Prime Minister Imran Khan will undertake a second visit to Saudi Arabia in five weeks on Tuesday. He will attend the “Future Investment Initiative” conference in Riyadh. Dubbed ‘Davos in the desert’, the conference brings together businesspersons, investors, corporate giants, representatives of hi-tech industry and major media outlets at one platform. However, many renowned multinational companies as well as Western countries have decided to boycott the event over the murder of Saudi dissident journalist Jamal Khashoggi.
Nevertheless, Imran sees this as an opportunity to project Pakistan’s economic and investment potential and his vision of the country in the five years to come, according to the Foreign Office statement. The devil, however, lies in the details. On the sidelines, the prime minister is scheduled to meet Saudi Crown Prince Salman Bin Abdulaziz and Crown Prince Muhammad Bin Salman. Although, the government has not said it publicly, the main purpose of Imran’s visit to Riyadh is to seek an economic bailout package. There are reports that Saudi Arabia may provide $8 billion economic package, including oil on deferred payment. It was because of this reason the prime minister during his recent interaction with editors and owners of media outlets indicated that Pakistan might not opt for the IMF option.
Unlike his finance minister, Imran has always been reluctant to approach the international lender. The reason is that the IMF programme will always come with tough economic conditions. The government, if it avails the facility, would be compelled to take unpopular and tough decisions. Also, it is an issue of prestige for Imran, who in the past had spoken against going to the IMF.
What worries the government is that the IMF now is seeking greater scrutiny of the China-Pakistan Economic Corridor (CPEC) project. Even the United States voiced its concerns, insisting that CPEC is to be blamed for Pakistan’s current economic woes. This clearly indicates that Pakistan will have a tough task ahead in negotiating with the IMF team. Imran has made it clear that his government would resist tough IMF conditions. But he needs to understand Pakistan, not the IMF, needs assistance. Therefore, one likes it or not, the government will have to accept the conditions no matter how tough those would be.
It is, perhaps, due to these complexities, the government is still exploring options other than the IMF. The equation is simple: if Pakistan is to avoid the IMF then only three countries can provide the way out. Those three countries are Saudi Arabia, China and the United Arab Emirates (UAE). If Saudi Arabia agrees it is safe to assume that the UAE would follow suit.
The question, however, is: what Pakistan is going to offer in return to Saudi Arabia if Riyadh indeed approves the bailout package? Would the government commit troops for Yemen, a longstanding standing demand of Saudi Arabia? At this stage it is not clear if the Prime Minister agrees to such a condition given Pakistan’s principled stance that it would stay out of Arab-Iran rivalry. Till now, Pakistan has successfully managed to ensure that delicate balance. But Saudi Arabia knows that Pakistan is facing serious economic challenges and that it needs external assistance, which means that Saudi assistance would not be without any strings attached to it. Therefore, the Saudi option may entail serious strategic implications for Pakistan. On the other hand, the IMF conditions would mostly be about taking certain corrective economic measures. It is true that those decisions may make it difficult for the government to provide relief to the masses at least for a couple of years.
The choices are not easy. Imran has to decide whether it wants to meet hard IMF conditions or accepts the Saudi offer in return for compromising on certain strategic interests.
Published in The Express Tribune, October 22nd, 2018.
Source: https://tribune.com.pk/story/1831106/6-hard-choices-saudi-arabia-imf/
