Saudi Arabia has been seemingly distancing itself from Pakistan, as there have been various instances of it forging strategic business ties with India
On his visit to Pakistan in 2019, Crown Prince of Saudi Arabia Mohammed Bin Salman signed memorandums of understanding (MoUs) for an investment of US$ 21 billion, including an investment of US$ 12 billion to be utilised for a deep conversion refinery and petrochemical complex. But, to the disappointment of millions of Pakistanis, the much-anticipated venture never saw the light of day. Instead, it remained yet another failed undertaking to accrue from diplomatic slip-ups and strained foreign relations. In late 2020, Pakistan accused the Organisation of Islamic Cooperation (OIC), the Saudi Arabia-led bloc of 57 Muslim-majority countries, of not intervening in the Kashmir issue—a key policy issue for former Pakistani Prime Minister Imran Khan.
With the leadership of the Saudi Arabian hegemony over the Muslim world called into question and challenged openly on the world stage, the Gulf kingdom's otherwise-cordial relations with Pakistan turned acrimonious. In response to this threat, Saudi Arabia pulled back an interest-free loan of US$ 1 billion it had extended to Pakistan in November 2018. This worsened the condition of the country’s already declining foreign exchange reserves, pushing it to the brink of sovereign default. Saudi also withdrew the deferred oil payments scheme—targeted at helping Pakistan ameliorate its import bill—that was part of the same package.
With the leadership of the Saudi Arabian hegemony over the Muslim world called into question and challenged openly on the world stage, the Gulf kingdom's otherwise-cordial relations with Pakistan turned acrimonious.Since the royal family seemingly distanced itself from the Pakistani top leadership, there have been instances of sidelining Islamabad in favour of forging strategic business ties with India. Notably, during the Saudi Crown Prince's visit to Pakistan in 2019, he signed MoUs worth US$ 100 billion with India, despite Pakistan's objections. This demonstrated the significant sentimental risk that Riyadh was willing to undertake. Nevertheless, Pakistan and Saudi relations have demonstrated unwavering resilience since its inception as an independent state in 1947. Both nations, united by shared religious beliefs and rooted in the foundations of Islam, have enjoyed a longstanding alliance and maintained exceptionally close ties. During challenging economic periods, Pakistan has heavily relied on the Gulf Kingdom for crucial oil supplies and financial support. Considering Pakistan's recurrent challenges of dwindling forex reserves, volatile exchange rates, and escalating inflation, the reported investment plans of the Saudi Kingdom amounting to US$ 11 billion, along with the increase of its loan deposit to the State Bank of Pakistan from US$ 3 billion to US$ 5 billion, could serve as a potential lifeline. These measures might prevent Pakistan from falling under the scrutiny of the International Monetary Fund (IMF). The robust patronage from the Gulf leader could prove to be Pakistan's trump card in renegotiating a stalled IMF bailout, which would otherwise necessitate further increases in electricity and gasoline prices and additional tax burdens. The Gulf Kingdom has not only extended its support to Pakistan in times of economic distress but has also been a generous benefactor during humanitarian crises. Saudi has disbursed deposits of US$ 200 million each, in favour of Pakistan’s central bank and for the purchase of urea fertilisers. Moreover, 13.3 percent of the global funds pledged to Pakistan for stress relief from the floods, come from Saudi Arabia. The aid extended is not limited to monetary terms, and includes cargo aeroplane-lifts, trucks, as well as search and rescue supplies. This unique and profound relationship predates independence – handsome donations were received from Saudi in 1943 when the Bengal famine struck. The two countries also formed an anti-communist front during the Cold War and stood against the erstwhile Soviet Union’s occupation of Afghanistan.
Both nations, united by shared religious beliefs and rooted in the foundations of Islam, have enjoyed a longstanding alliance and maintained exceptionally close ties.Contrary to common perception, Saudi Arabia's relationship with Pakistan goes beyond religious ideologies. The Gulf nation views Pakistan as a reliable ally and an indispensable defence partner, particularly due to Pakistan's possession of a nuclear arsenal that serves as a deterrent against regional threats. The Saudi government recognises the importance of maintaining a strong alliance with Islamabad, especially considering its concerns about Iran. The recently signed US$ 400 billion China-Iran Chabahar deal, facilitated through the China-Pakistan Economic Corridor (CPEC), has further emphasised the significance of Pakistan as a conduit for this project. If the deal proceeds as planned, it would lead to Iran's formal integration into China's Belt and Road Initiative (BRI), resulting in significant economic benefits for Iran, which could cause considerable discontent for Saudi Arabia, its arch-rival. Additionally, Pakistan plays a crucial role in meeting Saudi Arabia's labour demands, providing a steady supply of inexpensive workers for the country's ambitious infrastructure projects. Furthermore, Pakistan represents a significant international market for Saudi Arabia's oil and offers attractive opportunities for foreign investment. Table 1: Pakistan’s Trade with Saudi Arabia (2003 – 2020)
| Year | Export (US$ Million) | Import (US$ Million) | Total Trade Volume (US$ Million) | Pakistan’s Total Trade Deficit (US$ Million) |
| 2003 | 469.6 | 1416.7 | 1886.2 | 947.1 |
| 2004 | 353.1 | 1757.8 | 2111 | 1404.7 |
| 2005 | 354.9 | 2650.6 | 3005.5 | 2295.7 |
| 2006 | 309 | 3033.2 | 3342.3 | 2724.2 |
| 2007 | 295.5 | 4011.8 | 4307.3 | 3716.3 |
| 2008 | 441.1 | 5954.9 | 6396 | 5513.9 |
| 2009 | 425.7 | 3500.1 | 3925.8 | 3074.4 |
| 2010 | 409 | 3837.9 | 4247 | 3428.9 |
| 2011 | 420.2 | 4668.3 | 5088.5 | 4248.1 |
| 2012 | 455.6 | 4283.5 | 4739.2 | 3827.9 |
| 2013 | 494.1 | 3847.2 | 4341.3 | 3353.2 |
| 2014 | 509.7 | 4417.4 | 4927.1 | 3907.7 |
| 2015 | 431.3 | 3006.8 | 3438.1 | 2575.4 |
| 2016 | 380.4 | 1843.1 | 2223.6 | 1462.7 |
| 2017 | 334.5 | 2730.4 | 3064.9 | 2395.9 |
| 2018 | 316.3 | 3242.3 | 3558.7 | 2926 |
| 2019 | 404.9 | 2436.3 | 2841.2 | 2031.4 |
| 2020 | 432.3 | 1893.1 | 2325.4 | 1460.8 |
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Soumya Bhowmick is an Associate Fellow at the Centre for New Economic Diplomacy at the Observer Research Foundation. His research focuses on sustainable development and ...
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