Middle East & Central Asia News
LAST UPDATE: June 10, 2025
Pakistan likely to hike defence spending but slash overall budget in 2025-26
Pakistan will unveil its annual federal budget for the coming fiscal year later on Tuesday, seeking to kickstart growth while finding resources for an expected hike in defence expenditure following the conflict with India last month. Defence spending may rise by about 20%.
Insight
Pakistan’s budgetary priorities reveal the persistent challenge of balancing security imperatives with economic constraints, as the country increases defense spending by approximately 20% despite operating under strict IMF program conditions. The decision to boost military expenditure following recent conflicts with India underscores the enduring security dilemma that has shaped Pakistan’s development trajectory for decades. With defense allocation rising to approximately $8.9 billion while the overall budget shrinks to $62.45 billion, Pakistan continues prioritizing military preparedness over development spending, potentially undermining long-term economic growth prospects. This resource allocation occurs as Pakistan struggles with one of the world’s lowest tax-to-GDP ratios, with only 1.3% of the population paying income tax. The IMF’s insistence on expanding the tax base through agricultural and retail sector reforms creates additional fiscal pressure, while defense spending increases could jeopardize program compliance and economic stability.
Trump Says Iran Pushing to Enrich Uranium in ‘Tough’ Talks
President Donald Trump said Iran was pressing to be allowed to enrich uranium in a potential nuclear deal with the US, expressing worry that Tehran was seeking too much. “They’re just asking for things that you can’t do. They don’t want to give up what they have to give up. You know what that is. They seek enrichment. We can’t have enrichment,” Trump said Monday at a White House event.
Insight
Trump’s characterization of Iran as “tough” negotiators seeking uranium enrichment rights reflects the fundamental challenge facing nuclear diplomacy, as both sides maintain irreconcilable red lines that could derail any potential agreement. The President’s public statements appear to contradict his own administration’s earlier proposals that reportedly would have allowed limited enrichment, suggesting internal tensions within the US negotiating team or a deliberate hardening of the American position. Iran’s insistence on maintaining enrichment capabilities, which it claims as a sovereign right under the Nuclear Non-Proliferation Treaty, directly conflicts with Trump’s zero-enrichment demands, making any deal increasingly unlikely. The timing of these comments, coming after Trump briefed Israeli Prime Minister Netanyahu on the talks, indicates that Israeli concerns about any Iranian nuclear program may be influencing American negotiating positions and contributing to the hardline stance.
Iran says new round of US talks planned for Sunday
“The next round of Iran-US indirect talks is being planned for next Sunday in Muscat,” foreign ministry spokesman Esmaeil Baqaei said in a statement Tuesday, adding foreign minister and chief negotiator Abbas Araghchi would this week attend the Norway’s Oslo Forum, a gathering of conflict mediators.
Insight
Iran’s announcement of continued nuclear talks despite public disagreements over uranium enrichment demonstrates both countries’ recognition that diplomatic engagement remains preferable to military confrontation, even as fundamental positions remain far apart. The scheduling confusion between Iran’s Sunday date and Trump’s earlier Thursday expectation reflects the complex logistics of indirect negotiations mediated through Oman, highlighting how even basic coordination remains challenging between two countries without formal diplomatic relations. Iran’s participation in the Oslo Forum while simultaneously planning nuclear talks suggests Tehran is pursuing multiple diplomatic tracks to manage international pressure and potentially build support for its positions among global mediators. The persistence of these talks through five rounds since April, despite repeated public disagreements and contradictory statements, indicates that both sides see value in keeping diplomatic channels open, possibly as insurance against escalation. The Omani mediation role continues to be crucial for both countries, providing a face-saving mechanism that allows continued engagement without direct bilateral contact.
