UAE asked Pakistan to repay its USD 1.5 billion loan. Is India the reason?

Ties between the United Arab Emirates and Pakistan have come under strain after Abu Dhabi asked Islamabad to return a billion-dollar loan — a move that has exposed growing unease over Pakistan’s shifting regional posture.

While Pakistan rushed to repay the funds, the timing raised eyebrows. Even as Islamabad tries to project itself as a mediator between the US and Iran, its actions have suggested anything but neutrality. Its deepening dependence on Saudi Arabia — which stepped in to help repay the loan — and its muted response to Iran’s moves in the Gulf have fuelled perceptions that Pakistan is trying to play both sides, according to The Financial Times.

This balancing act of Pakistan has not gone down well in Abu Dhabi. Neil Quilliam of Chatham House noted that Pakistan’s attempt to position itself as a mediator in the US–Iran conflict has irritated the UAE, which views the situation in far more clear-cut terms.

Even as Pakistan pitches neutrality, the UAE has chosen what it calls a “middle ground”, signalling a lack of trust in Islamabad’s stance. Quilliam also pointed to the UAE’s growing strategic alignment with India, suggesting that Abu Dhabi increasingly sees Pakistan’s proximity to Saudi Arabia as a conflict of interest.

Emirati academic Abdulkhaleq Abdulla was blunt about the mood in Abu Dhabi, saying there is visible “frustration” with Pakistan’s approach. “However, being upset is one thing, but rethinking the relationship after all this is said and done is something else,” he said.

Meanwhile, Pakistan’s foreign ministry has downplayed the episode, calling the loan repayment a “routine financial transaction” and denying any link to the Gulf tensions.

While some officials in Islamabad privately voiced frustration over the episode, others viewed it as a chance to reduce reliance on the United Arab Emirates—especially amid Abu Dhabi’s deepening ties with India.

As per The Financial Times report, the development has strained what was once a close Pakistan–UAE relationship. Abu Dhabi’s sudden demand for loan repayment also took both Islamabad and the International Monetary Fund by surprise, particularly since the UAE had earlier assured it would not seek repayment before Pakistan’s IMF programme ends in 2027.

The fallout has further increased Pakistan’s dependence on Saudi Arabia, whose backing now makes up nearly half of the country’s central bank reserves.