UAE President Muhammad ibn Zayed Al-Nahyan’s commitment to invest $10 billion in Pakistan, made to Prime Minister Shehbaz Sharif on his visit there, is good news, though for the time being it is too short on specifics to make it possible to assess how far it will go to ameliorate the country’s foreign exchange, which brought it to the edge of default last year, and which is still not over, what with Pakistan needing well over $30 billion a year for the foreseeable future to service its debt. One result has been its pursuit of the IMF, with ever more stringent terms in each package.
While the commitment of $10 billion would be a shot in the arm for the economy, which sector the money is to go to, seems yet to be determined. This would mean a delay, as it would require investors to consider. If they knew which sector they were going to enter, it would reduce the delay, and if they had already selected a project, the delay would be reduced even further. At the moment, though, it seems as if the UAE has decided not to make any further loans to Pakistan, but to make investments. However, the investments to be made have yet to be determined.
It appears that the UAE is following the Saudi lead in the matter of helping Pakistan. Saudi Arabia is changing its economic relationship with Pakistan, turning it from a source of labour into an investment destination. Now the UAE is following suit. Pakistan should realize that expectations from Saudi Arabia and the UAE will change. Previously, neither country was interested in Pakistan’s internal situation. That will change, as both will now take a proprietary interest in it, especially if at all it begins to affect their investments. At the same time, Pakistan, its politicians and perhaps most importantly its bureaucracy must realize that they will be dealing with investors who are used to being treated well in the world’s most advanced companies. It will be interesting to see how Saudi and Emirati investors meld with Chinese. Pakistan is asking for a further expansion of CPEC, to take in the Diamer-Bhasha Dam, which implies that it wants to increase Chinese investment even as it welcomes investors from the Gulf.
