Britain at a Crossroads

Political Instability: A Crisis of Leadership, Not Identity

The news headline that the United Kingdom is heading towards its seventh Prime Minister in a decade is a powerful reminder of the political uncertainty confronting a country that once dominated global affairs. A nation where “the sun never set on the British Empire” built its reputation on strong institutions, a respected monarchy, parliamentary traditions, and a democratic system admired across the world.

Yet, today’s Britain presents a different picture. Frequent changes in leadership, internal party conflicts, economic pressures, and declining public confidence suggest a deeper problem than a simple change of government. The real question is whether Britain is experiencing a temporary political crisis or a structural decline in leadership quality.

Some critics link Britain’s challenges to demographic transformation, arguing that the country has become increasingly shaped by immigrants and leaders from diverse backgrounds. The rise of figures such as former Prime Minister Rishi Sunak and London Mayor Sadiq Khan is often highlighted in this debate. However, attributing national difficulties to the origin of political leaders ignores the more fundamental issues facing the country.

Modern democracies evolve. Diversity in leadership is not necessarily a weakness; the real test is competence, vision, and the ability to deliver results. The challenge confronting Britain is not who leads, but how effectively leaders respond to economic pressures, social divisions, declining industrial competitiveness, and changing global realities.

The responsibility also lies with political parties. The Conservative Party and Labour Party have struggled to offer consistent long-term strategies. Leadership changes increasingly appear driven by internal political calculations rather than a coherent national agenda. Voters are left questioning whether politicians are solving problems or merely managing crises.

Public apathy is another factor. Democratic systems depend not only on institutions but also on an engaged citizenry that demands accountability and rewards performance. When trust declines and political participation weakens, even strong systems face pressure.

Britain’s institutions remain resilient. The monarchy, parliament, and legal framework continue to provide stability. But institutions alone cannot compensate for weak leadership.

The challenge before Britain is not the loss of its past glory; it is the ability to adapt to a rapidly changing world. Nations do not decline because societies change — they decline when leadership fails to recognize change and respond effectively.

The future of Britain will depend less on who occupies Downing Street and more on whether its leaders can restore confidence, rebuild economic strength, and present a credible national vision.

If Strait of Hormuz Reopens: Gainers and Loses

The reopening of the Strait of Hormuz marks more than the restoration of a critical energy route. It represents a strategic moment where the assumptions, calculations, and objectives of major stakeholders must be reassessed. In modern geopolitics, victory is not always measured by battlefield outcomes; sometimes it is determined by who achieves their strategic objectives after the crisis ends.

For Israel, the outcome may raise difficult questions. A key objective behind applying pressure on Iran was to weaken its regional influence and constrain its ability to support allied groups. However, the restoration of energy flows and economic activity reduces the effectiveness of any strategy based primarily on economic isolation. A pressured Iran may have suffered setbacks, but it retains the ability to rebuild influence through diplomacy, regional partnerships, and economic recovery.

Similarly, Iran’s regional allies, including Hezbollah, may find an opportunity to reassess and recover from recent challenges. A reduction in confrontation gives Tehran greater space to redirect resources and rebuild political and strategic networks. However, recovery will depend not only on external support but also on internal dynamics and changing regional realities.

The economic impact extends beyond the Middle East. A decline in oil prices following the reopening of the Strait could hurt profitability for some high-cost oil producers, including segments of the US energy industry that benefited from elevated prices. At the same time, cheaper energy provides relief to consumers and industries worldwide, demonstrating that geopolitical events create winners and losers simultaneously.

The broader challenge, however, concerns the perception of American strategic dominance. For decades, the United States has maintained significant influence in the Gulf through security partnerships, military presence, and arms relationships. If Iran emerges from the crisis with its core capabilities intact, questions will be raised about the effectiveness of pressure-based strategies.

Regional countries may increasingly seek a more balanced foreign policy, avoiding excessive dependence on any single power. This could accelerate a trend toward strategic autonomy and diversified alliances.

The reopening of the Strait of Hormuz should therefore not be viewed simply as a victory or defeat for any one country. It highlights a deeper reality: in a multipolar world, even the strongest powers face limits. The future of the Middle East will depend less on coercion and more on the ability of nations to negotiate, adapt, and coexist.

PSX benchmark index up 4%WoW

Pakistan Stock Exchange (PSX) witnessed positive momentum during the week ended on June 18, 2026, driven by a promising US-Iran deal causing oil prices to fall below US$80/ bbl, a 3-month low, alongside a favorable budget for most sectors including Cement, Steel, Refineries, Textile, Pharma and Tech, coupled with reduction/ elimination of super tax for individuals and corporates. The sentiments were further supported by a status quo by the central bank in its Monetary Policy Committee (MPC) meeting on Tuesday. However, the postponement of commencement of technical talks between US and Iran during Friday’s early hours slightly tempered the momentum on the final day, despite an overall positive week. The benchmark Index gained 6,523 points or 4%WoW, to close the week at 178,923 points. Market participation improved considerably, with average daily trading volume increasing by 53%WoW to 1.4 billion shares, as against 900 million shares in the prior week.

On the macroeconomic front, Current Account showed a surplus of US$459 million in May 2026, as against a deficit of US$44 million in same period last year.

IT exports rose 13%YoY to US$373 million during the same month.

Yields in the first PIB auction following the recent MPC declined by to 12.14%, 12.09%, 12.19%, and 12.61% for 2, 3, 5 and 10 year tenors, respectively.

LSM index rose 6.4%YoY in 10MFY26.

Urea offtakes remained flat YoY at 419,000 tons in May 2026 and DAP sales fell 36%YoY due to higher prices.

Other major news flow during the week included: 1) oil and gas shipments through Strait of Hurmuz commenced after signing of MOU between United States and Iran, 2) foreign exchange reserves held by SBP rose to US$17.2 billion as of June 12, 2026, 3) Power generation declined 1% in May, 4) Power sector circular debt rose to PKR1.9 trillion in 10MFY26, and 5) Textile exports rose 2%YoY to US$16.7 billion in 11MFY26.

Top performing sectors were: Vanaspati & Allied Industries, Transport, and Jute, while laggards included: Property, Woolen, and Sugar & Allied Industries

Major buying was recorded by Mutual Funds of US$63.4 million. Major selling was recorded by Insurance amounting to US$59.7 million.

