The United Arab Emirates has issued a startling demand to its longtime ally Pakistan for the immediate repayment of $3.5 billion. This comes as cash-strapped Pakistan attempts to mediate an end to the US-Israel war against Iran.

The demand, made by Abu Dhabi this month, could deplete one-fifth of the foreign exchange reserves held by Pakistan's central bank and jeopardize a $7 billion International Monetary Fund bailout program secured in 2024. Saudi Arabia, which signed a mutual defense pact with Islamabad last year, has stepped in to provide assistance by offering a new $3 billion central bank deposit and rolling over an existing $5 billion deposit for more than a year.

Analysts suggest that Abu Dhabi's decision reflects growing dissatisfaction with Islamabad. This is partly due to Pakistan's deepening relationship with Riyadh and its perceived weak response to Iranian attacks on Gulf regions following the US-Israel offensive.

Neil Quilliam, an associate fellow at Chatham House, stated that Pakistan's role as a mediator in the US war against Iran has also irritated the Gulf state, as the UAE currently "sees things in black and white." He added, "From the UAE's perspective, there is no neutrality here, no middle ground. If you are mediating, you are precisely in that middle ground."

Underlying this is the increasing tension between Saudi Arabia, which signed a defense agreement with Islamabad last September, and the UAE. In December and January, disagreements between the two Gulf powers over the Yemen civil war, where they support opposing factions, led to a public rift.

The US-Israel war with Iran has overshadowed these divisions, as the Islamic Republic responded with attacks targeting both Gulf nations. However, analysts indicate that tensions between Saudi Arabia and the UAE continue to worsen, with Riyadh cultivating closer ties with Pakistan, Turkey, and Egypt compared to its Gulf neighbor.

"The rift remains, and Pakistan is an area where this rift can manifest. In any case, the UAE has a much greater commitment to India," Quilliam said. "They see the growing alliance between Saudi Arabia and Pakistan, which, for the UAE, represents a conflict of interest with Abu Dhabi."

Three Pakistani advisors have indicated that the UAE has signaled to Islamabad to adopt a tougher stance against Iran. The UAE's foreign ministry has not responded to requests for comment.