Managing minefields: Saudi/UAE aid puts Pakistan-Iran relations on the spot
By James M. Dorsey
Pakistan is traversing minefields as it concludes agreements
on investment, balance of payments support and delayed payment oil deliveries
with Saudi Arabia and the United Arab Emirates worth USD$13 billion that are
likely to fawn growing distrust in its relations with neighbouring Iran.
Pakistani prime minister Imran Khan expects to next month
sign a memorandum
of understanding with Saudi Arabia on a framework for US$ 10 billion in Saudi
investments, primarily in oil refining, petrochemicals, renewable
energy and mining. The signing would take place during a planned visit to
Pakistan by Saudi crown prince Mohammed bin Salman.
The memorandum follows the
kingdom’s rewarding of Mr. Khan for his attendance of a foreign investors
summit in Riyadh in October that was shunned by numerous CEOs of
Western financial institutions, tech entrepreneurs and media moguls as well as
senior Western government officials because of the killing of journalist Jamal Khashoggi
in the Saudi consulate in Istanbul.
Mr. Khan walked away from the summit with a US$3 billion
deposit in Pakistan’s central bank as balance of payments support and a promise
to defer up to US$3 billion in payments for oil imports for a
year.
The United
Arab Emirates is expected to conclude similar agreements with
Pakistan in the coming weeks.
Perhaps the most sensitive investment is likely to be a plan
by Saudi national oil company Aramco to build a refinery in the Chinese-backed Baloch
port of Gwadar close to both Pakistan’s border with Iran and the Indian-backed
Iranian 486-hectar port of Chabahar. Both Pakistan and Saudi Arabia are
monitoring progress in Chabahar with Argus eyes.
A potential Saudi investment in troubled Balochistan’s Reko
Diq copper and gold mine would further enhance the kingdom’s foothold in the
strategic province.
As always, the devil could be in the details of the
Pakistani-Saudi investment agreement. Haroon Sharif, the chairman of Pakistan’s
Board of Investment, cautioned that foreign investment would require a “better
law and order situation and ease-of-doing-business opportunities.”
Pakistan’s security situation has somewhat improved in the
last year, but the
country continues to risk blacklisting by the Financial Action Task Force
(FATF), an international anti-money laundering and terrorism finance
watchdog because of the Pakistani military’s selective support of militants and
close ties between militants and political parties, including Mr. Khan’s Pakistan
Tehreek-e-Insaf (PTI).
Adding an additional layer of complexity is the fact that funds
from the kingdom have been flowing into the coffers of ultra-conservative
anti-Shiite, anti-Iranian Sunni Muslim madrassahs or religious
seminars in Balochistan. It was unclear whether the funds originated with the
Saudi government or Saudi nationals of Baloch descent and members of the two
million-strong Pakistani Diaspora in the kingdom.
Saudi Arabia sees the Pakistani region as a launching pad of
a potential effort by the kingdom and/or the United States to destabilize the
Islamic republic by stirring unrest among its ethnic minorities, including the
Baluch. While Saudi Arabia has put the building
blocks in place for possible covert action, it has to date given no
indication that it intends to act on proposals to support irredentist action.
The flow of funds coincided with the publication in November
2017 of a study by the International Institute for Iranian Studies, formerly
known as the Arabian Gulf Centre for Iranian Studies, a Saudi government-backed
think tank, that argued that Chabahar
posed “a direct threat to the Arab Gulf states” that called for “immediate
counter measures.”
Iran’s Revolutionary Guards were the target of a rare suicide
bombing in December in the port city that killed two people and wounded 40
others.
Iranian officials, including Foreign Minister Mohammad Javad
Zarif and Revolutionary Guards spokesman Brigadier General Ramadan Sharif suggested
without providing evidence that Saudi Arabia was complicit in
the attack.
The attack “underscores
the anti-regime sentiment boiling under the surface in provinces
such as Sistan and Baluchestan and Khuzestan, as well as security
vulnerabilities in Chabahar and beyond,” said Brian M. Perkins, a risk
management consultant and former US Navy signals intelligence analyst.
Khuzestan is Iran’s impoverished, oil-rich province that is
home to the country’s ethnic Arab community while Chabahar is located in the
Iranian province of Sistan and Baluchistan that boasts
the country’s highest unemployment rate.
Saudi thinking about stoking unrest strokes with that of
President Donald J. Trump’s national security advisor John Bolton, who before
assuming office, publicly advocated destabilization of Iran.
Mr. Bolton, in a policy speech in Cairo, asserted this week
that the United States had “joined the Iranian people in calling for freedom
and accountability… America’s economic sanctions against the (Iranian) regime
are the strongest in history, and will
keep getting tougher until Iran starts behaving like a normal country.”
Mr. Bolton was referring to harsh US sanctions imposed after
Mr. Trump last year withdrew the United States from a 2015 international
agreement that curbed Iran’s nuclear program.
Desperately in need of financial support and investment,
Pakistan’s agreements with Saudi Arabia and the UAE come at a moment that “Pakistan-Iran
relations are at a crossroads, according to Muhammad Akbar Notezai, Dawn
newspaper’s plugged in Balochistan correspondent.
A far cry from four years ago when the
Pakistani parliament refused a Saudi request that Pakistani troops join the
kingdom’s ill-fated military intervention in Yemen, Iran now sees
Pakistan as a Saudi ally in the kingdom’s rivalry with Iran.
Similarly, Pakistan fears that Chabahar will allow India to
bypass Pakistan in forging closer economic and political ties with Iran as well
as Afghanistan and Central Asian nations. Pakistani analysts expect an
estimated US$ 5 billion in Afghan trade to flow through Chabahar
after India last month started handling the port’s operations.
Pakistan is further concerned that Iran, in response to the
Saudi funding that its sees as part of an anti-Iranian US-Saudi plot, could
step up support for Baloch nationalists in a bid to raise the stakes for the
South Asian nation.
Pakistan is also worried that deteriorating
Pakistani-Iranian relations offers India an opportunity to subvert the US$45
billion plus China Pakistan Economic Corridor (CPEC), a crown jewel of the
People’s Republic’s Belt and Road initiative.
In November, the nationalist Baloch Liberation Army claimed responsibility
for an attack on the Chinese consulate in Karachi, Pakistan’s
commercial and industrial heartland.
Writing in the Pakistan Security Report 2018, published by
the Islamabad-based Pak Institute for Peace Studies (PIPS), Mr. Notezai noted
that “to many in Pakistan, such concerns were materialized with the arrest of
Kulbushan Jadhav, an Indian spy in Balochistan who had come through Iran. Ever
since, Pakistani intelligence agencies have been on extra-alert on its border
with Iran.”
The journalist warned that “the more Pakistan slips into the
Saudi orbit, the more its relations with Iran will worsen… If their borders
remain troubled, anyone can fish in the troubled water. This is what is
(already) happening in the border region.”
Dr.
James M. Dorsey is a senior fellow at the S. Rajaratnam School of International
Studies, co-director of the University of Würzburg’s Institute for Fan Culture,
and co-host of the New Books in Middle Eastern Studies podcast.
James is the author of The Turbulent World
of Middle East Soccer blog, a book with the same title and a co-authored
volume, Comparative Political Transitions between Southeast Asia and
the Middle East and North Africa as well as Shifting
Sands, Essays on Sports and Politics in the Middle East and North Africa
and just published China
and the Middle East: Venturing into the Maelstrom
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