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Second Take on Pakistan-Saudi Loans

Lincoln

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I have seen a lot of threads popping up on this forum, and I feel that they were mostly emotional rather than critical of the reality, only focusing on our view of the whole situation. In different words, to sum up my point, we have failed to realize that the repayment of a loan and the silence on renewing the oil-on-deferred-payments could be a consequence of the deep pile of sh!t that Saudi Arabia is in right now. So, I think it's important to talk about a few things and understand all of this from Saudi Arabia's perspective.

upload_2020-8-11_3-8-3.png


Domestic Economy
Honestly, their economy is not looking good right now. They have been struggling a bit due to the changing mobility dynamics around the world, and also the recent hit on oil prices and demand for oil due to the pandemic. Here are some factors which indicate that their economy isn't doing as well as they would like.

- The International Monetary Fund warned that the economy of Saudi Arabia could actually shrink by -6.8% in 2020. It already shrank by -1% in the first quarter.
- Saudi Aramco, the backbone of the country, reported very recently that it took a hit this year due to the pandemic, as its profit plunged by 73%. This implies that Saudi Arabia has seriously struggled with oil exports due to the pandemic. We're talking billions of dollars near the mark of $100 billion.
- Saudi Arabia, only a couple years back introduced a domestic VAT of 5%, and now this year, in May, tripled it to 15%.
- Just very recently, Saudi Arabia announced it will consider an asset sale, as well as introducing an income tax on its citizens in the Kingdom.
- Economic indicators show that inflation has been on a slow and steady rise. Petrol is going up prices domestically, and it will probably go higher since UAE also pumped its domestic petrol prices up significantly as well.
- The government had announced austerity measures in April it will take to keep the economy afloat during the crisis.
- This year, Saudi Arabia, so far posted a deficit of about $29 billion. It has been borrowing from the international, as well as the domestic market, in addition to using $13 billion from its reserves.
- Saudi Arabia is considering privatizing sectors 'previously not considered' this year.
- Let's not forget the war they are in, it costs. A lot.

Why is this happening?
Well, mostly because we have to realize that the entire economy of Saudi Arabia floats on the insane export of oil and oil products. This is bad in general, especially when the world is working towards the better use of renewable energy, which is why the new Prince has been trying to diversify their financial dependency on other areas as well, such as tourism. But Saudi Arabia hasn't yet reached such a point where it can 'live' without oil, or rather not even feel the impact if it loses some exports of oil. There's a pandemic going on, so what do we all expect. Of course, the oil exports would take a hit. In fact, at one point the oil prices dipped below zero, and for a country whose economy relies on oil export... well you know how well that fares for them. On top of that, let's not forget that the country has entered a big war which it cannot pull out of, and it's costing them, for the war machinery and American assistance, both.

What does this mean?
With the current situation of their economy, is it really that far fetched to think that they would ask for the reimbursement of a part of their loan, and be silent on the agreement for deferred payments on oil? Also, I want to make a small correction. According to news reports, the agreement was set to be renewed two months ago but the response has only been silence so far (not rejection), which means that this cannot be in reaction to Shah Mehmood Qureshi's comments which were made in his personal capacity only a few days ago.

Okay, but what about them not convening the FM meeting on Kashmir via OIC?
You have to understand that India is the 3rd or 4th largest importer of oil from Saudi Arabia. The export of oil from Saudi Arabia to India is worth $16.8 billion. They cannot lose a part of this at a point in time which is so crucial for their economy. I normally say that trade is not a favor, but a necessity; but over here, oil is a commodity that so many other countries export, and at competitive pricing too, India can choose another exporter, so India does have a degree of leverage at this point in time, especially with Iraq slowly stabilizing around the corner.

