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In Brief
PAKISTAN AND THE US-IRAN WAR
Islamabad urges Washington and Tehran to end hostilities and resume dialogue
On 16 July, Dawn reported that Pakistan's Foreign Office (FO) called on the United States and Iran to end hostilities and resume technical-level talks, while acknowledging that the Pakistan-mediated interim peace deal was facing challenges. FO Spokesperson Tahir Andrabi said the implementation of the Islamabad Memorandum of Understanding (MoU), signed between Washington and Tehran last month, was under strain. He reaffirmed that Islamabad would continue to encourage all sides to resume dialogue in line with the MoU and the joint statement issued by the mediators, Pakistan and Qatar, on 20 June following direct talks in Switzerland. Andrabi also underscored the importance of keeping the Strait of Hormuz open, noting that many countries, particularly in the Global South, were being adversely affected by the situation. The remarks came as hostilities continued, with the US striking Iran's coastal defences and missile sites, and Iran retaliating by targeting American military assets in neighbouring Gulf countries. US President Donald Trump had declared the ceasefire over the previous week, though he left the door open to further talks. ("Pakistan urges US, Iran to 'end violence', resume technical-level talks," Dawn, 16 July 2026)
PM Shehbaz warns renewed US-Iran conflict threatens economic stability
On 16 July, Dawn reported that Prime Minister Shehbaz Sharif warned that fresh tensions in the Middle East, triggered by renewed US-Iran hostilities, could again adversely affect the country's economy. He made these remarks while chairing a meeting in Islamabad to review the impact of regional tensions and austerity measures. Shehbaz said the economy was currently stable but stressed the importance of preparedness. He directed relevant authorities to develop a comprehensive contingency plan and take strict action against those creating artificial shortages of petroleum products, in coordination with provincial governments. The meeting was informed that sufficient petroleum reserves were available and that arrangements had been made to ensure uninterrupted supplies. The PM also commended the public for their support during the previous national austerity campaign and noted that government subsidies had helped mitigate the impact of fuel price increases on ordinary citizens. Islamabad had raised petrol and diesel prices by over PKR 13 on 10 July following a surge in global oil prices driven by the conflict. ("PM Shehbaz warns renewed US-Iran conflict could hit economy again," Dawn, 16 July 2026)
EXTERNAL
EU flags GSP+ compliance failures on human rights, media freedom and judicial independence
On 16 July, Dawn reported that the European Commission's final monitoring report on GSP+ implementation for 2023-2025 found Pakistan had "regressed in a number of areas" and faced "compliance issues" with its obligations, warning that continued access under the revised GSP framework from January 2027 would depend on tangible improvements. Key concerns included rising enforced disappearances and extrajudicial killings without accountability, deteriorating media freedom, vague provisions in cybercrime, blasphemy, and counter-terrorism laws creating a chilling effect on journalists and minorities, recent constitutional amendments undermining judicial independence, and continued military trials falling short of a fair trial under International Covenant on Civil and Political Rights (ICCPR) standards. The report acknowledged positive legislative steps including the National Commission for Minorities, the Anti-Torture Act, a domestic violence bill, and Pakistan's first marital rape conviction, but said most progress remained legislative and had not translated into real improvements on the ground. Pakistan is the EU's largest GSP+ beneficiary, with EU imports from Pakistan reaching EUR 8.3 billion in 2024, textiles accounting for 70 to 76 per cent of exports, and Pakistan benefiting from approximately EUR 732 million in tariff exemptions last year. ("EU notes 'issues' in Pakistan's GSP+ compliance, urges Islamabad to address 'shortcomings'," Dawn, 16 July 2026)
Pakistan joins China-led AI governance body as founding member
