Riyadh and Islamabad entering new era of commercial and strategic partnerships

Riyadh and Islamabad entering new era of commercial and strategic partnerships

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Recent developments depict the increasing economic and defense cooperation between Pakistan and Saudi Arabia. Pakistani economic wizards have pitched $30 billion in investment projects to Riyadh. Prime Minister Shahbaz Sharif has assured Saudi investors of a conducive investment environment. Besides, both states’ military high-ups have contemplated ways to augment their defense cooperation.

Islamabad is determined to improve its cooperation with Riyadh. Prime Minister Shahbaz announced the transformation of the deep-rooted Pakistan-Saudities into a comprehensive strategic partnership. Besides, cooperation between the Pakistani and Saudi Royal armed forces in various defense sectors is on a positive trajectory. Indeed, increasing collaboration in defense production bolsters Pakistan’s military-industrial complex. 

PM Shahbaz’s visit to Saudi Arabia at the beginning of this month has kick-started high-level engagements between Riyadh and Islamabad. Following it, a high-ranking ministerial delegation, led by Foreign Minister Prince Faisal bin Farhan, visited Islamabad to expedite the recent understanding of Riyadh’s $5 billion investment in various Pakistani sectors.

Saudi Assistant Defense Minister Major General Talal Bin Abdullah Al-Otaibi visited Pakistan to participate in, and chair the fifth meeting of the Pakistan-KSA Defense Collaboration held on April 19 in Rawalpindi. Co-chaired by Pakistan’s army chief, General Asim Munir, the meeting yielded significant outcomes. Both sides reaffirmed their commitment to strengthening defense collaboration, explicitly focusing on enhancing land, air, and sea capabilities.

Admittedly, a weak writ of state in Pakistan’s mineral rich regions discourages foreign investors, including Saudi investment, from exploration and mining.

Dr. Zafar Nawaz Jaspal 

Since 1967, the Pakistan military has supported the Royal Armed Forces in building capacity. Presently, one of the appropriate areas of cooperation is learning from each other to combat the menace of militancy, mainly militant proxies which both sides have been confronted with repeatedly in recent years.

The transformation in global geopolitics and the modernization in military hardware due to new emerging technologies necessitates Saudi and Pakistani defense policymakers to improve their defense cooperation. During the recent Pakistan and KSA Defense Collaboration meeting, both sides deliberated on concrete proposals to achieve tangible objectives within specific timelines, marking a substantial step forward in their military cooperation. They also agreed to cooperate in defense, technology transfer, localization, and research and development in line with Saudi Vision 2030.

The objective of Vision 2030 is to abandon Saudi Arabia’s rentier state dependent on oil export revenue by integrating its economy into global financial markets as both a destination and a source of investment.

One of the essential pillars of Vision 2030 is to transform the country into a global investment powerhouse. Therefore, Riyadh has transformed the Public Investment Fund into the world’s largest sovereign wealth fund, encouraging major Saudi corporations to expand across borders and take their rightful place in global markets.

Saudi’s contemporary economic policy, especially investment in other countries, makes Pakistan very attractive due to its geographical location and availability of a young, dynamic workforce. Pakistan is encouraging Saudi Arabia to invest in promising fields, including semiconductor development and chip packaging projects with a $270 million investment and a 17 percent return, corporate farming, etc.

The Pakistani ruling elite is aware of the obstacles impeding foreign investment. To attract foreign investment, especially from states like Saudi Arabia, the government of Pakistan formed a hybrid civil-military Special Investment Facilitation Council (SIFC) in June 2023. The SIFC is designed for fast-track decision-making, i.e., one-window, one-stop, and bureaucratic red-tape free operations. On April 18, Prime Minister Shahbaz announced that he would personally monitor the completion of projects with Saudi investment. He warned the bureaucracy that negligence regarding international investment projects would not be accepted. 

Admittedly, the security situation in the peripheral areas of Pakistan, especially parts of KPK and Balochistan, discourages foreign investors. Despite having the potential of $6 trillion in minerals, the country has yet to tap the advantage of the mineral and mining sectors. The SIFC has germinated optimism about erasing significant obstacles, such as bureaucratic hurdles and a lack of mineral investment-friendly policy. Admittedly, a weak writ of state in Pakistan’s mineral rich regions discourages foreign investors, including Saudi investment, from exploration and mining.

In summary, the positive trajectory of Saudi investment ushers in a new era of commercial and strategic partnerships between Islamabad and Riyadh. Indeed, these can go on to seriously rejuvenate the national economy, with tangible benefits for Pakistani society and state. 

- Dr. Zafar Nawaz Jaspal is an Islamabad-based analyst and professor at the School of Politics and International Relations, Quaid-i-Azam University. E-mail: [email protected] Twitter: @zafar_jaspal

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