Conclusion
I want you to genuinely think from their perspective and see if their actions are really that uncalled for.
Secondly, I think it is a deep blunder by Pakistan to keep on approaching Saudi Arabia to convene an OIC meeting on Kashmir, why can't Pakistan call for a meeting on its own or rather approach the impartial persons with high positions in OIC to convene a meeting so that no one country is blamed. It is rather obvious that for Saudi Arabia to call for such a meeting would put the country in an awkward position.
Lastly, Shah Mehmood Qureshi has a calm and sophisticated personality but I think that his recent statements, even in his personal capacity, were absolutely nonsense. Let me explain why. As I said, Pakistan should be approaching the president or secretary-general of OIC, not a country. Also, calling for an FM meeting in OIC won't liberate Kashmir; if this is about narrative then an OIC meeting doesn't help that either because no one cares about OIC including its own member countries, and just like how narrative of Palestine hasn't helped Palestine despite the popularity and mass information available, it won't help Kashmir. So, for absolutely nothing, we are breaking off our relations with a rather important country. By not saying these statements, we had nothing to lose, actually probably something to gain in the future, but by saying these statements, we have everything to lose.

That's my opinion. Data were taken from various finance-based news outlets.

Edit: I want to add that Pakistan financed $1 billion loan by borrowing $1 billion from China. Could this not mean that both countries reached an understanding? After all, it is difficult to arrange a large loan in such a short period of time. Just a speculation, no basis.
 
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Blacklight

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I have seen a lot of threads popping up on this forum, and I feel that they were mostly emotional rather than critical of the reality, only focusing on our view of the whole situation. In different words, to sum up my point, we have failed to realize that the repayment of a loan and the silence on renewing the oil-on-deferred-payments could be a consequence of the deep pile of sh!t that Saudi Arabia is in right now. So, I think it's important to talk about a few things and understand all of this from Saudi Arabia's perspective.

View attachment 660152

Domestic Economy
Honestly, their economy is not looking good right now. They have been struggling a bit due to the changing mobility dynamics around the world, and also the recent hit on oil prices and demand for oil due to the pandemic. Here are some factors which indicate that their economy isn't doing as well as they would like.

- The International Monetary Fund warned that the economy of Saudi Arabia could actually shrink by -6.8% in 2020. It already shrank by -1% in the first quarter.
- Saudi Aramco, the backbone of the country, reported very recently that it took a hit this year due to the pandemic, as its profit plunged by 73%. This implies that Saudi Arabia has seriously struggled with oil exports due to the pandemic. We're talking billions of dollars near the mark of $100 billion.
- Saudi Arabia, only a couple years back introduced a domestic VAT of 5%, and now this year, in May, tripled it to 15%.
- Just very recently, Saudi Arabia announced it will consider an asset sale, as well as introducing an income tax on its citizens in the Kingdom.
- Economic indicators show that inflation has been on a slow and steady rise. Petrol is going up prices domestically, and it will probably go higher since UAE also pumped its domestic petrol prices up significantly as well.
- The government had announced austerity measures in April it will take to keep the economy afloat during the crisis.
- This year, Saudi Arabia, so far posted a deficit of about $29 billion. It has been borrowing from the international, as well as the domestic market, in addition to using $13 billion from its reserves.
- Saudi Arabia is considering privatizing sectors 'previously not considered' this year.
- Let's not forget the war they are in, it costs. A lot.

Why is this happening?
Well, mostly because we have to realize that the entire economy of Saudi Arabia floats on the insane export of oil and oil products. This is bad in general, especially when the world is working towards the better use of renewable energy, which is why the new Prince has been trying to diversify their financial dependency on other areas as well, such as tourism. But Saudi Arabia hasn't yet reached such a point where it can 'live' without oil, or rather not even feel the impact if it loses some exports of oil. There's a pandemic going on, so what do we all expect. Of course, the oil exports would take a hit. In fact, at one point the oil prices dipped below zero, and for a country whose economy relies on oil export... well you know how well that fares for them. On top of that, let's not forget that the country has entered a big war which it cannot pull out of, and it's costing them, for the war machinery and American assistance, both.

What does this mean?
With the current situation of their economy, is it really that far fetched to think that they would ask for the reimbursement of a part of their loan, and be silent on the agreement for deferred payments on oil? Also, I want to make a small correction. According to news reports, the agreement was set to be renewed two months but the response has only been silence so far (not rejection), which means that this cannot be in reaction to Shah Mehmood Qureshi's comments which were made in his personal capacity only a few days ago.

