Analysis of Saudi
Arabia’s aid to Pakistan
By
Rahib Raza Malik
15.03.2019
Willy Brandt School
of Public Policy, University of Erfurt
Introduction
Saudi Arabia is not a democracy
led country and democratic processes are not followed in terms of giving away
bilateral aid. The system can be seen by some as a less complicated process
whereas by others it may be more complicated for the same reason that it deals
through private channels. Due to which a lot of important data on Saudi
Arabia’s aid does not get public and people may not have a concrete information
about it. The limited information i n floating in public spheres through some
local and foreign news sources and academic research may not be enough to
conclude yet based on the outcome we can outline structures that are followed
around bilateral aid between Saudi Arabia and Pakistan.
The information on Saudi led aid has regional scopes and motives of the royal families in Saudi Arabia, this could be in the shape of development aid to religious aid. This paper discusses motivation, reasons and sources of aid and interests Saudi royal families. Saudi Arabia has been long supporting Pakistan and vice versa through aid and government related collaborative actions, these relations have lasted decades and have managed to evolve on different grounds, it often has more to do with military activity and or exchange as well (Riedel, 2011). As of 2018 Pakistan has a crippling current account deficit. The current account deficit is more than US$18 billion (S$24.9 billion) and some of the problems directly affecting the economy are fewer exports, fewer tax collections, unstable political cloud and religious extremism surrounding Islam. All of these factors affect the situation where government would look for financial aid from its allies. Saudi Arabia has similar interests towards Pakistan so it may see Pakistan’s current situation as an opportunity by investing into such areas through bilateral aid for better gains. As of 2018 Pakistan’s foreign reserves are sufficient to cover less than two months of its imports but later it may need other plans, this is a similar economic situation since decades that is why bilateral aid has been a key factor for strengthening economic situation of Pakistan.
Pakistan recently approached the International Monetary Fund (IMF) as well for a bailout in October 2018. A team from the IMF arrived in Pakistan in November 2018 to discuss a potential loan which was also sanctioned that also added more confidence among allies like Saudi Arabia to invest in Pakistan too. Although, IMF will be looking for assurances through structural reforms in Pakistan’s government and impose austerity measures. Another important aspect to focus on from Saudi Arabia’s interests in Pakistan has a lot to do with military alliance working independently or under Islamic Military Alliance to Fight Terrorism (IMAFT) as well. Pakistan is one of 41 members at the Saudi-led Islamic Military Counter Terrorism Coalition (IMAFT) that provides the most number of soldiers and cooperative measures. IMAFT was launched by the Saudi Crown Prince, Mohammed bin Salman, in 2017 and deals with a lot of military aid that may not surface the public spheres or media because both countries keep these details confined to confidentiality. Saudi Crown Prince Mohammed bin Salman held a ministerial meeting of the Islamic Military Counter Terrorism Coalition (IMCTC) and Pakistan being one of the strongest armies in Islamic states would lead the way that is of huge value to Saudi Arabia.
In November 2018 Dr. Abdullah Al-Rabeeah general supervisor of the King Salman Humanitarian Aid and Relief Center (KSRelief) told at a seminar in University of Warsaw that total foreign aid given by Saudi Arabia to 79 different countries has been $84.7 billion from 1996 to 2018 (Arab News, 2019). Although Pakistan is not among the top 5 countries Saudi Arabia gives financial aid to as per the statistics laid by Saudi Government in 2018 shows that Pakistan is the 7th in receiving aid from Saudi Arabia but 2nd when it comes to projects.
The information on Saudi led aid has regional scopes and motives of the royal families in Saudi Arabia, this could be in the shape of development aid to religious aid. This paper discusses motivation, reasons and sources of aid and interests Saudi royal families. Saudi Arabia has been long supporting Pakistan and vice versa through aid and government related collaborative actions, these relations have lasted decades and have managed to evolve on different grounds, it often has more to do with military activity and or exchange as well (Riedel, 2011). As of 2018 Pakistan has a crippling current account deficit. The current account deficit is more than US$18 billion (S$24.9 billion) and some of the problems directly affecting the economy are fewer exports, fewer tax collections, unstable political cloud and religious extremism surrounding Islam. All of these factors affect the situation where government would look for financial aid from its allies. Saudi Arabia has similar interests towards Pakistan so it may see Pakistan’s current situation as an opportunity by investing into such areas through bilateral aid for better gains. As of 2018 Pakistan’s foreign reserves are sufficient to cover less than two months of its imports but later it may need other plans, this is a similar economic situation since decades that is why bilateral aid has been a key factor for strengthening economic situation of Pakistan.
Pakistan recently approached the International Monetary Fund (IMF) as well for a bailout in October 2018. A team from the IMF arrived in Pakistan in November 2018 to discuss a potential loan which was also sanctioned that also added more confidence among allies like Saudi Arabia to invest in Pakistan too. Although, IMF will be looking for assurances through structural reforms in Pakistan’s government and impose austerity measures. Another important aspect to focus on from Saudi Arabia’s interests in Pakistan has a lot to do with military alliance working independently or under Islamic Military Alliance to Fight Terrorism (IMAFT) as well. Pakistan is one of 41 members at the Saudi-led Islamic Military Counter Terrorism Coalition (IMAFT) that provides the most number of soldiers and cooperative measures. IMAFT was launched by the Saudi Crown Prince, Mohammed bin Salman, in 2017 and deals with a lot of military aid that may not surface the public spheres or media because both countries keep these details confined to confidentiality. Saudi Crown Prince Mohammed bin Salman held a ministerial meeting of the Islamic Military Counter Terrorism Coalition (IMCTC) and Pakistan being one of the strongest armies in Islamic states would lead the way that is of huge value to Saudi Arabia.
In November 2018 Dr. Abdullah Al-Rabeeah general supervisor of the King Salman Humanitarian Aid and Relief Center (KSRelief) told at a seminar in University of Warsaw that total foreign aid given by Saudi Arabia to 79 different countries has been $84.7 billion from 1996 to 2018 (Arab News, 2019). Although Pakistan is not among the top 5 countries Saudi Arabia gives financial aid to as per the statistics laid by Saudi Government in 2018 shows that Pakistan is the 7th in receiving aid from Saudi Arabia but 2nd when it comes to projects.
In 2017 total aid Pakistan
received was 1270.41 million USD as per OECD stats and aid in 2018 shows that
almost half of the aid to Pakistan comes from Saudi Arabia. That makes Saudi
Arabia a very strong ally of Pakistan (OECD, 2019). Various news sources have
been asking the newly elected government about the conditions but government
spokespersons kept telling the people that there are no special regulations
setup for Pakistan regarding aid from Saudi Arabia. The actual deal was not
revealed by the government but assured for non-regulated fund. Previous
governments in Pakistan never answered such questions in public space either.
(To read the full paper please write to me)
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