Saudi Arabia and Pakistan have signed a sweeping defence pact, marking a significant deepening of military co-operation between the two long-time partners. The agreement adds a new layer to the Gulf’s recalibrating security architecture.
It commits the two nations to treat any act of aggression against one as aggression against both. It also covers joint deterrence, intelligence sharing and military training, effectively formalising a relationship that has existed for decades. The kingdom has long maintained close economic, religious and security ties with Pakistan.
The move comes amid heightened regional tensions. Last week, Israel attacked members of the Hamas leadership in the Qatari capital Doha, an attack that raised questions about US security guarantees in the region, as one ally struck another.
While US President Donald Trump said he was not informed of the attack beforehand, and Israeli Prime Minister Benjamin Netanyahu described the Qatar raid as a “wholly independent decision by Israel”, the episode demonstrated Washington’s limited ability, or willingness, to prevent Israeli action against a key regional partner.
Analysts say the pact between Saudi Arabia and Pakistan highlights the kingdom's drive to strengthen its security posture beyond its traditional dependence on the US. It is both a signal of intent and a hedge – a way for Saudi Arabia to diversify its security partnerships.
“It’s less about breaking with the US and more about Riyadh signalling deep frustration with the US after Israel’s attack on Qatar, a fellow GCC country,” Firas Maksad, managing director for Middle East and North Africa at Eurasia Group, wrote in a post on X, referring to the Gulf Co-operation Council.
“[Saudi Crown Prince Mohammed bin Salman] is telling Washington: we’re diversifying our options. But Saudi Arabia still is and will remain dependent on the US for security. This is hedging, not decoupling. Deepening defence ties to Europe is also a possibility.”
The US has deep-rooted security commitments in the Gulf, with tens of thousands of troops and advanced military assets that can surge rapidly to address emerging contingencies. But Riyadh and other Gulf states have sought in recent years to diversify their defence partnerships, and this pact underscores that strategy.
While the US remains a vital ally, Gulf countries are looking to reduce reliance on any single power and strengthen their strategic autonomy.
This includes acquisitions such as Turkish and Chinese UAVs, South Korean surface-to-air missiles, and, in the UAE’s case, Chinese L-15 trainer jets and Russia’s Pantsir point-defence system. Qatar has strengthened defence ties with Turkey, focusing on joint exercises and agreements on military technology.
Qatar was attacked twice this year. During the 12-day Israel-Iran war in June, Tehran struck Al Udeid Air Base in retaliation for US air strikes on its underground nuclear sites. The base hosts American military personnel.
The incidents have amplified Gulf security worries. The same happened in 2019, when Iran was blamed for the Aramco attack in Saudi Arabia. The issue resurfaced this year when the US joined Israel in its conflict with Iran, despite Gulf states pushing for a diplomatic resolution.
Implications for Iran
The Saudi-Pakistan defence pact aligns two of Iran’s largest neighbours in a defensive alliance, raising the possibility that Pakistan’s nuclear deterrent could extend over Saudi Arabia.
A Saudi official told Reuters that “this is a comprehensive defensive agreement that encompasses all military means” when asked whether Pakistan would be obliged to provide a nuclear umbrella under the pact. Observers say this development could be a source of concern for Tehran.
Saudi Arabia has sought US assistance to advance a civilian nuclear power programme, which was reportedly tied in part to a proposed diplomatic recognition deal with Israel before the 2023 Hamas attack. Prince Mohammed had previously said the kingdom would pursue nuclear weapons if Iran developed them.
There has been intensified Saudi-Iranian engagement over the last few days. Prince Mohammed held talks with Iranian President Masoud Pezeshkian on Monday on the sidelines of the emergency Arab-Islamic summit that took place in Doha in response to Israel’s attack on Qatar. The following day the Saudi Crown Prince received Iran’s top security chief Ali Larijani in Riyadh.
Later, Mr Larijani met the Saudi Defence Minister Prince Khalid bin Salman. In April, Prince Khalid met with Iran’s Supreme Leader Ali Khamenei in the Iranian capital and delivered a letter from King Salman. The message warned, according to reports, that Israel was seeking a pretext for escalation and urged Iran to engage with Washington over its nuclear programme. In June, Israel struck Iran’s nuclear facilities.
Pakistan remains the only nuclear-armed Muslim-majority nation and commands the Islamic world’s largest army, which it has repeatedly said is focused on deterring its arch-rival India. The two neighbours engaged in a direct military confrontation in May.
India's ministry of external affairs spokesman, Randhir Jaiswal said in a post on X on Thursday that India was aware of the development, adding it would study its implications for New Delhi’s security and for regional stability.
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Correspondents
By Tim Murphy
(Grove Press)
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