Asia tour sets tone for future Saudi ties with Pakistan, India
DUBAI - Asia’s booming economies create exciting opportunities for Riyadh to build partnerships and share the dividends. Saudi Crown Prince Mohammed bin Salman bin Abdulaziz’s high-profile tour of Asia aims to overcome interregional hostilities and set the tone for the future, especially in the context of Pakistan and India.
The first leg of the crown prince’s tour to Pakistan culminated in a $20 billion investment programme covering oil refining and storage, petrochemicals, power generation, minerals mining, agriculture, food processing and tourism sectors. This is Riyadh’s largest direct investment into Pakistan.
Saudi Arabia’s flagship project is an $11 billion oil refinery and petrochemical complex in the port city of Gwadar. It also set aside $4 billion towards two regasified liquefied petroleum gas plants and a $2 billion fund for minerals mining.
Beijing has heavily invested into the $62 billion China-Pakistan Economic Corridor under its Belt and Road Initiative, which is redrawing regional trade networks and Saudi Arabia, as the world’s largest oil producer, stands to gain significantly for the oil export and investment potential it would unlock.
Saudi Arabia’s moves with Pakistan, described as the “first phase” of future economic ties, follow an economic support package in October that involved a $3 billion Saudi deposit in the State Bank of Pakistan to support foreign exchange reserves, which had fallen almost 50% in the preceding 18 months, as well as around $3 billion as deferred oil payment facility.
Saudi Minister of State for Foreign Affairs Adel al-Jubeir said the “investment was for the benefit of the two countries.” However, there is a growing strategic undertone to the direction of Saudi Arabia’s ties with Pakistan.
The formation of the Saudi-Pak Supreme Coordination Council was announced. It will meet quarterly and have ten working groups coordinating areas such as defence, security, intelligence and energy cooperation.
Crown Prince Mohammed, whose arrival was marked with a national holiday, was conferred the Nishan-e-Pakistan (Order of Pakistan) — the country’s highest civilian award — by President Arif Alvi. Crown Prince Mohammed spoke of Pakistan as a “dear country” and recalled the nations “have walked together in tough and good times.”
Pakistani Prime Minister Imran Khan requested the Saudi crown prince assist in diffusing tensions with India following a terror attack February 14 in Pulwama, Indian-administered Kashmir, which killed more than 40 paramilitary fighters. India laid blame for the Pulwama attack on Pakistan and promised a “jaw-breaking” response.
Kashmir — disputed territory since 1947 — has seen a dramatic resurgence of unrest in recent years and anti-India sentiment is at unprecedented levels in the Muslim-majority region seeking self-determination.
The India-Pakistan rivalry has also been playing out at the International Court of Justice over the case of Kulbhushan Jadhav, allegedly a high-value Indian espionage agent captured in Pakistan after crossing over from Iran in 2016.
Saudi efforts to de-escalate the crisis and encourage dialogue between the nuclear-armed neighbours may be a futile exercise, given that anti-Pakistan rhetoric serves well in Indian politics. The government of Indian Prime Minister Narendra Modi is preparing for general elections in a few months after a dramatic slump in popularity.
Modi’s core support base includes right-wing Hindu voters who have been blamed for violence and intolerance against minorities, including Muslims and Christians.
An amicable resolution of the Kashmir dispute would be a boon to regional trade as well as international security by removing one of the world’s most plausible threats of nuclear war. Saudi-India ties have great potential that neither Riyadh nor New Delhi want compromised because of conflict between India and Pakistan.
India’s economy is energy hungry, with the fastest growing demand for oil anywhere in the world. Saudi Arabia is one the three largest oil suppliers to India, delivering approximately one-fifth of its requirements. India treats Saudi Arabia as a “key pillar” of its energy security and this relationship is expected to deepen as India nears a deadline to find alternatives to Iranian oil — its main source, traditionally — to comply with US sanctions against Tehran.
Saudi Aramco is keen to begin building the world’s largest integrated oil refinery and petrochemicals complex at Ratnagiri in Maharashtra, a $44 billion venture.
The extent of Saudi ambitions is reflected by the fact that Crown Prince Mohammed has declared interest in investment opportunities in India amounting to $100 billion across multiple sectors, including infrastructure, energy, manufacturing and housing, in the years ahead.
Saudi Arabia identified India as one of eight strategic partners in its Vision 2030. India, too, sees Saudi Arabia and its Gulf allies — the United Arab Emirates in particular — as key to energy security for sustained economic growth and unlocking its potential.