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Members of the Study Group

Ambassador Husain Haqqani, Senior Fellow, »ªÌå»á

Sahar Khan, South Asia Analyst

Michael Kugelman, South Asia Analyst

Ambassador Cameron Munter, Senior Fellow CEVRO Institute

Ambassador Anne Patterson, Member Advisory Board, Jackson Institute for Global Affairs at Yale

Ambassador Robin Raphel, Nonresident Senior Associate, Center for Strategic and International Studies

Harlan Ullman, Senior Advisor, Atlantic Council

Dr. Marvin Weinbaum, Scholar-in-Residence, Middle East Institute 

Uzair Younus, Principal, The Asia Group

Note: Individuals have signed on to this report in their individual capacities. Listing of organizational affiliations is for identification purposes only and does not represent organizational endorsement of the findings in the report.

The recent India-Pakistan crisis reportedly brought the two nuclear-armed South Asian countries to the brink of war before the United States intervened and pulled them back. This crisis highlights the need for continued US engagement with Pakistan, a critical country in a geostrategic location with which Washington has historically had a complex relationship. 

The relationship between Pakistan and the United States has weathered many ups and downs. In the opening months of his second term, President Donald Trump has indicated that he intends to adopt a more pragmatic foreign policy, one that maintains relations even with countries that hold beliefs or values different from his own. As a result, the relationship between the United States and Pakistan has a better chance of improvement than it has enjoyed in recent years—if both countries� leaders are able to focus on shared interests rather than ideological differences.

American critics of Pakistan have often accused Islamabad of accepting US military assistance without aligning with Washington’s priorities on India or Afghanistan. Pakistanis, on the other hand, have complained that the United States has failed to consider Pakistan’s concerns and interests in the region while demanding its unconditional support. 

More than its predecessors, the Trump administration has acknowledged that a country’s geography may dictate its strategic calculus. Pakistan considers both India and Afghanistan critical to its security interests; accordingly, Islamabad’s view on these countries is likely to be different from Washington’s. 

Rather than insisting that Pakistan see its neighborhood through a Western lens, if the US accepted Islamabad’s different understanding of its geopolitical realities, Washington would have a better chance at a functional transactional partnership with Pakistan. Such a move would not prohibit the US from promoting democratic values or demanding accountability from Islamabad for its past support of militancy and terrorism. 

During his first address to Congress in his second term, President Trump acknowledged Pakistani cooperation in the arrest and extradition of a wanted Islamic State–Khorasan Province (IS-KP) terrorist. This is an early indication that the Trump administration is willing to appreciate the cooperation it gets from Pakistan without emphasizing complaints that Islamabad’s crackdown on terrorist groups has been incomplete. 

Pakistan, too, seems willing to set aside its oft-repeated characterization of the United States as a fair-weather friend. Its civil and military leaders have built close ties with China and understand that US-India relations are improving. Like many countries in Asia, Pakistan wishes to maintain some measure of neutrality in any disputes between China and the United States. But Islamabad’s forward-thinking business elites and some of Pakistan’s military leaders have made clear that they remain receptive to American overtures. 

The time is ripe for both Washington and Islamabad to lay the foundations for a more pragmatic partnership in areas of mutual concern. Both countries have a shared interest in working together on counterterrorism, for example. While the two nations will likely always have differing views on India, conflict between India and Pakistan is in no nation’s interest. Similarly, the United States and Pakistan will also have differing views on China, but it is in Washington’s interest to prevent Islamabad from becoming too dependent on Beijing.

After years of fraught interaction, Pakistan and the United States should cultivate new ways of engagement. US policymakers would be wise to seek instruments of influence over Pakistan other than aid and public chastisement. For their part, Pakistan’s leaders should accept that while their country is not Washington’s most important ally in Asia, it can still be a valued partner.

Convergent Interests

The relationship between the United States and Pakistan has seen times of deep partnership and weathered years of turmoil. With the US military’s withdrawal from Afghanistan and competition deepening between Washington and Beijing, some believe Pakistan is no longer as relevant to American interests as it used to be. But Pakistan remains important to the US in several strategic areas.

First, a stable South Asia requires a relatively stable Pakistan. It is in Washington’s interest to prevent India and Pakistan, both nuclear-armed nations, from coming to blows. If the United States favors Delhi too heavily at the expense of Islamabad, it risks losing leverage. The April –May 2025 India-Pakistan crisis demonstrated the importance of American engagement and the role the US can play in preventing a nuclear war in the subcontinent. 

