Second Take on Pakistan-Saudi Loans

[Lincoln]

Would you want Americans to sit Inside Pakistan with all their arsenal? The Arsenal belongs to Americans not Saudis and they are not entitled to help them. No country helps other without some ulterior motive behind their action. At the end of the day it is just you and your enemy as other will tuck tails and scram to save their own behind.

Americans have given them a guarantee. They provide Saudia Arabia with jets, with training, and equipment. Also, Nuclear deterrence isn't nuclear deterrence if you're not ready to use nukes.

 

[Patriot forever]

UAE is in a completely different ballgame. I have no excuses for them.

All countries have an investment fund and look to use it for investments which will pay off for them of course. Jio is one of those smart investments in which Google, Facebook among other giants invested. Obviously, long term payoff.

What I am trying to say it, the economic angle is just assumption.
The issue is OIC foreign ministers conference and its not just holding the conference Pakistan wants a joint response not just condemnation. Saudi Arabia does not want to antagonize India. The problem is it does not want Pakistan to organize a summit on its own as well as this will effectively diminish their influence in the Muslim world. (Turkey, Pakistan, Malaysia, Iran).
In short we like it or not, Pakistan is very much in China's sphere and Saudi Arabia is in America's sphere. We do not feel it as both Saudis and us try to maintain good relation with both the powers but in the coming times it will get harder. Especially if the Chinese and Iran deal materializes.

 

[Imad.Khan]

I have seen a lot of threads popping up on this forum, and I feel that they were mostly emotional rather than critical of the reality, only focusing on our view of the whole situation. In different words, to sum up my point, we have failed to realize that the repayment of a loan and the silence on renewing the oil-on-deferred-payments could be a consequence of the deep pile of sh!t that Saudi Arabia is in right now. So, I think it's important to talk about a few things and understand all of this from Saudi Arabia's perspective.

View attachment 660152

Domestic Economy
Honestly, their economy is not looking good right now. They have been struggling a bit due to the changing mobility dynamics around the world, and also the recent hit on oil prices and demand for oil due to the pandemic. Here are some factors which indicate that their economy isn't doing as well as they would like.

- The International Monetary Fund warned that the economy of Saudi Arabia could actually shrink by -6.8% in 2020. It already shrank by -1% in the first quarter.
- Saudi Aramco, the backbone of the country, reported very recently that it took a hit this year due to the pandemic, as its profit plunged by 73%. This implies that Saudi Arabia has seriously struggled with oil exports due to the pandemic. We're talking billions of dollars near the mark of $100 billion.
- Saudi Arabia, only a couple years back introduced a domestic VAT of 5%, and now this year, in May, tripled it to 15%.
- Just very recently, Saudi Arabia announced it will consider an asset sale, as well as introducing an income tax on its citizens in the Kingdom.
- Economic indicators show that inflation has been on a slow and steady rise. Petrol is going up prices domestically, and it will probably go higher since UAE also pumped its domestic petrol prices up significantly as well.
- The government had announced austerity measures in April it will take to keep the economy afloat during the crisis.
- This year, Saudi Arabia, so far posted a deficit of about $29 billion. It has been borrowing from the international, as well as the domestic market, in addition to using $13 billion from its reserves.
- Saudi Arabia is considering privatizing sectors 'previously not considered' this year.
- Let's not forget the war they are in, it costs. A lot.

Why is this happening?
Well, mostly because we have to realize that the entire economy of Saudi Arabia floats on the insane export of oil and oil products. This is bad in general, especially when the world is working towards the better use of renewable energy, which is why the new Prince has been trying to diversify their financial dependency on other areas as well, such as tourism. But Saudi Arabia hasn't yet reached such a point where it can 'live' without oil, or rather not even feel the impact if it loses some exports of oil. There's a pandemic going on, so what do we all expect. Of course, the oil exports would take a hit. In fact, at one point the oil prices dipped below zero, and for a country whose economy relies on oil export... well you know how well that fares for them. On top of that, let's not forget that the country has entered a big war which it cannot pull out of, and it's costing them, for the war machinery and American assistance, both.