Top performing scrips were: SSOM, PSX, SNGP, SSGC, and FATIMA, while laggards included: JVDC, HCAR, TRG, BNWM, and ATLH.

According to AKD Securities, compliance of peace deal along with positive outcomes of technical talks between US and Iran, followed by favorable financial results for the period ended June 30, 2026, will support market sentiment in the near term.

Market continues to trade at attractive valuations.

The brokerage forecast the benchmark Index to reach 263,800 by end December 2026.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Strategic Triumph or Political Narrative

Iran’s decision to declare victory after signing a memorandum of understanding (MOU) with the Trump administration has triggered a new debate, is Tehran celebrating a genuine strategic achievement, or is it shaping a political narrative for domestic and regional audiences?

From Iran’s perspective, there are clear reasons for confidence. The agreement ends a damaging confrontation, reopens the Strait of Hormuz, removes immediate military pressure and creates the possibility of relief from restrictions on its oil and banking sectors. Most importantly, Tehran has avoided the outcome many feared, a forced political collapse or a decisive military defeat. In international politics, preserving national sovereignty under extreme pressure is often considered an achievement.

Iran can also argue that Washington’s decision to negotiate represents recognition that maximum pressure and military action alone could not achieve all American objectives. A return to diplomacy suggests that both sides eventually accepted the limits of coercion.

However, the declaration of victory may be premature. The MOU is not a final settlement but the beginning of a difficult negotiating process, particularly regarding Iran’s nuclear program and broader regional issues. The durability of Iran’s gains will depend on implementation, economic recovery and whether future disagreements lead to renewed confrontation.

The reaction inside Iran also reflects a more complex picture. Supporters of the government view the agreement as evidence of resistance and national strength. Hard-line groups, however, argue that Iran had greater leverage and should have demanded more concessions. Meanwhile, ordinary citizens appear focused less on political symbolism and more on whether the agreement improves daily economic conditions and reduces uncertainty.

The United States also faces a complicated outcome. Washington retains influence through diplomacy, sanctions mechanisms and future negotiations, but it cannot claim a complete victory when military pressure ultimately led back to the negotiating table.

The reality is that neither side achieved all of its objectives. Iran gained survival, diplomatic space and potential economic relief, while the United States achieved a pause in escalation and a framework for further negotiations.

The MOU should therefore not be viewed simply as an Iranian victory or an American defeat. It represents a temporary balance of power where both sides accepted that confrontation had limits.

History will judge this agreement not by the celebrations that followed its signing, but by whether it produces lasting stability, economic improvement and a sustainable solution to one of the world’s most dangerous geopolitical disputes.

Trans-Afghan Railway: Turning Geography into Opportunity

For decades, discussions about Afghanistan have been dominated by conflict, instability, and missed opportunities. The proposed Trans-Afghan Railway offers a rare chance to change that narrative. More importantly, it presents an opportunity for Pakistan, Afghanistan, and Central Asia to convert geography into economic advantage.

The project aims to connect Uzbekistan with Pakistan through Afghanistan, providing Central Asian states access to the Arabian Sea via Pakistan's ports. If completed, the railway could significantly reduce transportation costs and transit times for regional trade. For landlocked Central Asian economies, access to Karachi, Port Qasim, and potentially Gwadar would diversify trade routes and reduce dependence on traditional corridors.

The economic logic behind the project is compelling. Central Asia possesses abundant natural resources and growing industrial capacity, while South Asia offers one of the world's largest consumer markets. Yet trade between the two regions remains far below its potential, largely because of inadequate transport infrastructure. The Trans-Afghan Railway could become the missing link that bridges this gap.

For Pakistan, the benefits extend beyond transit fees. Increased cargo movement would stimulate activity at ports, support logistics and warehousing industries, and strengthen the country's ambition to become a regional trade hub. At a time when Pakistan is seeking sustainable sources of economic growth, regional connectivity projects deserve greater attention.

However, enthusiasm must be tempered with realism. Financing remains a major hurdle. Construction costs are estimated in billions of dollars and could rise further due to Afghanistan's difficult terrain. Securing funding from international lenders and private investors will require strong assurances regarding security, governance, and commercial viability.

Security is perhaps the most critical challenge. Infrastructure can only succeed when investors and traders have confidence that it can operate without disruption. Political stability and constructive cooperation among the participating countries will therefore be just as important as engineering expertise.

The Trans-Afghan Railway is not merely a transportation project; it is a test of regional vision. Success would demonstrate that economic cooperation can overcome historical divisions and create shared prosperity. Failure, on the other hand, would reinforce the perception that South and Central Asia remain unable to capitalize on their strategic location.

The railway's promise is undeniable. The real challenge lies in transforming a bold vision into a functioning corridor of trade, investment, and regional integration.

Iran-US sign MOU: Pause in Conflict, Not End

With the signing of the memorandum of understanding (MOU), attention is shifting from military confrontation to political interpretation. As details emerge, supporters and critics in all three capitals—Washington, Tel Aviv, and Tehran—are attempting to define the agreement on their own terms. Such reactions are hardly surprising. In geopolitical disputes, agreements are often judged less by what they contain than by how they are perceived.

For the United States, the immediate achievement is the avoidance of a wider regional conflict. Washington can argue that a combination of military pressure and diplomacy brought Iran to the negotiating table without requiring a prolonged war. The agreement also helps contain risks to global energy supplies and international markets. However, the US administration may still face difficult questions. If Iran retains substantial strategic capabilities, critics may argue that the objectives initially articulated by Washington have only been partially achieved.

Israel can claim that its security concerns have been elevated to the center of international diplomacy. Any restrictions on Iran's military or nuclear-related activities would be viewed as a tangible gain. Yet Israeli policymakers are likely to remain cautious. Their primary concern has never been the signing of an agreement but the effectiveness of its enforcement. For Israel, verification may prove more important than the commitments themselves.

Iran, meanwhile, appears to have secured what it has long sought: relief from mounting economic and military pressure while preserving national sovereignty. Reduced sanctions pressure and improved economic prospects could provide much-needed support to the Iranian economy. At the same time, Tehran must convince domestic audiences that any commitments undertaken do not compromise its strategic independence or regional standing.

