As India tightens its diplomatic grip in response to the April 22 Kashmir terror attack, a parallel and often under-discussed battleground has emerged: economic diplomacy. Specifically, New Delhi is lobbying the International Monetary Fund (IMF) and allied financial institutions to reconsider or scrutinize Pakistan’s pending loan negotiations.
India’s argument is centered on the premise that global financial assistance to Pakistan indirectly subsidizes state-sponsored terrorism. While Islamabad has pushed back, claiming such lobbying violates norms of economic neutrality, the narrative is gaining traction among Western policymakers increasingly skeptical of Pakistan’s counterterrorism credentials.
Pakistan, currently facing economic instability and balance-of-payment issues, is relying on extended IMF packages to stabilize its currency and debt obligations. Should India succeed in its informal diplomatic pressure campaign, it could further isolate Pakistan economically and politically on the global stage.
This interplay of geopolitical and economic conflict is not without precedent. However, what sets the current situation apart is the coordinated nature of India’s approach, blending hard diplomacy, international advocacy, and strategic economic influence.
Both nations now find themselves in a dangerous tug-of-war that could reshape South Asia’s economic landscape. The international community, particularly the IMF and its stakeholders, must tread carefully to ensure financial decisions remain transparent, while also acknowledging the broader security implications.