As India’s influence rises in South Asia, all countries in the region, not only Pakistan, may seek deeper engagement with China as a counterweight to Delhi. Therefore, it is in Washington’s interest to maintain its own relationship with Pakistan. Recognizing India’s preeminence need not mean disengaging with India’s neighbors. 

As a result, Washington should work to ensure that Pakistan does not become too close to China. While Islamabad has long-standing ties with Beijing that it will likely always cultivate, it is also eager to maintain its relationship with Washington. The United States, therefore, should not cede Pakistan to China. India, too, benefits from efforts to prevent Pakistan and China from growing too close. 

Second, as a Muslim country close to the Middle East, Pakistan would benefit from membership in the India–Middle East–Europe Economic Corridor (IMEC), a project the Trump administration supports. Pakistan’s participation in that partnership could enhance the project’s viability and might incentivize Islamabad to lessen its hostility toward Delhi. 

Third, the US and Pakistan also have shared interests in countering terrorism, especially as Pakistan faces serious security concerns on its border with Afghanistan and in its own region of Balochistan. On balance, the United States benefits from Pakistan’s counterterrorism efforts.

Although some elements inside Pakistan cheered the US withdrawal from Afghanistan, Islamabad is deeply concerned about the threat the Afghan Taliban poses. This group has developed external relationships beyond Islamabad and has been reluctant to take action against Tehreek-e-Taliban Pakistan (TTP), which wants to impose a strict Islamist regime in parts of Pakistan. The US should work to prevent TTP and other extremist groups from wielding power or influence in a nuclear-armed Pakistan.

The breach between Pakistan and Afghanistan opens the door for Washington and Islamabad to engage in short-term security cooperation designed to pressure the Afghan Taliban. The main US counterterrorism concerns in Afghanistan and Pakistan relate to IS-KP and remnants of Al-Qaeda, not TTP. But Pakistan could provide Washington with intelligence on IS-KP’s movements and activities in return for US assistance against TTP.

Fourth, Iran also remains a source of potential shared interests between Washington and Islamabad. The United States has held discussions with the Gulf Arab countries and Israel on extending a security umbrella to protect them from a belligerent Iran. Here, too, Pakistan could play a key role by working with the US or the Gulf Arab countries. 

Islamabad also worries about a belligerent Iran, which has exploited sectarian cleavages inside Pakistan in the past. Iran’s recruitment of Pakistanis to fight in Syria in the Fatemiyoun Brigade has drawn Pakistan’s belated attention. Pakistan struck Iranian territory in 2024—the first country to do so since the Iran-Iraq war—in retaliation for Iranian airstrikes. Closer US engagement and intelligence sharing could help convince Pakistan to stand up to Iranian malfeasance further.

Finally, a politically and economically stable Pakistan that respects the human rights of its people, delivers on its development goals, and enjoys good relations with its neighbors is of interest to both Pakistan and the United States. It is also in Washington’s interest that Pakistan experiences sustained economic growth.

However, while it makes sense for the US to remain engaged with both the civilian and military leadership of Pakistan, as well as with leaders of its major political factions and parties, the United States should steer clear of becoming too closely involved in Pakistan’s fissiparous domestic politics. 

The section below will look at some of these areas of common interest in more detail. The final section will offer policy recommendations.

Security Cooperation

Historically, the United States has benefited from cultivating close ties with the top brass of Pakistan’s military. Over the last few years, however, such interactions have been few and far between. This is unfortunate, as access to the top levels of the Pakistani government and military is essential for advancing US policy interests. 

For decades, the security relationship between the two countries dominated US-Pakistan relations. Pakistan has long sought to build its military capabilities for a possible fight with India, making military assistance the major topic of conversation between leaders of the two countries. During the Cold War, Pakistan provided the United States with a useful base for conducting intelligence-gathering flights into the Soviet Union or for covertly fighting the Soviets in Afghanistan.

The diminution of the two countriesâ€� once robust security relationship has been the major reason for the gulf that has emerged between them. If the United States and Pakistan are to lay the foundation for a more realistic partnership, it is important to foster consistent security ties. 

As mentioned above, both countries have an interest in cultivating a stable Afghanistan from which Al Qaeda and IS-KP are unable to launch future attacks. Washington will need help in curbing the spread of terrorist organizations in the region. Here, Pakistan can play an important role in intelligence sharing and in conducting counterterrorism operations on the ground. 