What does this mean?
With the current situation of their economy, is it really that far fetched to think that they would ask for the reimbursement of a part of their loan, and be silent on the agreement for deferred payments on oil? Also, I want to make a small correction. According to news reports, the agreement was set to be renewed two months ago but the response has only been silence so far (not rejection), which means that this cannot be in reaction to Shah Mehmood Qureshi's comments which were made in his personal capacity only a few days ago.

Okay, but what about them not convening the FM meeting on Kashmir via OIC?
You have to understand that India is the 3rd or 4th largest importer of oil from Saudi Arabia. The export of oil from Saudi Arabia to India is worth $16.8 billion. They cannot lose a part of this at a point in time which is so crucial for their economy. I normally say that trade is not a favor, but a necessity; but over here, oil is a commodity that so many other countries export, and at competitive pricing too, India can choose another exporter, so India does have a degree of leverage at this point in time, especially with Iraq slowly stabilizing around the corner.

Conclusion
I want you to genuinely think from their perspective and see if their actions are really that uncalled for.
Secondly, I think it is a deep blunder by Pakistan to keep on approaching Saudi Arabia to convene an OIC meeting on Kashmir, why can't Pakistan call for a meeting on its own or rather approach the impartial persons with high positions in OIC to convene a meeting so that no one country is blamed. It is rather obvious that for Saudi Arabia to call for such a meeting would put the country in an awkward position.
Lastly, Shah Mehmood Qureshi has a calm and sophisticated personality but I think that his recent statements, even in his personal capacity, were absolutely nonsense. Let me explain why. As I said, Pakistan should be approaching the president or secretary-general of OIC, not a country. Also, calling for an FM meeting in OIC won't liberate Kashmir; if this is about narrative then an OIC meeting doesn't help that either because no one cares about OIC including its own member countries, and just like how narrative of Palestine hasn't helped Palestine despite the popularity and mass information available, it won't help Kashmir. So, for absolutely nothing, we are breaking off our relations with a rather important country. By not saying these statements, we had nothing to lose, actually probably something to gain in the future, but by saying these statements, we have everything to lose.

That's my opinion. Data were taken from various finance-based news outlets.

Edit: I want to add that Pakistan financed $1 billion loan by borrowing $1 billion from China. Could this not mean that both countries reached an understanding? After all, it is difficult to arrange a large loan in such a short period of time. Just a speculation, no basis.

My rebuttal to your claims

1. Let me start by summarizing your whole post in one line "Na Dost na Bhai, sub se bara hai rupiya"
2. If economy was the only reason then why did Saudis blackmail Pakistan and stop them from joining the Malaysian Summit?
3. The reason Pakistan keeps asking Saudis for OIC FM meetings is because as the Chairmanship with them and only they can call the meeting.

However i do agree, Saudis care more about money than they do about Ummahism. Time for Pakistan to look elsewhere for its own interest.

 

[Pandora]

Americans have given them a guarantee. They provide Saudia Arabia with jets, with training, and equipment. Also, Nuclear deterrence isn't nuclear deterrence if you're not ready to use nukes.

Americans also gave them guarantees in Yemen but when things went sour they left them with their Arab Arses hanging in the open.

LoL and here i though ever since Cold war US and Russian didn't below each other to kingdom come bcz of mutually assured destruction.

 

[bahadur]

things are easing out as saudi envoy meets gen bajwa.

 

[AZADPAKISTAN2009]

I think as a Pakistani I am thankful for Saudi Arabia's loan when we needed it , it is 100% natural to return the fund as Pakistan has always done , lets us all be practical about it

Just because a friend loaned us cash , and helped us out it does not means it was a gift

It is time to return the funds (If we can)

Saudi Arabia is a brotherly nation who have traditionally supported us on Kashmir

 

[Gorgin Khan]

Certainly you should have preferred silence over kid blabber.

