Saudi Arabia has agreed to take back oil aid to Pakistan worth at least $ 1.5 billion annually in July, according to Islamabad officials, while Riyadh works to counter the influence of Pakistan. Iran in the region.
Riyadh asked Pakistan to repay a $ 3 billion loan last year after Islamabad put pressure on Saudi Arabia to criticize India’s cancellation of Special status of Cashmere.
But the rift between the two longtime allies has eased after Imran Khan, the prime minister, met Saudi Crown Prince Mohammed bin Salman in May.
The news of the oil deal with Pakistan comes when Saudi Arabia undertakes a diplomatic push with the United States and Qatar to build a front against Iran, analysts said. Riyadh lifted a three-year blockade in Qatar in January in what experts said was an attempt to gain favor with the newly elected Joe Biden.
Pakistan had moved closer to Saudi Arabia’s regional rivals Iran and Turkey, which, along with Malaysia, have sought to establish a Muslim bloc to compete with the Saudi-led Islamic Cooperation Organization.
Khan has developed a strong relationship with President Recep Tayyip Erdogan, encouraging Pakistanis to watch the historical Turkish TV series Exit Ertugrul (Resurrection of Ertugrul) for his depiction of Islamic values.
Ali Shihabi, a Saudi commentator familiar with the leadership’s thinking, said “bad blood” had accumulated between Riyadh and Islamabad, but recent bilateral meetings had “blown up the air” and reset relations to the point that oil credit payments resumed soon.
A senior Pakistani government official said: “Our relations with Saudi Arabia have recovered. [a downturn] before. Saudi Arabia’s support will go through deferred payments [on oil] and the Saudis are looking to retake their investment plans in Pakistan. ”
The Saudi bid is less than half of the first $ 3.4 billion oil structure, which was put on hold when ties broke down.
But Fahad Rauf, head of equity research at Ismail Iqbal Securities in Karachi, said: “Any amount of dollars helps because many times we face a current account crisis. And with these prices north of $ 70 a barrel everything helps you. “
Pakistan’s foreign reserves were more than $ 16 billion in June compared to about $ 7 billion in 2019 before entering its $6bn IMF programme.
Robin Mills of the Qamar Energy Council said: “Saudi Arabia and Pakistan are allies, but their relationship has always been rocky. And the Pakistan-Iran relationship is better than you might think.”
Mills said the timing of the Saudi move was “interesting” as Iran prepares to intensify oil exports with the United States considering easing sanctions.
“The Saudis are on a more general bridge construction mission. They are looking to repair ties with the US and there is also a resumption of relations with Qatar, ”he said.
Ahmed Rashid, author of books on Afghanistan, Pakistan and the Taliban, said there were a variety of factors that could have stimulated Riyadh to restart the oil facility.
It may be “partially related to the American need base“To launch counter-terrorism attacks in Afghanistan from Pakistan, he said, but he added that his priority was probably to prevent Islamabad from falling under Tehran’s influence.
Rashid noted that Pakistan has been caught between China, which has invested billions of dollars in infrastructure projects, and the United States.
“Pakistan has to play well with it, it depends on China for the Belt and the Road, it depends on the West for the loans,” Rashi said. “This is a very complex game.”
Anjli Raval in London and Simeon Kerr in Dubai