The agreement therefore creates opportunities as well as dilemmas for all three stakeholders. The United States seeks stability without appearing weak. Israel seeks security without relying solely on diplomacy. Iran seeks economic relief without sacrificing strategic autonomy.

Ultimately, the significance of the MOU will not be determined by its wording but by its durability. If implemented in good faith, it could reduce tensions in one of the world's most volatile regions. If mistrust and competing interpretations prevail, the agreement may be remembered not as a settlement, but as a temporary pause between successive crises.

Ceasefire Ambition and Strategic Ambiguity

The reported 14-point memorandum of understanding on ending the Iran conflict, as cited by The Hill and attributed to Bloomberg and CNN sources, presents a sweeping and highly consequential framework. Yet, rather than signalling a settled peace architecture, it raises fundamental questions about legitimacy, sequencing, and strategic intent.

According to the reported text, the United States and Israel initiated military action while negotiations were still ongoing, without prior consultation of the United Nations Security Council or clear congressional authorization. This sequencing alone casts doubt on the institutional grounding of the process, especially when such a far-reaching agreement is now expected to carry binding implications.

The proposed structure appears heavily front-loaded with political assurances but back-loaded with enforceable obligations. A key example is the creation of a US$300 billion reconstruction fund for Iran, reportedly to be financed by the United States “together with its regional partners.” This raises a critical equity question: why should regional actors shoulder reconstruction costs while the responsibility for conflict escalation remains contested?

Equally contentious is the ambiguity surrounding sanctions. While the draft suggests a commitment to lifting “all types of sanctions,” it simultaneously defers implementation to a final agreement, leaving Iran’s economic reintegration uncertain and conditional. The immediate easing of oil export restrictions and unfreezing of Iranian assets further complicates the sequencing, effectively front-loading economic relief before verifiable political concessions.

On the nuclear dimension, the agreement reportedly reiterates Iran’s commitment not to develop nuclear weapons, while maintaining the “status quo” of its enrichment program. However, without explicit, time-bound constraints or robust verification mechanisms involving neutral actors, such as additional oversight by the United Nations Security Council, the arrangement risks replicating past cycles of mistrust.

President Trump’s assertion that the memorandum is “not final” and his warning of renewed bombing if Iran does not “behave” further underscore the fragility of the arrangement. Diplomacy framed by conditional coercion may secure short-term de-escalation, but it leaves long-term stability unresolved.

Ultimately, the reported MOU reflects less a conclusive peace settlement and more an evolving geopolitical bargaining framework—one that demands closer scrutiny of sequencing, burden-sharing, and institutional legitimacy before it can credibly translate into lasting regional stability.

Safe Departure of Stranded Crew

Both the International Chamber of Shipping (ICS) and the International Maritime Organization (IMO) welcomed news of the US-Iran peace deal and the expected re-opening of the Strait of Hormuz.

The closure of the key waterway to all but a trickle of traffic since February 28, has left around 1,000 ships and 20,000 crew stranded in the Arabian Gulf.

“This announcement comes as a relief to the 20,000 seafarers who have been caught in the middle of this war. Their safe departure from the region must be a top priority but will take time,” said ICS Secretary General Thomas Kazakos.

The ICS is looking to the IMO to help facilitate this process. “With around 500 ships needing to pass through the Strait to exit the area this will require coordination.  The International Maritime Organization has a crucial role, working alongside industry and states in the region, to ensure this is done as safely and as quickly as possible,” Kazakos said.

In a separate statement IMO Secretary-General Arsenio Dominguez, said, “The agreement also allows IMO to advance its plan to evacuate the thousands of seafarers stranded in the area. The Organization is working in close collaboration with Member States and partners to implement this plan safely and effectively. However, its implementation will require time to ensure that all necessary safety and security guarantees are in place.”

Details of the re-opening of the Strait and when it will happen remain unclear although it is expected after the signing of the peace deal between US and Iran on 19 June.

Both ICS and IMO stressed the need for a return to freedom of navigation in the Strait of Hormuz and paid tribute to innocent seafarers who lost their lives in the conflict.

“This signals a crucial return to peace, dialogue, multilateralism and diplomacy, and in particular, an important step toward restoring safety in this vital maritime corridor for seafarers and ships, as well as safeguarding the fundamental principle of freedom of navigation,” IMO said.

Kazakos from ICS stated, “The fundamental principle of freedom of navigation has been sidelined during the war, and many seafarers have regrettably been injured or lost their lives. As we now hopefully move towards peace, we must see a permanent return to vessels being able to pass through the Strait of Hormuz unimpeded without paying a toll or other clearance mechanism.” 

IMO Secretary-General Dominguez has repeatedly highlighted the plight of seafarers caught in the conflict and the unacceptable targeting of commercial shipping. The IMO said the Secretary-General expressed his deepest sympathies for all victims of the conflict, and paid particular tribute to the innocent seafarers affected and to their families. 

Courtesy: Seatrade Maritime News

 

Growing Credibility Gap in US Foreign Policy

The conflicting statements emerging from Washington regarding a possible agreement with Iran have generated more confusion than confidence. President Donald Trump appears to alter his position with remarkable frequency, while sections of the Western media continue to interpret every statement as evidence of an imminent breakthrough. Yet the fundamental reality remains unchanged - any sustainable agreement with Iran cannot be imposed solely on American terms.

For decades, the United States has relied on a combination of sanctions, diplomatic pressure, and military leverage to influence Iranian behavior. However, recent developments suggest that these tools have yielded diminishing returns. Despite facing severe economic restrictions and international isolation efforts, Iran has demonstrated resilience and retained its ability to influence regional dynamics. Whether the West acknowledges it or not, Tehran today remains a significant geopolitical actor whose interests cannot simply be ignored.

This reality has exposed a growing credibility gap in US foreign policy. Repeated shifts in messaging have made it increasingly difficult for allies and adversaries alike to distinguish between strategic objectives and political rhetoric. When policy signals change rapidly, uncertainty becomes the dominant feature of international relations.

The consequences extend beyond the Iran question. Energy markets remain vulnerable to geopolitical tensions, yet major oil-exporting countries appear unable to persuade Washington to adopt policies that would facilitate smoother and more predictable crude oil flows. The result has been prolonged uncertainty for both producers and consumers.

