Whether the US will agree to Pakistan’s request remains unclear. Some analysts see benefits for Washington too. The Trump administration has sought a greater role in Pakistan’s critical minerals sector, and it is widely believed the request is likely to be entertained partly to cement that role — alongside potential cryptocurrency business. Others are more skeptical, reading Pakistan’s proposal as straightforwardly a form of ’geopolitical rent’ — a dividend of its mediation in the US war on Iran, presented against a backdrop of fresh Middle Eastern escalation.

Pakistan’s borrowing habits make this episode unsurprising. The current government is desperate to pull more dollars into the system. In April, Pakistan repaid approximately $3.5 billion in UAE deposits2 — roughly one-fifth of its reserves at the time — and immediately turned to Saudi Arabia, which agreed to deposit $3 billion with the State Bank of Pakistan within a week to sustain the required reserve level. Reports are also in circulation that the government is in talks with Saudi Arabia for a further $6.7 billion oil facility over fifteen years. Pakistan has had other swap arrangements as well, notably one with the People’s Bank of China dating to 2013,3 which has been extensively utilized since then.

This request is widely read as a dividend of Pakistan’s Iran mediation, but the deeper question is whether it increases Pakistan’s exposure to geopolitical risks and reopens the door to the old dynamic where the country was routinely told to ’do more.’ The Pakistan establishment appears to have made up its mind: it is willing to accept that headache in exchange for tens of billions of dollars. One can imagine a new ’do more’ list including pressure to support Saudi operations against the Houthis in Yemen, roll back Chinese-funded CPEC, and join the Abraham Accords. The particular danger is that acquiescence could create lasting bad blood with Iran.

This recalls the regime of General Pervez Musharraf, which entangled itself in the ’do more’ dynamic in exchange for US dollars during the so-called War on Terror. The current government appears to be pursuing the same logic as a conscious strategy — reaching for any arrangement where financial opportunity is present. History, however, suggests that what looks like opportunity often turns into dependency.

Public skepticism in Pakistan runs deep, and the historical record justifies it. US financial and military support for Pakistan has consistently tracked Washington’s strategic needs rather than Pakistani development imperatives. In 1971, Pakistan helped Washington establish secret diplomatic channels with Beijing that reshaped global geopolitics — but the Nixon administration’s support, beyond a symbolic naval deployment, fell well short of what Islamabad had counted on during the 1971 war with India.

When the Soviet Union invaded Afghanistan in 1979, Pakistan became the frontline partner in recruiting, training, and arming Afghan fighters. Billions of dollars were pumped into fueling that fire. When the Soviets withdrew in 1988, the US simply walked away, leaving Pakistan to absorb the chaos and long-term costs of that war.

After 9/11, Pakistan again agreed to become a ’frontline state’ in the US-led war on terror in Afghanistan. General Pervez Musharraf’s regime treated this as strategic necessity rather than choice. As the Congressional Research Service documented, since 1948 the United States has pledged more than $30 billion in direct aid to Pakistan, about half for military assistance, with more than two-thirds appropriated in the post-2001 period spanning the Musharraf years and the subsequent Zardari government4 — but this money entrenched dependency rather than building sustainable development.

Much of that aid between 2001 and 2010 went to military hardware and counterterrorism operations rather than education, health, or industrial development — reinforcing the dominance of the military in Pakistan’s political economy at the expense of democratic and welfare institutions. This relationship was also wired into structural adjustment through repeated IMF programs, often coordinated with US goodwill, which pushed large-scale privatization, subsidy cuts, and currency devaluation, deepening inequality and hurting the working poor while insulating military and elite interests.

With an ’aid-dependent war economy,’ Pakistan paid heavily across four decades — fighting a war whose costs far outstripped the aid received, making the net economic effect extractive rather than developmental. Ordinary Pakistanis absorbed those costs through inflation, utility price hikes, and shrinking public services.

Pakistani officials, economists, and independent researchers broadly agree that the War on Terror extracted an enormous price — economic, human, social, and political — even as debate continues over how much of that cost was self-inflicted versus imposed from outside. Critics locate the problem with the Pakistani establishment and ruling elite, who repeatedly aligned with US interests and facilitated its geostrategic agenda. Successive regimes — military and civilian — are seen as trading sovereignty for aid, arms, and elite legitimacy, rather than negotiating from a position of strength.

