Towards middle power status

THE period between May 2025 and May 2026 has been unusually consequential for Pakistan. In May 2025, the country surprised observers by demonstrating a high degree of capability and professionalism in an aerial war with a much larger power. More recently, a nation often portrayed as peripheral to global affairs assumed a central diplomatic role by facilitating a ceasefire and enabling direct talks between a superpower and a neighbouring country that had not engaged face to face for nearly five decades. Pakistan’s ability to balance its relationships — building trust with the US while sustaining deep ties with China, entering into a defence pact with Saudi Arabia while maintaining constructive engagement with Iran — has drawn global recognition. Governments, media and policy analysts have begun to describe it as an emerging middle power in a rapidly evolving multipolar world. A country’s strength rests on three pillars: military capability, diplomatic reach and economic and technological capacity. Pakistan has shown competence in the first two. The third pillar is the critical missing link where Pakistan must focus its efforts. Its moment of achievement should be a catalyst for the transformation of the stop-go pattern of policymaking of the past three decades. A decisive shift requires support across political parties, the private sector and civil society. Yet the near-term outlook is complicated. Risks to recently achieved macroeconomic stability have risen due to external shocks, including disruptions in the Strait of Hormuz. The UAE’s recent withdrawal of its deposits highlights this vulnerability. While such withdrawals might be manageable under normal conditions, the need to replace them with Saudi deposits shows the fragility of Pakistan’s external position. Reliance on short-term financial inflows from friendly countries or on geopolitical rents must be phased out. Depen­dence has delayed structural reforms, suppressed growth, discouraged domestic savings and