Shakeel Ahmad Ramay

Political Economist

Foreign minister of Saudi Arabia is visiting Pakistan on 27 July, on the invitation of foreign minister of Pakistan. According to Foreign Minster of Pakistan, both countries will hold comprehensive dialogue including all fields of mutual interest. This is not new in bilateral relations of Pakistan and Saudi Arabia, both countries always consult each other and try to deepen their cooperation. Saudi Arabia and Pakistan always help each other to face the difficult situation and there is no need to mention the things, as it is common knowledge among masses. Howbeit, world is going through a greater reset and dynamics are changing quite frequently. Thus, it has become important for both countries to interact frequently and analyze their relation in changing dynamics. This visit should also be analyzed in the context of changing dynamics in Middle East.

Last decade witnessed rapid changes in Middle East especially with the emergence of new leadership. Although, there can be many contributing factors, but economic interests dominate all other factors. It is evident from the fact that many countries came up with their own visions of development and future course of actions. Countries are trying to reshape their economies and looking for new avenues of economic significance, which can help them to sustain and enhance their development status. Climate change has further pressurized the countries to look for new avenues and race of reshaping has been accelerated. As, we know major economies of Middle East are dependent on export of oil, which is major contributing factor to climate change.

There is pressure on world leaders to move away from oil and look for cleaner sources of energy. Paris Agreement has further made it compulsory for countries to move towards cleaner sources of energy. COVID-19 has further stressed the need to diversify. Saudi Arabia’s economy shrank by 4.1 percent due to COVID-19, as the oil prices and export declined. Now the market is recovering but there are some irritants in the markets, due to different preferences of countries.       

In this context, Saudi Arabia has devised Vision 2030 to diversify its economy. Presently the oil is major source of revenue, as 85 percent export of Saudi Arabia revolves around the oil and its products. In the efforts to diversify economy, Saudi Arabia is facing some competition and challenges, especially from the old allies. The first glimpse came from UAE, when UAE unilaterally announced to enhance its oil production. Saudi Arabia strongly opposed it and asked the UAE to reconsider its decision. This is not only area, where both countries have difference. There are many areas, where both countries differ from each other.

On economic front, the recent efforts of Saudi Arabia for diversification have created distress in some Middle Eastern countries. First, Saudi Arabia has announced that it will be connectivity hub in coming years, according to the plans of Vision 2030. Saudi Arabia has announced that it will be investing almost US$ 130 billion to restructure and expand the airports and related sectors. It has also planned to launch a new airline. This initiative has direct relevance for UAE and Qatar, as both are major hubs of connectivity in region.

Second, Saudi Arabia is also trying to attract major companies to Kingdom by using the methodology of “carrot and stick”. On one hand KSA is offering good incentives for companies and private business. On other hand in early 2021 KSA announced that it will sever its relationship with companies which do not established their headquarters in Kingdom. Again, presently, many companies are based in UAE or Qatar and operate their business from there. Third, KSA has also revised its policy of concessions of tariff and movement of goods across the border. It has announced thatgoods containing Israeli inputs and those produced in free trade zones, will not receive any type of concession or preference. It is direct hit on UAE.

Fourth, the next competition would be in the field of renewable energy, climate friendly industries, technologies and securing food. Oil dependent countries are facing dual challenge. They have to quit fossil fuel production and meet the energy demand of country, simultaneously. Besides, they also have to shift their industry on climate friendly technology, as they do not have any base for such technologies. On food front, most of the regional countries are dependent on imported food. In the case of KSA, it imports more than 80 percent food. Climate change will further complicate the situation, as climate change is impacting food production.

There are also many areas in the geo-political field, where Saudi Arabia has conflicting views with other Middle Eastern countries. However, that is not focus of article and it is also advisable for Pakistan avoid it, until all parties request Pakistan to be part of it. Pakistan should focus on economic field and emerging opportunities from the region. Pakistan should closely work with all countries in region but there should be special focus on Saudi Arabia and Kuwait. Pakistan can benefit from opportunities from both countries by adopting a wise and dynamic policy of engagement.

For example, as it is stated in Vision 2030 that KSA will be building new infrastructure. It will open doors for construction and companies. Adaptation of modern technology, especially in the field of cyber technology will also create many opportunities, which Pakistan can exploit. Pakistan can also benefit from emerging job market in services sector. As, Saudi Arabia decided to become connectivity hub, it will bring new job opportunities in great number. Pakistan can also benefit by venturing in restaurants industry by tagging it to food and food commodities of Pakistan. KSA has high demand of quality and fresh and Hilal food and food commodities. Pakistan can meet the demand of Saudi Arabia.

Howbeit, to exploit the potential of job market Pakistan will have to work on two areas. First, Pakistan will have to develop skill, especially among the youth. For that purpose, Pakistan will have to run specialized program by keeping in mind the new job market of Saudi Arabia. We need to say goodbye to old strategies and practices. Second, Pakistan will have to work on communication and PR skills of people. As, most of the jobs will be in the field of public engagement sectors. The improved communication and PR skills along with skills of related field, will create greater demand for Pakistani workers. It will result in better source of foreign exchange earnings. 

In the conclusion, Pakistan must be conscious of changing dynamics of region, both in term of economic and geo-politics. Pakistan should conduct a detailed analysis of these changing dynamics and politics in the region. It will help Pakistan to devise a balanced and wise policy. Howbeit, Pakistan should try to avoid picking sides in region. It will be harmful for Pakistan, and Pakistan should stick to policy of Prime Minister Imran Khan “Pakistan is ready to work for peace and development, but Pakistan will not pick sides in conflicts”. This should be guiding principle. By sticking to this policy Pakistan should try to create common ground among all countries. It will be win-win scenario for all regional countries and Pakistan.