'Saudi induction in CPEC could build new trade troika'

By Aamir Latif

KARACHI, Pakistan (AA) – The proposed induction of Saudi Arabia in the multibillion-dollar China Pakistan Economic Corridor (CPEC) would not only boost trilateral trade but could also serve to weaken U.S. and Indian opposition to the project, according to experts and analysts.

Islamabad last week announced that it had invited the oil-rich kingdom to join the CPEC as a third partner to bring a “huge” investment to cash-strapped Pakistan. Though the government has not revealed the volume of the investment Riyadh has promised, local media, citing anonymous officials, reported that the kingdom is going to invest $10 billion for construction of an oil city at the strategic port of Gawadar.

The development follows Prime Minister Imran Khan's two-day visit to the kingdom, and powerful army chief Gen Qamar Javed Bajwa’s simultaneous three-day visit to China last week.

A high-level Saudi delegation, including the treasury and energy ministers, is scheduled to visit Pakistan next month to finalize an "important economic partnership" vis-a-vis CPEC, which is part of Beijing's ambitious One Road One Belt plan, according to Information Minister Fawad Chaudhry.

The $64 billion megaproject signed in 2014 aims to connect China's strategically important northwestern Xinxiang province to the port of Gawadar through a network of roads, railways, and pipelines to transport cargo, oil, and gas.

The economic corridor will not only provide China cheaper access to Africa and the Mideast but will also earn Pakistan billions of dollars to provide transit facilities to the world’s second-largest economy.

– New economic troika

Abdul Khalique Ali, a Karachi-based political and security analyst, thinks that the kingdom’s induction in the CPEC would not only boost trilateral trade but also serve to form a new economic troika in the region.

"It will benefit the three countries in many ways,” Ali said.

“Saudi Arabia will find a huge new avenue to bolster its oil and other exports, whereas Pakistan and China will get a wealthy partner, which will help further widen the project’s sphere, and influence on the international economy."

Shahid Hassan Siddiqui, a Karachi-based economist, thinks that Riyadh intends to boost its oil exports through the CPEC.

"Induction in the CPEC will provide a new route and additional avenues to Saudi Arabia for its oil exports," Siddiqui told Anadolu Agency.

"The highest rate of returns against investment in Pakistan is attracting emerging economies, including Saudi Arabia. China is already getting over 20 percent returns from its investments here. Why wouldn't Riyadh take advantage of that incentive?” he asked.

And in return, he added, Pakistan would get huge revenues in addition to what it is already poised to get from China's exports through the strategic Gawadar seaport.

– Winning over opponents

Ali argued that Riyadh joining the CPEC would weaken U.S. and Indian opposition to the project.

The two have long opposed the project, calling it a “debt trap” for developing countries, including Pakistan.

“Washington and New Delhi not only have huge trade with Riyadh but also enjoy congenial diplomatic relations with the kingdom. Therefore, if the kingdom joins the CPEC, it would not be as easy for the two to oppose the project,” Ali said.

Riyadh’s joining, he added, would pave the way for other wealthy Gulf states, including the United Arab Emirates and Kuwait, to join the megaproject.

"Saudi support for the CPEC means the support of the entire Gulf region, except for a couple of countries,” he argued, referring to Iran — an arch-rival to the kingdom.

– No objections

Siddiqui does not foresee any objection from China to a third partner’s induction into the megaproject.

"The whole exercise has been carried out with China's consent. The army chief visited Beijing and met the Chinese president to settle the matter before inviting Saudi Arabia,” he added.

“It's a bilateral agreement with China as a key partner. There is no question of Saudi induction in the project without Beijing's consent," Siddiqui said, commenting that the induction would not hurt Beijing's interests.

Also, he said, the army chief assured the Chinese leadership of "no change" in the execution of the CPEC despite the recent change in Pakistan’s government.

A series of allegations and counter-allegations hurled by the ruling Pakistan Tehreek-e-Insaf (PTI) and the opposition Pakistan Muslim League (of Nawaz Sharif), which ran the previous government and struck the CPEC deal, raised alarms with Beijing over the project's future.

PTI leaders accused the previous PML (N) government of taking kickbacks from Chinese companies on several CPEC projects, apart from warning that the new government might review those CPEC projects.

"China’s objectives are very clear, which are to invest billions of dollars of reserves and get the highest returns to boost its per capita income, to strengthen its role in international financial systems like the IMF and World Bank, and to establish its political influence,” Siddiqui said.

"All its objectives are being served successfully. Why would it object to Saudi inclusion?"

– Political implications

Siddiqui said he could see some political motives behind Saudi inclusion in the CPEC.

"Saudi Arabia will definitely seek something in return for its investment,” he thought. "And I fear it would seek Pakistan's involvement in the Middle East, mainly in Yemen,” he argued.

Islamabad has time and again refused to join the Saudi-led war in Yemen — a move that has strained Pakistan-Saudi relations in the recent past.

Calling the development “an opportunity like never before", Firdous Iftikhar, an Islamabad-based political commentator, agreed that the Yemen conflict could not be overlooked in the context of Saudi investment in Pakistan.

However, he said, Pakistan would continue to focus on its efforts towards peace in the region.

Ali agreed that Islamabad would not be part of the Middle East conflict, saying: “It must have made this clear before inviting Riyadh to join the CPEC.”