Pakistan and Saudi Arabia: A walk on oil bridge and money pillars

“Let us not allow baseless rhetoric to jeopardise a time-tested relationship or create a rift within the Ummah.”- Dr. Ali Awadh Asseri is a former senior Saudi diplomat, ambassador of the Kingdom of Saudi Arabia to Pakistan’’

Introduction

From a stringent form of Sunni ideology to strategic interests, Pakistan and Saudi Arabia share a unique bond in geopolitics. With the new developments in Asia, new fault lines in geopolitics are observed. Pakistan’s alienation from Saudi Arabia provides unprecedented clout for China and Turkey. Pakistani Foreign Minister Mr Qureshi’s statements affected the financial aid and oil diplomacy between the two countries. Saudi Arabia forced Pakistan to repay 1 billion dollars, which is part of the 6.2 billion-dollar package announced earlier. It includes 3 billion dollars’ worth of loans and 3.2 billion dollars of an oil credit facility. This package announced is in the wake of Pakistan’s crumbling economy. However, it is important to note that nearly half of Pakistan’s oil securities are from Saudi Arabia. Under these terms (of the package), Pakistan can postpone Saudi payments for months, even years. It is contrary to the case where payment is being made in 30 days of oil shipment for other countries.

Financial aid and Oil Diplomacy

Saudi Arabia's ARAMCO and SABIC jointly announced to set up a 10 billion-dollar oil refinery and petrochemical chemical industry in 2019. This proposal is at Pakistan’s strategically important deep-water port of Gwadar, Baluchistan. It will enhance Pakistan’s capabilities to refine and store imported oil. This will further help in the transportation of oil to China and in developing a fuel supply chain for the landlocked Central Asian states. A western route via the Indian Ocean may take more than forty days, while the same Fuel transportation to China through Pakistan would be completed in just seven days.

Saudi Arabia increased its investments in Pakistan after the CPEC and String of Pearls initiatives. China is the largest importer of Saudi oil and Saudi’s economic diversion plan which includes Pakistan; it will help in the expansion of its long-term economic aspirations. Pakistan faced a huge economic crisis in 2019, and Saudi immediately came to its rescue. This pattern of economic aid and oils diplomacy has been prevalent for the past two decades. Saudi planned to invest 20 billion dollars in Pakistan. Pakistan also accounts for a quarter of the 10 million expatriates working in the United Kingdom.

It should be noted that Riyadh is facing its economic crisis in the wake of the Coronavirus pandemic. Employment for the growing young population and the ambitious plans to bring investment has come to a dead-end due to the pandemic. There is a steep decline in oil prices and tourism- both of which account for a majority of the UK's revenue. It resulted in a rollback of generous handouts, increasing fuel prices and forcing Saudi rulers to cut wages. In this backdrop, Pakistan’s actions provided Saudi with an opportunity to analyse its oil diplomacy and financial aid policy.

Oil diplomacy is a key factor in Saudi-Pakistan relations. Pakistan has deferred its payments on many occasions and also has a huge dependency on Saudi oil supplies. Countries like Saudi Arabia, UAE and Qatar offered aid to Pakistan constantly and generously. However, there cannot be an equal partnership if one party is a constant receiver of funds from others. Recent fault lines can affect a bond which has existed for over sixty years. Historically, the friendship is time tested. Even during the Kuwait crisis, Pakistan sent its army to help Saudi and Saudi stood by Pakistan after its nuclear tests.

Other than the U.S and China, Saudi Arabia influenced internal and international discourses in Pakistan to a large extent. Many civilian conflicts are resolved because of Saudi’s influence.

Saudi Wahhabism has strong footholds in Pakistan. Being the birthplace of Islam and the largely accepted Sunni religion, Saudi has a strong domestic influence in Pakistani politics.

The Yemen crisis and Pakistan’s staunch position on Kashmir have strained the Saudi-Pakistan relationship in recent times. Pakistan’s efforts to carry out a Palestine style intifada in Kashmir failed to meet similar echoes from the Muslim community because Pakistan failed to understand the importance of India to the Muslim community. The worldwide Muslim community is highly aware of the fact that fourteen per cent of the Indian population consists of Muslims. Countries like the Maldives opposed the politicisation of Kashmir. Saudi Arabia, Oman and UAE also took a similar stand. Pakistan wanted OIC to chair a large meeting on the abrogation of Art 370. Saudi Arabia needs India on its side for energy, security and strategic needs. However, there are beneficiaries of the crisis between Pakistan and Saudi.

New Bloc and Strategic Geo-Partnership

There is a tussle between Saudi, Iran and Turkey for leadership in the Muslim world. Everyone has their version of legitimacy to such claims. Pakistan imagines itself as a key player in the Muslim world. This is far beyond its capabilities and reality. Pakistan proposed its nuclear capabilities as a weapon on behalf of all of the Muslim community. Turkey’s assertion for the Neo-Ottoman empire is a problem for Saudi domination. The growing relationship between Pakistan and Turkey along with Pakistan’s stand on the Yemen war is cautiously observed by Riyadh. Pakistan’s ultimatum to Riyadh is a strange phenomenon and one that was least expected. Media diplomacy is to reduce tensions in the atmosphere rather than increase them. It is not the place for such aggressive statements. In the words of Dr Ali Awadh Asseri, “If Foreign Minister Qureshi’s veiled reference is towards another Kuala Lumpur-style gathering, then it is a dangerous proposition that could be least expected from a brotherly country”.

Turkey factor

On the other hand, Turkey provides clout and support for Pakistani aspirations. Erdogan’s ambitious Islamist focused world governance promotes Pakistan’s role globally. Pakistan is rallying for a new Islamic bloc under Turkey’s leadership. Turkey is a loyal supporter of Islamabad in Kashmir and other key issues. A recent upsurge in Turkish pop culture in Pakistan can be observed with this shift. The realm of national identity, pseudo-science, mythology and the linkage of identity to Arab and Turkish lineage is bizarre in many ways. Turkey- Pakistan- Malaysia are trying to form a nexus of Muslim brotherhood as an alternative to Saudi based OIC.

Recent developments will help China to further control Pakistan’s foreign policy and Turkey to dominate Pakistan’s internal discourse. Pakistan is planning to maintain its leverage of CPEC and China internationally. Even though China is a bigger partner, Pakistan feels that it has an economic lifeline. Beijing cannot afford to jeopardise its relations with Pakistan, which is its largest overseas investment partner (sixty-two-billion dollars for CPEC). The Turkey-China-Pakistan alliance can also accommodate Iran but this can be a mammoth task.

Conclusion

However, Pakistan’s mistakes can help India further deepen its relations with the middle east and the Arab world. In the wake of Saudi Arabia’s plan for Vision 2030, there is a possibility of a partnership with developing countries like India. Traditional ties of Pakistan with Saudi are too weak to fail because of the ongoing tussle. Pakistan’s export for Saudi has increased by thirty-four per cent in June, however, the fault lines will provide India with an opportunity. India’s strategic, energy and economic ties can be strengthened with Saudi Arabia.