At the same time, Washington's broader strategic objectives appear increasingly difficult to reconcile. The United States has sought to contain Iran, restrict China's access to reliable energy supplies, reassure its allies, and maintain pressure on geopolitical competitors—all while preserving stability in global markets. Such ambitions may be understandable, but pursuing multiple objectives simultaneously often produces unintended consequences.

Questions are also being raised about the effectiveness of traditional Western alliances. America's partners continue to depend on Washington's leadership, yet many are increasingly concerned about policy unpredictability and the absence of a coherent long-term strategy. This uncertainty has encouraged countries across Asia, the Middle East, and elsewhere to diversify their diplomatic and economic partnerships.

Perhaps the most striking outcome is visible in global energy markets. Despite recurring geopolitical crises and heightened tensions, crude oil prices have struggled to sustain significant gains. This suggests that markets are increasingly influenced by structural economic factors rather than political narratives alone.

The lesson is straightforward. Credibility remains one of the most valuable assets in international diplomacy. Military strength and economic power matter, but they are most effective when supported by consistency and strategic clarity. As long as Washington continues to send mixed signals on critical issues such as Iran, the credibility gap in US foreign policy is likely to widen, with consequences extending far beyond the Middle East.

TAPI: A Test of Regional Economic Cooperation

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is one of the most significant energy connectivity projects linking Central and South Asia. The project aims to transport natural gas from Turkmenistan's giant Galkynysh gas field to Afghanistan, Pakistan, and India, helping meet growing energy demand while promoting regional economic integration.

The proposed pipeline, stretching about 1,800 kilometers, is designed to carry around 33 billion cubic meters of natural gas annually. Besides supplying energy, the project is expected to generate transit revenues, create employment opportunities, and strengthen economic ties among participating countries.

Since its inception, TAPI has faced numerous challenges, including security concerns, financing constraints, and political tensions among regional stakeholders. These obstacles have repeatedly delayed the project's implementation and raised questions about its long-term viability.

Recent statements from Afghan officials, however, suggest that progress continues despite political strains between Afghanistan and Pakistan. Islamic Emirate spokesman Zabihullah Mujahid has stated that work on TAPI inside Afghanistan is proceeding normally and that regional economic projects have not been adversely affected by recent bilateral tensions. Afghan authorities maintain that TAPI, along with other regional initiatives such as CASA-1000 and the Trans-Afghan Railway, remains a priority for economic development.

Private-sector representatives in Afghanistan argue that accelerating these projects could strengthen regional trust and generate thousands of direct and indirect jobs. Economic analysts also believe that successful implementation could improve investor confidence and encourage greater regional cooperation.

For Pakistan, TAPI offers the prospect of diversifying energy supplies and reducing dependence on costly imported fuels. Afghanistan stands to benefit from transit fees and infrastructure development, while Turkmenistan would gain access to new export markets. India, if fully engaged, could secure an additional source of energy for its growing economy.

Despite renewed optimism, the ultimate success of TAPI will depend on sustained political commitment, effective security arrangements, and timely financing. The project remains a powerful symbol of the opportunities and challenges facing regional economic cooperation in Eurasia.

 

Eurasia: World's Largest Strategic Zone

Eurasia is the combined landmass of Europe and Asia, covering nearly 55 million square kilometers and accounting for about 70% of the world's population. It stretches from the Atlantic Ocean in the west to the Pacific Ocean in the east and includes some of the world's largest economies, energy producers, and transportation corridors.

The Eurasian region comprises major countries such as China, Russia, India, Pakistan, Kazakhstan, Türkiye, Germany, France, and several Central Asian republics. Due to its geographical position, Eurasia serves as a bridge connecting Europe, Asia, and the Middle East, making it one of the most strategically important regions in the world.

Historically, Eurasia has been the center of trade, cultural exchange, and geopolitical competition. Ancient trade routes, including the Silk Road, connected East Asia with Europe through Central Asia. These routes facilitated the movement of goods, technology, ideas, and civilizations for centuries.

Today, Eurasia remains a critical hub for global commerce and energy security. The region possesses vast reserves of oil, natural gas, coal, rare earth minerals, and agricultural resources. Russia and Central Asian countries are among the world's leading energy exporters, while China and India are among the largest energy consumers.

The importance of Eurasia has increased with the development of large-scale connectivity projects. China's Belt and Road Initiative (BRI), the International North-South Transport Corridor (INSTC), and various regional railway and pipeline networks aim to improve trade links across the continent. These projects seek to reduce transportation costs, enhance regional integration, and strengthen economic cooperation.

Eurasia is also a focal point of geopolitical competition. Major powers, including China, Russia, the United States, the European Union, India, and Türkiye, seek to expand their economic and strategic influence across the region. Issues such as energy security, trade routes, technological development, and regional stability shape much of the political discourse surrounding Eurasia.

For countries located along Eurasian corridors, including Pakistan, the region offers significant opportunities. Improved connectivity, investment flows, industrial cooperation, and access to larger markets could support economic growth and regional integration.

As global economic activity increasingly shifts toward Asia, the significance of Eurasia is expected to grow further. The region's vast resources, strategic location, and expanding infrastructure networks are likely to make it a key driver of global trade, energy flows, and geopolitical developments in the coming decades.

 

Indian Hegemony Being Questioned

In recent years, the notion of India as an uncontested regional hegemon in South Asia has increasingly come under scrutiny. While New Delhi continues to project itself as a rising global power and the “largest democracy,” regional realities are telling a more complex and less linear story.

At the core of India’s strategic narrative lies the assumption of economic scale, military modernization, and diplomatic outreach translating into unquestioned regional leadership. However, this assumption is being challenged on multiple fronts — from persistent border tensions with neighbours to shifting alignments within South and West Asia.

Countries in the region are no longer willing to align automatically with Indian preferences. Smaller South Asian states are increasingly pursuing multi-vector foreign policies, balancing ties with China, Gulf states, and Western powers rather than remaining within India’s traditional sphere of influence. This reflects a gradual erosion of the old hierarchical regional order.

Militarily, while India continues to invest heavily in defence capabilities, strategic outcomes have not always aligned with expectations of dominance. Prolonged standoffs along contested borders and the inability to decisively translate military superiority into political leverage have exposed structural limits in its regional posture.

