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