Friends of Pakistan

Pakistan’s President, Asif Ali Zardari, undertook a trip to Saudi Arabia to secure financial assistance to help Pakistan stave off a mounting budgetary deficit which is estimated to total $5 Billion by December. Pakistan hopes to exploit its long standing friendship with the Kingdom that culminated with joint support for the anti-Soviet Mujahideen resistance in Afghanistan, as well as the current US led effort against global extremism. Seeing that an upfront cash payment of $5 Billion is highly unlikely, Pakistan is seeking deferred payments for Saudi oil shipments, which will relieve budgetary pressure. Further, President Zardari is attempting to buttress Saudi support ahead of the upcoming “Friends of Pakistan” summit, which includes, the US, UK, France, Saudi Arabia, China the UAE, among other countries.

While President Zardari was soliciting Saudi support, former Boston University professor and now Pakistan’s new ambassador to the US, Husain Haqqani, was in Washington asking for a “bailout of $10 billion to fight terrorism.” However, increased American aid to Pakistan is not certain, as the US is dealing with its own financial crisis, and during the summer a House subcommittee uncovered evidence of graft in the more than $6 billion in military aid funneled to the Musharraf Administration. Although conflating aid with Pakistan’s military operations in the border regions will likely be quite persuasive to Capitol Hill. And it is just speculation, but the US may tie any aid package for a freer hand to target militants inside the Pakistani border, at least until the new Obama administration takes office.

Perhaps more than fear of a budget collapse, Pakistan appears to be doing everything within its power to avert the dreaded IMF loan packages, which come with stringent preconditions Pakistan is loath to accept.  An initial Saudi oil payment deferment would allow Pakistan to forgo requesting an IMF loan package, or if it does accept one, would allow it to negotiate from a position of strength.

President Zadari’s visit, coming on the heels of Prime Minister Gordon’s recent trip to the Gulf to solicit investment in Britain’s increasingly troubled economy, illustrates the role that the Gulf nations, whether they seek it or not, will play in the international economic order.


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