Pakistan is traversing minefields as it concludes agreements on investment, balance of payments support and delayed payment oil deliveries with Saudi Arabia and the United Arab Emirates worth USD$13 billion that are likely to fawn growing distrust in its relations with neighbouring Iran.
Pakistani prime minister Imran Khan expects to next month sign a memorandum of understanding with Saudi Arabia on a framework for US$ 10 billion in Saudi investments, primarily in oil refining, petrochemicals, renewable energy and mining. The signing would take place during a planned visit to Pakistan by Saudi crown prince Mohammed bin Salman.
The memorandum follows the kingdom’s rewarding of Mr. Khan for his attendance of a foreign investors summit in Riyadh in October that was shunned by numerous CEOs of Western financial institutions, tech entrepreneurs and media moguls as well as senior Western government officials because of the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.
Mr. Khan walked away from the summit with a US$3 billion deposit in Pakistan’s central bank as balance of payments support and a promise to defer up to US$3 billion in payments for oil imports for a year.
The United Arab Emirates is expected to conclude similar agreements with Pakistan in the coming weeks.
Perhaps the most sensitive investment is likely to be a plan by Saudi national oil company Aramco to build a refinery in the Chinese-backed Baloch port of Gwadar close to both Pakistan’s border with Iran and the Indian-backed Iranian 486-hectar port of Chabahar. Both Pakistan and Saudi Arabia are monitoring progress in Chabahar with Argus eyes.
A potential Saudi investment in troubled Balochistan’s Reko Diq copper and gold mine would further enhance the kingdom’s foothold in the strategic province.
As always, the devil could be in the details of the Pakistani-Saudi investment agreement. Haroon Sharif, the chairman of Pakistan’s Board of Investment, cautioned that foreign investment would require a “better law and order situation and ease-of-doing-business opportunities.”
Pakistan’s security situation has somewhat improved in the last year, but the country continues to risk blacklisting by the Financial Action Task Force (FATF), an international anti-money laundering and terrorism finance watchdog because of the Pakistani military’s selective support of militants and close ties between militants and political parties, including Mr. Khan’s Pakistan Tehreek-e-Insaf (PTI).
Adding an additional layer of complexity is the fact that funds from the kingdom have been flowing into the coffers of ultra-conservative anti-Shiite, anti-Iranian Sunni Muslim madrassahs or religious seminars in Balochistan. It was unclear whether the funds originated with the Saudi government or Saudi nationals of Baloch descent and members of the two million-strong Pakistani Diaspora in the kingdom.
Saudi Arabia sees the Pakistani region as a launching pad of a potential effort by the kingdom and/or the United States to destabilize the Islamic republic by stirring unrest among its ethnic minorities, including the Baluch. While Saudi Arabia has put the building blocks in place for possible covert action, it has to date given no indication that it intends to act on proposals to support irredentist action.
The flow of funds coincided with the publication in November 2017 of a study by the International Institute for Iranian Studies, formerly known as the Arabian Gulf Centre for Iranian Studies, a Saudi government-backed think tank, that argued that Chabahar posed “a direct threat to the Arab Gulf states” that called for “immediate counter measures.”
Iran’s Revolutionary Guards were the target of a rare suicide bombing in December in the port city that killed two people and wounded 40 others.
Iranian officials, including Foreign Minister Mohammad Javad Zarif and Revolutionary Guards spokesman Brigadier General Ramadan Sharif suggested without providing evidence that Saudi Arabia was complicit in the attack.
The attack “underscores the anti-regime sentiment boiling under the surface in provinces such as Sistan and Baluchestan and Khuzestan, as well as security vulnerabilities in Chabahar and beyond,” said Brian M. Perkins, a risk management consultant and former US Navy signals intelligence analyst.
Khuzestan is Iran’s impoverished, oil-rich province that is home to the country’s ethnic Arab community while Chabahar is located in the Iranian province of Sistan and Baluchistan that boasts the country’s highest unemployment rate.
