Saudi-Pakistan defense pact can help Islamabad stabilize economy, increase exports—analysts

Saudi Crown Prince Mohammed bin Salman and Pakistan Prime Minister Shehbaz Sharif shake hands in Riyadh, Saudi Arabia, September 17, 2025. (Saudi Press Agency/Handout via REUTERS)
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Updated 18 September 2025
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Saudi-Pakistan defense pact can help Islamabad stabilize economy, increase exports—analysts

  • Pakistan, Saudi Arabia signed defense pact on Wednesday pledging aggression against one country would be treated as attack on both
  • Defense analyst says Saudi Arabia could buy JF-17 Thunder fighter jets from Pakistan amid increasing bilateral defense collaboration

KARACHI: Pakistan’s recent defense pact with Saudi Arabia can help Islamabad stabilize its economy via increased jobs, sharing of technology and exports to the Kingdom, defense and economic experts said on Thursday. 

Pakistan and Saudi Arabia on Wednesday signed a “Strategic Mutual Defense Agreement” pledging that aggression against one country would be treated as an attack on both, a move that will enhance joint deterrence and strengthen decades of military and security cooperation. The accord comes at a time of extreme volatility in the Middle East, where prolonged conflicts have heightened fears of wider instability, reinforcing the urgency Gulf states place on stronger security and defense partnerships.

It also takes place as Pakistan looks to escape a prolonged macroeconomic crisis that forced it to secure loan packages from the International Monetary Fund (IMF). Saudi Arabia has bailed Pakistan out of financial troubles over the years, extending loans to the South Asian country and providing it oil against deferred payments. 

Mushahid Hussain Syed, former chairperson of the Senate Standing Committee on Defense, noted that enhanced defense ties between the two allies could have positive implications for Pakistan’s economy. 

“Yes, both Muslim brotherly countries are leveraging their respective strengths in this historic pact: Pakistan’s military capability and Saudi Arabia’s economic strength,” Syed told Arab News.

Prime Minister Shehbaz Sharif has attempted to increase Pakistan’s GDP and sought help from IMF loans to keep Pakistan’s fragile economy afloat. Pakistan, which exported goods and services worth $32 billion last fiscal year, holds an exhibition in Karachi every two years to increase its defense and military exports. 

The JF-17 Thunder, a multi-role fighter jet co-developed by Pakistan and China, is one such fighter jet that was showcased in the exhibition last year.

Syed said it was likely the Kingdom could buy the fighter jets from Pakistan. 

“Saudi Arabia has close ties with China so JF-17 Thunder sales can also be on the agenda, given the triangular Pakistan-KSA-China partnership,” Syed said. 

Asked if Pakistan could expect some economic relief from the Kingdom in the form of deferred oil payments and loans going forward, Syed said it “should be expected.”

“KSA has helped out Pakistan economically in the past,” he said. 

Khurram Schehzad, adviser to Pakistan’s finance minister, did not respond to Arab News’ queries. 

’FERTILE LAND, LABOR AND REMITTANCES’

Khaqan Najeeb, former finance adviser to Pakistan’s finance ministry, said the pact had formalized decades of ties and opened space for deeper trade and investment between Pakistan and Saudi Arabia. 

“For Saudi Arabia, Pakistan offers fertile land, skilled labor and potential food security links,” Najeeb noted. “For Pakistan, Riyadh is its top remittance source and a critical investor,” he added. 

He said the defense agreement is in line with Saudi Arabia’s Vision 2030 program and gives Pakistan a chance to stabilize its economy “through jobs, capital, and technology.” 

Asked if Pakistan was expected to receive an investment pledge from Saudi Arabia, similar to the US which had secured a pledge of $600 million from the Kingdom earlier this year, Najeeb pointed out that Islamabad and Riyadh had signed agreements worth $2.8 billion in October 2024. 

The finance expert, however, warned that transforming those agreements into “real projects” was a challenge for Pakistan amid the country’s regulatory and fiscal strains. 

“Effective follow-throughs can move the relationship beyond short-term bailouts toward a durable, security-backed economic partnership,” Najeeb noted. 

PAKISTAN STOCKS RALLY

Buoyed by the defense pact, investor confidence surged in Pakistan’s stock market during trading on Thursday. Pakistan’s benchmark KSE-100 Index rose by over one percent and closed at a record 157,953 points, with analysts attributing the rally to Wednesday’s pact. 

“The market touched all-time high after Pak-Saudi pact which is likely to ease (Islamabad’s) financial burden as Pak-Saudi relations improve,” Ahsan Mehanti, CEO at Arif Habib Commodities, told Arab News.

He said investors were expecting Pakistan to receive economic support from Saudi Arabia following the pact. 

