CPEC has been a cornerstone of Pakistan’s long-term macroeconomic policy, and no matter who has been in power, the resolve to continue it further has been steadfast. Pakistan has realized its geopolitical advantage and has focused on constructing trade, energy and transportation corridors throughout its length. China and Pakistan in 2015, had agreed on partnering for the development of an economic corridor which would connect China’s western front with that of the Indus Belt and eventually with the Arabian Sea. The plan saw $ 62 Billion being committed to the execution of the project, building roads, rails, and power projects all along the length of Pakistan. Contrary to popular belief, the economic corridor actually benefits both countries. China needs alternate routes for uninterrupted trade and energy supply, while Pakistan direly needed infrastructure and power sector development.
At the recent Investment Conference titled “Davos in the Desert”, Pakistan’s newly elected Prime Minister had pitched the investment opportunities in Pakistan. Saudi Arabia now wants to be a partner in the CPEC project. The investment revolves around the establishment of an “Oil City” in Gawadar. Adviser to the Pakistani Prime Minister had said Saudi that the investment in the huge Oil City project in Gwadar would be $22 billion.
Recently after the twitter spat between the US and Saudi Arabia, the relations have been strained between the two long-term allies. Saudi Arabia, a longstanding US ally in the region is looking to diversify its relations with other nations to reduce its American dependence. This is why Saudi Arabia wants to partner into the CPEC project.
What benefits does Saudi Arabia have with the joining in the project? Saudi Arabia is still the largest supplier of crude oil. It has been looking to secure its oil exports and look for stable markets for its oil export. China is the largest importer of crude oil in the world, accounting for 18.6% of the total global import. The US, on the other hand, is the second largest importer of crude oil, though it also has a huge domestic production which accounts for 40% of its total domestic use. China clearly has the demand and the will to import Saudi oil and for this reason, Saudi Arabia wants to establish refineries, storages, and oil processing units at Gawadar to allow for uninterrupted oil flow into western China. The flow of this oil would be through Pakistan which has longstanding friendly bilateral relations with both Saudi Arabia and China. These relations are also independent of each other, hence the relations would not be affected by overlapping national interests. China also wants to have an uninterrupted energy supply to its mainland via alternate routes, which could not be affected by the geopolitics of the seas.
Saudi Arabia also looks at Pakistan as its long-term partner and a potential market for its exports. Pakistan has a 202 million population, 70% of which is under 35 years of age. In case, peace returns to the region, Pakistan could show exponential growth and bulge of a new vibrant and energy-hungry middle class. In addition to that, Saudi Arabia wants to have stakes in Pakistan’s economy and what better way of doing all this than to invest in an Oil City, which also happens to be geographically nearby Saudi territory. Pakistan has also been very eager for investment diversification in its economy to avoid being labeled a China-only economy. Showing to the world that’s its doors are open for any country willing to invest into Pakistan.
Convergence of interests
This incredible convergence of interests paves the way for the China Pakistan Saudi Economic Corridor to be a very constructive regional partnership. This partnership would see three regional powers engaging in positive regional trade and connectivity projects which would eventually increase trade, trust, and dependence on each other. Pakistan and China, both have repeatedly stated that CPEC is open for all to join in and collectively reap the benefits of trade and regional connectivity.