India-Pakistan Diplomatic Downgrade, Treaty Suspension
Analysis based on 6 articles · First reported Apr 24, 2025 · Last updated Apr 24, 2025
The escalating diplomatic tensions between India and Pakistan, marked by India's suspension of the Indus Waters Treaty and expulsion of diplomats, are likely to increase geopolitical risk in the region. This could negatively impact investor confidence in both India and Pakistan, particularly in sectors like tourism and infrastructure, and potentially lead to increased defense spending.
Following a terrorist attack in Pahalgam, Jammu and Kashmir, which killed 26 people, India has taken stringent diplomatic and economic measures against Pakistan. India summoned Pakistan's top diplomat, Saad Ahmad Warraich, to declare Pakistani military diplomats Persona Non Grata and demand their departure within a week. India also announced the withdrawal of its own military advisors from Islamabad, the immediate closure of the Integrated Check Post at Attari, and the suspension of the Indus Waters Treaty until Pakistan credibly ceases support for cross-border terrorism. Additionally, SAARC Visa Exemption Scheme visas for Pakistani nationals have been cancelled, and diplomatic mission strengths will be reduced. Pakistan's Defence Minister, Khawaja Asif, has stated that Pakistan is prepared to respond to any Indian escalation, while Prime Minister Shehbaz Sharif is convening a National Security Committee meeting.
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