by Seyyed Ali Nejat and Mohammad Reza Mohammadi
The victory in the August 2018 elections in Pakistan of the Tehreek-e-Insaf (PTI) party led by Imran Khan—and the failure of the Pakistan Muslim League-Nawaz party, which has traditional ties to Saudi Arabia’s ruling family—caused deep concerns among Saudi officials. In the eyes of Saudis, Imran Khan’s election win was a victory for Tehran and a loss for Riyadh. For example, after Khan’s electoral victory, Saudi Prince Khalid bin Abdullah Al Saud tweeted that Imran Khan was an agent of Iran.
Although Riyadh was disappointed by the result of Pakistan’s general elections, Saudi officials have since adopted a policy of enticement to attract Imran Khan and, in doing this, boost their influence within the new Pakistani government. This is why the Saudi ambassador to Pakistan was the first foreign envoy to meet with Khan at his residence on the suburbs of Islamabad after the election results were announced. Saudi Arabia’s minister of information, Awwad Alawwad, subsequently paid a visit to Pakistan and met with the country’s high-ranking officials such as the prime minister, president, and foreign minister. Saudi Crown Prince Mohammad bin Salman also made three phone calls to Imran Khan in less than a month, inviting him to travel to Riyadh.
At first, the PTI government announced that the new prime minister would make no foreign trips to any country in the first three months after his appointment. On the other hand, Pakistan’s Ministry of Foreign Affairs announced that Iran would be the destination of Khan’s first foreign trip, after which he would visit Saudi Arabia and the United Arab Emirates. However, before the end of the three-month period and about a month after being sworn in as prime minister, Khan paid a surprise visit to Saudi Arabia on September 18 along with his foreign minister as well as the minister of economic affairs and finance.
Imran Khan swept to power with the promise to eradicate corruption and reduce poverty in Pakistan. However, the new prime minister and his government are faced with many challenges, including political and religious extremism, shortage of water, and rapid growth of population. The most urgent crisis facing the Pakistani government, however, is the payment of the foreign debt and the resolution of the country’s economic problems.
Economic experts believe that, to overcome some of these problems, Pakistan has no choice but to seek help from the International Monetary Fund (IMF). Since the late 1980s, Pakistan has received IMF loans on 12 occasions. Assad Omar, Pakistan’s finance minister, has, however, announced that the government seeks alternative financial avenues, including assistance from China and Saudi Arabia.
Perhaps this is why Imran Khan’s first foreign trip was to Saudi Arabia. As a result of the trip, Islamabad and Riyadh agreed to cooperate on a comprehensive $10 billion package.
Given Pakistan’s high unemployment rate in Pakistan, which tops 13 percent, Khan knows the importance of the two million Pakistanis currently working in Saudi Arabia who are sending home a total of about $4 billion a year. These Pakistani workers are employed in various industrial sectors in Saudi Arabia, including oil refineries, the development sector, hotel management, and the service sector. On the one hand, increasing Saudi investment in Pakistan to boost its economy will have a positive impact on reducing unemployment. On the other hand, any tension in bilateral relations could prompt Saudi officials to expel Pakistani workers.
Saudi Arabia has been Pakistan’s sole option when it comes to seeking financial resources. By receiving inexpensive oil from Saudi Arabia, Pakistan can meet part of its energy needs. Riyadh can also help Islamabad secure a loan from the Islamic Development Bank.
The Saudis are pursuing their own goals by granting financial aid to Pakistan. Saudi Arabia uses a slew of tools— enticement, threat, economic pressure, sanctions, and finally military aggression—to infiltrate the political systems of other countries. Taking advantage of its huge oil revenues is the first tool that Saudi Arabia usually uses to gain political influence beyond its borders. A second tool is Saudi control of the Islamic Development Bank (IDB). In order to deal with its foreign debt crisis, Pakistan has set its sight on a $4 billion loan from the IDB with the support of Saudi Arabia.
Saudi Arabia has already helped Pakistan’s economy by granting loans to the country. For example, after the International Monetary Fund granted a loan to Pakistan in 2014, Saudi Arabia also loaned $1.5 billion to Islamabad to bolster the value of Pakistan’s currency.
The new Pakistani government considers relations with Saudi Arabia as key to resolving its financial crisis and overcoming some intensifying economic challenges. The country needs immediate financial aid. In an interview with Turki Aldakhil, the general manager of Al Arabiya TV, Imran Khan said, “Our message is that we are standing by the Saudi nation, because any time we needed help, Saudi Arabia has stood by us. Therefore, we will always stand by Saudi Arabia.” He added, “Pakistan has good opportunities for progress and development, including a big young workforce among its population and a diversity of state-run resources. When the system of government in the country improves, so does investments in Pakistan and we will witness a new economic renaissance in the country.”
Fawad Hussain Chaudhry, Pakistan’s federal minister for information and broadcasting, announced after Khan’s visit to Saudi Arabia that Riyadh had entered the China–Pakistan Economic Corridor project as a new investing partner to the tune of $10 billion. After Saudi Arabia was invited to take part in the China–Pakistan Economic Corridor project, a delegation traveled from Riyadh to Islamabad, announcing Saudi Arabia’s decision to build Pakistan’s biggest oil refinery at the Gwadar port. “This refinery will meet Pakistan’s need for oil,” Dostain Khan Jamaldini, the director general of Pakistan’s Gwadar port, said. “We have asked Saudi Arabia’s representatives to build this refinery along the Sea of Oman, which is adjacent to Gwadar port, or inside the port itself.” Saudi Arabia is also planning to invest in gold and copper mines in Pakistan’s Balochistan province.
Saudi Arabia’s multibillion-dollar aid to Pakistan did not materialize during Khan’s visit to Riyadh. Riyadh was not willing to give full support to the ruling PTI party, in part out of frustration that the party didn’t support the Saudi war in Yemen. But the situation has changed after the killing of Saudi journalist Jamal Khashoggi. Riyadh faced a historic crisis and needed the cooperation of some trusted and powerful states. Many countries boycotted the International Investment Conference in Saudi Arabia in mid-October.
But not Pakistan. Iman Khan himself attended the conference dubbed the Davos of the dessert. Although many personalities and human rights organizations have criticized Pakistan’s move, Pakistan had no choice but to deal with its economic crisis. After Khan’s second visit, Saudi Arabia agreed to a $3 billion donation to Pakistan as well as a $3 billion loan for Pakistan to buy oil.
Saudi Arabia may ask Pakistan, in exchange for the financial assistance, to support Saudi military activities. It may ask Islamabad to stand behind King Salman and Crown Prince Mohammed bin Salman in the wake of Khashoggi’s murder and to help mediate with Turkey. It may even ask Pakistan to dispatch military units to the Saudi interior to guard against possible foreign threats.
Pakistanis take a dim view of Saudi Arabia these days. Therefore, Khan’s decision to take Saudi financial aid under the present conditions is likely to have a negative effect on the credibility of the new Pakistani government.
Seyyed Ali Nejat is a guest researcher at the Middle East Strategic Studies Institute in Tehran. He is a graduate of regional studies from Allameh Tabatabai University.
Mohammad Reza Mohammadi is an analyst in the Persian Gulf Studies Center (PGSC) in Tehran. He holds a Master’s Degree in International Relations with focus on the Middle East and Persian Gulf.