Despite PR duress, Saudi $6bn to Pakistan comes with strings
Saudi Arabia's crisis over Khashoggi murder is Imran Khan's gain, but Pakistan may still be expected to up military cooperation with the kingdom
Saudi King Salman, right, and Pakistani Prime Minister Imran Khan, left, in Jeddah on September 19, 2018. Photo: Center for International Communication / AFP
Pakistani Prime Minister Imran Khan returned home this week from Saudi Arabia with a pledge of $6 billion in loans. Khan was likely able to secure the deal with fewer strings than a previous rejected offer, due to enormous international scrutiny on the kingdom in the wake of the Jamal Khashoggi murder. But the latest package may require a deepening military partnership with Saudi Arabia.
Khan headlined on day one of the Future Investment Initiative conference in Riyadh on October 23, even as many western officials withdrew.
The kingdom’s generosity comes at a critical time for Pakistan, which is facing a fiscal crisis and last month saw $300 million in US military aid suspended by the Trump administration.
“Trump’s decision has stripped the military of resources, forget about the rest of the country,” Pakistani military scientist Ayesha Siddiqa told Asia Times.
On Khan’s return to Pakistan, he stated in a televised address that Pakistan will help end the conflict in Yemen.
“We are trying our best to act as a mediator to resolve the Yemen crisis,” Khan said. Observers have interpreted this statement by Khan as being linked to the terms surrounding the loans, as there were no other significant points mentioned by the PM regarding his visit.
Riyadh in 2015 launched a coalition to fight the Houthi rebels in Yemen and sought military support from Islamabad, but Pakistan’s parliament voted against joining the war.
Saudi Arabia just two weeks ago offered loans to ease Pakistan’s financial woes, but Islamabad refused. “There were too many conditions attached,” said Minister of Information Fawad Chaudry.
When asked what led to Pakistan shifting its position to accept the Saudi loans, Chaudry said: “ There is a change in politics. Obviously Saudi Arabia needs some support. I think the situation has changed now.”
With Saudi Arabia’s reputation under pressure, Pakistan was likely able to negotiate more acceptable terms, but those have not yet been disclosed.
“The terms could not be elaborated due to the fact that it is not in the interest of the mediation currently taking place,” Chaudry told Asia Times.
He said the Ministry of Foreign Affairs would likely present its findings on the terms surrounding the deal next month.
The Saudi Ministry of Foreign Affairs did not respond to a request for comment on the terms.
“They need to bring this to the parliament to tell us what conditions are attached by the Saudis and what they expect from Pakistan in return,” said Miftah Ismail, Pakistan’s former federal finance minister.
“There was no discussion, therefore. Until we understand what transpired at the conference it is hard for us to really know if this is a good decision or not,” said Ismail.
Yemen, Balochistan in focus
According to a diplomat close to discussions in Saudi Arabia, this loan is not only a commercial deal, but the kingdom is also interested in Balochistan.
Balochistan is of strategic interest to both Iran and Saudi Arabia, bordering the Islamic Republic and located north of the Arabian Sea.
Saudi Arabia has faced allegations of backing anti-Shiite jihadist groups in Balochistan, namely Jundullah and Jaish al-Adl, and a heightened influence could be dangerous for Pakistan’s security.
“If you increase investment, it is not just money that pours in. With the money comes influence,” analyst Siddiqa said.
“It’s hard to imagine a $6 billion gift with no strings attached,” said Michael Kugelman, a scholar on Southeast Asia at the Woodrow Wilson Center in Washington, D.C.
“There’s a very good chance Saudi Arabia placed some type of conditions on this support. Riyadh may have made it quite clear that Pakistan will need to rein in its recent efforts to position itself as a neutral actor in the Saudi-Iranian regional rivalry,” Kugelman said.
“Pakistan has an Iran problem and a Saudi problem. [The Pakistani military] is allowing the Saudis to build up their capacity in Balochistan, which is in effect a certain kind of encirclement around Iran,” said Siddiqa.
Pakistan and Saudi Arabia have maintained a defense partnership since 1983, though it is very difficult to pinpoint the exact number of Pakistani personnel in the kingdom. According to Kamal Alam of the London-based think tank RUSI, there are at least 1,200 Pakistani trainers in various Saudi security and military sectors.
A source close to the Pakistani military said the number is far higher, however. Speaking on condition of anonymity, he told Asia Times there are upwards of 7,000 Pakistani military personnel in the kingdom.
“One of the big questions coming out of this new deal is whether Riyadh has now asked Islamabad to operationalize that military presence and be willing to join Saudi military efforts in Yemen,” Kugelman said.
“Islamabad has long resisted this ask from Saudi Arabia, but with this financial assistance Islamabad is now getting, Riyadh has more leverage,” he added.
According to a political source briefed on the matter but who declined to be named due to the sensitivity of the subject, the Pakistani armed forces have been under mounting pressure from the Saudis to join the conflict in Yemen.
The Saudi-led intervention has never been more controversial, with Yemen facing what the United Nations last week said could become the worst famine in living memory.
Upon his return from Saudi Arabia, Khan said: “My fellow Pakistanis, today I am here with good news for all of you. We were facing really hard times. We were under high pressure to pay heavy debts. But thanks to Saudi Arabia’s extension of assistance, we are out of this pressure.”
The coming months will reveal if Pakistan is prepared for the reasons behind the kingdom’s generosity and whether the country can continue to deflect military requests in Yemen.