The politics of Saudi-CPEC partnership

Published: September 25, 2018
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The writer is a public policy expert and an honorary Fellow of Consortium for Development Policy Research. 
He tweets @hasaankhawar

The writer is a public policy expert and an honorary Fellow of Consortium for Development Policy Research. He tweets @hasaankhawar

Last week Imran Khan made his debut visit to Saudi Arabia whereas the army chief met President Xi Jinping in Beijing. Later, the PTI government announced that Saudi Arabia would be joining CPEC as the third strategic partner.

While Imran Khan’s visit was in the context of seeking a bailout package to support Pakistan’s dwindling forex reserves, many expected relief to come in the form of concessional terms for oil supply or some immediate government-to-government lending. But the CPEC spin was so unexpected that some were even quick to link it with the suspension of Nawaz Sharif’s sentence. However, the real reason behind the Saudi-CPEC partnership has to be more than immediate infusion of dollars or Nawaz Sharif’s release.

It is a reality that no matter what the PTI government does about CPEC, the credit would always remain with the PML-N and Nawaz Sharif for initiating the project. Bringing in Saudis and other partners in this equation will create an alternative political narrative for the PTI, where it can take credit for giving CPEC a new meaning.

CPEC is not an uncharted space for Saudis. It is an offshoot of the Belt and Road Initiative (BRI) and Saudi Arabia has been a part of it and an economic partner for China. Not only does China rely heavily on the Saudis for its crude oil supplies, only last year the two countries signed investment deals worth billions in refineries and petrochemical sector. The potential Saudi investment in Gwadar Mega Oil City, therefore, can be an excellent candidate for a tripartite partnership. The project will be ultimately used to transport oil to China, not only reducing transportation costs but also addressing the longstanding vulnerability of China with its oil tankers passing through the Strait of Malacca.

As later indicated by the government, the Chinese have already been taken onboard regarding Saudi involvement in CPEC, as Pakistan cannot jeopardise its relationship with China through such unilateral moves. Moreover, recent developments, such as, the regime change in Islamabad, Razzaq Dawood’s retracted stance about renegotiating Chinese contracts and Mike Pompeo’s statement that the IMF money should not be used to pay back Chinese lenders have caused quite a bit of stir. It is also hard to ignore the deepening US-India defence ties, making China an important defence partner for Pakistan. Therefore the simultaneous visit by the army chief to Beijing could be looked at in this context, where he would have given some assurance to the Chinese of an unabated partnership. It also shows that Islamabad and Rawalpindi are working in sync on CPEC.

Iran is another piece in this puzzle. Any partnership between China, Pakistan and Saudi Arabia is going to make Tehran uncomfortable, which is an important BRI ally for China. Furthermore, Iran-India partnership on Chabahar and Saudi-Pak alliance on Gwadar can potentially increase regional tensions. We must not forget that economic corridors are about economic growth, which in turn is dependent upon regional peace and stability.

Similarly, regarding the US, an alternative narrative is taking shape that Pakistan is the centre stage of the US-China conflict. This narrative is likely to do more harm than good to Pakistan and must be avoided.

While the US is not likely to abandon Pakistan altogether considering its importance in the US Afghan policy, for Pakistan the US has been too important an ally to alienate. The Saudi involvement in CPEC therefore should be used to ensure that the Chinese and Americans are on the same page regarding CPEC.

Involvement of Saudis in CPEC is a good omen and will open up Pakistan for investment from other sources and diversify its investment base. However, such investment should not come at the cost of regional stability or new geopolitical tensions. 

Published in The Express Tribune, September 25th, 2018.

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