by SALMAN RAFI SHEIKH
Pakistan is tentatively reorienting its foreign policy away from Saudi Arabia and UAE towards China’s New Silk Roads
When Saudi Arabia pressed Pakistan last August to repay early a US$3 billion soft loan, Riyadh’s demand caught Islamabad’s rulers by surprise.
Islamabad quickly dispatched its current army chief General Qamar Javed Bajwa to Riyadh to defuse the tensions, but the mission failed as Saudi officials stood firm on their early repayment demand. Riyadh also froze a $3.2 billion oil credit facility with Islamabad.
Saudi Arabia applied the squeeze soon after Pakistan’s foreign minister criticized the kingdom for its perceived stalling on convening an Organization of Islamic Conference’s (OIC) Council of Foreign Ministers meeting on Kashmir, where Pakistan is locked in a conflict with India.
The incident underscored fast-shifting South Asia-Middle East relations, with several Gulf states that previously habitually sided with Muslim majority Pakistan now instead prioritizing growing their commercial and economic ties with India.
That mounting dynamic is pushing Pakistan ever closer to China, which provided funds to repay part of the Saudi loan. On December 17, Pakistan repaid $1 billion as a second tranche of its accelerated repayment schedule.
Significantly, the Saudi demand comes at a time of extreme economic and financial stress in Pakistan.
The UAE, which is Pakistan’s second-largest source of foreign remittances, has recently banned issuing work visas for Pakistani workers. While the ban was nominally imposed due to Covid-19, India, which has a much higher number of Covid cases, notably has not been banned.
Pakistan Foreign Minister Shah Mahmood Qureshi’s recent visit to the UAE failed to lift the ban, reportedly to Islamabad’s severe disappointment.
In November 2020, Pakistanis sent $519.5 million worth of remittances from the UAE, according to the figures provided by the State Bank of Pakistan. Pakistanis sent home about $615.1 million from Saudi Arabia that same month.
Pakistan’s declining relations with its two biggest sources of foreign remittances and foreign exchange is bad news for its already ailing economy.
While Pakistan dutifully repaid the Saudi loans, its rising reliance on China showed that it is not only an important but also Islamabad’s only available option in a time of financial need.
But Kashmir is not the only reason Pakistan’s relations with its traditional allies in the Gulf are on a downswing.
Pakistan Prime Minister Imran Khan recently admitted that he was under pressure from “friendly countries” to establish diplomatic relations with Israel. Observers note no “friendly countries” other than the UAE and Saudi Arabia have the clout to exert such pressure on Pakistan.
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