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Friday, May 17, 2024

Is KSA’s inclusion in CPEC an answer to Pakistan’s economic crises?

News Analysis |

Pakistan has struck a $10 billion deal with and Kingdom of Saudi Arabia after taking the Chinese authorities in confidence over the KSA joining as the China-Pakistan Economic Corridor (CPEC) project as a strategic partner. Information Minister Fawad Chaudhary confirmed the development while addressing a press conference in Islamabad. “KSA is the first country to join the CPEC as a third country partner,” he said. Saudi delegation including the Saudi minister for finance and energy would visit Pakistan in the first week of October to lay down a “foundation for a very big partnership,” he added.

“A high-level coordination committee has been constituted and it has the complete backing of the Saudi King, His Highness Salman bin Abdul Aziz Al-Saud, as well as the Crown Prince [Mohammad bin Salman] and PM Khan,” Chaudhary remarked. Prime Minister Imran Khan in his maiden two-day visit to KSA negotiated the deal with his counterpart. Amid Pakistan’s financial turmoil, PM Khan has been looking to secure funding from friendly countries including KSA to put the economy back on track.

In 2014, six months after Pakistan obtained its last IMF bailout, Saudi Arabia loaned it $1.5 billion that the government used to strengthen its rupee currency.

Earlier, a leader of Pakistan Muslim League-Nawaz (PML-N) and former interior and planning minister Mr. Ahsan Iqbal asked on twitter if China was on board about SA’s joining the CPEC. “Has China been taken into confidence? CPEC is a bilateral project in which induction of any other country has to have the concurrence of both sides.” Ahsan asked.

In response to Ahsan, Information Minister tweeted and said that ‘Yes China has been taken into confidence, expansion of CPEC is in China and Pakistan interest. Pak will be a center of economic activity of this region; the era of darkness is over.

Amid the financial time’s controversy and alleged doubts raised over the CPEC projects, PTI led coalition government faced the heat. There was speculation that amid the economic downturn, Pakistan would suspend the CPEC project for a year. PTI minister profoundly rejected the notion and claimed that he was quoted out of context.

Read more: Saudi Arabia to become third partner in CPEC but what about…

After ministers presser, it is confirmed that desert kingdom is making a big investment in Pakistan, however, did not reveal if the KSA would extend the much-required loan to assist Pakistan to tackle/overcome its Balance of Payment crises. Moreover, Saudi Arabia has a history of bailing out Pakistan financially. In 2014, six months after Pakistan obtained its last IMF bailout, Saudi Arabia loaned it $1.5 billion that the government used to strengthen its rupee currency.

After this announcement, the geopolitical dynamics of the region have taken an interesting turn. Both the KSA and Pakistan have been America’s long-term allies. However, after Trump unveiled South Asian policy, and repeatedly accused Pakistan of harboring terrorists, the cooperation with Pakistan has deteriorated.

Read more: CPEC provided “favorable financing arrangements”

On the contrary, Trump has extended an olive branch towards KSA’s new crown prince Muhammad Bin Salman and supported his policies in the region. Since America has been working tirelessly to counter China’s Beijing-funded Belt and Road corridor of major infrastructure projects inside Pakistan along with India, it would be interesting to see that how the US would react to this development, after KSA’s inclusion.