Why NOT look at it from KSA perspective ?
As much as I hate to use this saying,
“Beggars aren’t choosers”, as the term beggar is insulting to my nation, But let’s consider this a political definition, Then who are we to ask as well as dictate them ?

Who is a beggar ? Anyone i know in my life sweats his *** to earn. Do you know anyone who works to earn and is yet titled as a beggar ? Is this a mentality or the beggar has to see his own awqat work more , spend less and efficiently ? That might give the beggar some chances to turn his tables around.

Do you think that Goras will come and do their high end Jobs that our people are doing? The reality is the ERA of Local Jobs in Saudi Arabia is coming to end for our people ( Who are not beggars and works in one of toughest conditions) even if we dont beg and dont choose. The self reliance , the taxes , localisation of Jobs , What do you think will be the out come ? We can go on for ever. I haven't suggested to Nuke them or throw everything as a piece of paper .Btw will the beggar give up Kashmir as per the wishes of the generous contributor? . You could have better ignored my blabbering.

 

[Gorgin Khan]

A meeting on Kashmir in OIC which will do practically nothing and will only be the equivalent of brownie points for the domestic audience, is now our biggest national interest?
And, do you genuinely think that Saudi Arabia pulled out their loan to annoy Pakistan? If you think they pulled it out due to the rebuke by our Foreign Minister then they had the right. Such rebukes have caused wars in history. As for the deferred payments, they were on hold for two months, so it is obvious they're struggling. They have no hostilities with Pakistan, rather a time-tested practical alliance.

This loan is somewhat of aid. Our economy was dying and not everyone can so quickly finance such large loans without conditions.

As for the USA, I think what you're making mention of is their debt. If they had a trillion-dollar deficit in paying their yearly financial responsibilities, they wouldn't exist.

Ignore my ignorance Bro ! may be we should wait to further assess the gravity of situation when the picture becomes more clearer!

 

[V. Makarov]

I don't completely agree with the OP. Saudi is an economic crisis....OK. They thought they would save their economy by taking Pakistan's lunch money? Are we so ignorant to see the reason behind such initiatives?

The simple fact is that Pakistan is now fed up from Saudis not supporting a single Pakistani stance. In addition to that, China has replaced the place Saudi Arabia had in the hearts of the military and political establishment. When the Army Chief discussed the situation with the Chinese a month ago, they were more than happy to give Pakistan the billion dollars. The reason:

1) Pakistani establishment is genuinely angry with the Saudi policies.
2) China wants Pakistan to isolate herself from the Middle East (S.A specially) so that Pakistan is fully in Chinese sphere of influence.

Before this fiasco, the relation between Pakistan and Saudi Arabia had strategic dimensions. After Pakistan failed to 1) join Yemen war, 2) Pakistan is no more in need of Saudi aid (thanks to China maybe?) , 3) Saudi thinks Israel is the better strategic partner in the region to counter Iran, I think this relationship will only get more dysfunctional from now onward.

Your argument that our SaUdI BroThErs HaVe BaD eCoNoMy hence they took money from Pakistan does not connect well with reality.

 

[OldenWisdom...قول بزرگ]

They are, and have been spending money where their objectives meet... Financing fancy toys for Egypt, unloading misery on Yemenis and investment and/or promising investment in India. None of these can and should be taken in isolation, these reflect policy and deliberation. The ramp is ending and they're not in a position to jump nor stop on their tracks.
As I said as the spigot stops truths will start manifesting themselves or Saud's will stop the sharade altogether.

 

[ejaz007]

Saudi Arabia pulls support for Pakistan as Kashmir tiff widens
As Riyadh takes India's side, China comes through with $1bn for Islamabad

Prime Minister Imran Khan meets with Crown Prince Mohammed bin Salman in Jeddah, Saudi Arabia, in September 2019, a time when Saudi Arabia was seen as something of a white knight in Pakistan. (Photo courtesy of Pakistan's Press Information Department)
ADNAN AAMIR, Contributing writerAugust 10, 2020 16:59 JST
KARACHI -- Pakistan last week repaid a $1 billion Saudi loan that was called in after Pakistan began insisting that Saudi Arabia allow it to marshal the Islamic world's support on the Kashmir issue.

