Why Saudi Arabia Decided to Bail out Bankrupt Pakistan despite Troubled Ties

While Pakistan won’t get Saudi’s support on Kashmir, it is perfectly happy to cash Riyadh’s check. And that’s enough for both.

On October 31, Pakistan’s troubled prime minister expressed his gratitude to Saudi Arabia for its recent commitment “to deposit $3 billion and financing $1.2 billion refined petroleum products during the year”, and further opined that the two states enjoy “long-standing and historic fraternal relations, rooted deep in common faith, shared history and mutual support”. Imran Khan further effused that the move “reaffirms the all-weather friendship between the two states”.

However, this verbiage is a small fig leaf for the bigger truth: There has long been trouble in paradise for the two states. Why has Riyadh sought to begin closing the otherwise gaping chasm in relations now? Afghanistan likely explains the move in some measure, but Riyadh’s growing economic ties with India will constrain the limits of Saudi-Pakistan ties.

PARADISE LOST?

Pakistan and Saudi Arabia’s ties predate the latter’s acquisition of massive wealth. In the 1960s, both sides valued each other for reciprocal reasons. Saudi appreciated Pakistan’s willingness to train Saudi armed forces as a countermeasure to Gamal Abdel Nasser’s socialist regime in Egypt. The kingdom sent troops to Pakistan for training and later, following an agreement in the mid-1960s, retired Pakistani military officials went to Saudi Arabia both to help build up the kingdom’s armed forces while enabling Pakistan to forge an international presence in the wake of its defeats to India in 1965 and 1971. Saudi Arabia became even closer to Pakistan after the loss of East Pakistan.

Events in the late 1970s bolstered Saudi’s interest in strengthening its security with the military help from the Land of the Pure, including the dissidents’ 1979 siege of the mosque at Mecca, the Iranian Revolution, the Iran-Iraq War and the Soviet Invasion of Afghanistan. By 1981, the Pakistan government admitted that “1,500 to 2,000 military men are on duty in Saudi Arabia in what they describe as engineering and training assignments”. In return, Saudi Arabia paid Pakistan perhaps as much as $1 billion. Throughout this period, Western intelligence agencies were aware of Pakistan’s efforts to build a nuclear bomb. Throughout the 1980s, Pakistan became the beneficiary of Saudi largesse while Saudi Arabia benefited from Pakistan’s military assets.

As Pakistan’s economic situation became ever more shambolic, its reliance upon Saudi Arabia deepened. Saudi Arabia was more than happy to oblige: It deferred loan payments for subsidised Pakistani oil imports; helped build large networks of madrassas, dampened impacts of sanctions following Pakistan’s 1998 nuclear tests in exchange for Pakistan military assistance while shoring up its regional interests. Moreover, remittances from Pakistani migrant workers in Saudi Arabia comprise about one-fourth of Pakistan’s overall foreign remittances while providing the kingdom with much-needed human resources.

Given the inordinate financial dependence upon Saudi Arabia and Riyadh’s expectation that Pakistan would be a reliable military partner, Saudi Arabia was miffed when Pakistan demurred from contributing ships, aircraft, and troops to Saudi’s brutal campaign in Yemen to restore President Abdrabbuh Mansour Hadi in April 2015 after Pakistan’s parliament voted to remain neutral. Despite then prime minister Nawaz Sharif’s close ties with Saudi Arabia, Sharif’s opposition to Pakistan’s military made his government unreliable in the eyes of Riyadh. In an effort to smooth over Riyadh’s ruffled feathers, Pakistan participated in the 2016 “North Thunder” military exercise with Saudi Arabia and its allies as well as joint exercises between the special forces of both countries.

The Sharif government additionally dispatched more than 1,000 troops to the Kingdom, which augmented the 1,600 already deployed to Saudi Arabia to “secure Islamic holy sites and serve in other internal security roles”. In November 2017, Sharif’s government joined the Saudi-led Islamic Military Counter-Terrorism Coalition, which comprised militaries from 41 Islamic countries ostensibly to fight terrorist groups and their activities throughout the Muslim world. Pakistan’s retired Army chief Raheel Sharif commanded the group.

