Saturday, January 25, 2020

Deals in Doha

Syeda Mamoona Rubab

Prime Minister Imran Khan’s quest for foreign assistance to stabilize the country’s economy took him to Doha last week. A statement issued at the end of the two-day visit said that Qatari Emir Sheikh Tamim bin Hamad Al Thani had assured Prime Minister Imran Khan of “all possible support for progress and development of Pakistan.”

The visit was expected and was preceded by trips of Foreign Minister Shah Mahmood Qureshi, Finance Minister Asad Umar and Army Chief General Qamar Bajwa to Doha for setting the agenda of the PM’s visit. The prime minister had himself spoken to the Qatari emir over the phone last month.

Khan has heavily focused on the Arab world since coming to power after last year’s general elections for assistance to tackle the economic crisis his government inherited. He has so far been greatly successful in securing deals from Saudi Arabia and United Arab Emirates, which are together providing a total of $6 billion in Balance of Payment Support and oil on credit facility cumulatively worth $6.4 billion. The Saudis have so far provided $2 billion of the promised amount, whereas the Emiratis this week signed an agreement with the State Bank formalizing the pledged deposit.

Large-scale investments have also been committed by the two countries. The importance of the money from Arab world is underscored by the foreign exchange reserve figures, which currently stand at $6.9 billion, after getting $2 billion from the Saudis. Imagine the situation without these inflows. Furthermore, negotiations with IMF over a bailout package have made little headway because Pakistan is not comfortable with the conditions being set for the facility.

The government’s expectations from Qatar were somewhat similar to what it had from other Arab countries. Pakistan annually imports LNG from Qatar worth $4 billion and has a 15-year LNG import contract. It wants to get the LNG supply on deferred payments. Moreover, Qatar has been asked to lower the price at which it is presently supplying LNG to Pakistan – equivalent to 13.39 percent of international benchmark crude oil price.

The PTI, it should be recalled, was very critical of the LNG agreement with Qatar before coming to power. There was nothing in the official statement on the visit or the one made by Foreign Minister Qureshi that could suggest that Qataris have agreed to revise the price. But officials say Qatari leadership has assured favourable consideration of the request. They, moreover, point out that others in the region are ready to provide LNG on more favourable terms.

Therefore, there would be both economic and political reasons for Qatar to revise the price. Khan further sought Qatari investments in energy, petroleum and petrochemicals, agricultural research, food processing, culture, tourism, education and infrastructure development, particularly his housing project. A delegation of Qatari businessmen is expected to visit Islamabad for a follow-up on the discussions the prime minister had with Qatar Business Association.

It has been initially indicated that Qataris would be interested in power sector, agriculture, and food processing. Doha is also recruiting 100,000 workers from Pakistan. Qatar, which is heavily reliant on imports for meeting its food requirements, is seeing Pakistan as a major strategic partner in strengthening its food security. Qatar’s food security vulnerabilities were exposed during its confrontation with Saudi Arabia and UAE. Iran and Turkey had on that occasion stepped in to ease the crisis. Qatar has since then invested lot of resources to improve food security.

Pakistan, in a way, is late to the bus. Islamabad, a long-time friend of Qatar, attempted at balancing ties between Saudi Arabia and Qatar by remaining neutral at the start of their diplomatic standoff in 2017.  Qatar, which on that occasion sent high level emissaries to Islamabad, met its immediate requirements through Turkey and Iran and successfully weathered the challenge. This turned Islamabad – Doha ties lukewarm. Some say Qatari participation in Pak-Qatar Business Forum held in Doha in last November was also lackluster.

Pakistan’s attempt at engaging Saudi Arabia and UAE in the Afghan reconciliation process by holding a meeting of US and Taliban in Abu Dhabi in December in presence of Saudi and Emirati representatives heightened Qatari concerns because they had been hosting Taliban political office in Doha since 2013 and suddenly felt being cut out at the cost of their rivals.

Khan has heavily focused on the Arab world since coming to power after last year’s general elections for assistance to tackle the economic crisis his government inherited. The US-Taliban talks, after a brief interregnum, have returned to Doha. It was rumoured that Saudis and Emiratis attempted to block the Taliban meeting in Doha.

Going forward, it would be a serious challenge for Khan’s government to keep Saudis, Emiratis, and Qataris happy at the same time. He should not forget that their acrimony is so strong that the Saudis last year announced a plan to cut Qatar off from their mainland by digging a huge canal that would turn it (Qatar) into an island.

Saudi Crown Prince Muhammad bin Salman is due at the end of February, during which he is expected to sign an agreement for the setting up of $10 billion worth oil refinery in Gawadar. It remains to be seen how Saudi Arabia responds to the developments in Pak-Qatar ties. One expectation is the Kingdom would not react to it because Qatar growing ties with Pakistan, despite troubles in their own relations, would still be a lesser evil than Islamabad turning to Tehran, whom the current government has cold shouldered for fear of antagonizing rich Arab brothers.


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