Leading brokerage house Topline Securities agreed.

“The bulls stampeded across the trading floor today as the local bourse surged on the back of a landmark development— the signing of the Strategic Mutual Defense Agreement (SMDA) between Saudi Arabia and Pakistan,” Topline Securities said in a statement. 


Pakistan’s flood-hit Sindh farmers’ group plans climate lawsuit against German firms

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Pakistan’s flood-hit Sindh farmers’ group plans climate lawsuit against German firms

  • Claim seeks $1.08 million in damages linked to devastating 2022 floods
  • Case targets energy, cement companies cited as major historical emitters

ISLAMABAD: A group of 43 farmers from Pakistan’s flood-ravaged Sindh province has decided to file a climate justice lawsuit against two German companies, accusing them of contributing to the global greenhouse gas emissions they say worsened the catastrophic floods of 2022, a rights activist and a claimant said on Friday.

The planned legal action targets energy company RWE and cement manufacturer Heidelberg Materials, following a legal notice issued in late October that gave the firms until December to reach a settlement over an estimated $1.08 million in damages. Environmental campaigners describe both companies as major historical contributors to global emissions.

Heidelberg Materials confirmed last month that it had received the legal notice and was reviewing the claim. RWE has not responded.

The case follows the devastating monsoon floods of 2022, which killed more than 1,700 people, displaced around 33 million and caused economic losses exceeding $30 billion across Pakistan. Sindh was the hardest-hit province, with districts such as Dadu, Larkana and Jacobabad submerged for months.

The legal move comes as communities in climate-vulnerable countries increasingly seek accountability from multinational corporations for climate-related losses, amid growing scientific evidence linking extreme weather events to global warming driven largely by industrialized economies.

“The farmers in Sindh, affected by environmental devastation, have now decided to pursue legal action against two German companies for climate justice, which is a historic decision,” Nasir Mansoor, general secretary of Pakistan’s National Trade Union Federation (NTUF), told Arab News.

Mansoor said climate change should be treated as a labor and livelihoods issue, arguing that repeated environmental shocks were eroding rural employment, food security and social stability in one of Pakistan’s poorest regions.

Abdul Khaliq Leghari, a landowner from Khairpur Nathan Shah and one of the 43 claimants, said the floods permanently damaged his farmland. He lost 40 acres of rice and wheat crops, and his yields have since fallen by half.

“We not only suffered large-scale losses to crops and livestock during the floods, but we are still suffering these losses even now. This is not our fault; rather, it is the fault of companies like the German ones,” Leghari told Arab News.

“Clouds rain all over the world, but here the clouds burst. What is our fault in this? Those who have brought the climate to this point are becoming richer and richer, while we are becoming poorer and poorer,” he said, adding that the farmers were seeking not only compensation but action by major polluters to prevent further environmental damage.

At a press conference at the Karachi Press Club on Thursday, farmers and activists said Pakistan, which contributes less than 1 percent of global greenhouse gas emissions, was paying a disproportionate price for industrial pollution generated elsewhere.

Mansoor said environmental degradation within Pakistan was accelerating, citing the rapid melting of 14,000 glaciers across three major mountain ranges and the loss of around 90 percent of the historic Indus Delta.

“The industrial model of capitalist development had brought the planet to the brink of destruction,” Mansoor said, adding that current generations had a narrowing window to prevent irreversible damage.

The litigation is being supported by the European Center for Constitutional and Human Rights (ECCHR) and the HANDS Welfare Foundation. Dr. Shaikh Tanveer Ahmed of HANDS told reporters that the 2022 floods were driven by global warming rather than being a purely natural disaster.

Lawyers involved in the case say it aims to link climate science with human rights law. While RWE and Heidelberg Materials have been identified in “carbon majors” research as significant historical emitters, neither company has accepted liability for the damages claimed in Sindh.

Miriam Saage-Maab, a German constitutional lawyer and a representative of the European Center for Constitutional and Human Rights (ECCHR), said the two firms were selected because they are among Germany’s major historical carbon dioxide emitters and are emblematic of the country’s fossil fuel-based economic model that has contributed to the climate crisis.

She said German civil law recognizes the principle of “joint and several liability,” under which it is legally permissible to hold one or more entities accountable for harm caused collectively by many contributors.

“If there are several people or several entities responsible for a harm, it is legitimate to only bring to court one or two of them, representing that the whole group of those have contributed to a harm,” Saage-Maab told Arab News.

She added that greenhouse gas emissions contribute to global warming regardless of where they are produced, intensifying extreme weather events worldwide.

“The CO2 emissions emitted in Germany, Europe or elsewhere have contributed to a warming climate, and this warming climate enabled the 2022 floods,” she said, describing this link as the core causal argument behind the lawsuit.