- By Surarika Das
- Fri, 17 Jul 2026 03:04 PM (IST)
- Source:JND
- Pakistan pays India's share in Indus Waters Treaty arbitration.
- .India suspended participation after cross-border terrorist attack.
- .Dispute costs Pakistan over $600,000 amid economic struggles.
Who knew an international dispute for its own gain would backfire on Pakistan, paying both its arbitration costs and India's share as well? That's what happened with Islamabad after New Delhi suspended its participation in the proceedings in the ongoing Indus Waters Treaty dispute, placing it in abeyance. Pakistan has spent over 600,000 dollars to keep the arbitration before the Permanent Court of Arbitration (PCA), and the cost is going to get higher as the case continues, ET reported.
The question that arises here is why Pakistan is paying India's costs and how the case is even continuing without India's presence.
Why Is Islamabad Paying India's Share?
The story dates back to April 2025, wherein India's Pahalgam was allegedly attacked by Pakistani terrorists. Following the episode, India suspended its participation in all proceedings linked to the treaty, arguing that the agreement would remain in abeyance unless Islamabad took credible and irreversible action against cross-border terrorism.
The report outlines that Pakistan, since then, has been paying India's share of the proceedings along with its own expenses.
What Is The Dispute About?
The case revolves around India's Kishanganga and Ratle hydroelectric projects on the western rivers governed by the Indus Waters Treaty. Pakistan claimed that the structure of the two projects violates the treaty and has sought arbitration before the Permanent Court of Arbitration.
On the other hand, India continues to argue that such disputes should be evaluated by a neutral expert, not a court of arbitration.
Why Is India Boycotting Its Proceedings?
After the Pahalgam attack, the Indian government said that it would not resume its cooperation under the treaty until Pakistan "credibly and irrevocably" ends its assistance to cross-border terrorism.
Additionally, it also rejected the Permanent Court of Arbitration's jurisdiction, claiming that the judicial body is "illegally constituted" and asserting that its decisions will be "null and void."
Under the prescribed rules, proceedings can be conducted even in the absence of one party, provided the tribunal determines that it has jurisdiction over the dispute. The international body (PCA) stated that it is capable of hearing Pakistan's case without India's presence. Meanwhile, India does not recognise the proceedings and continues to stay away from the case.
Pakistan's Collapsing Economy
The expenses come at a time when the Islamic Republic is still recovering from a debt after years of financial stress and repeated dependence on international bailouts. Pakistan still stands under a $7-billion IMF Extended Fund Facility, its 25th IMF programme since joining the lender in 1950.
Even as the economy has stabilised compared to the crisis years of 2022-23, Islamabad still continues to operate under strict reform conditions that include raising tax revenues, reducing subsidies, managing public debt, and rebuilding foreign exchange reserves.
As per the IMF's latest projections, Pakistan's economy is likely to elevate by 3.6 per cent in 2026, while average inflation is projected at 7.2 per cent. The country’s nominal GDP is estimated at around $408 billion, but outstanding IMF credit remains above SDR 7.1 billion (roughly $9-10 billion).
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