India-Pakistan ceasefire: A victory of global diplomacy and economic pressure

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The clashes that began on Wednesday, May 6, 2025, soon escalated into air strikes and drone warfare. Both sides attacked each other’s military bases, raising fears of instability in the region.

On 10 May 2025, two nuclear-armed neighbours in South Asia, India and Pakistan, declared a complete and immediate ceasefire after four days of intense military clashes. The conflict, which escalated to missile attacks and drone warfare along the Line of Control (LoC), not only reflects the military strategies of the two countries but also tells a complex story of global diplomacy and economic pressures. In this article, we analyse the facts behind the ceasefire, international interventions, and its long-term implications.

Emergence of conflict: Kashmir at the centre again

A deadly terror attack in Indian-controlled Kashmir last month reignited tensions between the two countries. The attack was part of a decades-old dispute over Kashmir, a picturesque Himalayan valley that has remained unresolved since the India-Pakistan Partition in 1947. The clashes, which began on Wednesday, May 6, 2025, soon escalated into air strikes and drone warfare. Both sides attacked each other’s military installations, raising fears of instability in the region. This was the first time the two countries used drones on a large scale, opening up new dimensions for future wars.

Ceasefire announced: US role?

US President Donald Trump announced on his social media platform on May 10, 2025 that India and Pakistan had agreed to a “complete and immediate ceasefire” brokered by the US. Trump praised the “prudence and great intelligence” of both countries. However, Indian Foreign Secretary Vikram Misri said that the agreement was reached through direct talks between the military directors general of the two countries, which began at 3:35 pm on Saturday and came into effect from 5 pm. Pakistan Foreign Minister Ishaq Dar also confirmed the ceasefire on social media and described his conversation with US Secretary of State Marco Rubio as “reassuring”.

It is clear that the US had a role in the ceasefire, but both India and Pakistan tried to present it as their diplomatic victory. Misri indicated that the military directors general of the two countries would talk again on Monday, making the ceasefire appear temporary.

Role of global diplomacy

The ceasefire was not just a result of the will of India and Pakistan; several international players had a role to play in it. Gulf countries such as Saudi Arabia, Qatar, and the United Arab Emirates (UAE) held diplomatic talks with both sides. These countries, which have close ties with both India and Pakistan, were active in reducing tensions. On Thursday, Saudi and other Gulf diplomats met the leaders of both countries.

The US, though now refrains from direct mediation in the India-Pakistan dispute, also played its role. Marco Rubio spoke to the foreign ministers of both countries and advised them to avoid “miscalculations”. The US’ focus is now on containing China and the Indo-Pacific strategy, but instability in South Asia poses a threat to its interests.

China, which Pakistan calls its “iron brother”, also played an indirect role in the ceasefire. Its investment of over $60 billion in the China-Pakistan Economic Corridor (CPEC) passes through volatile regions. Escalation of tensions could have endangered Chinese projects, so Beijing sent a message to Pakistan to exercise restraint.

Economic pressure: The real brake of the war

The biggest reason for the ceasefire was economic pressure more than military strategy. Pakistan, which is struggling with inflation, an energy crisis, and a weak tax base, managed to secure $1.1 billion from the International Monetary Fund (IMF) on May 9, 2025. This was part of a $7 billion bailout. But this money came with conditions: subsidy cuts, tax reforms, and—most importantly—avoiding war.

Financial Action Task Force (FATF) monitoring also put pressure on Pakistan, despite its removal from the grey list in 2022. Pakistan’s growing dependence on external financing is a significant constraint on its ability to escalate the conflict with India. For Pakistan, the need to maintain economic stability and avoid international sanctions limits its strategic autonomy, effectively putting the “pause button” on escalation in the hands of global financial institutions and major powers.

For India, the shift from “strategic restraint” to “strategic messaging” reflects a more assertive but calculated approach. The 2019 Balakot airstrike is an example of this, combining military action with diplomatic efforts to shape global perceptions.

India’s growing economic strength and strategic partnerships such as the United States and Israel have enhanced its ability to respond decisively, as well as maintain international legitimacy. The article highlights India’s use of Israeli-origin drones and cyber warfare capabilities, underscoring how technological advancements have reshaped the dynamics of conflict.

The broader geopolitical context is equally important. The United States, though no longer keen to mediate, exerts economic influence, particularly on Pakistan through the IMF. China, despite its “iron brother” rhetoric, prioritizes the sustainability of its $60 billion China-Pakistan Economic Corridor (CPEC) investment, urging restraint.

Gulf countries such as Saudi Arabia and the UAE, once unconditional supporters of Pakistan, now balance their relations with both countries, viewing India as an attractive economic partner. Meanwhile, actors such as Turkey and Qatar offer moral support to Pakistan, but their influence remains marginal.

The India-Pakistan rivalry is no longer simply a bilateral competition but a complex interplay of global economic and strategic interests. The “pause button” in the ongoing conflict rests not with military commanders but with bankers, diplomats and technocrats in Washington, Beijing, Riyadh and beyond. For now, the ceasefire holds, but without addressing the root causes—especially the Kashmir dispute—lasting peace remains elusive.