IPRI – Islamabad Policy Research Institute

CPEC and Saudi Arabia

After Prime Minister Imran Khan’s visit to Saudi Arabia, very major news came that Saudi Arabia was a new partner in the China-Pakistan Economic Corridor (CPEC). The significant one to make out of Imran Khan’s visit to Saudi Arabia is the fact that Pakistan-China and Pakistan-Saudi relations are going to stay as corner stone of Pakistan’s foreign policy. This news though made good impression inside Pakistan, but it also has raised eyebrows of those who overtly or covertly oppose the CPEC. Geo-politic-economic strategic calculations would soon start taking shape in coming days as it is too early to pen down the exact happening with analyses. Is Saudi Arabia really joining the CPEC as a “partner” or would be “investing” in some major ventures under the project?

At present, both the US and India stand overtly opposed to the CPEC. And traditionally, Saudi Arabia enjoys good relationship with the US and an year ago both states had signed deals worth more than US$ 350 billion during President Trump’s first ever foreign visit to America’s one of the closest allies in the region. In fact, Trump is the only US President who chose Saudi Arabia being his maiden visit, which did give a signal that the US under the Republican Party considers the Middle Eastern geo-politics important as ever. And this was obvious as Middle East region has always caught the attention of the Presidents or administrations under the Republican Party, of course the preservation of Israel and eye on oil in the region being the top objectives. But the question arises that since the US has not been admirer, if not against, of the Belt and Road Initiative (BRI), especially the CPEC and is involved in trade war with China, how the US would react on Saudi Arabia joining the CPEC?

Beyond any doubt, joining of Saudi Arabia will not only have greater value, but also will further legitimize the CPEC. Even if Saudi Arabia joins it as an investor in some major projects, it will contribute to Pakistan’s faltering economy. Already, under President Trump administration, if one closely investigates how the US has been handling its relationship with Pakistan, one would find an obvious pattern. And that is getting things done by other means, i.e. keeping finger on sensitivities of Pakistan, especially using Pakistan’s existing economic vulnerabilities. Suspension of coalition support fund, FATF episode, and using American influence in the world financial institutions, i.e. World Bank and the IMF are the recent archetypal examples of how the US wants to get things done by Pakistan. Fragile economics has always remained Pakistan’s “Achilles heel”, which in turn made Pakistan to take some not so famous decisions in the past vis-à-vis the US.

Lately, China has emerged as an industrial hub and stands being the second largest economy after the US. Saudi Arabia on the other hand is a Mogul in oil sector coupled with Pakistani diaspora there. Pakistan could play an important role in connecting China and Saudi Arabia both in terms of trade and geo-politics. Since China imports oil from Saudi Arabia, Pakistan could be an oil artery between the two. Because, as per “World Exports,” during 2017, Saudi Arabia was the second largest crude oil provider to China worth US$ 20.5 billion (12.6%) after Russia US$ 23.7 billion (14.6%). The route involved lengthy “Strait of Malacca” costing a lot to Chinese economy. With the CPEC in place and Gwadar being fully operational, Pakistan could be a bridge which will not only reduce the distance and other allied difficulties the Chinese face today, but also the cost of transportation will substantially be reduced. Overall, the inclusion of Saudi Arabia in the project reinforces the fact that strategic community inside Pakistan does take geo-economics seriously for quite some time.

A version of the article appeared in Daily Times, dated 8 October 2018

{Disclaimer: The views expressed in the article are of the author and do not represent Institute’s policy}


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