Saudi thinking about stoking unrest strokes with that of President Donald J. Trump’s national security advisor John Bolton, who before assuming office, publicly advocated destabilization of Iran.
Mr. Bolton, in a policy speech in Cairo, asserted this week that the United States had “joined the Iranian people in calling for freedom and accountability… America’s economic sanctions against the (Iranian) regime are the strongest in history, and will keep getting tougher until Iran starts behaving like a normal country.”
Mr. Bolton was referring to harsh US sanctions imposed after Mr. Trump last year withdrew the United States from a 2015 international agreement that curbed Iran’s nuclear program.
Desperately in need of financial support and investment, Pakistan’s agreements with Saudi Arabia and the UAE come at a moment that “Pakistan-Iran relations are at a crossroads, according to Muhammad Akbar Notezai, Dawn newspaper’s plugged in Balochistan correspondent.
A far cry from four years ago when the Pakistani parliament refused a Saudi request that Pakistani troops join the kingdom’s ill-fated military intervention in Yemen, Iran now sees Pakistan as a Saudi ally in the kingdom’s rivalry with Iran.
Similarly, Pakistan fears that Chabahar will allow India to bypass Pakistan in forging closer economic and political ties with Iran as well as Afghanistan and Central Asian nations. Pakistani analysts expect an estimated US$ 5 billion in Afghan trade to flow through Chabahar after India last month started handling the port’s operations.
Pakistan is further concerned that Iran, in response to the Saudi funding that its sees as part of an anti-Iranian US-Saudi plot, could step up support for Baloch nationalists in a bid to raise the stakes for the South Asian nation.
Pakistan is also worried that deteriorating Pakistani-Iranian relations offers India an opportunity to subvert the US$45 billion plus China Pakistan Economic Corridor (CPEC), a crown jewel of the People’s Republic’s Belt and Road initiative.
In November, the nationalist Baloch Liberation Army claimed responsibility for an attack on the Chinese consulate in Karachi, Pakistan’s commercial and industrial heartland.
Writing in the Pakistan Security Report 2018, published by the Islamabad-based Pak Institute for Peace Studies (PIPS), Mr. Notezai noted that “to many in Pakistan, such concerns were materialized with the arrest of Kulbushan Jadhav, an Indian spy in Balochistan who had come through Iran. Ever since, Pakistani intelligence agencies have been on extra-alert on its border with Iran.”
The journalist warned that “the more Pakistan slips into the Saudi orbit, the more its relations with Iran will worsen… If their borders remain troubled, anyone can fish in the troubled water. This is what is (already) happening in the border region.”
The economic summit in Bahrain won’t be about Palestinian-Israeli conflict
In less than two weeks Jared Kushner and Jason Greenblatt will present in Manama the first part of the long-awaited “deal of the century”, the peace initiative of president Donald Trump designed to find an ultimate solution for the prolonged Palestinian-Israeli conflict.
Iraq and Lebanon will not take part in the event, while Tehran had already accused the participants, mainly Saudi Arabia of “betrayal of the Palestinian struggle”. Following the massive pressure on Arab leaders and promises of significant economic development, the American administration was finally able to secure the participation of Egypt, Jordan, the Gulf states, and probably Morocco. Israel didn’t receive an official invitation for this event yet. It is, however, clear that it will be invited, and some rumors imply that PM Netanyahu himself might come to Bahrain, a country with which Israel doesn’t have any diplomatic relations.
Yet, it seems that this odd event in Manama will resemble a wedding without the bride. The groom will be there, so are the loving parents who will provide the dowry and the guests, but the bride, i.e. the Palestinian autonomy had already declared that it will not send any official or unofficial delegation to the upcoming economic conference.