The $1 billion to repay the loan came from China in the form of another loan.

The original loan was a part of a $6.2 billion package announced by Saudi Arabia in November 2018, when Islamabad was struggling with a rapidly expanding trade deficit and declining foreign reserves. The package included $3 billion in loans and a $3.2 billion oil credit facility. Saudi Arabia at the time was something of a white knight, providing much-needed cash before the International Monetary Fund approved a $6 billion bailout in July 2019.


According to Pakistani media, the oil credit facility was suspended in May, with the Saudis later asking Pakistan to also repay the loan in full.

The countries' relations deteriorated quickly, beginning in February when Saudi Arabia turned down a request by Pakistan to convene a special meeting of the Council of Foreign Ministers of the Organization of Islamic Cooperation. Islamabad did not back down, demanding to use the OIC to pressure India on the Kashmir issue. It was then that Saudi Arabia decided to call in the loan.

The OIC is a group of 57 Muslim countries that is largely guided by Saudi Arabia.

India and Pakistan have been disputing claims over Kashmir since gaining their independence from Britain in 1947. Each of the neighbors controls parts of Kashmir, but they also have overlapping claims.

Since 1963, China has controlled the Aksai region of Kashmir. Lately, China has adopted an aggressive posture toward Kashmir that favors Pakistan. This has resulted in a number of border clashes, including ones with India that erupted May and June.

Shah Mahmood Qureshi, Pakistan's foreign minister, has continued openly demanding that Saudi Arabia convene an OIC council meeting.

Last week in a TV interview, he said, "Today, I am telling the OIC to convene the meeting of the council of foreign ministers. If they cannot do it, then I will be compelled to ask the prime minister [Imran Khan] to call a meeting of Islamic countries [Iran, Turkey and Malaysia] that are ready to stand with us on the issue of Kashmir."

The latest developments have also cast doubt on the future of memorandums of understanding that call on Saudi Arabia to invest $20 billion in Pakistan; they were signed during Saudi Crown Prince Muhammad bin Salman's visit to Pakistan in February 2019.

The proposed investments include $10 billion in an oil refinery in Gwadar, a port city that because of its strategic location at the mouth of the Gulf of Oman has made it a focal point of the $50 billion China-Pakistan Economic Corridor, itself a big part of China's much wider Belt and Road Initiative.

Experts believe Saudi Arabia is reluctant to become entangled in the efforts of Pakistan and China to contain India.

"Saudi Arabia is closely allied with the U.S., which may also be [applying behind-the-scenes pressure on] Saudi Arabia to stay away from Chinese initiatives," said Jeremy Garlick, an assistant professor with the Jan Masaryk Center for International Studies at the University of Economics in Prague.

Garlick is also the author of "The Impact of China's Belt and Road Initiative: From Asia to Europe."

"It is probably less risky for Saudi Arabia to withdraw its support for Pakistan than to stay in Gwadar," Garlick told the Nikkei Asian Review, "since Pakistan is so closely allied to China and both are forming a wedge against India."

James M. Dorsey, a senior fellow at the S. Rajaratnam School of International Studies at Singapore, believes close economic ties between the Saudis and India are driving the kingdom's change of heart toward Pakistan.

"Saudi Arabia has significant investments in India, which is also a major buyer of oil from the kingdom. Consequently, Riyadh has been less forthcoming to extend support to Pakistan's stance on Kashmir," Dorsey told Nikkei.

Protestors in Peshawar, Pakistan, chant slogans during a "Kashmir Hour" demonstration called to show solidarity with the people of Kashmir in August 2019. © Reuters
Other experts say the Saudis are on a diplomatic high wire and are sure to try to find a balance. "Saudi Arabia also needs Pakistan due to its proximity with Iran and being home to world's largest Shiite minority," Dorsey said. He added that the Saudis will try to do something on the issue of Kashmir to placate Pakistan but not go so far as to provoke India.

