Saudi Arabia to join CPEC as third strategic partner
Pakistan has invited Saudi Arabia to join $50 billion China-Pakistan Economic Corridor (CPEC) as the third strategic partner. Formal request in this regard was made after Pakistan Prime Minister Imran Khan visited Saudi Arabia during his first foreign trip after getting elected.
Saudi Arabia is first country that Pakistan has invited to become partner in CPEC. Pakistan’s main interest in inviting Saudi Arabia in CPEC is to ensure huge investment from cash rich gulf country. This invitation comes after Pakistan concern over rising debt levels have especially due to unsustainable loans from China for CPEC projects, compromising cash-strapped Pakistan’s sovereignty.
Projects as part of CPEC in which Saudi Arabia will be investing will be smoothed out during visit of Saudi Arabia’s Finance and Energy Ministers to Pakistan in the first week of October 2018. During this visit, Pakistan and Saudi Arabia will also finalise important economic partnership.
Note: Saudi Arabia has long history of financially bailing out Pakistan during economic crisis. Saudi Arabia had loaned Pakistan $1.5 billion in 2014 to strengthen its rupee currency, six months after Pakistan obtained its last IMF bailout.
China-Pakistan Economic Corridor (CPEC)
CPEC is flagship project as part of China’s multi-billion dollar Belt and Road Initiative (BRI), aimed at enhancing China’s influence around the world through China-funded infrastructure projects. CPEC aims to construct and upgrade transportation network, energy projects, deep-water port at Gwadar and special economic zones (SEZs) to eventually support Pakistan’s industrial development as manufacturing hub by 2030. CPEC will linking Gwadar in South Western Pakistan to China’s North Western region Xinjiang through vast network of highways and railways. The proposed project is financed by heavily-subsidised Chinese loans, disbursed to Pakistan Government by Chinese banking giants such as China Development Bank, Exim Bank of China and Industrial and Commercial Bank of China.