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Weighing The Real Cost Of Pakistan’s Saudi Aid Package

Saudi King Salman (R) meeting Pakistani Prime Minister Imran Khan in Riyadh on October 23.
Saudi King Salman (R) meeting Pakistani Prime Minister Imran Khan in Riyadh on October 23.

Pakistan is hailing its economic relief package from Saudi Arabia as a success. Riyadh’s generosity, however, is unlikely to alleviate Islamabad’s woes and could prove counterproductive in its relations with major Muslim countries at a time when the Saudis are considered international pariahs.

This week, Pakistani Prime Minister Imran Khan attended the high-profile investment conference in Riyadh called the Future Investment Initiative, touted as “Davos in the desert.” This is where he supposedly got the unexpected good news of securing $6 billion from Saudi Arabia. But while Khan is congratulated for securing the loan, it should not be taken as an act of Saudi generosity.

The Saudis might be using this particular loan to clean their own hands. To understand this, we first need to comprehend the Saudis’ placement in the world and why they would give $6 billion to assist a country so crippling that its leader begs for money at a deserted conference (pun intended).

Khan was among the few world leaders not to pull out ofthe conference after Saudi Arabia faced mounting international pressure following the alleged murder of Saudi dissident journalist Jamal Khashoggi at its Istanbul consulate this month.

In response, world leaders and investors have almost unanimously shown their disapproval of working with the Saudis. The country has become a liability, especially for businesses and investors who rely on credibility.

The IMF’s Christine Lagarde initially was looking forward to the conference, but after Khashoggi’s murder her office said she would not be attending. Jamie Dimon of J.P. Morgan Chase also pulled out despite 85 years of business relations with the Saudis. Bill Ford of Ford motors pulled out, too. He was hoping to boost sales in the market that is due to expand since Saudi women can now drive.

If the global retaliation against the Saudis increases, the country could even face sanctions from the international community. This conference was positioned as a core platform to bring in new contracts for its economic plans.

Investors view Saudi Arabia so risky that it has cost the country 32 percent of its own investment to ensure the risk against defaulters. The country has been trying to woo investors to contain the economic crises it might slide into, possibly irrevocably. The Saudi government might now pursue forcing more debt into the country, though at a much higher cost.

As Khashoggi’s murder looms large in international media, things have gotten out of hand for Riyadh. The Saudis have been trying to bribe their way out of the mess; they have even tried bribing Turkey to avoid the sabotaging news cycle the Saudis triggered by allegedly murdering Khashoggi.

An official close to Turkish President Recep Erdogan told the New York Times that Saudi Prince Faisal offered financial aid, investments, and an end to a Saudi embargo on Qatar if Turkey would drop the Khashoggi case. This is huge, considering these two issues have been the core reasons Turkey has been going after the Saudis in the first place. But now that the bargaining chips are more solidly in Erdogan’s grasp, the Turkish leader angrily called the offer “a political bribe.”

In this scenario, giving a couple of billion dollars is by no means a gift to Pakistan, but a getaway for the Saudis. As they seek to pull in more debt, this money will in fact help the Saudis clean their own slate.

It should be assumed that given the advisers and economists Khan has access to as prime minster, he consulted the matter before requesting money from a country that is undergoing its own nightmare of stability and reliance. But Khan went ahead anyway.

“Unless we get loans from friendly countries or the IMF [International Monetary Fund], we actually won’t have, in another two or three months, enough foreign exchange to service our debts or to pay for our imports. So we’re desperate at the moment,” he said.

As an opposition leader, loans from the United States and the IMF have been the staple of Khan’s criticism for years. But since he was elected, he has to go out begging for money again. The problem is much greater, though, when the lender is the unreliable Saudi Arabia.

"Pakistan's strength is overseas Pakistanis, and we have to make conditions favorable for them to invest in the country," Khan also said. "We are working to create a favorable environment for investment in the country and will introduce a one-window operation for it."

He said this, naively, in a country that has been actively mistreating, manipulating, and deporting Pakistanis, often after torture and extortion. According to one of my sources in Pakistan’s Federal Investigation Agency, Saudi Arabia sends thousands of Pakistanis home every month in a large-scale crackdown where foreign laborers are being replaced by local labor under a Saudization drive.

The military that helped Khan get elected has left him high and dry when it comes to the actual matters of governance. Khan is now having to deal with a broken country all by himself, which is perhaps something he facilitated when he rallied in sit-in protests against other elected leaders who were trying to be proactive.

If the Saudis face sanctions, it would be terrible for Pakistan. Khan has already risked the country's relationship with allies like Iran and Turkey by taking this money. But sanctions on Saudi Arabia could force renewed and unsurmountable economic challenges for Pakistan.

Given Khan's record so far, it is very unlikely he has thought this through.

Kiran Nazish is a journalist and commentator who has worked extensively in South Asia and the Middle East. She runs a global support network for women journalists called and can be followed at @kirannazish.These views are the author's alone and do not represent those of Radio Free Europe/Radio Liberty.