Why Saudi Arabia matters to Pakistan

As the crown prince Muhammad bin Salman completed his two day Pakistan visit, the debate about Pakistan joining the Riyadh’s camp, against Tehran, for financial largesse dominated the public discussion. Pakistanis are vying cost and benefits of Saudi financial assistance. Both countries are linked by financial assistance, religious ties, energy markets, and defence agreement. Pakistan needs Saudis for various reasons.

Enhancing CPEC image
During the visit the crown prince announced a 10 billion$ refinery and an oil city in Gawadar, Baluchistan under CPEC. The city will have facilities for storing oil for its onward transport to China.

In fact, the prospect of Saudi investment has already helped divert global attention from the controversy regarding Chinese debts incurred by Pakistan, its economic crisis, and the possible connection with ongoing CPEC projects. Saudi investment can project Gwadar as an investment destination, encouraging Arab African and Asian nations to become part of CPEC.

The investment is an effort by crown prince to diversify Saudi economy and reduce its dependence on oil under vision 2030. Saudi Arabia is still largest oil exporter and rules the oil markets with its ability to drill oil at lowest cost in the world i.e. 4 $ per barrel.

Sovereign wealth fundThe public investment fund of Saudi Arabia has planned to increase its size to 2 trillion dollars till 2030. The country is hungry for investment opportunities especially in the field of science and technology, petrochemical and refining, mining, and entertainment.

Overseas Pakistanis
Saudi Arabia hosts 2.6 million workers from Pakistan, who send remittance worth 4.5 billion dollars every year. These remittances prove to be a valuable support for cash starved Pakistani economy.

Balance of payment (BoP) crisis
Pakistan frequently faces balance of payment crisis and therefore needs foreign support. Saudi Arabia has frequently helped Pakistan in dealing with its foreign payment difficulties. Though, critics claim this easy to get support held Pakistan away from taking hard measures to rectify its recurring BoP crisis.

Help deal with international powers
Saudi Arabia with its deep pockets, massive oil reserves, and considerable investment clout has say at international fronts and can help Pakistan sway international opinion in its favour e.g. In the midst of Kargil saga, at the time when New Delhi was blowing hot and cold, Pakistan asked Bandar bin Sultan for arranging US pressure on India. Bandar bin Sultan, erstwhile Saudi Ambassador to USA, was most powerful foreigner in US at that time.

Middle East influence
Millions of Pakistani labourers work in Middle Eastern countries. Saudi Arabia through tribal connection and religious ties hold considerable influence in Middle East and help Pakistan deal with these countries.

Religious clout
Saudi Arabia wields enormous influence on people among religious class through its huge investment religious institutions, mosques and madrassas related to Wahabism doctrine. Moreover, Hajj visas also offer an opportunity to Saudi Arabia to develop a rapport with Pakistani religious class.