The Indus Water Treaty (IWT) is a crucial water-sharing agreement between India and Pakistan, signed in 1960 and brokered by the World Bank. It governs how water from the Indus River system—vital for millions—is shared between the two countries127.

If the Indus Water Treaty is suspended or disrupted, the effects would be felt most immediately in Pakistan, where about 80% of the country’s farmland and nearly a quarter of its economy depend on Indus water for irrigation, drinking, and power generation236. This could lead to:

Lower crop yields and food shortages, risking food security for millions236.

Power shortages, as key hydropower plants depend on river flows26.

Economic instability, especially in rural areas, with rising unemployment and possible migration26.

Impact on the World Economy:

Pakistan is a major exporter of crops like rice and cotton. Disruption in water supply could reduce exports, affecting global markets and supply chains for food and textiles6.

Increased economic instability in Pakistan could lead to regional tensions, affecting trade and investment flows in South Asia and possibly drawing in international mediators like the World Bank25.

The situation could set a precedent for other international river disputes, highlighting the need for stronger global water-sharing laws and cooperation5.

In short, while the biggest impact is regional, the ripple effects—especially through trade, food prices, and geopolitical tensions—could be felt worldwide