What’s behind Saudi Arabia’s oil aid to Pakistan?

By Dr. Mohammad Salami

Saudi Arabia’s relations with Pakistan have been strained over the past year, but on June 20, 2021, Saudi Arabia agreed to restart oil aid to Pakistan worth at least $1.5 billion a year in July, according to officials in Islamabad.

In  2018, Saudi Crown Prince Mohammed bin Salman (MBS) promised to invest in Pakistan, and  that year, Saudi Arabia agreed to give Pakistan $3 billion in foreign exchange support, over the course of a year, and an additional loan of up to $3 billion in deferred oil import payments,  to help avoid a current account crisis. Beginning in May 2020, the oil loan was suspended.

Kashmir; challenge between the two countries

Relations between the two countries deteriorated after Saudi Arabia declined, on February 2020, the request of an urgent meeting of the Organization of Islamic Cooperation (OIC),  requested by Pakistan, to address the special situation in Kashmir due to Indian intervention. The Saudi refusal to convene an OIC meeting was strongly opposed by Pakistan. In response, Saudi Arabia cancelled an oil deal with Pakistan and demanded repayment of a $3 billion loan. Pakistan was forced to turn to China to repay the loan, borrowing $1 billion from Beijing. In addition, Saudi’s close ally, the United Arab Emirates, banned the issuance of work visas to Pakistani workers, a vital source of revenue for Islamabad. Relations between the two countries normalized  after the Pakistani Prime Minister Imran Khan three-day official visit to the Kingdom of Saudi Arabia (KSA) on 7 May 2021, and the following agreement of  Saudi Arabia to resume the oil deal.

But what’s behind Saudi oil aid to Pakistan? Saudi Arabia has faced several regional problems in recent years. Participation in a direct war in Yemen and several indirect wars such as Syria and Libya, the murder of journalist Jamal Khashoggi, disputes with Turkey and Qatar, the Arab Spring and threats from fundamentalist groups such as the Muslim Brotherhood, Iran’s influence in Arab countries, Lebanon’s economic crisis, the U.S. presidential transition, and Riyadh’s human rights challenges with Biden. But one of Saudi Arabia’s potential threats in the region is with Iran, and the main reason for the oil deal with Pakistan is to keep Islamabad away from Iranian influence.

Countering Iran’s influence

The first reason for Saudi oil aid to Pakistan is to keep Islamabad away from Iran. Pakistan was one of the countries wishing to participate in the Kuala Lumpur summit, known as an alternative bloc to the OIC and  initiated by Malaysian Prime Minister Mahathir Mohamad on the sidelines of the 2018 United Nations General Assembly, with his meetings  with the leaders of Turkey and Pakistan.

The summit was held in December 2019 in Kuala Lumpur, the capital of Malaysia. The event, under the theme “The Role of Development in Achieving National Security,” was attended by representatives from the host country as well as Indonesia, Pakistan, Qatar, Iran and Turkey. Some 450 leaders, scholars, clerics and thinkers from 52 countries were invited, along with Turkish President Recep Tayyip Erdogan, Emir of Qatar Sheikh Tamim bin Hamad al-Thani, Indonesian President Joko Widodo, Iranian President Hassan Rouhani and Pakistani Prime Minister Imran Khan. The OIC opposed the summit, and King Salman telephoned Mahathir Mohammad to state that issues related to Muslim affairs should be pursued through the OIC.

All of the presidents present at the summit, including the leaders of Turkey, Qatar, and Iran, are major Saudi rivals in the region. Upon insistence and threat, Saudi Arabia prevented the prime minister of Pakistan from attending the summit. Saudi Arabia tried to strike a deal with Pakistan to prevent Pakistan’s possible future initiatives in such actions and its distance from Iran in order to keep Pakistan out of the influence of revisionist countries in the region, such as Iran, through economic ties.

The second reason for Saudi Arabia is the increase in Iran’s oil exports after the resumption of the JCPOA (Iran nuclear deal) talks. After Trump withdrew from the JCPOA in May 2018, he sought to reduce Iran’s oil exports to zero. Saudi Arabia welcomed Trump’s decision and promised the U.S. and the international community to make up for the shortage of Iranian oil supplies to avoid a sudden increase in oil prices. However, the tide turned and the next U.S. president, Joe Biden, decided to resume JCPOA talks with Iran and lift oil sanctions on Iran.

Saudi Arabia is well aware that Iran will be heavily dependent on oil exports to revive its weakened economy after the JCPOA revival during Ebrahim Raisi’s new presidency, and will quickly recover its past markets. Pakistani Prime Minister Imran Khan sent a congratulatory message to the new president, calling for closer cooperation and strong ties with him. Saudi Arabia is trying to alienate Imran Khan from Tehran by threatening to cut its oil deal to prevent Pakistan from having close ties with Iran and from completing any Islamabad oil deal with Tehran.

The third reason for Saudi Arabia’s close ties with Pakistan is the security crisis situation in Afghanistan. After the United States announced the withdrawal of 2,500 troops from Afghanistan on September 11, 2021, Taliban forces began to advance militarily and in June managed to take control of one-third of the country. They now hold nearly twice as much of Afghanistan as they did two months ago. The U.S. intelligence community concluded last week that Afghanistan’s government could collapse as early as six months after the completion of the U.S. military withdrawal from the country, according to officials familiar with the new assessment.

Over the past decade, Saudi-Pakistani relations with the Taliban in Afghanistan have weakened and, conversely, Iran’s relations with the Taliban have strengthened. The Taliban has acted in the affairs of international relations through Qatar, and Iran has good relations with Qatar, so Qatar can be an intermediary in strengthening Iran’s influence in Afghanistan and among the Taliban, which, after the complete withdrawal of American troops from Afghanistan, has led to widespread influence. Pakistan also has interests with Saudi Arabia in blocking Iran’s influence in Afghanistan, and Saudi Arabia wants to eliminate or weaken Iran’s influence in Afghanistan by establishing good relations with Pakistan.

Moreover, with the completion of fundamentalism and terrorism in Afghanistan, which is the result of the Taliban’s presence in Afghanistan, the country will become a source of instability and drug exports to the world, and in the coming decades it will be a possible future U.S. internal security concern and Pakistan will be the U.S. access point for Afghanistan. Saudi Arabia is well aware of this and wants to be in Pakistan to have bargaining power with the United States.

Iran is one of Saudi Arabia’s biggest concerns in the region, and Pakistan could be a big obstacle to increase Iran’s influence in the region. Pakistan is a country that has good relations with both Saudi Arabia and Iran, so it may be the best option for Saudi Arabia to curb Iran’s influence in the region.

Author: Mohammad Salami  – Ph.D. in International Relations. He writes as an analyst and columnist in various media outlets. His area of expertise is Middle East issues, including the GCC countries, especially Saudi Arabia.

(The views expressed in this article belong  only to the author and do not necessarily reflect the editorial policy or views of World Geostrategic Insights).

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