A new beginning of Pak-Saudi partnership,
By Asif Khurshid,
With the two-day successful visit of Saudi Crown Prince Mohammad
Bin Salman (MBS) along with a high-level official delegation, surely a new era of Pak-Saudi economic and strategic partnership has begun. At the time of shaky economic crises, Pakistan was in the direst need of such assurances and support which could help tide over its economic
predicament hovering over the nation’s heads. MBS visited Pakistan on the invitation of Prime Minister Imran Khan who welcomed him along with the country’s top leadership. Prince Crown was conferred on with the highest civil award by President Arif Alvi. During its official visit, Saudi crown prince signed seven investment agreements in different fields worth $20 billion. The MoUs and agreements included technical cooperation programs in the field of standardizations/quality control, framework agreement between the Government of Pakistan and Saudi Fund for Development, draft MoU on the development of renewable energy products, MoU to study investment opportunities for the establishment of an integrated complex (refinery petrochemical plant), MoU in the field of mineral resources, framework for power generation, and agreement for cooperation in the field of youth and sports. Again, with the formation of the Saudi-Pakistan Supreme Coordination Council, the ties between the two countries are given a significant boost.
Indeed, Saudi Arabia has been the first state that came to Pakistan’s
aid. The Prince called Pakistan a darling country to all Saudi and said that he was very optimistic about Pakistan’s future. The most heart winningmoment of Prince Mohammad’s visit, however, was his reply to Imran Khan’s request and concern raised over the difficulties of Pakistani Hajj pilgrims and laborers in KSA. PM Khan by saying they were very close to his heart and should be treated as ‘their own’ people. In responding, Mohammad Bin Salman won the hearts of millions of Pakistan by declaring himself as ‘Pakistan’s ambassador to Saudi Arabia’ and said ‘we can’t say no to Pakistan’.
Within a month after assuming the Prime Minister’s seat, Imran
Khan embarked on his first official visit to Saudi Arab accompanied with a high-level official delegation including his foreign and finance ministers knowing the country was on the edge of bankruptcy due to the burden of massive foreign loans, fiscal deficit, and circular debt payments. That was the time when Saudis came forward to shoulder Pakistan’s crumbling economy with $6 billion. This package would include “$3 bn balance of payments support and another $3bn in deferred payments on oil imports.” Towards the beginning of October 2018, Pakistan was facing the current account deficit of $18 billion. “An MoU was signed between the Finance Minister Asad Umar and the Saudi Finance Minister Muhammad Abdullah Al-Jadaan. It was agreed Saudi Arabia would place a deposit of $3 billion for a period of one year as the balance of payment support.”
The Saudi Kingdom has also agreed for a one-year deferred payment
facility for import of oil, up to $3 Billion. Initially, this facility will be for a period of three years; however, this can be extended and revised upon
completion of the stipulated period. It is also worth mentioning here that, Pakistani crude oil import from Kingdom is 110,000 barrels per day.
Historically, the bilateral relations between the Islamic Republic of
Pakistan and the Kingdom of Saudi Arabia have been cordial and time
tested. Pakistan has been called “Saudi Arabia’s closest Muslim ally.” Pak- Saudi economic cooperation has been exceptionally smooth. The Kingdom has been a great source of supplement to Pakistan’s economy. There have been many areas of economic cooperation between the two countries. A great number of Pakistani manpower has been at work in the Kingdom. They, through their remittances, plays a critical part in the sustenance of the country’s economy besides relieving the burden on the Pakistani job market. As an estimate, more than 2 million Pakistanis are currently working in various fields in the Kingdom of Saudi Arabia.
Bilateral trade volume between Pakistan and Saudi Arabia was over
$30 billion during the first decade of the 21st century. However, in any
difficult time, Saudi Arabia has been repeatedly assisting Pakistan
financially without its direct commercial interests. In March 2014, the
Kingdom supported the Pakistani economy through direct funding of $1.5 billion. Indeed, that was serious crisis time and Pakistani currency was significantly devalued and foreign currency reserves dropped to a drastic low level. At that time, Saudi financial aid boosted the Pakistani economy besides bolstering “the country’s falling foreign currency reserves” to 18 % with 4% increase in the value of Pakistani Rupee. Unfortunately, no worthwhile attention was paid to reform and diversify the economy, which resulted in another crisis where newly formed Government of Imran Khan had to face the financial crunch right from the beginning. In return to Saudi Arabia economic assistance, Pakistan provided military aid and expertise to KSA.
Indeed, the relations between Pakistan and Saudi Arabia are far
beyond and above the realm of normal diplomatic relations and Saudis
have proved Pakistan’s all weathers friends since inception. This historic visit of charismatic Prince Mohammad is the dawn of a new relationship between the two countries, and now it is the responsibility of Imran Khan and his team to take the partnership to its newest heights by possibly reciprocating the advantages extended by the Kingdom. Nothing is more direly needed than the proper channelizing of these dividends through long term and pragmatic economic policies.
(Note: The writer belongs to an Islamabad based think tank Centre of Peace and Social Studies, can be reached at [email protected].)