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Tuesday 8 April 2014 - 06:14

Serious concerns over $1.5 billion suspicious Saudi aid to Pakistan

Story Code : 370431
Serious concerns over $1.5 billion suspicious Saudi aid to Pakistan
The idea that the government would contemplate such a deal has incensed politicians, activists and thinkers across the board, generating calls for clarification.

Two weeks ago Pakistan received Saudi Arabia’s money without so much as a blink, a cavalier attitude the media immediately picked up on and wondered about. After all never before did Al Saud show so much eagerness and generosity toward Pakistan. So many asked, what’s the catch? So far the government only barely admitted to the transaction, only mentioning that the money would help shore Pakistan’s foreign cash reserves and thus prevent a complete financial meltdown.
 
The cash injection boosted reserve figures and helped the rupee rise to a nine-month high against the greenback of Rs97.40 from 105.40 against the dollar between March 4 and 12. This is the strongest rally of the rupee in 30 years.

“On a personal guarantee of the prime minister, Saudi Arabia has given $1.5 billion, which has helped bail out the rupee,” one senior Pakistani government official close to the deal told the press.

Interestingly Saudi Arabia Central Bank Governor declined to comment on the deal.
 
Another top official stressed the money went into an account known as the Pakistan Development Fund set up to channel money from “friendly countries” like Saudi Arabia and the United Arab Emirates.

“We have a promise of a total $3 billion, of which $1.5 billion has been received so far,” an official admit anonymity, adding. “Most recently, we got $750 million from the Saudis.”

Prime Minister Nawaz Sharif has long enjoyed close relations with Al Saud. After his second term as prime minister was ended by a military coup in 1999, he was sent into exile in Saudi Arabia.

Prince Alwaleed bin Talal, the Saudi financier and member of the ruling House of Saud, had dubbed Nawaz as “Saudi Arabia’s man in Pakistan”.

Saudi crown prince and deputy prime minister Salman Bin Abdulaziz Al Saud paid Pakistan a three-day-visit last month, a move which was qualified as significant by analysts and experts given tensions in the region.

Pakistan’s Army Chief, General Raheel Sharif, also met King Abdullah and top Saudi military commanders during a trip to the kingdom two weeks prior to the contested transaction, leading many to believe that there is more to the story than officials care to admit.

Other high-profile Saudi visitors to Pakistan this year have included Saudi Foreign Minister Saud Al Faisal and Prince Salman bin Sultan, the country’s deputy defence minister.

According to Pakistan finance ministry, gross official reserves – including the latest injection of $1.5 billion – stood at $9.52 billion on March 11. A third loan tranche of $550 million from the International Monetary Fund, which was received on March 27, will push reserves close to $10 billion.

Pakistan is expected to receive $150 million from the Islamic Development Bank in March, as well as $150-200 million under the Coalition Support Fund, reimbursements for assistance in the US-led coalition’s Afghanistan war effort.

Pakistan has delayed its launch of Eurobonds worth $500 million to May and plans to raise billions of dollars in privatisation revenue by June.

The government also expects to raise over $1 billion through the auction of spectrum licences.

An increase in foreign investment and remittances by overseas Pakistanis has also helped lift the rupee. Remittances increased by 11% to $10.2 billion during the first eight months of this fiscal year.

Pakistan opposition parties, particularly the Pakistan People Party, the Awami National Party, Pakistan Tehrike Insaf, Muttahida Qaumi Movement and the Muslim League Qaide Azam have expressed concerns over Saudi Arabia’s aid package. They have called on the government to dispel rumours and clearly state the specifics of the deal.

“It would be a mistake of monumental proportions if we allowed ourselves to be sucked into the web of regional power politics in the Middle East,” the Pakistani opposition warned.

The opposition added that alarm bells first rang when reports mentioned late last month that Saudi Arabia was in talks with Pakistan for the supply of anti-aircraft and anti-tank rockets to Syrian rebels.

It is believed that Saudi Arabia seeks to use Pakistan in its fight in Syria and Bahrain by using both its military technology and its men.

King Al-Khalifa of Bahrain’s recent visit to Pakistan only reinforced such rumours. Islamabad and Manama signed an agreement of defence and security cooperation during the visit. 
Doubts have lingered on after both Pakistan and Saudi Arabia issued a joint statement in which they called for a regime change in Syria and the “formation of a transitional governing body with full executive powers enabling it to take charge of the affairs of the country.”

Pakistan maintains close military ties with Saudi Arabia, providing extensive support, arms and training to the Kingdom. Moreover, Saudi Arabia has negotiated the purchase of Pakistani ballistic missiles capable of carrying nuclear warheads. It also has been speculated that Saudi Arabia secretly funded Pakistan's atomic bomb programme and has sought to purchase atomic weapons from Pakistan.
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