Why diplomacy must prevail

The region is sliding into geo-economic chaos as the precarious US-Iran ceasefire begins to fray. The resumption of hostilities has once again threatened global supply lines, sending oil prices climbing by over 3% yesterday to their highest in four weeks. Two things are for sure: diplomacy is taking a backseat and all CBMs brokered over the Straits of Hormuz are falling apart. The aggressive maneuvers on the part of Tehran to assert its absolute supremacy over the water channel, as is evident with a legislation underway in its parliament, and Washington's purported decision to slap 20% tariffs on vessels passing through it are unnerving. These moves are proving detrimental to prospects of peace and reconciliation.

The retaliatory attacks by the Islamic Republic on American bases in Jordan, Kuwait, and Bahrain, as well as on the UAE's ADNOC installations and crude carriers, represent further setbacks. Of late, the bombing near Iran's Bushehr nuclear plant has been spine-chilling. These incidents - coupled with the Houthis flexing their muscles against Saudi Arabia and Israel's uninterrupted salvos on Lebanon - are hallmarks of an Armageddon in the making. The feuding sides have reached this point because they collectively resorted to brinkmanship and failed to do justice to the hard-earned outcome of Pakistan-led mediation. Sticking to the 60-day ceasefire framework by progressing talks was the way forward, but the opportunity has been missed.

The fallout of warmongering, however, was clearly evident as the stock market slumped in Pakistan. The KSE-100 Index shed 3.5% as nervous investors grew wary of the future. Widespread selling was the order of the day as the government mulled a plan to review oil prices on a weekly or even daily basis. The prices of petroleum products have seen a sharp increase recently, following a brief sigh of relief during the last two weeks. This escalating crisis in the strategic Strait could plausibly stir inflation in Pakistan as trade and oil supplies are set to take a hit. There is an urgent need to give diplomacy yet another chance by avoiding maximalist positions by all concerned.