Amid a Diplomatic Spat with Saudi Arabia, Pakistan Rethinks its Foreign Policy

By Aryaman Bhatnagar
October 03, 2020

The historically close relationship between Pakistan and Saudi Arabia hit a snag recently over differences in how to address India’s decision last year to revoke the special autonomy of Jammu and Kashmir, a Muslim-majority state that is also claimed by Pakistan. Pakistani officials had repeatedly urged Saudi Arabia to convene a meeting of the Organization of Islamic Cooperation, or OIC, to discuss Kashmir, to no avail. Finally, in early August, Pakistan’s foreign minister, Shah Mahmood Qureshi, took the unprecedented step of publicly criticizing Riyadh. Appearing on a TV talk show, he threatened to “call a meeting of the Islamic countries that are ready to stand with us on the issue of Kashmir and support the oppressed Kashmiris.”

If this was a calculated risk to publicly shame the Saudis into action, it clearly failed. Riyadh responded by demanding early repayment of a $3 billion loan to Pakistan, and refused to renew a $3.2 billion oil credit facility. Saudi Crown Prince Mohammed bin Salman also refused to meet Pakistan’s army chief when he visited Riyadh in the immediate aftermath of Qureshi’s statement.

Although Qureshi was heavily criticized domestically for provoking Pakistan’s long-standing diplomatic partner, the fact that there was no public rebuke from the military speaks volumes. In Pakistan, the military has a huge—if not final—say over foreign policy. It is unlikely that Qureshi or any other senior figure from Prime Minister Imran Khan’s government would have taken such a step without the military’s approval.

In fact, the episode highlights the growing realization within Pakistan of its strategic divergence from Saudi Arabia. This is true, most of all, when it comes to Kashmir. In an interview in mid-August, Khan dismissed “the rumors that our relations with Saudi Arabia have soured” as false, but he also admitted that Saudi Arabia “has its own foreign policy. We shouldn’t think that because we want something Saudi will do just that.” Qureshi’s outburst was hardly a spontaneous one, but a reflection of months of frustration with perceived Saudi inaction on Kashmir.

The reality is that for the Saudis, India has a lot more to offer than Pakistan in terms of an investment market, bilateral trade and geopolitical heft. India does $33 billion in bilateral trade with Saudi Arabia annually—10 times that of Pakistan. It is hardly a surprise, then, that Riyadh is reluctant to derail this burgeoning partnership with New Delhi just to keep Islamabad happy.

At the same time, it is unlikely that Pakistan is willing, or can even afford, to make any drastic overnight readjustments to its foreign policy vis-à-vis Saudi Arabia. The immediate steps it has taken to address the diplomatic fallout suggest as much. Besides the visit of the army chief to Riyadh, Pakistan’s Foreign Ministry issued a statement praising past Saudi and OIC efforts on Kashmir.

Pakistan is keen to reduce its dependency on Saudi Arabia over time, and consequently diminish Saudi influence over its domestic politics and foreign policy.
Pakistan depends on Saudi Arabia for its substantial financial aid and shipments of oil on deferred payment terms. Saudi largesse has bailed out Pakistan on numerous occasions in the past, particularly in shoring up its foreign exchange reserves or addressing its debt crises. Remittances from Pakistani migrant workers based in Saudi Arabia also account for a quarter of Pakistan’s total remittances from abroad.

However, Pakistan is keen to reduce its dependency on Saudi Arabia over time, and consequently diminish Saudi influence over its domestic politics and foreign policy. A major realignment in its foreign policy, where it can follow its priorities independent of Riyadh’s preferences, will be gradual, but seems to already be underway.

One indication of this new direction was Pakistan’s initial decision to participate in a Malaysian-hosted summit of Muslim-majority nations in December 2019. The meeting was boycotted by Saudi Arabia and its Gulf allies, but was attended by prominent Saudi rivals like Qatar, Iran and Turkey. Although Pakistan reluctantly withdrew from this summit at the last minute under Saudi pressure, Khan has been keen to promote relations with both Iran and Turkey since he assumed office. He has publicly acknowledged Turkish President Recep Tayyip Erdogan as one of his political heroes. While Pakistan may not push for the creation of a separate Islamic bloc, as Qureshi’s veiled threat suggested, it is unlikely that it will continue to moderate its engagement with both countries in deference to Saudi Arabia.

In particular, Iran and Turkey offer Pakistan the opportunity to build a coalition of Muslim countries to contain India. Such an alliance is an important foreign policy strategy for Islamabad, especially as it seeks backing from overseas for its position on Kashmir.

Turkish and Iranian leaders, in stark contrast to the Saudis, have been extremely critical of India’s Kashmir policy and the perceived persecution of India’s Muslim minority under Prime Minister Narendra Modi. Neither sought to tone down their criticism, even in the face of a backlash from New Delhi. Erdogan, in an effort to position himself as the champion of Muslim causes worldwide, has been especially enthusiastic about the Kashmir issue, lamenting that India’s actions have revoked “the freedom and vested rights of the Kashmiri people.” Much to India’s chagrin, Erdogan again raised the Kashmir issue at last month’s United Nations General Assembly, claiming that it is “still a burning issue.”

Ultimately though, its belief in China as its “all-weather” friend will embolden Pakistan the most with regard to Saudi Arabia. China may have already emerged as Pakistan’s principal economic and political supporter. For Beijing, a strong Pakistan is an effective balancing force against its rival, India, on the subcontinent. It has also become more overtly supportive of Pakistan’s position on Kashmir over the past year. As China’s relations with India deteriorate further amid a tense border standoff that resulted in bloody clashes in June, Pakistan could expect even more support from Beijing. Already, some analysts are suggesting that China is backing the Khan administration’s recent decision to convert Gilgit-Baltistan, part of Pakistan-controlled Kashmir, into a full-fledged province in retaliation for India’s revocation of Kashmir’s autonomy.

Even as Pakistan’s diplomatic spat with the Saudis was unfolding in August, China immediately provided a $1 billion loan to Pakistan to return the funds demanded by Saudi Arabia. China has provided financial assistance in the past to help Pakistan navigate some troubled times, and the China-Pakistan Economic Corridor, a multibillion-dollar assortment of infrastructure projects, continues to remain the flagship initiative under China’s Belt and Road Initiative. There is some basis, then, to Khan’s recent assertion that Pakistan’s economic future is now linked to China.

China’s financial assistance does, however, come with its own set of complications. Despite the concerns within Pakistan about the debt-inducing nature of Chinese investments and their strategic implications, and even signs that Chinese economic assistance may be scaled back in the coming years, the Khan administration has reiterated its commitment to CPEC. A number of critical projects have been revived or started in recent months, and the military has stepped in to play a more overt role in their implementation. In a cost-benefit analysis of its long-term foreign policy realignment, Pakistan right now seems more willing to face the potential risks that come with Chinese financial assistance for the obvious breathing room it offers when it comes to dealing with the Saudis.

Aryaman Bhatnagar is a foreign policy analyst based in New Delhi. He is a former German Chancellor Fellow of the Alexander von Humboldt Foundation. He tweets @aryaman89.
A perspective from an Indian analyst.

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