Economically, India’s growth story remains impressive, but it has not yet fully translated into regional economic integration on its own terms. Instead, competing connectivity initiatives — particularly those linked to China’s Belt and Road framework — continue to dilute India’s economic centrality in the neighbourhood.

Diplomatically, India’s ambition to lead the Global South and shape multipolar discourse is also facing nuanced responses. Many countries engage with India, but few are willing to defer to it.

This does not signal a decline of India as a major power. Rather, it reflects a transition from assumed hegemony to contested influence. The regional order is becoming increasingly multipolar, fluid, and transactional.

In this evolving landscape, influence will depend less on historical narratives and more on adaptability, restraint, and genuine regional accommodation. The question, therefore, is not whether India is rising — but whether its regional dominance is being fundamentally redefined.

Iran War Unlikely to End on US Terms

The longer the conflict with Iran drags on, the more difficult it becomes to accept Washington's claim that it genuinely seeks peace. Months after the ceasefire announcement, the region continues to witness periodic escalation, suggesting that the United States and Israel are still pursuing objectives that remain unfulfilled.

If the war were truly about eliminating an immediate threat, it should have ended by now. Instead, the persistence of tensions indicates that broader geopolitical ambitions remain at play.

First, despite years of sanctions, diplomatic isolation, and military pressure, Iran's status as a regional power remains largely intact. Far from being marginalized, Tehran continues to exert influence across the Middle East. This outcome falls well short of what United States and Israel had hoped to achieve.

Second, the US has failed in securing a major diplomatic breakthrough by bringing Saudi Arabia fully into the Abraham Accords framework. The ongoing conflict has made such an objective increasingly difficult, exposing the limitations of American diplomacy in the region.

Third, expectations of regime change in Tehran have once again proven unrealistic. Iranian institutions remain functional, and the leadership has survived a campaign designed to weaken its authority and legitimacy.

Fourth, despite repeated military operations, neither Iran's nuclear capabilities nor its missile program appears to have been decisively neutralized. The enormous costs incurred have not delivered the strategic victory that was promised.

Meanwhile, Israel has also struggled to achieve one of its key security objectives: the complete elimination of Hezbollah's military and political influence in Lebanon. The group's continued presence remains a source of concern for Israeli policymakers.

These shortcomings help explain why pressure persists against any settlement that does not fully satisfy American and Israeli demands. Iran is expected to make concessions, yet there is little willingness to discuss lifting decades-old sanctions or compensating Tehran for infrastructure damaged during the conflict.

The reality is becoming increasingly difficult to ignore. The war continues because its principal architects have not achieved their desired outcomes. Until Washington and Tel Aviv recognize the limits of military coercion and accept a genuinely negotiated settlement, the ceasefire will remain little more than a pause in a conflict that neither side has truly left behind.

Key Takeaways from Pakistan Economic Survey

Ministry of Finance has released Economic Survey of Pakistan for FY26 and based on that and in line with numbers reported by National Accounts Committee (NAC), Pakistan has provisionally recorded real GDP growth of 3.7% during nine months of FY26 as against 3.18% during the same period of FY25.

The GDP growth of 3.7% for FY26 is 4-year high and is also higher than last 5, 10 and 20-year average growth of 3.09%, 3.41% and 3.44%, respectively. While the initial target set by the government was 4.2%.

IMF and World Bank estimates FY26 GDP growth of Pakistan at 3.6% and 3.0%, respectively. Topline Securities maintains its GDP estimates for FY26 in range of 3.5 to 4.0%.

Services sector growth has posted provisional growth of 4.09% in FY26 as compared to 3.14% in FY25, making it the largest contributor to overall economic growth. Within services, Public Administration & Social Security and Information and Communication saw strong momentum with a growth of 8.54% and 7.52% respectively, while Financial and Insurance Activities posted a modest increase of 0.32%.

Industrial sector has posted provisional growth of 3.51% in FY26. Within this, manufacturing, construction and Mining and Quarrying drove the recovery to growth by 6.61%, 5.73%, and 0.38% respectively. Further small, large-scale manufacturing and Slaughtering see a huge growth of 8.50%, 6.11% and 6.19% respectively. These gains are partly offset by a sharp decline of 10.63% in Electricity, Gas and Water Supply.

Agri sector is expected to record a growth of 2.89% recovering from second lowest FY25 growth of 1.53% growth in 9 years, which is second lowest growth in last 9 years. Important Crops and Cotton rebounded from last year's steep contractions of 13.49% and 19.03%, respectively, to contribution of 0.65% and 0.07% to overall agricultural growth. Meanwhile, Livestock, Forestry, and Fishing are estimated to grow by 3.75%, 2.02%, and 1.66%, respectively, providing stability to the sector.

The Whole World Is Losing, Except the US

My point is clear, the United States must acknowledge defeat, ensure the full reopening of the Strait of Hormuz, lift economic sanctions on Iran, and compensate for the losses incurred during this war. Enough time has passed, and there is no justification for portraying defeat as victory.

The ongoing negotiations between the United States and Iran are increasingly becoming a rhetorical exercise rather than a strategic achievement. The ambitious campaign launched in coordination with Israel to curb Iran’s regional influence and nuclear development has failed to accomplish its stated objectives.

It would not be incorrect to say that Iran’s regional significance has increased, its negotiating posture has become more assertive, and its capacity to withstand economic pressure has proven far stronger than anticipated. After weeks of diplomacy, fundamental differences remain unresolved due to US intransigence, leaving the talks far from any meaningful breakthrough.

The situation in and around the Strait of Hormuz underscores US miscalculations and Iran’s leverage, while exposing the vulnerability of oil-exporting countries that rely heavily on American security guarantees. The US blockade of the Strait has reduced the daily movement of approximately 140 vessels to only a handful of oil and LNG carriers.

The consequences have been staggering. Oil-exporting Arab states are facing uncertain revenues, while energy-importing economies are grappling with inflationary pressures and severe supply disruptions.

Despite these grim realities, Washington’s rhetoric continues to speak of progress and opportunity. Such claims stand in stark contrast to the facts and appear to be an attempt to reframe strategic underperformance as diplomatic success. This only reinforces the perception of a policy being pursued without clear goals, direction, or achievable objectives.

The central point is now unmistakable - the longer the truth is denied, the greater the price the rest of the world will be forced to pay.

