Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed al Nahyan’s recent visit to Pakistan was the third meeting between the leaders of Pakistan and the UAE in less than three months. Not only that, it was Sheikh Mohammed’s first visit to Pakistan in 12 years.
Agreeing to pursue initiatives for a strengthened strategic bilateral relationship, the two leaders would work on a long-term investment framework agreement and further upgrade trade ties. Discussing economic, investment and development possibilities, Prime Minister Imran Khan and the UAE Crown Prince identified new sectors where co-ordination could be intensified.
To be exact, $3.2 billion each of oil supplies on credit as well as $3 billion in cash deposits were provided by both the Kingdom of Saudi Arabia and the UAE, along with $1.2 billion trade finance from the International Trade Finance Corporation (IFTC)
This new phase began soon after Prime Minister Imran Khan visited the UAE twice after assuming office. Faced by an economic situation, Pakistan was negotiating an $8 billion bailout package from the International Monetary Fund (IMF) to overcome the threat of a balance -of -payments crisis at home. Trying to break the harsh impact of any stringent conditions that may be laid out by the IMF, the idea was to reduce the amount of the bailout by requesting friendly countries for help.
Investing in Pakistan
In response to the request, Abu Dhabi had deposited $3 billion with the State Bank of Pakistan to boost the depleting foreign exchange reserves last month in December 2018. After this recent visit, the UAE has also offered $3.2 billion of oil supplies on deferred payment along with the previous cash deposits. Identical in amount, terms and conditions to the economic package provided to Pakistan by Saudi Arabia, both the countries have helped avert a financial emergency.
To be exact, $3.2 billion each of oil supplies on credit as well as $3 billion in cash deposits were provided by both the Kingdom of Saudi Arabia and the UAE, along with $1.2 billion trade finance from the International Trade Finance Corporation (IFTC). Thus, the total financing support from both countries and the IFTC comes to around $ 13.9 to 14 billion. Consequently, Pakistan can save nearly $7.9 billion that it would have spent on importing oil, as apparently the annual import bill runs to around $12 to 13 billion and this accounts for nearly 60 percent of the total figure.
Investing in Gwadar port, Abu Dhabi plans an oil refinery set up by PARCO at Khalifa Point valued at $5 to 6 billion while Saudi Arabia is also investing in the Gwadar Oil City project. Additionally, investing in logistics, ports, oil and gas as well as construction sectors, the UAE will be having a multi-dimensional presence in Pakistan. Working together in Gwadar along with other economic and business interests, these developments potentially stabilize the region and make foreign investments even more sustainable. Where trade is concerned, these developments would enable Pakistan’s Gwadar to be a bridge between Central Asia and China and the Middle East, onwards to Africa.
Meanwhile, Saudi Arabia, UAE and Pakistan have also been engaged in furthering the Afghan peace process and negotiations between the Afghan govt, U.S. representative Zalmay Khalilzad and Taliban representatives were arranged only recently in Abu Dhabi. Geopolitically, these countries appear to share a complete identification of views on matters of global interests in the years ahead.