US-Iran relations have kept the countries in the region on their toes for more than half a century now. From USA’s involvement in the overthrowing of the government of Prime Minister Mossadegh, a secular political leader of Iran who sought to nationalize Iran’s oil industry, in 1953 to US sanctions on Iran’s oil export and the most recent being the killing of Qasem Soleimani in January 2020. The only breather in between had been during the second term of President Barack Obama in office when Iran under Hassan Rouhani agreed on a Joint Comprehensive Plan of Action (JCPOA) on its nuclear programme with a group of powerful countries (P5+1) in 2015, in return for lifting of economic sanctions. The calm was short lived though, Obama’s successor Donald Trump stepped out of the deal in 2018, reinstating crippling sanctions on Iran as well as other states trading with the country. Iran though has still kept most of the commitments of the treatyit has retaliated by allegedly attacking Saudi oil tankers in the Gulf of Oman.Soon after which it also shot a US military drone over the Strait of Hormuz. Pakistan-Iran relations are always seen under the periphery of Pakistan’s relations with USA, Saudi Arabia, India and even Afghanistan. Pakistan’s alliance with USA and consequently Saudi Arabia post the Soviet-Afghan war was the first streak of distrust between the two neighbors that brought Iran and India closer. The relations deteriorated further post 9/11 as Iran was skeptic of Pakistan’s role in aiding USA to establish its presence in the region. An escalation of tensions between USA and Iran puts Pakistan in yet another dilemma, the strategic geography of the country and its economic dependencyon foreign support doesnot allow for it to remain neutral, but the costs of taking sides is even bigger specially with the current conditionits economy, the experiences of the past and the escalated tensions on its Eastern border. Pakistan has the second largest Shiite population in the world, thatlook up to Iran and any action against Iran will trigger that population creating an internal security situation for Pakistan. So far Iranian reaction to the US aggression is very calculated and restrained, US President Donald Trump also seem keen on de-escalating the situation now but Soleimani’s murder is not something Iran would forget and forgive very easily, especially considering the history of US-Iran relations and the state’s fondness for serving revenge ‘colder’. The accidental shooting down of Ukrainian air craft by Tehran and the following protests against the government has furtherincreased the uncertainty around the situation. What makes considering the option of neutrality easier for Pakistan in the current scenario is that the power dynamics internationally are different today than in 2001 where Pakistan was compelled to take a sidein War of terror. Last year when USA bailed out of the JCPOA, the other signatories remained committed to the deal. Most states remained neutral amid the current escalation and called both parties for restraint. It appears that unless there is a major provocation from Iran, the world is not ready to take sides in the war on terror fashion. But that does not mean the situation is under control. As the threats of immediate and direct confrontation are fading, the speculations of a slow and indirect response from Iran are very much alive which will make it more complicated. Even if we argue that Iran as of now does not have the means to conduct nuclear tests, one cannot rule out the possibility of Iran activating or supportingShiite proxies in the region, for which Soleimani himself has paved the grounds throughout his service.This shall be looked at considering Iran’s strong foothold within the Houthi rebels and their proximity to Saudi Arabia which hold utmost importance to Muslims across the world and Salafist all over, specifically are very sensitive towards the kingdom.Thus, to any proxy activities there will be counter proxy responses. For European economies the increase in oil prices due to escalation in tensions in the region are also one major issue that can compel them to play a more effective role in de-escalation of tensions and appealing to them must take a center-stage in Pakistan’s mediating efforts at present Apart from Pakistan’s economic dependency on the other side; directly in form of loans, investment and petroleum and indirectly by accommodating its labor force. Two factors will play a crucial role in determining Pakistan’s role in the situation First, there being a direct threat to its own security in form of sectarian clashesbecause of its large Shiite population, their vulnerability to both manipulation from Iran and the threat of violence from the powerful Salafist militant elements. Secondly the impeding charges of terror financing by FATF against the country that have already been paralyzing the country’s economy. Though FATF is hearing Pakistan’s case again in February, the likelihood of it giving Pakistan a clean chit to Pakistanis grim and it may remain in the grey list for some time. Thus, in case of a proxy war Pakistan will have no alternative but to take a side or be at least expected to provide intelligence support to the USA and Saudi block or risk blacklisting by FATF. Anotherelement to this situation is that of the revival of Global Terrorism; with a strategist of Soleimani’s stature out of the picture, Baghdad’s demand of withdrawal of US forces from Iraq and the pause in the operations of the anti-ISIS international coalitionthe grounds are somewhat favorable for the revival of ISIS. ISIS can also serve as a counter proxy against the Iranian proxies and may gain some support of the Salafists in the region. Which pose a huge threat to Pakistan, keen on seeking stability in Afghanistan by engaging the Afghan Taliban and USA for a peaceful transition of power. Pakistan is vastly depending on CPEC right now for improving its economic conditions and revival of trade and development in the country, growing uncertainties in the region and the probability of a revival of ISIS will put the project in a stale-mate. Deploying additional security to its western borders with Iran and Afghanistan to hamper cross-border militancy will bear costs for the security on its eastern border where the tension with India have heightened to an extreme level. India, battling with its internal situation at the moment may also find that as an opportunity for shifting the attention to a national enemy.As has been expressed by the Indian Prime Minister Narendra Modi already, after August 5th that abrogation of Article-370 was not the end and the next phase is retrieving the remaining territory of Kashmir from Pakistan. The international community has been time and again warned by the Pakistani Premier against the likelihood of such an adventurism by the Indian side and the developing situation provides India with a chance to materialize its ambitions as the world’s attention has drawn away from Kashmir and Pakistan’s neutral response to the USA-Iran crises may not bear it any support from the countries involved. Well aware of these challenges, the Government of Pakistan has been handling the situation with utmost maturity by maintaining a neutral stance but still being proactive for peace in the region. Since the US strikes in Baghdad that killed the leader of the Quds forces of the Iranian RevolutionaryGuards; Qasem Soleimani, Pakistan’s Foreign Ministerhas contacted all major players in the region. Alongside condemnation of the unilateral action by USA and demand for restraint that has come from the civil leadership, a message of similar nature was conveyed to the US Secretary of State by the military leadership. Pakistan’s desperation for peace is understandable and the immediate visits of the Foreign Minister to Mashhad and Riyadh are a further evidence that it realizes the sensitivity of the situation and the costs of escalation of tensions it may have to pay. What it needs to further ensure is sensitization of other players in the region like China, Turkey, Qatar, Kuwait and Omanto the severity of the threat and demand them to play a more active role in peaceful de-escalation of the situation. For it is not just the security of the region but the investment of China as well which is at stake with the looming threats of war and sectarian violence or terrorism in the region.Sitting on a fence thus will not bid well for China’s economic ambitions for the region. Similarly, Turkey has battled with the threat emanating from ISIS and cannot afford a relapse of terrorism as much as Pakistan. For Qatar, Kuwait and Oman it is not just their proximity to both Iran and UAE or Saudi Arabia but their dependency on the safety of the trade routes for their oil exports which is a major contributor to their economy. Saudi Arabia itself may be much stronger to be deterred by the threats from Iran and maintaining its hegemony may be of foremost importance but UAE has made substantial investment in establishing its tourism industry which relies majorly on peace. Apart from China, for European economies the increase in oil prices due to escalation in tensions in the region are also one major issue that can compel them to play a more effective role in de-escalation of tensions and appealing to them must take a center-stage in Pakistan’s mediating efforts at present. The writer is a Research Associate at Sustainable Development Policy Institute