Experts believe the Saudis are not alone in exercising caution, that Beijing is also wary. "China needs Saudi oil," Garlick said, adding that it will "play a waiting game at this stage and try not to become involved in Middle Eastern politics for as long as possible."

Einar Tangen, an author and economic affairs commentator based in Beijing, maintains that China's approach to the Islamabad-Riyadh tiff is more practical than ideological. "China needs multiple land and sea routes to protect its economic interests," he told Nikkei, "hence regional divides will not serve China's interests."

Analysts fear the Islamabad-Riyadh spat will make Pakistan further reliant on Chinese loans. "With China, Pakistan has put all its eggs in one basket at this stage," Garlick said, adding that Pakistan has a difficult task ahead -- finding more allies.

https://asia.nikkei.com/Politics/In...s-support-for-Pakistan-as-Kashmir-tiff-widens

 

[bahadur]

I don't completely agree with the OP. Saudi is an economic crisis....OK. They thought they would save their economy by taking Pakistan's lunch money? Are we so ignorant to see the reason behind such initiatives?

The simple fact is that Pakistan is now fed up from Saudis not supporting a single Pakistani stance. In addition to that, China has replaced the place Saudi Arabia had in the hearts of the military and political establishment. When the Army Chief discussed the situation with the Chinese a month ago, they were more than happy to give Pakistan the billion dollars. The reason:

1) Pakistani establishment is genuinely angry with the Saudi policies.
2) China wants Pakistan to isolate herself from the Middle East (S.A specially) so that Pakistan is fully in Chinese sphere of influence.

Before this fiasco, the relation between Pakistan and Saudi Arabia had strategic dimensions. After Pakistan failed to 1) join Yemen war, 2) Pakistan is no more in need of Saudi aid (thanks to China maybe?) , 3) Saudi thinks Israel is the better strategic partner in the region to counter Iran, I think this relationship will only get more dysfunctional from now onward.

Your argument that our SaUdI BroThErs HaVe BaD eCoNoMy hence they took money from Pakistan does not connect well with reality.

realignments are taking place in asia , china is increasing its presence aggrrssively , pakistan is major partner of china so the present distancing from american block is obvious .

 

[vi-va]

they are pissed off why we telecasted Erugul ghazi drama. They tried their best to stop the show from airing in the begining.

I am watching.

 

[SoulSpokesman]

@Pandora

Pandora Pai

Next time they come begging us for Nuclear Umbrella we can show the middle finger.

Good idea. ModiGee can extend his nuke umbrella to KSA.

Regards

 

[Trango Towers]

I have seen a lot of threads popping up on this forum, and I feel that they were mostly emotional rather than critical of the reality, only focusing on our view of the whole situation. In different words, to sum up my point, we have failed to realize that the repayment of a loan and the silence on renewing the oil-on-deferred-payments could be a consequence of the deep pile of sh!t that Saudi Arabia is in right now. So, I think it's important to talk about a few things and understand all of this from Saudi Arabia's perspective.

View attachment 660152

Domestic Economy
Honestly, their economy is not looking good right now. They have been struggling a bit due to the changing mobility dynamics around the world, and also the recent hit on oil prices and demand for oil due to the pandemic. Here are some factors which indicate that their economy isn't doing as well as they would like.