Against this backdrop, Pakistan’s economy remains in serious difficulty. Public debt is rising sharply: according to Pakistan’s Ministry of Economic Affairs, total external debt and liabilities now stand at $138 billion5, up from around $127 billion in 2022. The country’s reserves depend heavily on multilateral financing, rollovers, and deposits from China and Saudi Arabia — including the active $7 billion IMF Extended Fund Facility that has required politically unpopular tax increases, spending restraint, and structural reforms. Adding a large discretionary US facility to this mix would deepen a pattern where Pakistan’s monetary stability is contingent on favors from great powers rather than on fiscal sovereignty.

The real questions are yet to be publicly debated: What are the specific conditionalities attached to this rare facility? Will it give Pakistan’s economy a new direction, or will it prove temporary relief that defers rather than resolves the underlying crisis? Though IMF-backed reforms have stabilized the country’s macroeconomic indicators to some extent, they have done so at high socioeconomic cost — a barrage of new taxes, energy price hikes, budget cuts, and rising poverty.

The proposed facility will do little to address Pakistan’s structural economic ills. It would deepen dependency on US financial goodwill rather than building the fiscal sovereignty that could reduce Pakistan’s vulnerability in the first place. The real test is whether Pakistan can break out of the debt spiral — reducing its chronic reliance on the IMF and the goodwill of great powers. Keeping the historical record in view, fresh US support can buy time. It cannot buy growth.

Notes

1. The $20 billion figure is confirmed. On 9 October 2025, US Treasury Secretary Scott Bessent announced a $20 billion currency swap framework with Argentina’s central bank via the Exchange Stabilization Fund. See: Reuters/Yahoo Finance, ’Trump boosts Argentina’s Milei with $20 billion lifeline,’ 9 Oct 2025; and Congressional Research Service, ’U.S. Financial Support to Argentina,’ R48780, Dec 2025. Secretary Bessent subsequently pledged to seek an additional $20 billion in private-sector financing, potentially bringing the total to $40 billion, though that second tranche remained incomplete as of end-2025.

2. Pakistan repaid the full $3.5 billion owed to the UAE by end-April 2026, encompassing deposits accumulated since 2018. Saudi Arabia agreed to place $3 billion with the State Bank of Pakistan to compensate. See: Arab News, ’Pakistan completes repayment of $3.5 billion to UAE,’ 24 Apr 2026; and The Nation (Pakistan), ’Pakistan decides to repay $3.5b to UAE, ending rollovers,’ 4 Apr 2026.

3. The SBP–PBOC currency swap agreement was originally signed on 23 December 2011 (RMB 10 billion); Pakistan first drew on it in May 2013. It has since been renewed and expanded, with drawing rights reaching RMB 30 billion ($4.3 billion) by 2025. See: AidData / China.AidData.org, SBP–PBOC Swap Line project data; and Council on Foreign Relations, Central Bank Currency Swaps Tracker (updated Apr 2026). For the significance of the 2013 first drawdown see also Dawn, ’The geopolitics behind Pakistan’s $10 billion US request,’ July 2026.

4. Congressional Research Service (Susan B. Epstein and K. Alan Kronstadt), ’Pakistan: U.S. Foreign Assistance,’ CRS Report R41856, updated July 2013, p. 1: ’Since 1948, the United States has pledged more than $30 billion in direct aid, about half for military assistance, and more than two-thirds appropriated in the post-2001 period.’ Available at: CRS R41856 (EveryCRSReport.com). For the breakdown between military and economic assistance see also Center for Global Development, ’Aid to Pakistan by the Numbers’.

5. Government of Pakistan, Ministry of Economic Affairs / Press Information Department: ’Pakistan’s total external debt and liabilities currently stand at $138 billion’ (press release, 2026). See: Pakistan PID press release, PR No. 239. For Q1 2026 SBP data ($137.6 billion) see Trading Economics, Pakistan External Debt. The 2022 baseline figure of $127 billion reflects total external debt and liabilities as reported by the State Bank of Pakistan; the World Bank’s International Debt Statistics for end-2021 placed the figure at $130.4 billion. See World Bank International Debt Statistics 2022 (via Business Standard).