On 16 July, Dawn reported that Foreign Minister Ishaq Dar signed the founding agreement of the World Artificial Intelligence Cooperation Organisation (WAICO) in Shanghai, making Pakistan a founding member committed to bridging the global AI divide and promoting equitable access to AI for the Global South. Dar also held a bilateral meeting with Chinese FM Wang Yi on the sidelines of the World Artificial Intelligence Conference, reaffirming commitment to the All-Weather Strategic Cooperative Partnership, CPEC 2.0, and collaboration in trade, investment, and emerging technologies. WAICO was proposed by China last year for AI governance, and Pakistan had pledged support during PM Shehbaz's May Beijing visit. The conference also saw Chinese President Xi Jinping attending WAIC for the first time, with Huawei debuting its Atlas 950 SuperPoD AI computing cluster as part of China's broader push to build AI infrastructure independent of US technology. ("Pakistan becomes founding member of World Artificial Intelligence Cooperation Organisation," Dawn, 16 July 2026)
ECONOMY
Large-scale manufacturing grows 5.77 per cent in 11 months of FY26
On 16 July, Dawn reported that Large-Scale Manufacturing grew 5.77 per cent year-on-year during July-May FY26, with the automobile sector the biggest contributor after production surged 58.82 per cent, followed by food products (up 7.75 per cent), garments (up 7.31 per cent), and petroleum products (up 10.56 per cent). However, pharmaceuticals contracted 8.07 per cent, iron and steel fell 7.49 per cent, fertilisers declined 2.25 per cent, and textiles were virtually flat at negative 0.09 per cent. LSM production dipped 0.98 per cent year-on-year in May specifically, though it rose 1.21 per cent over April. ("Large-Scale Manufacturing grows 5.77pc despite May slump," Dawn, 16 July 2026)
Gulf war triggers investment outflows as Bahrain withdraws USD 30 million from Pakistan bonds
On 17 July, Dawn reported that renewed US-Israeli strikes on Iran have further dampened foreign investment in Pakistan, with no Gulf country inflows recorded in the first ten days of FY27 and Bahrain withdrawing USD 21 million from T-bills and USD 9 million from Pakistan Investment Bonds amid Iranian retaliatory strikes on American assets in the country. The only inflow was USD 4 million from Luxembourg. In FY26, domestic bonds recorded a net outflow of over USD 500 million. The UAE had earlier withdrawn USD 3.5 billion from the SBP, with Saudi Arabia stepping in to replace the amount. Currency experts warned that while remittances remain unaffected so far, a prolonged conflict could ultimately hit that critical revenue stream as well. ("Gulf war triggers investment outflow from Pakistan," Dawn, 17 July 2026)
State Bank reserves drop to USD 17.2 billion on debt repayments
On 17 July, The Express Tribune reported that the State Bank of Pakistan's (SBP) foreign exchange reserves fell by USD 1.245 billion to USD 17.225 billion for the week ended 10 July, primarily due to external debt repayments, bringing total liquid foreign reserves to USD 22.675 billion, including USD 5.449 billion held by commercial banks. The rupee strengthened to PKR 277.97 per dollar, its highest level in 19 months. Gold fell nearly 2 per cent internationally to around USD 3,990 per ounce amid rising oil prices and US Treasury yields amid concerns over a Middle East escalation. However, local gold prices edged up slightly to PKR 425,436 per tola. ("Reserves down $1.24b on debt repayments," The Express Tribune, 17 July 2026)
SECURITY
Kurram: Terrorists target police checkpost; injuring six security personnel
On 16 July, Dawn reported that six security personnel were injured when terrorists attacked a checkpost in the Shalozan Tangi area in the upper parts of Kurram tribal district. Immediately after the attack, the security forces launched a counter-operation. Under the intensity of the response, the attackers fled the scene, leaving behind the body of one of their accomplices. (“6 security men hurt in Kurram attack,” Dawn, 16 July 2026)
KP: Terrorists clash with law enforcement in Haidari Top area
On 16 July, Dawn reported that two policemen were martyred, and 16 others sustained injuries in an exchange of fire with terrorists on the Haidari Top. Haidari Top is a mountainous area located on the border of Laram Valley and Khall. Law enforcers were conducting a search-and-strike operation in the Haidari Top and Karam areas following reports about the presence of terrorists when they came under a sudden attack from armed insurgents. Terrorists also set three police vehicles on fire during the clash. The vehicles had reportedly been parked on the roadside as the security forces could not move them further due to the absence of a road in the rugged mountainous terrain. (“Two policemen martyred in Dir clash with terrorists," Dawn, 16 July 2026)
South Waziristan: Security forces foil TTP attack on military post, killing four