The relations between the White House and the Palestinian administration had gone sour since President’s Trump decision to move the US embassy to Jerusalem. The Palestinians are suspicious of Trump’s attempts to promote “a deal” that might not include a reference to a two-state solution. For the last two years, the sole connection between Washington and Ramallah has been maintained by the respective security agencies. Recent remarks made by the U.S. Ambassador to Israel on Israeli territorial claims in Judea and Samaria and the hints of Israel’s annexation plans intensified Palestinian concerns towards the unveiling of the first part of “the deal”. Palestinian officials had harshly criticized the participation of Arab countries in Bahrain conference, expressing hope that they will send low-key representation, while the Jordanian Kind explained that he decided to send a delegation to the summit “to listen and remain knowledgeable of what is taking place”.
Yet, the most fascinating thing about the economic conference is that it’s not at all about the Palestinian-Israeli conflict despite its title. With only one year left prior to the US presidential elections and considering the political turmoil in Israel and the unwillingness of the Palestinian partner to engage in any plan presented by Trump’s administration, there is little hope in Jerusalem, Ramallah or Washington that the “deal of the Century” will accumulate in peaceful solution in the current century.
Why, then, the American administration is investing time and energy in the upcoming Bahrain summit? The answer is clear: mostly, to consolidate the alliance of the “moderate Arab states”. Considering the recent dramatic events at the sea of Oman and the attack on two oil-tankers, it will not be far-fetched to imagine that the growing tensions in Iran will overshadow the official reason for the gathering. In the same fashion, the “anti-terror” conference in Warsaw that took place in February this year, was solely about Iran, while all other aspects of anti-terrorism activities were left behind. The deterioration of the situation in the Persian Gulf is crucial for the hosts and their allies – the Arab countries in the Gulf. Egypt and Jordan were required to be there because they are key American allies in the region who also maintain diplomatic relations with Israel. The plan that is envisaged by Kushner and Greenblatt will include economic benefits and development programs for both Amman and Cairo who are dealing with pressing economic hardships. Would they prefer to stay away from the conference that is being shunned by the Palestinians? Probably. Could these two countries, who receive significant economic help from the US say no to the invitation and not show up at the wedding of the century? Highly unlikely.
Ironically, some 52 years ago in Khartoum, it was the Arab league that had unanimously voted on the famous “three no’s” resolution in Khartoum, declining any possibility of dialogue with Israel. Today, when the Arab states are weakened by the “Arab spring” and preoccupied with growing tensions in the Persian Gulf while the focus has shifted from the Palestinian question elsewhere, they are more prone than ever to go along with practically any American plan, while the only ones who refuse to cooperate with Trump and obediently fulfil his orders are the Palestinians who will be absent from Manama gathering. The support of the Palestinian struggle and its importance in Arab politics had dwindled, while other regional affairs had moved center stage. Considering this dramatic change of circumstances, the odd wedding in Bahrain doesn’t seem so odd anymore. It can be seen as yet another step in American attempts to consolidate an Arab alliance against Iran. The Palestinian-Israel conflict that will keep simmering after the conference just as it did before has nothing to do with it.
Who benefits most of suspicious attacks on oil tankers, tensions in the Gulf?
The events roiling the Persian Gulf in recent weeks and days have the potential to affect everything from the price of gas to the fate of small regional states.
A look at the tensions going on around the world including the Middle East and Persian Gulf region, East Europe, Venezuela all indicate that these tensions originate from the US administration’s unilateral unlawful measures.
The White House’s unlawful withdrawal from the Iran’s nuclear deal (JCPOA), designation of the Islamic Revolutionary Guards Corps (IRGC) as a terrorist group, reimposing sanctions on Iran and trying to drive Iran’s oil export to zero all are provocative and suspicious moves of the US that have fueled the regional tensions.
The US and its regional allies including Saudi Arabia and the UAE’s suspicious and provocative move to accuse Iran of being behind the attacks on two ships at Fujairah in the UAE without presenting any document was also foiled by Iran’s vigilant approach and reduced tensions to some extent.