Okay, but what about them not convening the FM meeting on Kashmir via OIC?
You have to understand that India is the 3rd or 4th largest importer of oil from Saudi Arabia. The export of oil from Saudi Arabia to India is worth $16.8 billion. They cannot lose a part of this at a point in time which is so crucial for their economy. I normally say that trade is not a favor, but a necessity; but over here, oil is a commodity that so many other countries export, and at competitive pricing too, India can choose another exporter, so India does have a degree of leverage at this point in time, especially with Iraq slowly stabilizing around the corner.

Conclusion
I want you to genuinely think from their perspective and see if their actions are really that uncalled for.
Secondly, I think it is a deep blunder by Pakistan to keep on approaching Saudi Arabia to convene an OIC meeting on Kashmir, why can't Pakistan call for a meeting on its own or rather approach the impartial persons with high positions in OIC to convene a meeting so that no one country is blamed. It is rather obvious that for Saudi Arabia to call for such a meeting would put the country in an awkward position.
Lastly, Shah Mehmood Qureshi has a calm and sophisticated personality but I think that his recent statements, even in his personal capacity, were absolutely nonsense. Let me explain why. As I said, Pakistan should be approaching the president or secretary-general of OIC, not a country. Also, calling for an FM meeting in OIC won't liberate Kashmir; if this is about narrative then an OIC meeting doesn't help that either because no one cares about OIC including its own member countries, and just like how narrative of Palestine hasn't helped Palestine despite the popularity and mass information available, it won't help Kashmir. So, for absolutely nothing, we are breaking off our relations with a rather important country. By not saying these statements, we had nothing to lose, actually probably something to gain in the future, but by saying these statements, we have everything to lose.

That's my opinion. Data were taken from various finance-based news outlets.
This thing has been blown way out of proportion.
Wait for trolls and idiots to descend, and impart their BS wisdom, and drown this thread in unrealistic nonsense.

My earlier comment on the same topic, on another thread:
https://defence.pk/pdf/threads/paki...al-of-3-2b-oil-facility.679911/#post-12613600
 
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Pakistan Space Agency

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If I remember it correctly, Saudi Arabia had promised an OIC Conference to be held in April 2020 on Kashmir in return for skipping Kuala Lumpur Conference.

However, due to Coronavirus epidemic, this was rescheduled for August/September 2020. But for some reason Saudi Arabia doesn't want this conference held at all now.

Please correct me if I'm mistaken.
 

Blacklight

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If I remember it correctly, Saudi Arabia had promised an OIC Conference to be held in April 2020 on Kashmir in return for skipping Kuala Lumpur Conference.

However, due to Coronavirus epidemic, this was rescheduled for August/September 2020. But for some reason Saudi Arabia doesn't want this conference held at all now.

Please correct me if I'm mistaken.
Wait for Raheel Shareef to come back, he will tell us what ground realities are.
 

Pandora

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As you mentioned differed payment facility has been on hold for past 2-3 months so coupling it with SM qureshi statement is a moronic thing to do. Personally i think this unrevealing of ties has been going on for months now. Saudis probably asked something unthinkable from us which forced us into this mess. At the end of day it is not just loss of Pakistan but also saudis. Next time they come begging us for Nuclear Umbrella we can show the middle finger.
 

Pandora

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If I remember it correctly, Saudi Arabia had promised an OIC Conference to be held in April 2020 on Kashmir in return for skipping Kuala Lumpur Conference.

However, due to Coronavirus epidemic, this was rescheduled for August/September 2020. But for some reason Saudi Arabia doesn't want this conference held at all now.

Please correct me if I'm mistaken.
As mentioned by Qureshi Saudis have been dragging their feet on this issue. They want several foreign policy concessions regarding scaling down of ties with Iran, Turkey and Malaysia.
 

Gorgin Khan

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We are not Saudis so we should not look from their perspective. We should look at things from our own perspective as this is not the Gulf of 60s and 70s who lived in tents and herd camels , their investments are in other countries so are the interests , the quickly we realise the better. We must not allow the current lot to cream our religious sentiment which is related to the Holy sites but not to the riches of AL- E - SAUD and NAHYANS.

And for the author Kindly what a piece of crap. Saudi has 29 Billion Dollar deficit out of what trade balance ? The same country is showering billions and zillions to destabilize other regions. So much for the poor begging Arabs ? If their interest are with india and we have to buy oil on cash we can also buy it from anywhere else whats the matter ? We must better think of something which can make us out of economic messes not Saudis .
 

