Beyond a reset: US-Pakistan ties exemplify new era of pragmatism

If 2025 is remembered in Islamabad and Washington as a year of renewed engagement, it will not be because old alliances were revived or decades of mistrust suddenly disappeared.

Rather, it is likely to be recalled as a moment when realism took hold and shifting global priorities pushed both sides toward pragmatism instead of prolonged estrangement.

After years of drift, relations between Pakistan and the United States moved into a more workable phase. The shift was neither dramatic nor ideological, but measured and deliberate.

Senior-level channels reopened and, more importantly, remained active. Cooperation remained limited in scope, but it became steadier and less reactive. What emerged was not a reset, but a recalibration shaped by converging interests and the hard lessons of a complicated past.

The most visible signal came with an unprecedented White House meeting between President Donald Trump and Pakistan’s army chief, Field Marshal Syed Asim Munir. The message was clear: Pakistan was again being treated as a relevant regional actor rather than a peripheral security problem.

Islamabad, for its part, approached the engagement cautiously, well aware of how quickly bilateral warmth has faded in the past.

That caution was reinforced by events on the ground. The India-Pakistan standoff in May 2025 served as a reminder in Washington of how rapidly South Asia can slide toward escalation.

The US role in helping steady the situation, and President Donald Trump’s direct public acknowledgment of Pakistan’s restraint, pointed to a modest but noticeable shift in tone. Islamabad’s subsequent decision to nominate Trump for the Nobel Peace Prize was symbolic, but it carried a clear message: Pakistan was prepared to accept mediation rather than reflexively reject it.

Beyond transactional security

For much of their shared history, Pakistan-US relations were narrowly transactional. Cooperation was exchanged for assistance, alignment for tolerance.

That arrangement eroded over time and effectively collapsed after the US withdrawal from Afghanistan in 2021. What has followed is not a revival of the old model, but a more limited alignment shaped by shared constraints rather than shared visions.

Washington’s priorities have evolved. Large military deployments and open-ended stabilization missions no longer dominate US strategy, notwithstanding Venezuela.

Instead, the focus has shifted toward geoeconomics, resilient supply chains, technological competitiveness and partnerships that limit long-term security burdens. Pakistan’s own concerns – economic stabilization, investment-led growth, technological modernization, energy security and counterterrorism – overlap with this agenda more than is often acknowledged.

One indication of this shift came in mid-January 2026, when Pakistan signed a memorandum of understanding with SC Financial Technologies LLC, described as an affiliate of World Liberty Financial.

The agreement explores integrating a dollar-pegged stablecoin into Pakistan’s payments system to reduce the cost and time of cross-border transactions alongside planned digital-currency infrastructure. While exploratory, the move reflects Islamabad’s willingness to link aspects of its financial modernization to US-linked regulatory and technological frameworks.

Pakistan has framed this effort against significant scale: more than $38 billion in annual remittances and a rapidly expanding digital economy, with industry estimates suggesting roughly 40 million crypto users.

Accelerated regulatory efforts through new virtual-asset institutions signal an attempt to bring digital finance out of informal channels and into a supervised, growth-oriented system.

From Washington’s perspective, such steps align with broader goals of transparency, secure digital infrastructure, and the integration of emerging markets into regulated global networks. This is not ideological alignment. It is practical economics.

Security convergence without illusions

Security cooperation has returned, but in a more constrained and realistic form. Since the post-2021 transition in Afghanistan, militant activity has intensified along the Pakistan-Afghanistan border. Pakistan’s counterterrorism operations remain extensive. Official briefings for 2025 cite more than 5,300 terrorist incidents nationwide and nearly 2,600 militants killed.

For Washington, the calculation is straightforward: unchecked militancy undermines regional stability, disrupts trade routes and deters investment. For Islamabad, cooperation provides access to intelligence, operational credibility and diplomatic space.

Neither side pretends that trust has been restored. What exists instead is a shared recognition of risk.

The March 2025 joint operation that led to the arrest of Sharifullah, also known as Jafar, a senior ISIS-K figure linked to the Abbey Gate attack, illustrated this selective cooperation.

Trump’s public acknowledgment of Pakistan’s role marked a shift in tone, but it stopped short of signaling a broader partnership. It was recognition of capability, not absolution.

The evolving relationship has also extended beyond South Asia. In late 2025, Pakistan accepted an invitation from Washington to join the proposed “Board of Peace” aimed at stabilizing Gaza after years of conflict.

Backed by a US-sponsored resolution endorsed by the United Nations Security Council, the initiative reflects a broader effort to manage post-conflict stabilization and reconstruction.

For Islamabad, participation reinforces long-standing support for the Palestinian cause while signaling a willingness to contribute to complex international stabilization efforts.

For Washington, Pakistan’s inclusion reflects a recalibration recognizing Islamabad not only as a regional security actor, but as a state capable of playing a limited diplomatic role beyond its immediate neighborhood.

Former ambassador Masood Khan’s description of the invitation as a “diplomatic success” captures its symbolic value. More importantly, it highlights how Pakistan’s renewed engagement with Washington has expanded its diplomatic bandwidth, allowing selective participation in global initiatives without overreach or compromise of core foreign-policy positions.

Geoeconomics and strategic balance

Any serious assessment of Pakistan-US relations must account for China. Beijing remains Pakistan’s most consistent strategic partner, particularly in infrastructure and long-term industrial development. The China-Pakistan Economic Corridor is a central pillar of Pakistan’s effort to reposition itself within the broader Asian economy.

Washington recognizes this reality. The United States is not attempting to displace China in Pakistan. Instead, US strategy has focused on diversification-reducing overdependence while securing access to critical minerals and supply chains essential for advanced manufacturing and the global energy transition.

Pakistan’s mineral potential, often estimated between $6 and $8 trillion and including copper, lithium, and rare earth elements, has taken on new strategic significance. About 83 American firms already operate in Pakistan, generating more than $3 billion annually, yet US foreign direct investment remains modest. The constraint is not opportunity, but the absence of modern frameworks and sustained facilitation.

Discussion around revamping the Bilateral Investment Treaty and expanding engagement through Pakistan’s Special Investment Facilitation Council reflects this gap. Projects such as the Reko Diq copper-gold mine – projected to generate roughly $74 billion over 37 years – offer a sense of what deeper economic engagement could look like.

Limits and the long view

Despite the more positive tone of 2025, caution remains essential. The relationship continues to rely heavily on personalities and favorable circumstances. Institutional depth is limited. Trade volumes remain modest. And the India factor still looms large in a region prone to sudden crises.

Pakistan’s leadership understands that the US is not a dependable ally in moments of existential stress. American policy is guided by immediate interests rather than long-term commitments. That historical experience informs Islamabad’s current approach.

What has changed is how Pakistan manages that reality. Instead of swinging between dependence and defiance, Islamabad is engaging Washington with calibrated expectations – working together where interests overlap, hedging where they do not and avoiding the illusion of strategic rescue.

The result is a quieter, narrower relationship, but one that may prove more durable. For Washington, the value lies not in loyalty, but in Pakistan’s capacity to reduce regional risk and help prevent crises from spiraling out of control. For Islamabad, the benefit is relevance without dependency.

In international politics, maturity often begins when illusions fade. For Pakistan and the US, that recognition may offer the most realistic foundation for engagement they have had in decades.

Saima Afzal is an independent and freelance researcher specializing in South Asian security, counter-terrorism, the Middle East, Afghanistan, and the Indo-Pacific region. She holds an M. Phil in Peace and Conflict Studies from the National Defence University, Islamabad, Pakistan.