Business Recorder Editorials 14th August 2026

The tail wagging Washington

EDITORIAL: Benjamin Netanyahu’s rejection of the latest US-backed Gaza peace proposal has exposed an increasingly uncomfortable reality for President Donald Trump: Washington may provide Israel with extraordinary diplomatic and military support, but the Israeli prime minister continues to behave as though American policy must ultimately bend to his political requirements.

The latest dispute is particularly revealing because Hamas had accepted the broad framework for phased disarmament alongside Israeli withdrawal, only for Netanyahu to insist that Hamas surrender its weapons completely before Israeli forces begin pulling back. A plan Trump only recently described as a major breakthrough has therefore run directly into Israeli resistance.

The disagreement over sequencing is fundamental. The 15-point proposal envisages Hamas relinquishing its weapons through a verified process while Israeli forces withdraw in stages. Netanyahu has effectively reversed that bargain by demanding complete disarmament first, while Israel continues to control most of Gaza.

Such a condition strips the Palestinian side of its principal leverage before Israel fulfils the corresponding part of the arrangement. Unsurprisingly, it also makes implementation far more difficult and gives those opposed to ending the conflict another opportunity to run down the clock.

That appears particularly convenient as Israel approaches its October election. Netanyahu faces strong pressure from far-right political forces that oppose significant concessions and have repeatedly argued against withdrawal from Gaza. His own political survival is therefore increasingly intertwined with maintaining their support.

Compounding matters is his continuing corruption trial. Losing political power would not automatically send him to prison, but a conviction could ultimately carry that consequence, making the stakes surrounding his political future unusually personal as well as political. But why should any of this determine the fate of Gaza?

An entire population cannot remain trapped between bombardment, displacement and destroyed infrastructure because the Israeli prime minister finds compromise electorally inconvenient.

Close to three years of conflict have devastated Gaza’s healthcare and education systems, obstructed reconstruction and left civilians dependent upon restricted humanitarian assistance. A peace framework cannot remain hostage to coalition arithmetic in Jerusalem indefinitely.

The more troubling question concerns Washington. Trump has repeatedly demonstrated that he is willing to exert enormous pressure on allies and adversaries alike when he believes American interests require it. Yet Netanyahu has enjoyed an extraordinary degree of latitude even when Israeli actions have complicated US diplomatic initiatives. That imbalance has encouraged precisely the behaviour now threatening the Gaza plan. If every Israeli objection results in Washington modifying its own position, Netanyahu has little incentive to compromise.

The United States possesses considerable leverage and should finally be prepared to use it.

Military assistance, diplomatic protection and the depth of the bilateral relationship give Washington influence that no other outside power possesses.

Exercising that influence does not require abandoning Israel. It requires insisting that an agreement promoted by the American president cannot be repeatedly rewritten whenever the Israeli government finds one of its obligations politically inconvenient.

There is also a wider regional interest at stake. The Middle East is already absorbing the consequences of the renewed US-Iran war, instability in Lebanon and disruption to trade and energy routes. Allowing Gaza to remain another permanent theatre of conflict increases the risk that these crises begin feeding into one another.

Pakistan and other states that have consistently supported a negotiated Palestinian settlement have every reason to urge Washington to prevent yet another diplomatic opportunity from being squandered.

Trump now faces a test of his own authority. He can allow Netanyahu to keep shifting the conditions until the Gaza plan becomes meaningless, or he can insist that Israeli commitments carry the same weight as those demanded of the Palestinians.

Peace requires concessions from all parties, and no agreement can survive if one participant is permitted to rewrite it unilaterally.

For all Trump’s boasts about deal-making, Gaza has produced a simpler question: who exactly is setting the terms?

Borrowing the difference

EDITORIAL: A trade deficit approaching $4 billion in the very first month of the new fiscal year is precisely the sort of warning Pakistan’s external account does not need.

According to the Pakistan Bureau of Statistics (PBS), the deficit widened 25.17 percent year-on-year in July to $3.948 billion as imports jumped 18 percent to $6.887 billion.

Exports did rise, by 9.54 percent to $2.939 billion, but nowhere near fast enough to keep pace with imports. The imbalance, rather than any fall in exports during the month, is the real source of concern.

That distinction matters because Pakistan remains chronically dependent on foreign exchange generated outside its productive economy. Remittances have repeatedly provided the cushion that prevents external imbalances from becoming outright crises, while borrowed dollars and deposits from friendly countries have filled the remaining gaps.

Such support can stabilise the balance of payments, but it cannot substitute indefinitely for an export sector capable of paying the country’s way in the world. The latest trade numbers show once again how far Pakistan remains from that objective.

Perhaps the most damning feature of this failure is that even the rupee’s historic depreciation over the past decade has failed to produce the export transformation that textbook economics might have suggested. A cheaper currency should, other things being equal, make exports more competitive internationally.

Pakistan discovered instead that exchange-rate adjustment cannot compensate for expensive energy, weak productivity, poor logistics, inconsistent taxation, regulatory uncertainty and the absence of a coherent export strategy. Depreciation raised the cost of imported inputs while structural weaknesses continued suppressing competitiveness.

The deeper problem is that Pakistan has never developed an export policy commensurate with the seriousness of its foreign-exchange constraint.

The country largely continues selling abroad what established industries already produce rather than systematically identifying global demand, studying emerging supply chains and developing products in which competitive advantage can be created.

Comparative advantage is not always something countries simply inherit. Successful exporting economies invest in skills, technology, infrastructure, and market intelligence to manufacture it.

Pakistan has attempted pieces of that exercise at different times, but rarely with continuity. The export push during the Musharraf period demonstrated what sustained government attention to markets, trade facilitation and commercial diplomacy could achieve, yet subsequent governments failed to build a durable institutional framework around it.

Export policy became another collection of targets and incentive packages, regularly revised but rarely anchored in a serious long-term strategy for moving into new products and markets. The result is an economy that still depends overwhelmingly on a narrow export base while repeatedly rediscovering its balance-of-payments problem.

The contrast with the government’s continuing search for external financing is uncomfortable. Finance Minister Muhammad Aurangzeb recently used his Washington visit to seek a proposed $10 billion US exchange-stabilisation facility, alongside wider financing and investment support.

Such arrangements may provide valuable breathing space, particularly during periods of geopolitical stress, and refusing available financing would serve no purpose. But every fresh request for an external backstop should reinforce the urgency of creating an economy that eventually requires fewer of them. Liquidity buys time.

Export competitiveness determines what the country does with that time.

The July figures therefore deserve to be treated as an early warning rather than another monthly statistical fluctuation. Imports will naturally increase when economic activity strengthens, and suppressing productive imports merely to improve the trade balance would be self-defeating.

The answer lies in expanding exports quickly enough to finance a growing economy without repeatedly exhausting foreign-exchange reserves. That requires a genuine export strategy built around global demand, productivity, diversification and competitiveness, with measurable targets and institutional accountability.

Pakistan has become remarkably proficient at arranging the dollars required to survive the next external financing squeeze. It now needs to become equally proficient at earning them.