American policymakers have long doubted Pakistan’s commitment to acting against militant extremist groups that operate from its soil, especially those that target India or Afghanistan. However, fear of international isolation and its economic consequences has prodded Islamabad to take limited action against these militant groups. Pakistan is no longer on the Jurisdictions Under Increased Monitoring list of the United Nations Financial Action Task Force (FATF); to stay off this ignominious roster, it must continue to bolster its anti-money laundering (AML) and counter-financing of terrorism (CFT) systems.

Most of Pakistan’s strategic capabilities remain designed to match those of India. The United States should continue to discourage Pakistan’s development of strategic capabilities that could be perceived as targeting America and make clear that the development of these weapons will impact the US-Pakistan relationship. 

Securing Pakistan’s nuclear weapons and preventing the proliferation of its nuclear technology has always been of interest to the United States. Washington also harbors fears that extremist groups may gain access to Pakistan’s nuclear know-how or materiel. Meanwhile, American policymakers are still concerned about a conflict with India climbing the escalatory ladder toward nuclear war. 

Over the last three decades, the US government has consistently emphasized the need for in-depth conversations with Pakistan on nuclear-related issues. Although the Pakistani side occasionally has been reluctant to engage in these talks, successive US presidents have acknowledged that Washington is confident about Pakistan’s nuclear safety practices. The Trump administration should continue to engage Pakistan to ensure that Islamabad is held to the highest standards of safety for nuclear materials and does not become a source of nuclear proliferation. 

China-Pakistan Relations 

While US relations with China have changed over the decades, Pakistan’s views of its eastern neighbor have remained comparatively consistent. Islamabad sees good relations with China as critical to counterbalancing India. Pakistan has long-standing economic and security ties with Beijing but wants to maintain relations with the United States. Washington should take advantage of that desire. 

Over the last 30 years, China’s economic, military, and technological ties with Pakistan have deepened, especially due to the China–Pakistan Economic Corridor (CPEC), a part of China’s Belt and Road Initiative (BRI). While US policymakers are currently wary of foreign aid, helping Pakistan with debt sustainability and building its capacity for transparency and compliance with international lenders could reduce Islamabad’s dependence on Beijing. Given the broader reorientation of US foreign assistance, it is important for Washington to reexamine the effectiveness of its aid to Pakistan.

China’s construction of a port at the Pakistani city of Gwadar on the Arabian Sea is another source of concern in Washington. The prospect of Beijing having access to a naval facility 250 miles from Oman and close to the Gulf would create a more challenging operating environment for US military planners. Therefore, America has an interest in Pakistan continuing to balance relations between the US and China. Instead of making China the only lens through which Washington views Pakistan, policymakers should ensure that Pakistan does not become a Chinese proxy. 

Over the last 20 years, China has also built its soft power capabilities across Pakistan. For example, more Pakistani students study in China than in the United States. There are also many direct flights from Pakistan to China, and many Pakistanis are studying Mandarin. But the United States still retains an allure for most Pakistanis that China does not have. Washington should therefore strengthen constituencies within Pakistan that champion ties with the US and promote an affinity with Western values and culture. 

India-Pakistan Relations

Throughout much of the Cold War, the United States sought to balance India and Pakistan off each other. However, US-India relations have strengthened over the last two decades, deepening Pakistan’s apprehension. That Pakistan continues to see its relations with India as a zero-sum game carries implications for Washington, but both India and Pakistan have a vested interest in ensuring that the US remains engaged in the region. 

The United States is one of the few countries with both the leverage and the ability to play a role in resolving any potential escalation of military hostilities between Delhi and Islamabad. Even though Washington has clearly stated that it sees no role for itself as a mediator in Kashmir, its involvement in defusing the 2019 Pulwama-Balakot crisis, the aftereffects of an accidental missile strike in 2022, and the 2025 Pahalgam crisis demonstrate that preventing and managing escalation between India and Pakistan remains a key American interest. 

As the United States continues to deepen its strategic relationship with India, the Trump administration should also engage Pakistan. Retaining Washington’s position in South Asia can help it stabilize a region prone to conflict and confrontation. 

Economic Relations

The economic relationship between the United States and Pakistan has never grown to its full potential. The US remains the top destination for Pakistani exports and historically has been a top provider of humanitarian and development assistance. But the absence of vibrant bilateral trade or technology partnerships limits the relationship between the two countries. 