- The International Monetary Fund warned that the economy of Saudi Arabia could actually shrink by -6.8% in 2020. It already shrank by -1% in the first quarter.
- Saudi Aramco, the backbone of the country, reported very recently that it took a hit this year due to the pandemic, as its profit plunged by 73%. This implies that Saudi Arabia has seriously struggled with oil exports due to the pandemic. We're talking billions of dollars near the mark of $100 billion.
- Saudi Arabia, only a couple years back introduced a domestic VAT of 5%, and now this year, in May, tripled it to 15%.
- Just very recently, Saudi Arabia announced it will consider an asset sale, as well as introducing an income tax on its citizens in the Kingdom.
- Economic indicators show that inflation has been on a slow and steady rise. Petrol is going up prices domestically, and it will probably go higher since UAE also pumped its domestic petrol prices up significantly as well.
- The government had announced austerity measures in April it will take to keep the economy afloat during the crisis.
- This year, Saudi Arabia, so far posted a deficit of about $29 billion. It has been borrowing from the international, as well as the domestic market, in addition to using $13 billion from its reserves.
- Saudi Arabia is considering privatizing sectors 'previously not considered' this year.
- Let's not forget the war they are in, it costs. A lot.

Why is this happening?
Well, mostly because we have to realize that the entire economy of Saudi Arabia floats on the insane export of oil and oil products. This is bad in general, especially when the world is working towards the better use of renewable energy, which is why the new Prince has been trying to diversify their financial dependency on other areas as well, such as tourism. But Saudi Arabia hasn't yet reached such a point where it can 'live' without oil, or rather not even feel the impact if it loses some exports of oil. There's a pandemic going on, so what do we all expect. Of course, the oil exports would take a hit. In fact, at one point the oil prices dipped below zero, and for a country whose economy relies on oil export... well you know how well that fares for them. On top of that, let's not forget that the country has entered a big war which it cannot pull out of, and it's costing them, for the war machinery and American assistance, both.

What does this mean?
With the current situation of their economy, is it really that far fetched to think that they would ask for the reimbursement of a part of their loan, and be silent on the agreement for deferred payments on oil? Also, I want to make a small correction. According to news reports, the agreement was set to be renewed two months ago but the response has only been silence so far (not rejection), which means that this cannot be in reaction to Shah Mehmood Qureshi's comments which were made in his personal capacity only a few days ago.

Okay, but what about them not convening the FM meeting on Kashmir via OIC?
You have to understand that India is the 3rd or 4th largest importer of oil from Saudi Arabia. The export of oil from Saudi Arabia to India is worth $16.8 billion. They cannot lose a part of this at a point in time which is so crucial for their economy. I normally say that trade is not a favor, but a necessity; but over here, oil is a commodity that so many other countries export, and at competitive pricing too, India can choose another exporter, so India does have a degree of leverage at this point in time, especially with Iraq slowly stabilizing around the corner.

Conclusion
I want you to genuinely think from their perspective and see if their actions are really that uncalled for.
Secondly, I think it is a deep blunder by Pakistan to keep on approaching Saudi Arabia to convene an OIC meeting on Kashmir, why can't Pakistan call for a meeting on its own or rather approach the impartial persons with high positions in OIC to convene a meeting so that no one country is blamed. It is rather obvious that for Saudi Arabia to call for such a meeting would put the country in an awkward position.
Lastly, Shah Mehmood Qureshi has a calm and sophisticated personality but I think that his recent statements, even in his personal capacity, were absolutely nonsense. Let me explain why. As I said, Pakistan should be approaching the president or secretary-general of OIC, not a country. Also, calling for an FM meeting in OIC won't liberate Kashmir; if this is about narrative then an OIC meeting doesn't help that either because no one cares about OIC including its own member countries, and just like how narrative of Palestine hasn't helped Palestine despite the popularity and mass information available, it won't help Kashmir. So, for absolutely nothing, we are breaking off our relations with a rather important country. By not saying these statements, we had nothing to lose, actually probably something to gain in the future, but by saying these statements, we have everything to lose.

That's my opinion. Data were taken from various finance-based news outlets.

Edit: I want to add that Pakistan financed $1 billion loan by borrowing $1 billion from China. Could this not mean that both countries reached an understanding? After all, it is difficult to arrange a large loan in such a short period of time. Just a speculation, no basis.

Now ask yourself..

1. Size of the saudi economy.
2 Size of load to pakistan
3 would that loan make any difference at all.
4. Have they asked anyone else for money back?

Do not defend what not dependable