While the Japanese Prime Minister is visiting Iran after 4 decades and many expected even more reduction of the tensions in the region due his visit, in another suspicious and provocative move two oil tankers were targeted in Sea of Oman, a move that can intensify the tensions more than before.
Undoubtedly the US and its proxies in the region as usual will accuse of Iran being behind the incident without any document in hours once again, but the main question is that who is benefiting the most of the tensions in the Persian Gulf region?
Pondering the following reasons one can realize that the number one beneficiary of the tensions and attacks on tankers in the Persian Gulf and the Middle East is the USA and respectively Tel Aviv and the undemocratically appointed rulers of some regional Arab states seeking their survival in following the US policies.
– Contrary to decades ago the US is now one of the biggest oil and gas producers in the world seeking to grab the market share of the other countries in the world. Following US unlawful withdrawal from the JCPOA and its efforts to drive Iran’s oil export to zero under the pretext of different accusations, in fact the US is making efforts not only to grab Iran’s share of the energy market but also to limit Iran’s income to reduce Iran’s regional influence. The US move to create tensions in Venezuela and East Europe and slapping sanctions against Caracas and Moscow can also be interpreted in this line.
– Any tension in the Persian Gulf not only will increase the energy price in global market but also will create enough pretexts for Washington to boost its military presence in the region. This means control of energy routes by the US in order to contain its rivals like China, EU, Japan and new rising economies like India which their economies are heavily dependent on the energy coming from the Persian Gulf and Middle East.
– Tensions in the region besides Iranophobia project will guarantee continuation of purchase of American weapons by some regional countries such as Saudi Arabia. By continuation of selling weapons to Saudi Arabia the US not only creates thousands of jobs for Americans but also keeps its rivals like China and Russia out of Middle East weapon market.
– Tensions and conflicts created by the US in Middle East has resulted in great rifts and divergence among regional states which is vital for Tel Aviv’s security and its expansionist policies.
From our partner MNA
The odds of success for Japanese PM’s visit to Iran
US President’s recent retreat from his previous rhetoric stances towards Iran should not be misinterpreted as the White House’s retreat from its policy of ‘maximum pressure’ on Iran.
In line with its maximum pressure on Iran policy, on Friday the United States imposed new sanctions on Iran that target the country’s petrochemical industry, including its largest petrochemical holding group, the Persian Gulf Petrochemical Industries Company (PGPIC).
The main reason behind the changes to Trump administration’s tone against Iran in fact is internal pressure on him. Americans are against a new war in the region. Also opposition from the US allies which will suffer from great losses in case of any war in the region is another reason behind change to Trump’s tone.
Japanese Prime Minister Shinzo Abe is slated to visit Tehran on Wednesday June 12. He hopes to use his warm relation with Iran and the US to mediate between the countries.
Besides Abe’s warm relations with Iranian and the US leaders there are others reasons that potentially make him a proper mediator including Japan’s efforts to have independent Middle East policy and not having imperialistic record in the region which is a good trust building factor for Iran.
Above all, as the third largest economy of the world Japan is very dependent on the energy importing from the region. Japan imports 80 percent of its consuming energy from the Middle East which passes through Hormuz strait, so any war and confrontation in the region will inflict great losses and damages to the country’s economy and consequently to the world economy.
To answer the question that how Mr. Abe’s efforts will be effective to settle the tensions depends on two factors.
First on the ‘real will’ and determination of the US and Iran to solve the ongoing problems especially the US ‘real will’. One cannot ask for talk and at the same time further undermine the trust between the two sides by taking some hostile measures like new sanctions that the US slapped against Iran’s petrochemical section last night on the eve of Mr. Abe’s visit to Tehran. If there is a real will, even no need to mediator.
Second we have to wait to see that how the Japanese PM will be able to affect the US’ decisions. Iran’s Keivan Khosravi spokesman for the Supreme National Security Council said efforts to remove US extraterritorial sanctions against Iran could guarantee the success of Japanese PM’s visit to the Islamic Republic.
From our partner MNA
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