UAE Shelves Islamabad Airport Deal After President’s India Visit, Signals Shift in Regional Ties
The United Arab Emirates has reportedly withdrawn from plans to operate Islamabad International Airport, days after President Sheikh Mohammed bin Zayed Al Nahyan’s brief but high-profile visit to India, signalling a possible shift in regional diplomatic and economic priorities.
According to Pakistani media reports, negotiations between Abu Dhabi and Islamabad over the airport’s management, which had been ongoing since August 2025, have been put on hold after the UAE showed declining interest in the project and failed to finalise a local operating partner.
While officials have not publicly linked the decision to political factors, the timing has raised questions amid deepening strategic ties between India and the UAE.
Airport Deal Put on Hold
The proposed agreement was aimed at bringing UAE expertise into the management and modernisation of Islamabad’s main international airport. The project was expected to improve efficiency and attract foreign investment.
However, reports suggest that Abu Dhabi reconsidered its involvement due to operational uncertainties and governance concerns in Pakistan’s aviation sector.
Pakistan has been struggling with financial pressure on state-owned enterprises, with repeated losses attributed to political interference and weak regulatory oversight. Last year, Islamabad privatised Pakistan International Airlines as part of broader economic reforms.
Analysts say these structural challenges may have reduced the project’s commercial viability.
Shifting Gulf Dynamics
The development also comes amid changing power equations in the Gulf region. Once close allies, Saudi Arabia and the UAE have recently taken divergent positions on regional security and political influence, particularly in Yemen.
Pakistan, meanwhile, has strengthened defence ties with Saudi Arabia and Turkey, pursuing closer military cooperation in the Islamic world.
In contrast, the UAE has expanded its defence and strategic engagement with India, reflecting a recalibration of priorities in South Asia.
Strengthening India-UAE Partnership
President Sheikh Mohammed’s recent visit to New Delhi underscored the growing depth of India-UAE relations. During his discussions with Prime Minister Narendra Modi, both leaders reviewed cooperation in defence, trade, energy, technology, and infrastructure.
A key outcome of the visit was the signing of a Letter of Intent for a Strategic Defence Partnership, laying the foundation for long-term military and security collaboration.
The two sides also agreed to accelerate projects under their Comprehensive Strategic Partnership, focusing on innovation, supply chains, and investment.
Shortly after the visit, the UAE approved the release of nearly 900 Indian prisoners, a move widely seen as a strong humanitarian and diplomatic gesture.
Pakistan’s Changing Position
For decades, the UAE has been one of Pakistan’s most important economic partners, hosting millions of Pakistani workers and providing vital remittance flows.
The two countries also cooperated in defence, energy, and infrastructure sectors. However, in recent years, concerns over security, regulatory stability, and infrastructure quality have affected investor confidence.
Experts believe the withdrawal from the Islamabad airport project reflects growing caution among Gulf investors regarding Pakistan’s public sector management.
Regional Implications
The UAE’s decision to step back from a major infrastructure project in Pakistan, while simultaneously strengthening ties with India, highlights evolving regional alignments.
Observers note that Abu Dhabi appears increasingly focused on long-term economic stability and strategic partnerships, with India emerging as a central pillar of its Asia policy.
While Pakistan remains an important regional player, sustained economic reforms and governance improvements may be required to restore investor confidence.
Our Thoughts
The shelving of the Islamabad airport deal, coming soon after the UAE President’s India visit, reflects broader shifts in regional diplomacy. As India-UAE relations enter a new strategic phase, neighbouring countries may need to recalibrate their economic and political approaches to remain competitive and relevant.