 

Lebanon: Israel’s Last Strategic Frontier?

Lebanon continues to occupy a central place in Israel’s strategic calculus, not merely as a neighboring state but as the remaining unresolved frontier in its northern security doctrine. From this perspective, Israel’s sustained pressure on Lebanon is shaped by a mix of historical experience, security anxieties, and regional power competition.

At the core lies the belief in parts of Israeli strategic thinking that Lebanon represents the last major obstacle to achieving uncontested dominance along its northern arc. Unlike other Arab theatres where state structures have either been weakened or neutralized through normalization or conflict, Lebanon remains structurally resistant.

Secondly, Israel views Hezbollah as the most capable and disciplined non-state military actor on its borders. With its missile arsenal and battlefield experience, Hezbollah is seen not just as a border threat but as a strategic deterrent that constrains Israeli freedom of action.

Thirdly, the northern border security buffer remains a persistent concern. Israel’s strategic doctrine has long emphasized preventing hostile entrenchment along its immediate frontier, and southern Lebanon is viewed as an area where such entrenchment has already occurred.

Fourthly, the eastern Mediterranean energy equation adds another layer. Maritime boundaries, offshore gas fields, and economic corridors have turned Lebanon from a peripheral concern into a contested strategic space where economic and security interests increasingly overlap.

Finally, Lebanon is viewed through the wider prism of Iran’s regional influence. Israel’s strategic planners often interpret Hezbollah’s presence as part of a broader deterrence network linked to Tehran, making Lebanon not just a bilateral issue but a node in a wider regional rivalry.

Taken together, these factors explain why Lebanon remains a focal point in Israeli strategic thinking — not necessarily as a target for territorial expansion, but as an unresolved security frontier that continues to shape regional dynamics.

War, Fear and Israeli Ballot

As Israelis prepare to vote while military operations continue against Iran and tensions remain high on multiple fronts, the election is being viewed through a simple question: will voters reward or punish Prime Minister Benjamin Netanyahu for choosing confrontation over restraint? Several outcomes are conceivable.

One possibility is that Netanyahu's coalition suffers setbacks because many Israelis have grown weary of living under a constant state of emergency. Years of conflict have imposed economic, social and psychological costs. Critics argue that military victories, however significant, have not produced lasting peace. Voters seeking stability may therefore conclude that a different political course is needed.

A second scenario is that Netanyahu emerges stronger. His supporters will contend that Israel has seized a historic opportunity to weaken what it regards as its most formidable adversary. If military operations are widely perceived as successful, many voters may see little reason to replace the leadership that authorized them. In times of conflict, electorates often prioritize continuity over change.

A third possibility is that Netanyahu benefits from his image as the guardian of Israeli security. Elections held during periods of heightened tensions are rarely fought on economic performance alone. Security concerns tend to dominate public discourse, and leaders who project determination frequently gain political advantage. For many voters, the question may not be whether they approve of every government decision, but whether they trust any alternative leadership to manage the threats facing the country.

A fourth scenario is that the electorate embraces candidates advocating de-escalation and diplomacy. Such an outcome would signal a growing belief that military power, while necessary for defense, cannot by itself resolve Israel's long-term security challenges.

Yet the balance of probabilities appears to favor Netanyahu. The election is taking place in an environment where security concerns overshadow almost every other issue. Moreover, significant political, security and ideological constituencies remain committed to a strategy of confronting and weakening Israel's adversaries before pursuing broader regional accommodation.

The decisive factor may not be Netanyahu himself. Rather, it is whether Israeli society continues to believe that greater security can be achieved through military dominance. If that belief remains intact, Netanyahu's path to victory becomes considerably easier. The election, therefore, may be less a verdict on one leader than a reflection of a broader national mood shaped by fear, conflict and the enduring quest for security.

Invisible Hand Behind Iran War

The latest round of hostilities involving Iran, Israel, and the United States raises a question that mainstream discourse appears reluctant to confront: if elected leaders are truly in control, why do military actions so often proceed in defiance of political declarations?

President Donald Trump publicly urged restraint and claimed that he "calls all the shots." Yet Israeli strikes followed almost immediately. The episode exposed a contradiction that has become increasingly common in international politics. Governments speak the language of diplomacy while military escalation continues unabated.

Perhaps the real issue is not whether Washington controls Tel Aviv or vice versa. The more important question is whether both are operating within a framework dictated by interests far larger than individual politicians.

For decades, every major crisis in the Middle East has produced the same winners. Defense industries secure larger contracts. Security establishments gain expanded powers. Energy markets remain vulnerable to disruption. Strategic planners find justification for maintaining military footprints across the region. Meanwhile, ordinary citizens pay the price through economic hardship, displacement, and insecurity.

Iran has become the latest target of this entrenched system. Officially, the objective is to halt Tehran's nuclear ambitions and neutralize its missile capabilities. Yet the scope of military pressure suggests broader ambitions. The weakening of the Iranian state, the containment of its regional influence, and perhaps even the eventual collapse of the current political order appears to be equally important goals.

The implications extend beyond the Middle East. Any disruption involving the Strait of Hormuz threatens global energy flows and places additional pressure on emerging economies. China, one of the largest consumers of Iranian energy, stands to lose from prolonged instability. In this context, the conflict increasingly resembles a chapter in a wider geopolitical contest rather than a narrowly defined security operation.

What makes the situation particularly troubling is the growing irrelevance of public accountability. Leaders change, governments come and go, yet the direction of policy remains remarkably consistent. Escalation follows escalation, regardless of electoral promises or diplomatic rhetoric.

One does not need to believe in secret conspiracies to recognize this pattern. A powerful nexus of military, economic, and geopolitical interests has repeatedly demonstrated its ability to shape outcomes. Whether it is called an establishment, a strategic network, or an informal cartel of influence, its fingerprints are visible across the region.

The tragedy is that while nations debate who fired the latest missile, few ask who benefits from a conflict that never seems to end.

OPEC+ to raise oil output by 188,000 bpd

Seven OPEC+ countries have agreed to increase their combined crude oil output targets by 188,000 barrels per day (bpd) in July. This is the same as the June hike, which was adjusted down from monthly increases of 206,000 bpd in May and April to ⁠take into account the UAE exit.

