Buying Time for Islamabad
Choosing between an IMF and a Chinese loan is tricky for Pakistan. On the one hand, taking money from China would increase Islamabad’s reliance on and debt to Beijing, notorious for its tendency to raise interest rates when borrowers come back asking for more. On the other, requesting help from the IMF would probably entail greater transparency on Pakistan’s part, for instance over its debt deals with China. That transparency – something China has avoided in all of its infrastructure projects around the world – could damage Islamabad’s relations with Beijing. It could even provoke domestic backlash if the Pakistani public found the CPEC deals’ terms too favorable to China. Despite these risks, however – and despite reluctance from the IMF’s second-largest vote-holder, the United States, to follow through on a loan – Khan approved negotiations on Oct. 10 with the global lender. Islamabad has also accepted a few smaller loans from China to keep it afloat in the meantime.
Assistance from Saudi Arabia would give Pakistan a little more breathing room. The prospective agreement between them is believed to include a $2 billion bridge loan, along with a deal for Pakistan to buy between 110,000 barrels per day and 200,000 bpd of crude oil from the kingdom on 90 days’ credit, a generous arrangement. (For comparison’s sake, consider the 60 days’ credit Iran extended to India in what was regarded as a buyer-friendly deal.) The deferred payments plan would be especially important to Pakistan because it would enable Islamabad to stem foreign reserves outflows without restricting its access to oil imports, thereby easing some pressure on the Pakistani rupee. Furthermore, though Pakistan is expected to use the crude from Saudi Arabia initially to meet its domestic needs, the extended payment plan would give it enough time to refine and sell some of the oil to China for a profit before reimbursing Riyadh. Saudi Arabia probably wouldn’t mind, so long as Islamabad keeps buying more of its crude oil. After all, every barrel Pakistan sells to China is one less barrel for China to buy from Iran.
And that’s not all Riyadh stands to gain from lending Islamabad a hand. In exchange for funding, for example, Saudi Arabia could ask Pakistan to break its neutrality in the Yemeni civil war and lend support to the coalition fight against the Houthis, whom Iran sponsors. A purported investment in a new oil refinery at the Gwadar port, part of the CPEC, also promises to yield a 16 percent return for the kingdom. In addition, the deal would afford Saudi Arabia access to between 14.5 million and 22 million barrels' worth of storage space where it could house its oil without having to worry about a potential Iranian blockade at the Strait of Hormuz. That way, it could guarantee a more reliable supply of oil to its Asian customers regardless of what happens in the Persian Gulf.
A Mixed Bag for China
Beijing would welcome better and more secure access to Saudi oil, but it would take less kindly to other aspects of Riyadh’s involvement in Pakistan. If Saudi Arabia invests in infrastructure projects outside the CPEC that are nonetheless integral to the project, such as the refinery, it will undermine China’s control over the transport route, particularly at the ingress point. And for China, control is key. The main goal of the CPEC is to provide the country alternative supply routes so that it can bypass chokepoints such as the Malacca Strait in transporting its goods abroad. The corridor from China through northeast Pakistan to Gwadar port is one such route. (It would also give China access to, if not outright ownership of, another port on the Indian Ocean where it could station military forces down the line.) Saudi Arabia’s participation, however, would introduce an element of uncertainty to China’s authority over Gwadar, and over the CPEC as a whole, since a deal with Riyadh would ease the pressure on Islamabad to heed Beijing’s demands.
|
0 comments:
Publicar un comentario