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The new affair: Pakistan and Saudi Arabia

15 1 21
30.11.2021

Pakistan and Saudi Arabia appear to be mending fences, with the Kingdom agreeing to revive its financial support to Pakistan. The financial assistance package includes about USD 3 billion in deposits and USD 1.2 billion to USD 1.5 billion worth of oil supplies on deferred payments.

While Pakistan has hailed its ‘brotherly’ relations with Saudi Arabia in the context, it is evident that Pakistan’s new ‘brotherhood’ with Saudi Arabia comes at a time when Pakistan is in the brink of a financial crisis. The Pakistani economy has been faltering, with an imminent balance of payment crisis and the country increasingly dependent on external debts to stay afloat. Given its inability to negotiate with the International Monetary Fund for release of USD 1 billion, Pakistan has had no alternative but to seek help from countries like Saudi Arabia and the United Arab Emirates putting aside its pride filled principles of strategic autonomy and self-respect.

Traditionally, Pakistan and Saudi Arabia have had very close relations, particularly based on religious affinity. Growing defence cooperation and increasing financial assistance to Pakistan marked the ties between the two countries. Saudi’s Crown Prince Mohammed bin Salman visited Pakistan in February, 2019 with a large business delegation which pledged over USD 20 billion to Saudi investments in Pakistan.

The pledged investments however failed to materialise due to Pakistan’s sub-optimal trade and business climate, rampant corruption, procedural bottlenecks, power outages and a long list of deficiencies. Subsequently, relations between the two countries began deteriorating. The strategic drift was evident with Saudi Arabia demanding an early repayment of USD 3 billion in loans meant to shore up Islamabad’s foreign exchange reserves.

Pakistan was to blame for the souring relationship. Pakistan, despite clearly lacking........

© The Times of Israel (Blogs)


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