Pakistan’s strengthening Gulf diplomacy

Pakistan’s present and future engagements, as well as economic plans with Riyadh and Abu Dhabi, are an undoubtable model for that Gulf-wide effort.

In recent times, the incoming volumes of investment across strategically viable sectors in Pakistan have been a major plus, particularly given time-tested partnerships with key Gulf allies, chiefly Abu Dhabi and Riyadh. Islamabad’s sustained outreach towards the United Arab Emirates (UAE), for instance, has yielded several strong points on the economic front – from a stated intent to advance health sector investments to about a billion dollars from gas to logistics.

All these determinations, coupled with prior plans, should be seen as a tangible step towards adding a higher degree of self-sufficiency in the Pakistani economy. These steps arrive against the backdrop of pressing economic challenges in the country, and ripples witnessed worldwide. Therefore, Abu Dhabi appears to reflect support at a time when spending profiles remain modest, preparing the ground for positive, future capacity-building.

One of the many merits of the bilateral relationship between Pakistan and Riyadh is also the latter’s facilitation of imperative loan arrangements with the International Monetary Fund (IMF), a testament to improving stability in Pakistan, which has been noted in the past to be a consideration for stable fraternal ties in Riyadh. On the potential scalability of investments and financial diplomacy, several variables merit attention.

First, intensified mutual Pakistan-Saudi cooperation in the fields of investment, energy and trade add to a solid grounding of past agreements spanning high-potential sectors. It gives strength to new expectations about evolving developmental experiences over decades, with a view of the future. The current climate of the Ukraine-focused energy crisis has made clear that Riyadh is in a different league on leadership by example. It has been tailoring its management of oil supplies and price controls slickly to meet the kind of strategic autonomy that Pakistan has frequently acknowledged in its own experience with Riyadh.

Now as that sense of multi-sector cooperation finds a potent supplement in the form of Riyadh-backed IMF guarantees (all to further stability in Islamabad), this remains clear: that the latter’s commitment to unwavering ties and firm diplomatic support to the Saudis will be a focus for present and future administrations.

A breakdown of Abu Dhabi’s billion-dollar investment pledge also reveals some strong points for elevating UAE-Pakistan cooperation on the back of specific, long-term returns. Islamabad has already set the tone by welcoming the plans, which could serve as much-needed value additions in vital sectors such as gas, energy infrastructure, renewable energy, health care, biotechnology, agricultural technology, logistics, digital communications, e-commerce and financial services. The follow-up should be to formulate joint working groups with UAE and Pakistan’s industrial experts to measure the placement and allocation of these investments to offset short-term and long-term risks.

After all, energy investments alone have to remain responsive to varying degrees when it comes to the behaviour of international energy markets and can’t remain untethered to changes. It is thus a welcome template in the form of the UAE-Pakistan Assistance Programme (UAE-PAP), which separately enjoys completion of some 165 projects in various sectors, including economic, humanities, social, health, education and infrastructure in Pakistan. The message is simple: play to bilateral strengths and set an even stronger foundation for mutually beneficial investment with key partners in the Gulf. An expanding strategic partnership between Pakistan and the UAE could become the gold standard for other largely untapped Middle Eastern markets to follow suit in due course.

“In the economic field in particular, our two countries have strengthened bilateral coordination in the recent years. The UAE has played a vital role in ensuring the economic and financial stability in Pakistan through assistance in critical times,” said Ambassador of the United Arab Emirates (UAE) to Pakistan, Hamad Obaid Ibrahim Salim Al-Zaabi, on the current state of cooperation. “In 2019, the UAE released $2 billion to support the country’s financial and monetary policies and enhance liquidity and foreign reserves,” he added.

Interestingly, given the vital role of Pakistan’s well-documented diaspora and working community in Gulf countries, the time-tested reciprocity from Saudi Arabia on strategic loan facilitation is equally comforting. Consider the $3 billion deposit to bolster modest foreign reserves: in a move seen by some as an extension of traditional financial assistance to Pakistan, it helps Pakistan navigate hidden risks in an economic environment ruled by the IMF as “challenging.”

That, coupled with a simultaneous track to expedite the ongoing Saudi-Pak cooperation in investment, energy and trade fields deals a challenge to the international community’s groundless speculation about Saudi-Pakistan economic cooperation. That narrative can’t stand, given how Riyadh’s actions to stabilize Pakistan’s economic environment, and Pakistan’s success in agreeing on sectors that form long-term common-ground on cooperation, collectively confirm the scale and pace of cooperation to be consistent.

Presently, there is also a diplomatic upside for Pakistan as it keeps an eye on expanding decades-old engagements with other Gulf allies and bring that momentum out of stealth, particularly on trade. For one, it is a welcome sign for Islamabad to stay focused on an export-oriented growth model that can advance that country’s value-addition in the eyes of the broader Gulf neighbourhood if Kuwait, Qatar, Bahrain and Oman are approached in tandem.

It is through such a trajectory of evolving cooperation, specifically in Pakistan’s experience with the UAE and Saudi Arabia that an autonomous foreign policy pivot towards other states can work to Pakistan’s economic benefit. Pakistan’s present and future engagements, as well as economic plans with Riyadh and Abu Dhabi, are an undoubtable model for that Gulf-wide effort.

The writer is a foreign affairs commentator and recipient of the Fulbright Award