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Home Opinion & Editorial Opinion

US-Iran Standoff: Threat of Regional Economic Collapse

Ambassador Dr. Jamil by Ambassador Dr. Jamil
January 30, 2026
Reading Time: 4 mins read

In view of Iran’s nuclear program, the seemingly uncompromising policies of the United States and Israel, and escalating military tensions in the region, a slight hope of diplomatic progress is likely to emerge regarding U.S.–Iran tensions, as U.S. President Donald Trump, while maintaining an aggressive stance, has dispatched a substantial number of naval vessels and military assets to the region and simultaneously signaled a willingness for negotiations.

President Trump has stated that massive and formidable ships are heading toward Iran, and it would be preferable if they do not have to be used, while he seeks to engage in talks with Iran. The Joint Comprehensive Plan of Action (JCPOA), which was finalized in 2015 after extended negotiations among the United States, Russia, China, the United Kingdom, France, and Germany, was designed to curb Iran’s nuclear program, but after the United States withdrew from the agreement in 2018, Iran resumed uranium enrichment at an accelerated pace, which heightened global concern.

The current position of the United States and Israel is that Iran should not be permitted any degree or any type of uranium enrichment, even for civilian purposes, and they have also insisted upon a reduction in missile range, while Iran regards this demand as infringing upon its sovereignty and views a civilian nuclear program as its legitimate entitlement under international law. From Iran’s perspective, a complete ban on uranium enrichment would constitute a devastating blow to Iran’s national dignity and sovereignty, which is utterly impossible to accept.

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The influence of the Israeli lobby in U.S. policymaking is a widely acknowledged reality, which has long been working to permanently disable Iran’s nuclear and military capabilities. In this policy context, an expansion in U.S. military deployment in the Arabian Sea and the Middle East, preparations for cyber warfare, plans for digital blackouts, and surveillance of Iranian military and political leadership have surfaced, signaling thorough preparations for a possible military operation.

The United States is attempting to ensure that, in the event of an attack, protest movements inside Iran reignite with the support of their ground assets and pressure is intensified on internal institutions, which external powers can exploit for their purposes. On the other hand, Iran has declared at the United Nations Security Council that it is ready for negotiations; however, any aggression will be met with a harsh and resolute response. The attacks on Iran in June 2025 in relation to the Joint Comprehensive Plan of Action have deeply undermined Iran’s trust, which has further complicated the diplomatic process.

If the balance of military power is assessed, the United States is the world’s preeminent military power, with a defense budget in 2026 of approximately 900 billion dollars—an amount President Trump has announced will increase to 1.5 trillion dollars by 2027—while Iran’s defense budget is approximately 7 to 10 billion dollars, vividly illustrating the stark imbalance of power. However, Iran also possesses ballistic missiles with a range of up to 2,000 kilometers and hypersonic missiles, which pose a significant concern for the United States and Israel and, to some extent, help preserve the balance of power in the region.

European countries have also adopted a guarded response, where the United Kingdom and France stressed diplomacy and negotiations and rejected direct military action, while other European states refrained from taking a clear position. Disturbingly, the global effects of any major conflict in the Middle East would be profoundly far-reaching, because the Persian Gulf and the Strait of Hormuz are vital routes for global oil transportation, where any tension could seriously disrupt the global energy market and economy. Iran’s potential allies, Russia and China, can also provide Iran with diplomatic and strategic support against the United States, which could engender a Cold War–like situation among global powers.

From a historical perspective, whenever the U.S. economy encountered severe challenges, the United States became embroiled in some conflict or war, such as the war against Spain in 1898, the Gulf War in 1990, and the Second World War, which bolstered the U.S. economy. In the present era as well, the United States is expanding defense spending to safeguard its military superiority, while curtailing the growing influence of China and Russia remains a core objective of U.S. policy. China has become the world’s leading manufacturing and trading country and is expanding its global influence through the Belt and Road Initiative, while Russia has confronted the European security system through its advance in Ukraine, and all European countries seem unable to openly provide military support to Ukraine against Russia, because there is a fear of provoking a Third World War. In this context, Iran is an important resistant actor despite U.S. and Israeli pressure, fulfilling a key role in the balance of power in the region.

In the current global scenario, relations among the United States, Iran, Israel, China, and Russia are extraordinarily complex, and any miscalculation can turn a regional conflict into a global crisis. The nuclear dispute with Iran, U.S. threats, and regional tensions are one aspect of the persistent struggle among global powers, mirroring changes in the global system, the rise of new centers of power, and instability in the international system, and this is a situation in which Pakistan will have to reassess and strengthen its position and contribute to resolving U.S.–Iran tensions, because if the United States attacks Iran, the regional economic situation, which has already shifted from weak to fragile, could plunge toward devastation and destruction, upon which the national interests of Pakistan and all countries in the region are intertwined.

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