Saudi Crown Prince Mohammed Bin Salman is set to visit Pakistan on a trip that will see the closest alignment of both countries interests in decades.
While the fundamentals are still gloomy, the South Asian economy could just be beginning to emerge from a balance of payments crisis that threatened to force it into bankruptcy.
It’s been aided in large part by economic assistance packages from China and the Gulf Arab States, the latter of which have committed to more than $12 billion in cash deposits and deferred oil payments to ease pressures on the country’s currency and imports payments.
Prince Mohammed is set to arrive in Islamabad on February 16 for a two-day visit. Here’s what could result from his visit:
Pakistan’s Foreign Minister, Shah Mehmoon Qureshi, told reporters that the Saudi Crown Prince will be accompanied by a “high-powered” retinue that will be the “biggest in the history of both countries… and will include will include the prince's associates, ministers, advisers and heads of the large Saudi companies.” The delegation, expected to number over 1,200 people will include 40 CEOs from Saudi Arabia’s largest companies.
Foreign dignitaries and heads of state usually stay in accommodations furnished by their own missions in a country. This time, Crown Prince Mohammed Bin Salman has been invited to stay at the Prime Minister’s house by Imran Khan himself.
During UAE Crown Prince Mohammed Bin Zayed's visit to Islamabad last week, Khan received him and drove from the airport through the streets of Islamabad himself in an unprecedented display. Earlier, Khan’s austerity drive had included converting the Prime Minister’s House into a university, while Khan himself opted for smaller residences nearby.
It is unclear if Prince Mohammed will be invited to stay at the original Prime Minister’s House or at Khan’s own residence.
Pakistani officials have gone on the record numerous times to suggest Saudi Arabia’s interest in Pakistan could result in the largest investment in the South Asian economy by any country.
That title currently belongs to China with a $60 billion agreement to build the China Pakistan Economic Corridor, the largest single country grant within its overall One Belt One Road Initiative. No reports suggest Saudi Arabia will look to match that number, however it looks certain that Saudi Arabia will commit to its largest investment with Pakistan in history.
"Saudi Arabia’s investment fund is over $1 trillion, we want just a fraction of that," said an unnamed Pakistani minister, according to Channel News Asia.
Pakistan has been pursuing a free trade agreement with the GCC, but talks have been stuck in deadlock since 2006. Pakistan’s value of bilateral trade with Saudi Arabia is in a declining trend, dropping half to $2.5 billion in the three years until 2016-17. An agreement with Saudi Arabia would be Pakistan’s second FTA after agreeing to one with Iran earlier.
Qureshi told reporters both countries would sign eight memorandums of understanding across the investment, finance, power, renewable energy, internal security, media, culture and sports sectors.
The largest portion of investment from the MoUs will come from oil refining, liquefied natural gas (LNG) and mineral development, owing to a a $10 billion oil refinery Saudi Aramco intends to build near Pakistan’s port city of Gwadar at the apex of the China-Pakistan Economic Corridor.
It currently takes six weeks, reams of paperwork, and approximately $500 for Pakistani business travellers to attend conferences and other meetings in Saudi Arabia. Pakistan has recently revised its visa regime to allow visa-free travel to citizens of 50 countries and a faster e-visa application system for 175 others.
Ministers in the country have suggested they will raise issues relating to the ease of travel between both countries with members of the Saudi delegation during the visit.
After he leaves Islamabad, Prince Mohammed will stop over in New Delhi, India before heading further East to Malaysia and Indonesia. India is expecting Saudi Arabia to announce an investment in its National Investment and Infrastructure Fund, the country’s version of a sovereign wealth fund that is a key part of Prime Minister Narendra Modi’s agenda.
Pakistan’s PM Imran Khan had previously offered to mediate Saudi Arabia and the UAE and Qatar towards resolving the Gulf crisis. Saudi Arabia meanwhile could be seeing investments in both Pakistan and India as a way to ease simmering tensions between both nuclear-powered South Asian neighbours.
Pakistan is also in talks with the US, a key Saudi ally, and Russia, a country that shares mutual interests with India, to bring the Taliban to the table and end a 17-year war in Afghanistan. Saudi Arabia’s investment in the oil-refinery near Gwadar is also close to Pakistan’s border with Iran, a country at odds with the Gulf Arab states and that has been lobbying Khan’s government for influence.
Pakistan’s former army chief, General Raheel Sharif, is currently the head of Saudi Arabia’s Islamic-Nato alliance of 34 muslim nations. Sharif had agreed to the role only after commitments that it would not be used against Iran. Meanwhile, Pakistan has re-iterated that its military, the sixth largest in the world, will not enter the war in Yemen. However, it has committed to defending Saudi territorial sovereignty if called upon.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.