Basel
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The second option is completely viable.
National security and defence comes first, will Iran provide funds for PAF to buy new jets? All these deal is under the table, so you don't worry it might irritate Iran.
If second option is viable then Russia and China can close deal of at least another 24 birds as per Pakistani requirements and Russia allow resell in contract, so China finance deal via soft loans, win win situation and India will not be able to blame Russia, also Russia can shed crocodile tears to satisfy India.