Pakistan’s Saudi gamble

On 18 October, the Pakistan Foreign Office issued an unexpected statement. Unexpected because Pakistan had no direct stakes in the issue. Yet, Pakistan opted to take a public stance. “In the wake of statements made against the Kingdom in the context of OPEC+ decision, Pakistan expresses solidarity with the leadership of the Kingdom of Saudi Arabia,” reads the Foreign Office statement. “We appreciate the concerns of the Kingdom of Saudi Arabia for avoiding market volatility and ensuring global economic stability,” it added.

Pakistan’s move raised many eyebrows since expressing solidarity means directly challenging the US. Remember, the Biden administration was angry over OPEC+ move to cut oil supplies by 2 million barrels a day. The OPEC+ cartel is spearheaded by Saudi Arabia and Russia. The major oil exporting countries decided to cut the oil supplies despite request by President Joe Biden to the contrary. Biden himself visited Saudi Arabia in July to make a personal request for an increase in oil production to the gulf countries. The reason he wanted a surge in oil supplies — (a) to help provide relief to the inflation-stricken Americans and (b) to discourage Russia from earning more money due to increase in oil prices in the international market.

But Saudi Crown Prince Muhammad bin Salman had other ideas. Many American commentators believe that MBS took revenge from Biden who, during the election campaign, promised to make him a pariah for his alleged role in the killing of Saudi-American journalist Jamal Khashogji. Secondly, the Saudi move was seen as siding with Russia at a time when the US wanted to isolate President Putin.

Biden was so furious that he said Riyadh will have to face the consequences of this decision. His administration also hinted at revisiting the 80-year-old relationship with the oil-rich Arab country. Amid the brewing tension between Saudi Arabia and the US, it is a legitimate question to ask: what has prompted Pakistan to publically back Riyadh? Also Islamabad’s move is intriguing given the current government is seeking reset in ties with the US. The answer to this pertinent question lies in Pakistan’s economic woes. The country has barely managed to escape the default only a few weeks ago. With floods inflicting massive damage and depleting foreign reserves, Pakistan’s economic challenge is getting more complicated. There is a sense within the corridors of power that time for free dole-outs from the US and other western countries have long gone. These countries may be sympathetic to Pakistan’s needs in the wake of floods but are unlikely to provide hard cash.

In this situation Pakistan, as in the past, looks to the usual prospects for help. Saudi Arabia is one country that has bailed out Pakistan on several occasions. Certainly, those bailouts were not without a quid pro quo. Therefore, the statement by the Foreign Office expressing public support to Saudi Arabia over its row with the US is a calculated gamble. In return for putting weight behind Riyadh, Pakistan expects Saudi Arabia to come to its rescue.

The visit of MBS is on the cards next month. The likely visit will revive the multibillion dollar investment plan that couldn’t materialise during the PTI’s government. There is a proposal on the table seeking a Pakistan, Saudi Arabia, China tripartite deal to set up a refinery in Gwadar. The Saudi oil refinery was part of the $21 billion investment plan agreed during MBS’s visit to Pakistan in February 2019. Similarly, Pakistan is eyeing import of Russian oil at discounted rates. But given many logistic and other issues, Pakistan is looking to find a way out, one of which is that Pakistan imports Russian cheap oil via Saudi Arabia. Remember, Saudi Arabia, despite being one of the leading oil producers, is importing Russian oil at discounted rates. Meanwhile, these developments dispel the alleged sinister plan behind the removal of Imran Khan in April in order to punish him for deepening ties with adversaries of the US.

 

Published in The Express Tribune, October 24^th, 2022.

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