Talha Ali Madni
Economic independence is vital for any country to pursue its foreign policy according to its national interest. Since no country operates in a vacuum, it cannot remain fully autonomous and pursue its foreign policy as it wishes. Therefore, they make accommodations. However, if a country is continuously dependent on others, it will lack necessary independence and foreign policy space. Pakistan is dependent upon China, the United Arab Emirates (UAE), and Saudi Arabia when it comes to fulfilling its financial needs. It is doubly dependent upon Gulf Cooperation Council (GCC) countries– both for financial bailouts, which have become more frequent, and for remittances, for these countries house millions of Pakistani workers.
Hitherto, there were no major conflicts of interests among these countries, making the conduct of Pakistan’s foreign policy easier. However, there is an emerging challenge for Pakistan in the Middle East, a region undergoing significant changes. And this challenge is not related to the Iran-Saudi rivalry. Instead, it is the growing rift between the UAE and Saudi Arabia. Generally, Saudi Arabia and the UAE, two giants of the GCC, are perceived to be in absolute harmony on nearly all matters concerning their foreign policies. However, recent trends indicate that all is not too well , and both countries have different geopolitical and geoeconomic interests.
Geopolitical Rifts
Discord is becoming increasingly apparent, especially in the ongoing conflict in Sudan, where each side supports opposing factions. While the UAE supports the Rapid Support Forces, led by Mohamed Hamdan Dagalo (Hemedti), Saudi Arabia and Egypt aid the Sudanese Armed Forces, led by General al-Burhan. Both forces are involved in grave human rights’ violations. The UAE is the primary destination for smuggled Sudanese gold. According to SwissAid, a non-governmental organization, the UAE received 2,500 tons of smuggled gold from Africa between 2012 and 2022, which also included gold smuggled from Sudan. The UAE, which brands itself as the City of Gold, either consumes or reexports it. Hemedti is dependent upon Emirates for the flow of resources in exchange for gold. Using neighboring Chad’s land, the UAE has provided weaponry and battlefield intelligence, including China-made drones.
Furthermore, it is not just Riyadh and Tehran that are on the opposing sides in Yemen. The UAE and the Kingdom have divergent interests in that country. Although Riyadh and Abu Dhabi were partners in the conflict that started in 2014, they now hold different views regarding the future of government in Sana’a. Saudi Arabia backed the exiled Yemeni government, led by Abdrabbuh Mansur Hadi, while the UAE supported the separatist Southern Transitional Council (STC), training around 90,000 armed personnel in this cause. In 2020, the Hadi-led government finally acquiesced by recognizing the STC; however, Riyadh retaliated by funding the Hadramout National Council to counterweigh the influence of the UAE-backed STC. Both countries are now effectively supporting different factions in Yemen while jointly fighting the Houthis.
Additionally, Riyadh and Abu Dhabi now significantly diverge from each other on the issue of Israel-Palestine. Once considered a unifying cause for the Arab countries, the said issue is now another point of contention, especially following the UAE’s recognition of Israel.
Geoeconomic Flashpoints
Differences between these two Arab countries are not limited only to geopolitics. They have conflicting perspectives on economic policies, ranging from oil to regional economics. Most recently, they appear to be competing to become the regional hub of economic activity as they diversify their economies from oil.
A glimpse of these difference appeared as early as 2009 when Emiratis objected to housing the GCC central bank in Riyadh. Not only did the UAE formally oppose the decision, but it also abandoned its original plan of becoming a member of the GCC Monetary Union, effectively torpedoing the regional central bank initiative.
Similarly, Saudi Arabia and the UAE no longer share oil production policies, displaying open rivalry within the Organization of the Petroleum Exporting Countries (OPEC). In 2021, the UAE strongly objected to a Saudi-backed plan to boost oil production, resulting in an unprecedented public spat between the two countries and the cancellation of the OPEC meeting.
Additionally, rifts between the two countries are expected to grow as the Kingdom diversifies its economy under Saudi Arabia’s Vision 2030. Riyadh aspires to become a regional hub of economic activity by becoming a business and tourism attraction. It has already issued an ultimatum to multinationals operating in the GCC to relocate their head offices to Saudi Arabia. Moreover, to boost its tourism industry, it has already launched Riyadh Air with a large air fleet to compete with Emirati flag carriers. It is also improving its aviation infrastructure by expanding and constructing large airports, including the King Salman International Airport. It will likely impact tourism in the UAE, where it contributes 12.5 percent to the gross domestic product. It has also launched permanent residence and citizenship by investment initiatives to attract foreign investment in the country. Such economic policies are likely to affect the relationship between the two giants.
Implications for Pakistan
Although the rivalry between the two countries has not yet resulted in an outright conflict, and both countries remain close allies of the United States, there is no guarantee that it will not escalate and become another flashpoint in the Middle East, especially when there is no dearth of spoilers in the region. Any tension between the two nations will impact Pakistan as it not only shares brotherly relations with them but is also dependent upon the regular flow of remittances from millions of Pakistani workers to stay afloat. As these tensions grow, Pakistan may find it increasingly difficult to navigate the interests of both powerhouses.
The UAE and Saudi Arabia are among Pakistan’s largest sources of foreign remittances, accounting for around USD 12 billion annually. Both the countries host more than 4 million Pakistani workers. Beyond remittances, they are also significant sources of foreign investment, trade, and credit for Pakistan. Also, Islamabad’s largest import partners, besides Beijing, are Abu Dhabi and Riyadh.
Pakistan’s dependence on these nations is a vulnerability. This reliance has been exposed in recent years, such as during the Kuala Lumpur Summit when Pakistan’s Prime Minister withdrew under pressure from Riyadh, or when Saudi Arabia demanded early repayment of a loan following a statement from Pakistan’s Foreign Minister on reluctance of the Saudi-led Organization of Islamic Countries on the Kashmir issue. Not long ago, the Emirati Foreign Minister also warned Pakistan of paying a “heavy price” for not sending troops to defend Arab countries in 2015 during the Yemeni conflict. These incidents highlighted the pitfalls of overreliance.
To its credit, thus far, Pakistan has managed things by engaging with the Saudi-UAE bloc, but the future does not guarantee that it will have such choices. If anything, the future may require Pakistan to navigate competing interests between these two allies. If these underlying tensions escalate, Pakistan could risk losing an ally and jeopardizing the livelihoods of its overseas workers, all at a time when it lacks the resources to support a large return of unemployed citizens.
In a rapidly shifting Middle Eastern landscape, Pakistan’s reliance on economic assistance from both Saudi Arabia and the UAE places it in a difficult position. As tensions between these two allies grow, Pakistan may find itself forced to make challenging choices that could impact its foreign policy and economic stability. Pakistan can address its vulnerability in the foreign arena only by becoming more competitive in economic terms and ensuring decent employment for its citizens. Gradually, it needs to reduce its dependence on foreign remittances and increase its indigenous exports. Only then can Pakistan achieve a degree of economic independence that will enable it to pursue a more autonomous foreign policy.
Talha Ali Madni is a Fulbright scholar of peace and conflict studies.
The views expressed in the article are the author’s own, and they do not necessarily reflect those of Pakistan Politico.