In August 2018, the Pakistan Army selected Imran Khan as the prime minister, which suggested a greater degree of alignment between Rawalpindi and Islamabad. For a brief period, Prime Minister Khan and Saudi Crown Prince Mohammad bin Salman enjoyed bonhomie. As Khan came into office, Pakistan’s military had secured an economic package from Riyadh and the crown prince personally invited Khan to come to the Kingdom to attend a conference on investments. Other high-profile invitees withdrew following the 2018 murder of Jamal Khashoggi, a dissident Saudi journalist residing in the United States. Within a month of the conference, the first $1 billion of a $3 billion loan was delivered to Pakistan.

Riyadh’s junior partner in the region, Abu Dhabi, followed through with a comparable offering. As if to reward a pliant client, in February 2019, Mohammad bin Salman arrived in Islamabad with an entourage of businessmen with pages in over $20 billion, including an Aramco oil refinery in Gwadar. In March 2019, Pakistan’s willingness to join a Saudi-led coalition against Iran appeared to have patched up any lingering concern about Pakistan’s commitment to the Kingdom.

A SHORT-LIVED RESPITE

In August 2019, India dispensed with Kashmir’s special status. Pakistan was incensed and was discomfited when Saudi Arabia and the United Arab Emirates kept mum on the matter and remained so. In contrast, Turkey and Malaysia lent their outcry to that of Pakistan. The three countries considered forming an alternate Islamic bloc given Arab insouciance about India’s bold move.

Malaysia put a December summit on the books. Malaysia’s prime minister intimated that it would serve as an alternative bloc “to the inert, Saudi-dominated Organisation of Islamic Cooperation.” Ultimately, under vituperative Saudi threats, Pakistan withdrew from the Kuala Lumpur summit, which was attended by Saudi’s regional rivals Qatar, Turkey and Iran.

On the one-year anniversary of India’s decision to strip Kashmir of its special status, and after accumulating frustration with Saudi inaction over the outrage, Pakistan’s foreign minister Shah Mehmood Qureshi demanded that Saudi Arabia show leadership on the matter and convene a special meeting of the OIC to inveigh upon the matter. Failing to do so, Qureshi threatened to turn to Malaysia, Turkey and Iran which had vocally sided with Pakistan.

Riyadh was not amused. It demanded that Pakistan immediately repay $1 billion, which was part of the $3 billion lent to Pakistan in November 2018. While China stepped in to bail out Pakistan, but the question lingered: What leverage does aid-dependent Pakistan have over its long-standing benefactor?

THE LONG HAUL?

So what happened? Economics happened. The fact of the matter is that even Saudi Arabia has seen the long-term writing on the wall. In 2019-20, bilateral trade between India and Saudi Arabia was valued at more than $44 billion while trade with Pakistan was a meager $3.6 billion.

Under Mohammad bin Salman, Saudi Arabia cares about cash not concord across the Muslim world. To underscore this point, Mohammad bin Salman endorsed China’s policies in Xinjiang, which other states have decried as genocide. China is Saudi Arabia’s largest trading partner.

However, Saudi Arabia has been shut out of the most important developments in the region: the Taliban victory in Afghanistan, due to Pakistan’s unstinting military, diplomatic and political support. In 2013, the Taliban opened its first overseas office in Doha. Since then, Doha and China—along with Pakistan, Turkey and the United States—have shaped the events in Afghanistan without any substantive role for Saudi Arabia.

Saudi Arabia wants to reassert its prominence in the region after being eclipsed by its regional rivals for several years. While Saudi Arabia has no interest in limiting ties with India at Pakistan’s behest, it does want to limit the temptation for Pakistan to reassert ties with Iran. Pakistan’s partnership with Beijing, based nearly entirely on loans, cannot replace the Kingdom’s heft in the Islamic world even if it can influence it with the allure of its economy. While Pakistan won’t get Saudi’s support on Kashmir, it is perfectly happy to cash Riyadh’s check. And that’s enough for both.

06 Nov 21/Saturday                                                        Source: news18