By Mirza Abdul Aleem Baig
The global trade landscape has been profoundly unsettled by recent developments in U.S. tariff policies. The Trump administration imposed sweeping tariffs aiming to bolster domestic production. Financial institutions have expressed concern over these tariff policies and global trading partners are strategizing on how to mitigate the impacts of the escalating trade war.
Amidst these global trade upheavals, the India-Middle East-Europe Economic Corridor (IMEC) represents a significant shift in international trade and alliances. Designed as a strategic alternative to China’s Belt and Road Initiative (BRI), IMEC aims to link India with Europe via the Middle East using a combination of rail, road, and maritime networks.
Backed by key global players including the European Union, Saudi Arabia, the United Arab Emirates, and the United States, the corridor promises faster, more efficient trade routes with reduced transit times and lower costs.
While the project opens new avenues of cooperation and economic growth for participating countries, it also carries significant geo-economic risks for Pakistan – a nation already grappling with economic uncertainty, strategic isolation, and a slow-moving infrastructure agenda.
At the heart of the concern is IMEC’s deliberate route design, which bypasses Pakistan entirely. This is a stark contrast to the narrative that has long supported Pakistan’s strategic relevance through the China-Pakistan Economic Corridor (CPEC), a core component of the BRI.
The exclusion from IMEC diminishes Pakistan’s aspirations to serve as a regional bridge connecting China with the Middle East, Central Asia, and Europe. For years, Pakistan has positioned its ports, particularly Gwadar, as vital links in East-West trade, but with the advent of IMEC, that narrative is being fundamentally challenged.
The most immediate risk to Pakistan comes in the form of trade diversion. If IMEC successfully delivers on its promise of efficiency and security, regional trade patterns may shift in favor of the new corridor. Goods that might have otherwise passed through Pakistani territory or utilized Pakistani ports may instead be rerouted via India, the Gulf, and on to Europe.
This reconfiguration of regional logistics would have tangible consequences, including the loss of transit revenues, diminished port activity, and underutilization of road and rail infrastructure developed under CPEC. It could also impact Pakistan’s industrial zones planned along CPEC routes, which depend on a consistent flow of trade to become economically viable.
Another critical risk is the erosion of Pakistan’s strategic leverage in the Gulf. Traditionally, Pakistan has enjoyed close economic and diplomatic relations with Gulf States such as Saudi Arabia and the UAE. These relationships have yielded substantial financial aid, energy cooperation, and remittance inflows.
However, IMEC signals a significant deepening of Gulf-India ties, especially in the infrastructure and trade sectors. As Gulf investment flows increasingly pivot towards India and the IMEC framework, Pakistan risks losing its privileged access to Gulf capital and markets.
The diplomatic warmth shared with these nations may not be sufficient to compete with the scale and momentum of India’s growing engagement, particularly when backed by Western strategic interests.
The competition for foreign direct investment is another area of concern. Pakistan’s macroeconomic instability, coupled with governance challenges and security concerns, has already made it a less attractive destination for investors.
With IMEC emerging as a more stable, globally endorsed alternative, investment dollars that might have been considered for Pakistani infrastructure or special economic zones may now find a safer, more rewarding home in India or the Gulf states. This trend could further constrain Pakistan’s economy, particularly if existing projects under CPEC face delays or shortfalls.
Over and above, the implications of IMEC extend into the energy sector, a space where Pakistan has long aimed to play a transit role. From the stalled Iran-Pakistan gas pipeline to the uncertain prospects of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline,
Pakistan’s energy corridor ambitions have been fraught with geopolitical and security complications. IMEC’s plans to include energy connectivity, potentially involving electricity transmission and green hydrogen transport, could sideline Pakistan entirely if it cannot match the pace or security assurances required by international stakeholders.
The country’s geographic advantage will mean little if infrastructure lags behind or if investors view it as a high-risk zone. Despite these risks, there are also opportunities – though they require a decisive shift in policy and mindset.
Pakistan must consider repositioning itself as a connector rather than a competitor. By exploring possible linkages between IMEC and CPEC through regional partners like Iran and Turkiye, Pakistan could find ways to insert itself into the evolving trade architecture.
Such an approach would require robust regional diplomacy and a willingness to reimagine its strategic role. At the same time, Pakistan needs to fast-track the modernization of its logistics, port, and digital infrastructure to remain relevant in a highly competitive global environment.
Equally important is the need to reinvigorate and re-strategize CPEC. Transparency, better governance, and enhanced security will be essential to restore investor confidence and attract renewed interest from China and other potential partners.
Without significant improvements in how CPEC projects are managed and integrated into the broader economy, the corridor may fall short of its transformative promise. IMEC represents more than just a new trade route – it is a recalibration of strategic priorities across Asia, the Middle East, and Europe.
For Pakistan, it signals a potential geo-economic marginalization unless proactive measures are taken to adapt and engage. The country’s geographic advantage will mean little if infrastructure legs behind or if investors view it as a high-risk zone. As the world redraws its economic maps, Pakistan must ensure that it does not become a blank space on the new routes of prosperity.
Author: Mirza Abdul Aleem Baig – President of Strategic Science Advisory Council (SSAC) – Pakistan. He is an independent observer of global dynamics, with a deep interest in the intricate working of techno-geopolitics, exploring how science & technology, international relations, foreign policy and strategic alliances shape the emerging world order.
(The views expressed in this article belong only to the author and do not necessarily reflect the views of World Geostrategic Insights).