During the Cold War, Pakistan was a major recipient of American economic aid. Then, from 2002 to 2018, Islamabad received $34 billion from Washington (over $2 billion a year), but from 2019 to 2024, it received on average $265 million per year. In 2023, it received roughly $280 million, and in 2024 it received roughly $230 million.[i]

The Trump administration is likely to end or significantly reduce commitments to programs related to climate change. It has already reduced foreign assistance significantly, and Pakistan will have to learn to live without the US Agency for International Development (USAID), which has had a presence in the country for years. 

This creates an opportunity for Washington to shift its focus in Pakistan from aid to trade and investment. Pakistan could be an important partner in the US effort to secure access to critical minerals. If Pakistan can create an investor-friendly environment, US mining companies could be encouraged to finance the development of gold and copper mines and explore other mineral deposits in the country. Islamabad could also be a supply chain partner for Washington, particularly in labor-intensive sectors where the US wants to shift production from China. Pakistan could also benefit from offering to lower tariffs on US goods and reduce trade imbalances with the United States.

In recent years, the comparative cost of labor in Pakistan has declined and, on a per-hour basis, has become more competitive. Furthermore, turmoil in Bangladesh has temporarily increased Pakistan’s share of the global textile industry. Although many US companies have been reluctant to invest in Pakistan, those who have invested—in consumer goods, agribusiness, financial services, information and communication technology, renewable energy, and healthcare services—have generally done well.

Pakistan is not as large a market as India, but its population of 240 million, combined with its growing middle class, makes it a smart investment in an increasingly multipolar world. The United States, therefore, should engage Islamabad to improve its business environment and enable US companies to seek opportunities in Pakistan’s economy in emerging sectors such as information technology (IT) and telecommunications. 

Investors in Pakistan face regulatory challenges, unpredictable policies, inadequate protection for intellectual property rights, fluctuating taxation policies, and security concerns. For more US companies to invest in Pakistan, Islamabad needs to continue to stabilize and reform its economy.

This will be no easy task, as economic crises are not new to the country. Pakistan has taken 24 bailout loans from the International Monetary Fund (IMF) since 1958. The country’s leaders understand the need for structural changes, but vested interests are resistant to any such reforms. Over the last two years, its government has worked with the IMF to implement some significant reforms. But this is an uphill climb that will take years, likely decades.

The United States has always been a critical economic partner for Pakistan, with bilateral trade between the two countries reaching $12 billion. Washington is also one of Pakistan’s largest sources of foreign direct investment (FDI). FDI from the United States contributes immensely to modernizing Pakistan’s economy: in fiscal year 2022, FDI inflows from the US amounted to $257 million, behind only China ($706 million) and the Netherlands ($305.8 million). 

Pakistan’s growing dependence on Chinese financing appears to have peaked as a percentage of its total external debt, and Pakistani policymakers are aware of and willing to explore alternative mechanisms of financing to reduce their dependence on Chinese capital. If Pakistan can hasten the pace of its economic reforms, it could attract an influx of US capital.

In his public remarks after the April–May 2025 India-Pakistan crisis, President Trump appeared willing to boost trade ties with Pakistan as an incentive for the country. The Pakistani government should use this opening to boost trade ties with the US. 

Technology

Pakistan’s IT sector is one of the fastest growing in its economy, accounting for about one percent, or $3.5 billion, of the country’s gross domestic product (GDP). The domestic IT sector boasts over 10,000 companies and has benefited from the Pakistani-American diaspora in Silicon Valley, which has provided access to capital and expertise.

The digitization process in Pakistan is only just beginning. As a result, an opportunity exists for American technology and telecommunications companies. Until now, Chinese companies have dominated this space. Getting Pakistan to improve its business environment and grant operating licenses to entities like Starlink would accelerate the country’s digitization and help it attain balance between Washington and Beijing in a critical sector.

The development of the technology sector in Pakistan has also catalyzed growth in the country’s tech exports, which stand at almost $2 billion a year. In 2022, IT exports from Pakistan to the United States stood at $2.62 billion, nearly 35 percent of all Pakistani service-sector exports in 2023. According to most reports, the US is the largest market for Pakistan’s technology exports, including venture capital. Scaling technology startups and venture capital is of great interest to both countries. The US should promote technologies of the future in Pakistan, including artificial intelligence and new energy technologies, so that US companies have market access in a country that has growing energy demands and needs to adopt technologies like AI to improve its agriculture.

According to the Pakistan Telecom Authority, there are 140 million mobile broadband users in Pakistan. Google’s recent initiative to produce 500,000 Chromebooks in Pakistan by 2026 supports this estimate. US investment to replace Chinese capital could help build Pakistan’s telecommunications sector, provided Islamabad takes the necessary steps to liberalize and reform its economy.

