Strength in unity

Editorial Board
Thursday, Apr 18, 2024

The Kingdom of Saudi Arabia and Pakistan have done well to raise a strong joint voice for an immediate ceasefire in Gaza and an urgent resolution of the Palestine issue in line with the aspirations of the people of Palestine. The event itself is important, but looking through the prism of bilateral economic ties, its occasion adds another layer of meaning: Statements to this effect came from both foreign ministers at the joint presser held by them to mark the conclusion of a top Saudi investment delegation’s visit to Pakistan. In other words, the presser surfaced one more compelling reason for KSA and Pakistan going into business together. And truly, the synergies of uniting the Saudi investment with the Pakistani natural and human resources are substantial and diverse. Of course, economic ties must make sense as economic ties first and foremost, and for both sides. It was obvious from the joint presser that progress makes economic sense for both sides. That is the sweet spot that lifts great feats of cooperation and organization into existence. That is good news, not only for both Riyadh and Islamabad but also for the region and the world.

The two sides have a rock-solid history of brotherhood, cooperation, and partnership to build on. Pakistan’s ruling Sharif clan has its own tradition of cordial and intimate ties with Saudi Arabia and the royal family. In any case, sparks promise to fly as Islamabad and Riyadh do business together. The current delegation is focused on the first $5 billion tranche of Saudi investment for Pakistan coming as a package of $25 billion spread over the next five years. His Royal Highness Prince Faisal bin Farhan Al Saud was tight-lipped on the specifics of the projects the kingdom is willing to pick up. His Pakistani counterpart, Foreign Minister Dar, Senator Ishaq Dar was tight-lipped for reasons probably political. Some of the sell-offs of state enterprises planned under the aegis of the Special Investment Facilitation Council (SIFC) promise to be unpopular, but a firm resolve to set them free has mustered universal support. A bitter pill is unavoidable now and then.

Beyond the current year, the authorities in Pakistan will do well to remember that it is up to them to direct investment into making a bigger difference. CPEC has attracted most of the investment it needed. Newer investment can be used to build in close proximity, in alignment with, and on top of those broad contours. Together, these bricks can one day become a city. Can we focus on digital communications and allied ICTs – and bring to life something of a Digital Silk Road? The ancient Silk Roads were all about bridging distances – between China and Arabia. How difficult can it be to pull off digitally this time? The Saudi side’s contribution is financing. Pakistan’s part is the capacity to finance that financing. If Pakistan can keep a steady supply of economically viable projects going, there is no reason why the kingdom should run out of money to invest. Besides, investments by the kingdom will almost certainly encourage similar investments by other sovereigns, and probably for FDI.

The Saudi investment arrives at a time when Pakistan is under an imperative to push through painful macroeconomic reform to put its economy on an even keel. It is up to those in charge of Pakistan’s affairs to leverage this investment to help those reforms along rather than hold them off another while. Pakistan’s competitive geostrategic environment does not allow a long hiatus. This opportunity to put Pakistan’s economic ills to rest for good should not go begging. Squandering this opportunity will be a crime against the nation. All the government, facing a grim GDP growth forecast, needs to do is oil the wheels of the economy for zero friction. Ultimately, the SIFC may take it upon itself to ensure the same ease, the same one-window operation, for institutional investors and wealth funds in general. All in all, it seems the best use Pakistan can put to Saudi investment dollars is priming the Pakistani market for FDI. Only then can the economy become self-sufficient. Only then can Pakistan rise on its feet.