The decision was taken by the countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—during their virtual meeting held on Sunday to review global market conditions and outlook.

This increase marks the fourth monthly quota hike under the group's phased unwinding of voluntary supply cuts, though the physical realization of these barrels currently remains limited due to the blockade of the Strait of Hormuz.

Seven OPEC+ countries have increased their output quotas from April to June this year by almost 600,000 barrels per day. In their collective commitment to support oil market stability, the seven countries decided to implement a production adjustment of 188,000 bpd from the additional voluntary adjustments announced in April 2023. This adjustment will be implemented from next month.

The additional voluntary adjustments announced in April 2023 may be returned in part or in full subject to evolving market conditions and in a gradual manner. The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase out of the voluntary production adjustments, including reversing the previously implemented voluntary adjustments announced in November 2023.

The seven OPEC+ countries noted that this measure will provide an opportunity for the participating countries to accelerate their compensation. These countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that will be monitored by the Joint Ministerial Monitoring Committee (JMMC).
They also confirmed their intention to fully compensate for any overproduced volume since January 2024. The compensation period will be extended until the end of December 2026.

Sovereignty, Security and Selective Silence

Saudi Arabia's condemnation of Iranian attacks on Kuwait and Bahrain is understandable. Any attack against a neighboring Gulf state threatens regional stability and raises legitimate concerns about security. Riyadh's warning that such actions could push the region toward greater instability reflects the anxieties of governments and citizens alike.

Yet the latest crisis exposes a deeper question that deserves serious debate across the Gulf.

The Kingdom and its GCC partners have been swift in condemning Iranian military actions. However, they have been far more restrained when it comes to criticizing US attacks on Iran, many of which originate from military facilities located within GCC countries. This raises an uncomfortable but important question. Is sovereignty being defended as a universal principle, or is it being interpreted through the lens of strategic alliances?

The issue is not whether Iran should be held accountable for actions that threaten regional peace. It should. The real issue is whether the same standards are applied consistently to all actors.

For decades, Gulf states have justified hosting US military bases as a necessary component of their security architecture. The arrangement has undoubtedly provided strategic protection. However, it has also created a paradox. Facilities intended to enhance security may simultaneously transform host nations into potential targets whenever confrontation erupts between Washington and its adversaries.

This dilemma goes beyond the Gulf. It touches the very meaning of sovereignty in the modern world. Sovereignty is not merely the defense of territorial borders; it is also the ability to exercise independent control over how national territory is used. If military operations against a third country are launched from bases located within a sovereign state, can that state genuinely claim neutrality in the resulting conflict?

Supporters of the current security framework argue that these operations occur with the consent of host governments and therefore do not violate sovereignty. Critics counter that consent alone does not eliminate responsibility for the consequences that follow.

The Gulf's leaders frequently call for dialogue, restraint and de-escalation. These are worthy objectives. Yet lasting credibility requires a consistent approach. Condemning attacks from adversaries while remaining silent about military actions conducted by allies inevitably invites questions about selective outrage.

The debate, therefore, is not about choosing between Washington and Tehran. It is about determining whether sovereignty is a principle to be upheld universally or a concept applied selectively when political convenience demands it.

Trading at PSX driven by US-Iran conflict

The benchmark Index of Pakistan Stock Exchange (PSX) continued its positive momentum in May 2026 for the second consecutive month as the US and Iran moved closer to clinching a deal. The absence of additional revenue measures in the upcoming budget, amid the uncertainty created by the recent US-Iran conflict boosted investors’ confidence. Technology, Cement, and OMC sectors delivered the strongest positive returns while refineries remained negative during the month under review.

The Index continued its positive momentum for the second consecutive month as the US and Iran moved closer to clinching a deal that could pave the way for the reopening of the Strait of Hormuz. Consequently, the Index gained 6.7% (6.8% in US$ terms) during May. However, market liquidity contracted by 20.6% on sequential basis as average daily traded volume declined to 929 million shares from 1,170 million shares in April 2026 due to Eid effect. Average daily traded value also dropped by 22.2% to PKR41.8 billion (US$150 million) from PKR53.7 billion (US$192.7 million) in April 2026.

The absence of additional revenue measures in the upcoming budget, amid the uncertainty created by the recent US-Iran conflict boosted investor confidence. Analysts expect the government's focus to remain on increasing revenue through enforcement measures while curtailing expenditures, which would continue to be the mainstay of its fiscal strategy.

Pakistan’s role as a mediator in the ongoing US-Iran conflict supports the view that the country’s increasing importance in the GCC is likely to improve its global standing and help attract foreign investment. However, any adverse development in the US-Iran conflict could become a source of concern for investors.

Technology, Cement, and OMC sectors delivered the strongest positive returns, driven by improving IT exports, continued robust domestic demand, and higher inventory gains. The Technology sector posted a return of 15.6% in May, followed by OMCs and Cement, which generated returns of 10.7% and 10.0% respectively. The Fertilizer sector also reported a strong return of 8.8%, supported by healthy offtakes and attractive dividend yields. As against this, Refineries sector posted a negative return of 1.2% during the month following the government's decision to fix margins on certain petroleum products to provide relief to consumers.

Insurance and Brokers remained net buyers in May, accumulating equities worth US$12.8 million and US$5.5 million, respectively, amid expectations of a US-Iran deal. Conversely, Companies, Banks, and Mutual funds remained net sellers as funds shifted toward fixed-income securities following policy rate increase by the central bank in April 2026. Foreign investors also remained net sellers due to geopolitical tensions and rising concerns over currency depreciation across emerging and frontier markets amid inflationary pressures in developed economies resulting from the Middle East conflict. Net foreign selling was recorded at US$17.2 million, primarily in the banking sector (US$14.1 million), followed by the cement sector (US$5.4 million).

 

PSX benchmark index down 2.0%WoW

Pakistan Stock Exchange (PSX) remained volatile during the week ended on June 05, 2026, due to the evolving US-Iran negotiations and movements in international oil prices. The benchmark Index was down 3,484 points or 2.0%WoW to close at 170,479 on Friday.

Investor sentiment weakened at the start of week on the news of probable halt in US-Iran talks after Israel attacked Lebanon, and inflation came in above policy rate at 11.7%YoY, taking real interest rates into positive territory after 26 months. Brent crude was up 5.9%WoW to US$98.9/ bbl.