Democracy and Human Rights 

A relatively stable, economically prosperous, and politically open Pakistan that protects the human rights of all its citizens has long been a goal of US policy planners—and one that is shared by many Pakistanis. 

US policymakers broadly agree that Pakistan needs to do more to guarantee the rights of its citizens, especially religious and ethnic minorities. Pakistani women continue to suffer the consequences of honor crimes, sexual violence, and cyber harassment. And Pakistan’s blasphemy and anti-Ahmadiyya laws are of grave concern, especially as vigilante and mob justice remain rampant.

Pakistan’s government has a long history of curbing dissent, impeding the work of civil society organizations, and suppressing media freedoms. Unfortunately, in recent years these trends have only worsened. The political turmoil of the last two years, the worsening security situation, and strong polarization within Pakistani society have created a perilous environment for many in the country.

To the extent political realities allow, Washington should continue to support Pakistani civil society, through more frequent legislative interactions, conversations between local governments, and broader links between civic groups.

Policy Recommendations

The United States and Pakistan have worked together in the past. Moving forward, both countries could benefit from identifying common interests and collaborating in a pragmatic fashion. 

Isolating Pakistan is not in the United States� national security interests. Pakistan’s cooperation, even if selective and limited, is better than its intransigence. Therefore, Washington should continue to engage with both India and Pakistan to prevent and manage any crisis between the two nuclear-armed neighbors. This is even more important after the 2025 crisis. The US should engage in mediation efforts during crises, given the serious threat to US interests that an India-Pakistan conflict or nuclear escalation would pose.

The US is unlikely to change Pakistan’s strategic calculus about India simply by using carrots or sticks, and that approach of some previous administrations must be set aside. It is more realistic to deal with Pakistan as it is, rather than trying to mold its sense of self and its worldview as Americans might prefer.    

The United States is keen to keep an eye on terrorist groups; Pakistan, too, faces threats from militant extremist organizations. Washington should encourage Islamabad to share information on IS-KP and other militant groups. Resuming a bilateral counterterrorism dialogue could serve the interests of both countries. Similarly, the US and Pakistan should find ways to cooperate in Afghanistan, especially in the areas of humanitarian assistance and counterterrorism. 

Most nations have an interest in helping Pakistan combat terrorism on its own soil. Washington should encourage China and the Gulf states to join the US and others in urging Pakistan to make good on promises of economic development and improved governance in Balochistan and the former Federally Administered Tribal Areas agencies now in Khyber Pakhtunkhwa, while continuing to act against extremist violence there and elsewhere in the country. If tensions between the US and China decrease, they could jointly call on Pakistan to take further steps to ensure that terrorist groups targeting India are substantially weakened and can no longer operate from Pakistani soil.

Even if Washington is no longer offering large-scale military aid to most countries, it should preserve open lines of communication between its military and Pakistan’s. Training programs like International Military Education and Training (IMET), a low-cost initiative that has helped build ties between officers of both countries, should be continued if possible. Additionally, the United States will always have an interest in the safety of Pakistan’s weapons of mass destruction. The US should continue to signal to Pakistan the importance of its non-proliferation policies. 

Pakistan’s location makes it an ideal gateway to South and Central Asia. It is therefore in US interests to provide the country with alternatives beyond China for building its economy. With 240 million people, a middle class of at least 80 million, and a majority of its citizens under the age of 26, Pakistan could provide a huge demographic dividend and labor pool for Western manufacturers.

If Pakistan wishes to become a middle-income country, its per-capita energy consumption will have to grow at least fivefold. Facilitating that growth could provide a major opportunity for American businesses. Washington should therefore push Islamabad for reforms that make it easier to do business and create a level playing field for US companies. If Congress reauthorizes the US Development Finance Corporation (DFC), the organization could bring increased investment to Pakistan while advancing US strategic interests and countering Chinese infrastructure projects.

As a country on the front lines of climate change, Pakistan needs support in modernizing its agricultural sector and ensuring its food security. This is an area in which the US and Pakistan could work together, especially in emerging technologies such as battery storage and advancements in agricultural methods. Critical minerals as well as critical and emerging technologies are other areas that the two countries can work on together. 

Finally, Washington has an interest in supporting those in Pakistan who are striving to strengthen the country’s democratic institutions and rule of law. Younger generations of Pakistanis who have come of age in the internet era demonstrate a greater interest in democratic values than their forebears. The United States should continue to promote human rights and the growth of civil society in Pakistan.