The Pakistanis in the Middle East
Migration to the Middle East by millions of Pakistanis produced mixed results, some positive and some negative.
The writer is a former caretaker finance minister and served as vice-president at the World Bank
Of the many Pakistani diasporas that have been formed over the last several decades, by far, the largest is in the Middle East. It is spread over several countries in the region and has had the most profound impact on the country its members have left behind. There are no hard estimates of the numbers that have taken up residence in the Middle East. Not only that, the number keeps changing, depending upon the economic health and prospects of the host nations.
Large-scale migration from Pakistan to the Middle East began in the mid-1970s. This movement was prompted by two decisions. The first one was by the oil-producing and exporting nations to embargo the sale of oil to the US. This was to punish the Americans for their support of Israel. That led to a four-fold increase in the price of oil and enormous increases in the revenues earned by the oil-exporting countries. These windfall incomes were used in part to finance the construction of modern infrastructure for which workers were needed. Many of the large construction projects were undertaken by firms that had worked in the Indus water replacement works in Pakistan. They knew well the Pakistani labour market and the agents they had used to hire workers for their projects. The same agents were brought back into service to contract millions of workers needed for the construction boom in the Middle East.
The other important decision leading to the creation of the Middle Eastern diaspora was taken by then prime minister Zulfikar Ali Bhutto. His administration decided to freely issue passports to those who wished to travel to the Arab world. Instead of creating jobs for the unemployed, Bhutto’s nationalisation programme served as a disincentive for investment in the private sector. The rate of growth in job creation slowed down. Migration served as a valve for releasing the pressure at home.
While the unskilled and semi-skilled workers formed the bases on which the diasporas were built in Britain and the Arab states, there were some differences that were to significantly affect the nature of the two communities. Unlike the mill workers who went to Britain, the construction labour migrating to Arab lands was engaged on short-term contracts. They were expected to return home after the contract term was over. This way of meeting the continuing need for unskilled and semi-skilled workers created a circular flow between Pakistan and the Middle East. While at the peak of the construction boom there may have been four million or so Pakistanis working in the oil-exporting countries, the total over time ran into tens of millions. The migration to the Middle East was one of the more important reasons for the arrival of Wahhabism into Pakistan. Notwithstanding this negative influence of the migration, there were several positive economic consequences as well. The two of the more important ones were the remittances that came from the Pakistanis in the Middle East and the contribution made to the economy by the infusion of Arab capital.
A bit over 60 per cent of the total remittances received by Pakistan in 2011-12 — estimated at $13 billion — came from the Arab countries. Of this amount, Saudi Arabia with 27 per cent and the UAE with 22 per cent had the largest shares.
There was a significant amount of investment in Pakistan by the firms in the Middle East. This investment was motivated in part by the Pakistani professionals, who held senior positions in the enterprises that came to Pakistan. The sectors that were favoured included real estate, banking and telecommunications. These investments, while welcomed in Pakistan, created contingent liabilities in the sense that their earnings were in rupees, which needed to be converted into foreign currency before repatriation. In a way, some of the money that came in as worker’s remittances went out as repatriated profits by the firms from the Middle East. In other words, migration to the Middle East by millions of Pakistanis produced mixed results, some positive and some negative.
Published in The Express Tribune, March 3rd, 2013.
Large-scale migration from Pakistan to the Middle East began in the mid-1970s. This movement was prompted by two decisions. The first one was by the oil-producing and exporting nations to embargo the sale of oil to the US. This was to punish the Americans for their support of Israel. That led to a four-fold increase in the price of oil and enormous increases in the revenues earned by the oil-exporting countries. These windfall incomes were used in part to finance the construction of modern infrastructure for which workers were needed. Many of the large construction projects were undertaken by firms that had worked in the Indus water replacement works in Pakistan. They knew well the Pakistani labour market and the agents they had used to hire workers for their projects. The same agents were brought back into service to contract millions of workers needed for the construction boom in the Middle East.
The other important decision leading to the creation of the Middle Eastern diaspora was taken by then prime minister Zulfikar Ali Bhutto. His administration decided to freely issue passports to those who wished to travel to the Arab world. Instead of creating jobs for the unemployed, Bhutto’s nationalisation programme served as a disincentive for investment in the private sector. The rate of growth in job creation slowed down. Migration served as a valve for releasing the pressure at home.
While the unskilled and semi-skilled workers formed the bases on which the diasporas were built in Britain and the Arab states, there were some differences that were to significantly affect the nature of the two communities. Unlike the mill workers who went to Britain, the construction labour migrating to Arab lands was engaged on short-term contracts. They were expected to return home after the contract term was over. This way of meeting the continuing need for unskilled and semi-skilled workers created a circular flow between Pakistan and the Middle East. While at the peak of the construction boom there may have been four million or so Pakistanis working in the oil-exporting countries, the total over time ran into tens of millions. The migration to the Middle East was one of the more important reasons for the arrival of Wahhabism into Pakistan. Notwithstanding this negative influence of the migration, there were several positive economic consequences as well. The two of the more important ones were the remittances that came from the Pakistanis in the Middle East and the contribution made to the economy by the infusion of Arab capital.
A bit over 60 per cent of the total remittances received by Pakistan in 2011-12 — estimated at $13 billion — came from the Arab countries. Of this amount, Saudi Arabia with 27 per cent and the UAE with 22 per cent had the largest shares.
There was a significant amount of investment in Pakistan by the firms in the Middle East. This investment was motivated in part by the Pakistani professionals, who held senior positions in the enterprises that came to Pakistan. The sectors that were favoured included real estate, banking and telecommunications. These investments, while welcomed in Pakistan, created contingent liabilities in the sense that their earnings were in rupees, which needed to be converted into foreign currency before repatriation. In a way, some of the money that came in as worker’s remittances went out as repatriated profits by the firms from the Middle East. In other words, migration to the Middle East by millions of Pakistanis produced mixed results, some positive and some negative.
Published in The Express Tribune, March 3rd, 2013.