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Saudi investment in Pakistan: strong bilateral ties to continue

Published on 28th Apr, Edition 17, 2014


Saudi Arabia and Pakistan, both being Muslim countries enjoy a cordial relation. Saudi Arabia has high regard for Pakistan for being the first Muslim country to hold nuclear power. Those seeking jobs in Saudi Arabia are given visa without any major hiccups. Prime Minister Nawaz Sharif after his exile from Pakistan lived in Saudi Arabia during which time he developed close ties with the Royal family.

Saudi Arabia in the past has assisted Pakistan with financial support to build reserves and gifts, most recently with 200 tons of dates. Saudi Arabia has given Pakistan US$1.5 billion based on simple word of confirmation by Nawaz Sharif. It is expected that another round of $1.5 billion will be received soon. In March 2014, Pakistan further received $150 million from Islamic Development Bank. Pakistan in April 2014 committed to provide JF-17 thunder jets to Saudi Arabia at the back of the grant received earlier in 2014. Fighter Pilots of the Pakistan Air Force flew aircraft of the Royal Saudi Air Force to repel an incursion from South Yemen in 1969.

Saudi Arabia was one of the strongest supporters of Pakistan during Pakistan’s wars with India, especially opposing the creation of Bangladesh from Pakistan’s eastern wing in 1971. In the 1970s and 1980s, approximately 15,000 Pakistani soldiers were stationed in the kingdom. Saudi Arabia was a major supporter of the “Islamisation” program of the military ruler Gen. Zia-ul-Haq in the 1970s. In 2006, King Abdullah of Saudi Arabia was awarded the Nishan-e-Pakistan, the highest civilian decoration of Pakistan.

Saudi Arabia has negotiated the purchase of Pakistani ballistic missiles capable of carrying nuclear warheads. These reports have been denied by Pakistan. It is also speculated that Saudi Arabia secretly funded Pakistan’s atomic bomb program and seeks to purchase atomic weapons from Pakistan to enable it to counteract possible threats from arsenals of the weapons of mass destruction possessed by Iran, Iraq and Israel. Both nations have received high-level delegations of scientists, government and Saudi military experts of seeking to study the development of a Saudi nuclear program. Pakistan maintains close military ties with Saudi Arabia, providing extensive support, arms and training for the Saudi Arabian military.

Saudi Arabia views Pakistan as a strategic partner among Muslim states and wants to maintain close ties. It is expected that Saudi Arabia will build an army strong enough to contain Iraq or invasion by another country for which the country needs support of Pakistan.

With respect to bilateral relationships, Saudi Arabia and Pakistan are leading members of the Organization of Islamic Cooperation. Saudi Arabia has also provided extensive religious and educational aid to Pakistan, being a major contributor to the construction of mosques and madrassas across Pakistan. Faisal Mosque in Islamabad is dedicated to King Faisal of Saudi Arabia. Since 1980, the number of religious schools increased from 800 to 27,000 in 1997 and all are funded by Saudi Arabia. Since 1947, the political parties have been receiving funding for their political activities in the country.

The major Pakistani city of Lyallpur was also renamed Faisalabad in honour of King Faisal in 1977. Saudi Arabia remains a major destination for immigration amongst Pakistanis, the number of whom living in Saudi Arabia stands between 900,000 and one million, which adds to worker remittances of US$4 billion per year. Saudi Arabia also has invested in the financial sector in Pakistan presently Samba Bank, Saudi Pak Industrial and Agricultural Investment Company and previously Saudi Pak Commercial Bank.

Saudi Arabia is the largest source of petroleum for Pakistan. It also supplies extensive financial aid to Pakistan and remittance from Pakistani migrants to Saudi Arabia is also a major source of foreign currency. In recent years, both countries have exchanged high-level delegations and developed plans to expand bilateral cooperation in trade, education, real estate, tourism, information technology, communications and agriculture. Saudi Arabia is aiding the development of trade relations with Pakistan through the Gulf Cooperation Council, with which Pakistan is negotiating a free trade agreement; the volume of trade between Pakistan and GCC member states in 2006 stood at USD 11 billion.

Saudi Arabia is looking for investments across the board in Pakistan, key focus being on power and energy sector. Pakistan has invited Saudi Arabia for investment of upto $7 billion in to lay down transmission line from Gadani Power Plant to Arabian Sea. Pakistan’s trade with Saudi Arabia is 9 percent of Pakistan’s overall volume. Pakistan exports rice, meat, fish, spices, food and vegetables to Saudi Arabia every year. Pakistan also exports cement and medicines. In return, industries in Pakistan import various raw materials and chemicals from Saudi Arabia, SABIC being the largest player in the market.

Pakistan’s meeting with Saudi Arabia through 2014 has yielded positive results. Saudi Arabia views Pakistan as one of powerful states alongside Turkey and Iran. Saudi Arabia with borders from various countries has strategic military alliance. Being cash rich, Pakistan can turn to Saudi Arabia for investments in various projects and industries. Ties between Saudi Arabia and Pakistan pose a win-win situation for both countries. In all strategic meetings, Saudi Arabia is given a wide choice to invest in any of the industries and almost always end in positive results for both nations. Pakistani workers have acquired important career opportunities in Saudi Arabia and are preferred over other nations. Millions of Pakistani perform Haj and Umra each year.

It is often said that Saudi Arabia needs Pakistan more than Pakistan would need Saudi Arabia due to nuclear and military power. Pakistan can always approach multilateral organizations such as IMF, World Bank for loans and could substitute imports from Saudi Arabia with other countries. Saudi Arabia on the other hand would not be able to approach any other country for nuclear technology or military support which could come from Pakistan. In all, Pakistan is a strong ally for Saudi Arabia and is expected to continue with more positive relationship.


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