.S.-Israel war with Iran has ground into its fourth month. Yet the costs of playing peacemaker are mounting. There are signs that Pakistan’s prominent role in one of the most contentious conflicts facing the world today has also strained its relationships with critical Persian Gulf allies.
That’s especially true with the United Arab Emirates, which Iran has repeatedly attacked for hosting U.S. air bases. As many as 15,000 Pakistanis – mostly Shia Muslims – have been deported from the UAE since the war began. Some suggest it’s in retaliation for Islamabad’s perceived neutrality.
Much has been made of the positive role Pakistan has played as a mediator between the United States and Iran. But on the ground, the story is much more complicated, with many saying Pakistan is paying too high a price.The deportations are cutting into much-needed remittances at a time when the economy is already struggling. Negotiations with the United States also threaten domestic stability in a country where anti-American and anti-Israel sentiment runs high. And shopkeepers and businesspeople in Pakistan’s capital are eager for the war to end without playing host to another round of peace talks.
During the last round of talks, in April, authorities instituted a strict security lockdown in the twin cities of Rawalpindi and Islamabad, which the Islamabad Chamber of Commerce and Industry estimates cost several million dollars.
“The government’s priority should be to think of its own people,” says Usman Zahir, who is still trying to recover from losses he incurred by keeping his Rawalpindi corner shop closed for four days in April. “Here, it’s the opposite. Your own people are getting minced, and you are busy trying to solve problems for the world outside.”
Pakistani Shias caught in the crosshairs
Jawad Ali has worked in the UAE for years, sending money back to his family in Rawalpindi. Then, while visiting Pakistan for a medical procedure in April, the businessman received a message from an administrator at his firm back in Dubai: His permit to remain in the UAE had been revoked.Now living with his six children in an apartment he cannot afford, and with no access to his UAE bank accounts plus a slew of medical debts, Mr. Ali has yet to receive any official explanation for the change. But he believes he was deported due to his Shia faith.
Shia Islam is the state religion of Iran, and Shia Muslims represent about 15% of the population of Pakistan. Many Pakistani Shias make regular pilgrimages to Iran and some look to Iranian clerics for spiritual guidance. As the Iran war broke out, many Gulf nations – including the UAE – cracked down on Shia communities in the name of national security, arresting people with alleged ties to Iran.
But officials have given no indication that this is driving the recent wave of deportations.
Last month, Pakistan’s interior ministry issued a statement denying that any targeted or religion-specific deportations were being carried out by the UAE – even as rights groups and religious leaders in Pakistan pointed to thousands of cases like Mr. Ali’s. The UAE’s Federal Authority for Identity, Citizenship, Customs & Port Security did not respond to requests for comment.
Ghulam Saqlain, a Pakistani citizen who has worked in the UAE since 1984, says his house there was raided by law enforcement shortly after the U.S.-Iran war began. In the week that followed, Mr. Saqlain says he was held in two separate jails before eventually being put on a plane to Karachi.
K.M. Chaudary/AP
Shia Muslims attend the annual Al-Quds Day rally in solidarity with Palestinian and Iranian people, in Lahore, Pakistan, March 13, 2026.
He claims that 90% of the people he met in jail were Shia Muslims, all of whom believed they had been profiled because of their visits to imambargahs, or Shia congregation halls. In recent years, imambargahs in the UAE have required worshippers to scan their IDs at the door.
“I kept asking [the authorities] to tell me what my crime was,” says Mr. Saqlain. “The only answer I got was that I had to leave.”
Pakistan-UAE tension
Many observers, including top Pakistani journalist Asma Shirazi, suspect that the UAE is punishing Pakistan for not taking a harder line against Iran.“The UAE didn’t want Pakistan to act as a mediator between Iran and the U.S.,” says Ms. Shirazi, who is Shia. “The harassment of Pakistani citizens and the deportation of people from the Shia community is evidence of the friction between Pakistan and the UAE.”
It’s not the only evidence. In April, the UAE demanded that Pakistan immediately pay back a $3.5 billion loan, threatening to wipe out one-fifth of Pakistan’s central bank reserves. Ultimately, it was Saudi Arabia who came to the rescue by lending $3 billion to Islamabad as well as rolling over an existing $5 billion loan for another year.
https://www.csmonitor.com/Business/...my-iran-peace-deal-oil?icid=mkt:cdp:promo-a-f
The expulsion of Pakistani workers represents yet another headache for policymakers. Pakistan’s cash-strapped economy is heavily reliant on remittances from the approximately 5 million Pakistani workers who ply their trades in the Gulf region. It is estimated that around 1.5 million Pakistanis work in the UAE alone and send back between $650 million to $700 million each month.
“Pakistan is extremely sensitive to fluctuations in remittances,” says Shuja Nawaz, a former distinguished fellow at the Atlantic Council. “It is the single largest source of foreign exchange for them.”
Is Pakistan getting a bad deal?
Pakistan’s diplomatic visibility as a result of being the main interlocutor between the U.S. and Iran appeared to give its government a boost of credibility on the global stage. It also helped deepen a newfound friendship with Washington.But as the war dragged on without a formal breakthrough, experts became increasingly convinced that Pakistan had overestimated its influence in solving this crisis.
Jacquelyn Martin/Reuters
Jared Kushner (left) and U.S. Special Envoy Steve Witkoff listen to Vice President JD Vance speak during a news conference in Islamabad after meeting with representatives from Pakistan and Iran, April 12, 2026.
This week, as Pakistani officials worked to get a second round of talks on the calendar – potentially in Switzerland – the Trump administration oscillated between promising more attacks on Iran and claiming that peace is imminent. Pakistan’s interior minister, Mohsin Naqvi, met with Iranian Foreign Minister Abbas Araghchi in Tehran amid fears that Islamabad’s mediation effort is losing momentum. On Friday, Mr. Araghchi wrote on social media that a deal “has never been closer.”
But there have been false starts before, and Mr. Nawaz says the war’s outcome ultimately depends on factors far beyond Islamabad’s control.
“One is the president of the United States and his whimsical decision-making,” he says, “and the other is the rise of the ... Iranian Revolutionary Guard. ... They are consolidating power, and they’re worried that if they show any weakness, they will tempt another popular uprising.”
In the end, many Pakistanis worry their country is getting a bad deal – especially after a social media post last month from President Donald Trump, in which he linked negotiations to end the war with several Muslim countries normalizing ties with Israel.
“After all the work done by the United States to try and pull this very complex puzzle together, it should be mandatory that all of these Countries ... sign onto the Abraham Accords,” Mr. Trump wrote, mentioning Saudi Arabia, Pakistan, and others by name.
Any such move would risk instability in the streets of Pakistan, where polls show the vast majority of people align their sympathies with the Palestinian cause. Pakistani Defense Minister Khawaja Muhammad Asif rejected the demand outright. “We have a very clear stance that this is not acceptable to us,” he said during a television interview.
Yet Mr. Ali’s worries are more immediate. After being deported from the UAE, he is consumed by how to pay back his creditors, or cover his children’s school fees.
“There’s a huge difference between being in Dubai and being in Pakistan,” he says. “I had no problems there, and I could see a positive future. Now, I have no way of surviving except my willpower.”
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