On 16 July, Dawn reported that security forces foiled an attempted suicide attack targeting a military post in the Kari Kot area of Lower South Waziristan’s Wana, killing four terrorists. The terrorists tried to attack the security forces’ post using an explosives-laden vehicle late at night. But the attempt was foiled as the threat was detected, and the suicide attacker was killed. The targeted post was being used to protect the local population and to prevent the movement of Tehreek-i-Taliban Pakistan (TTP) towards Wana Bazaar. South Waziristan, as well as the rest of Khyber Pakhtunkhwa, has been facing terrorism for a long time, with a monthly security assessment released by the Pakistan Institute for Conflict and Security Studies (PICSS) stating that after two consecutive months of improvement, Pakistan’s security situation deteriorated sharply in May, driven primarily by escalating terrorist violence in Khyber Pakhtunkhwa and Balochistan. (“Security forces foil suicide attack on military post in South Waziristan's wana kill 4 terrorists: sources,” Dawn, 16 July 2026)
AF-PAK
Deportations of Afghan nationals continue under repatriation drive
On 16 July, Dawn reported that the repatriation of Afghan nationals under the Illegal Foreigners' Repatriation Programme (IFRP) was gaining momentum across Khyber Pakhtunkhwa. Official data showed that over 4,400 Afghans left through the Torkham border crossing in a single day. Of these, 1,768 held Proof of Registration cards, 616 held Afghan Citizen Cards, and 2,080 were undocumented individuals. In Swabi, district authorities and police arrested 350 Afghans over three days and deported them. Deputy Commissioner Dr Tariqullah confirmed that a search for remaining Afghan nationals in the district was underway. In Haripur, 46 individuals were arrested under Section 14 of the Foreigners Act and sent to a holding centre in Peshawar for onward deportation. A United Nations High Commissioner for Refugees (UNHCR) and International Organisation for Migration (IOM) flash update noted that from 28 June to 04 July, 19,130 Afghans returned through multiple border crossings. Returns increased by 59 per cent and deportations by 299 per cent compared to the previous week. ("Repatriation of Afghan nationals gains momentum," Dawn, 16 July 2026)
Editorials/Opinions
The Middle East
Inam Ul Haque, “Middle East's new security paradigm,” The Express Tribune, 16 July 2026
"The US-Israeli war on Iran has redefined the regional security architecture profoundly. That architecture in the Middle East was traditionally pegged to the 'purchased security framework' led by the US. The emerging, yet to be instituted and new security architecture is transitioning away from this historic and traditional US-led bilateral and multilateral alliances mode, and is gravitating towards a multipolar, regionally owned framework, wherein the main players are increasingly hedging with global powers, seeking advantage wherever they find it."
https://tribune.com.pk/story/2618449/middle-easts-new-security-paradigm
Climate change
Ali Tauqeer Sheikh, “Pakistan’s Ground Zero,” Dawn, 17 July 2026
“Gilgit-Baltistan has emerged as Pakistan’s climate ground zero. For decades, the country’s climate emergency was narrated from its floodplains: Sindh’s submerged villages, Punjab’s swollen tributaries, the 2010 and 2022 disasters. These were the consequences of a deeper story. The origin has abruptly moved upstream. GB is no longer the water tower that occasionally leaks. It is where the Indus system’s first disasters now begin, not where they arrive."
https://www.dawn.com/news/2015802/pakistans-ground-zero
Economy
Editorial, “Barren reforms,” Dawn, 17 July 2026
“Prime Minister Shehbaz Sharif’s assertion that agriculture and livestock hold the key to Pakistan’s quick economic revival is spot-on. The sector contributes almost a quarter of GDP, employs well over a third of the labour force and remains the largest source of livelihoods. Livestock alone accounts for more than 60pc of agriculture’s value addition, while Pakistan ranks among the world’s largest milk producers, and possesses considerable untapped potential in both milk and meat exports."
https://www.dawn.com/news/2016094/barren-reforms
Editorial, “Taxing retailers,” The Express Tribune, 16 July 2026
“The government's endeavour to bring in retailers with a favourable tax slab is appreciated. The intention is not only to ease complex accounting processes - as around three million retailers countrywide are currently untaxed - but also to bolster the exchequer with a decent turnover. The recent proposal introduces a voluntary income tax regime for small shopkeepers, offering them exemptions from audits, withholding taxes, and mandatory digital invoicing."
https://tribune.com.pk/story/2618445/taxing-retailers-2
PoK
Editorial, “AJK violence,” Dawn, 16 July 2026
“Since early June, Azad Kashmir has been on tenterhooks, with routine life severely disturbed, as the regional administration seeks to quell the protests of the now proscribed Joint Awami Action Committee, a coalition of political and civil society groups."
https://www.dawn.com/news/2015795/ajk-violence
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