On the macroeconomic front, Pakistan's trade deficit for May 2026 decreased by 14%YoY and 39%MoM to US$2.6 billion, led by 6.6%YoY and 21%MoM decrease in imports.

FBR's provisional tax collection for 11MFY26 was reported at PKR11.2 trillion, reflecting a shortfall of PKR25 billion against the revised target.

Foreign exchange reserves of State Bank of Pakistan (SBP) increased to US$17.2 billion as of May 29.

Cement dispatches for May 2026 declined by 21%YoY to 3.8 million tons, mainly due to Eid holidays amid higher fuel prices

OMC offtakes declined by 23%YoY to 1.17 million tons during the month, led by lower HSD offtakes.

Other major news flow during the week included: 1) GoP announced PKR290/ US$ exchange rate for the FY27 budget, alongside a GDP growth of 4% and inflation, 2) Pakistan secured three Qatari and one spot LNG cargo, 3) FCC questioned Punjab's royalty levy on cement, 4) OGDC made an oil and gas discovery at Bobi Deep-1, and 5) NEPRA approved a PKR1.99/unit relief.

Top performing sectors were: Synthetic & Rayon, and Modarabas, while laggards included: Power Generation, Oil & Gas Exploration, and Vanaspati & Allied Industries.

Major selling was recorded by Mutual Funds of US$19.5 million, while buying was recorded by Individuals of US$16.5 million. Top performing scrips were: HCAR, PSX, GHNI, IBFL, and PGLC, while laggards included: GHGL, NBP, APL, ENGROH, and PKGS.

According to AKD Securities a constructive resolution to the US-Iran conflict, alongside the trajectory of international oil prices, would remain the pivotal near-term catalysts for market direction.

The upcoming FY27 federal budget, scheduled for June 10, would remain a key focus for the market. Market continues to trade at attractive valuations.

Top picks of the brokerage house include: OGDC,

PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Foreign Bases and Price of Hosting

For decades, several Arab countries have hosted American military bases under defence and security agreements. Their governments have justified these arrangements as essential for national security, regional stability, and deterrence against external threats. Few questioned the logic when the bases appeared to serve a defensive purpose. The debate becomes far more complicated when those same facilities are used to launch offensive military operations.

The military confrontations involving the United States and Iran during 2025 and 2026 have brought this issue into sharp focus. According to various reports, American forces used bases located in Arab countries to conduct operations against Iran. Tehran responded by targeting facilities linked to the American military presence in the region.

The reaction was immediate. Host governments condemned the strikes as attacks on their sovereignty, while much of the Western media adopted the same narrative. Yet this raises an uncomfortable question: can a country allow its territory to be used as a launch pad for attacks on another state and still claim complete detachment from the consequences?

To be clear, international law recognizes the sovereignty of the host state over its territory. A foreign military base does not magically become American soil. However, sovereignty is not merely a legal concept; it also carries responsibility. When a government permits a foreign power to use facilities within its borders for offensive operations, it knowingly becomes part of a broader strategic equation.

This does not mean every retaliatory strike is lawful or justified. Nor does it absolve the attacking party of responsibility for escalation. But it does challenge the simplistic narrative that the host countries are innocent bystanders with no connection to the conflict.

The real issue is consistency. Governments cannot celebrate the security benefits of hosting powerful foreign militaries while disowning the risks that inevitably accompany such arrangements. Strategic partnerships bring strategic consequences.

The Middle East deserves a more honest discussion about these realities. If foreign bases are strictly defensive assets, they should not be used to project military force against neighbouring states. If they are used offensively, then regional governments must acknowledge that they have assumed a degree of political and strategic responsibility. Sovereignty is not only about rights; it is also about accountability.

Israel’s Security Paradox: Strength Without Psychological Closure

Benjamin Netanyahu’s long political dominance has coincided with one of the most turbulent phases in Israel’s modern security history. For his supporters, he represents strategic clarity in a hostile region. For critics, his era reflects the entrenchment of a permanent conflict mindset. Both interpretations, in different ways, touch the same underlying reality - Israel’s security condition today is defined as much by perception as by power.

Militarily, Israel remains one of the most capable states in the Middle East. Its intelligence infrastructure, air power, and multi-layered defence systems have significantly strengthened deterrence. Several adversaries are either weakened, fragmented, or operating under constraints not seen in previous decades. From a purely conventional standpoint, Israel’s strategic position appears more secure than in many earlier phases of its history.

Yet this is only one side of the equation. On the ground, security is not experienced in abstract balances of power. It is experienced through sirens, shelters, alerts, and the unpredictability of escalation. For civilians—particularly children growing up amid periodic conflict—security becomes a lived rhythm rather than a stable condition. Even when attacks are intercepted or contained, the psychological imprint of uncertainty remains. This is where Israel’s central paradox emerges - growing military strength has not translated into a proportional sense of psychological security.

The reason lies in the changing nature of conflict. Traditional wars between defined states have increasingly been replaced by asymmetric threats—rockets, proxy forces, cross-border raids, and regional instability. These forms of confrontation do not require parity to create disruption; they require only unpredictability. As a result, even a militarily dominant state can remain socially alert, frequently mobilized, and psychologically exposed.

Within Israeli society, this produces a dual perception. One strand believes Israel is stronger than ever, capable of managing multiple fronts simultaneously. Another strand, equally present, sees a country that remains encircled not necessarily by conventional armies, but by persistent and evolving threats that rarely disappear entirely.

Netanyahu’s political approach has reinforced this condition of “managed insecurity”—a doctrine in which deterrence is maintained not by eliminating threats, but by continuously containing them. This may strengthen strategic positioning in the short term, but it also prevents a full transition from conflict management to post-conflict normalcy.

The result is a society that oscillates between confidence and anxiety. Military superiority coexists with civilian vulnerability. Tactical successes coexist with strategic uncertainty. And periods of calm are often interpreted not as resolution, but as interludes between escalations.

The question is not whether Israelis believe their enemies are weaker or stronger. The more accurate question is whether they believe threats can ever be fully removed from their horizon.

For many, the answer remains uncertain. And it is in that uncertainty—more than in battlefield outcomes—that Israel’s modern security condition is ultimately defined.