M. Sarmad

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Foreign policy is shaped by reason not emotion
The stake for us, now, is not just Kashmir but our national survival
House of Saud obviously is more concerned about the survival of their own monarchy
On most of the occasions our interests were aligned with those of the Saud family
That's no longer the case
 

Salza

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As you mentioned differed payment facility has been on hold for past 2-3 months so coupling it with SM qureshi statement is a moronic thing to do. Personally i think this unrevealing of ties has been going on for months now. Saudis probably asked something unthinkable from us which forced us into this mess. At the end of day it is not just loss of Pakistan but also saudis. Next time they come begging us for Nuclear Umbrella we can show the middle finger.
they are pissed off why we telecasted Erugul ghazi drama. They tried their best to stop the show from airing in the begining.
 

Lincoln

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As you mentioned differed payment facility has been on hold for past 2-3 months so coupling it with SM qureshi statement is a moronic thing to do. Personally i think this unrevealing of ties has been going on for months now. Saudis probably asked something unthinkable from us which forced us into this mess. At the end of day it is not just loss of Pakistan but also saudis. Next time they come begging us for Nuclear Umbrella we can show the middle finger.
A lot of people mention our Nuclear Umbrella. The question is, Saudi Arabia needs the nuclear umbrella to protect them from whom?

They have the USA with numerous air bases, and state-of-the-art US military equipment deployed. They essentially don't need our 'nuclear umbrella.' Will we nuke Iran for them?

As mentioned by Qureshi Saudis have been dragging their feet on this issue. They want several foreign policy concessions regarding scaling down of ties with Iran, Turkey and Malaysia.
Once again, as in the thread, understand why. They're undergoing a severe economic crisis right now.
 

Salza

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Anyways its better Pak-Saudia sort out some of their grievance against each other asap. Mistrust shouldn't increase further.
 

Lincoln

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We are not Saudis so we should not look from their perspective. We should look at things from our own perspective as this is not the Gulf of 60s and 70s who lived in tents and herd camels , their investments are in other countries so are the interests , the quickly we realise the better. We must not allow the current lot to cream our religious sentiment which is related to the Holy sites but not to the riches of AL- E - SAUD and NAHYANS.

And for the author Kindly what a piece of crap. Saudi has 29 Billion Dollar deficit out of what trade balance ? The same country is showering billions and zillions to destabilize other regions. So much for the poor begging Arabs ? If their interest are with india and we have to buy oil on cash we can also buy it from anywhere else whats the matter ? We must better think of something which can make us out of economic messes not Saudis .
29 billion dollar deficit in whatever payments and financial responsibilities they have this year.

Secondly, can't the Saudi people also say the same; that we're not Pakistanis, so we will not look from their perspective. If you want to get something from someone, you have to view their interests in mind too, just like they viewed ours when they lent us the loans saving our economy, or when they gave us financial support after the detonation of 3 nuclear devices in 1998.

It's a two-way street. At one point, one country makes a sacrifice, and at another point, the other country makes a sacrifice.

Also, as in regard to the wars, that they are in right now. Those are blunders of theirs. They cannot immediately pull out without facing much greater damage. During times like these, it's easier and more cost-efficient to scale down your activities and move only a step back. One of the reasons USA doesn't want to move out of Middle Eastern countries where it is no longer relevant, such as Iraq, and as Trump has mentioned is because it would cost them a lot more dollars and they have big military bases there which costed them a lot of dollars.
 
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Lincoln

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Foreign policy is shaped by reason not emotion
The stake for us, now, is not just Kashmir but our national survival
House of Saud obviously is more concerned about the survival of their own monarchy
On most of the occasions our interests were aligned with those of the Saud family
That's no longer the case
Yes, foreign policy is shaped by reason. It is out of reason to break our relations with them over an OIC meeting on Kashmir.
 

Pandora

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they are pissed off why we telecasted Erugul ghazi drama. They tried their best to stop the show from airing in the begining.
Yes MBS ( Mr Bull $HIT) has some serious inferiority complex issues. One can only imagine the kind of demands spoiled brat put infront of us. There are several other factor such as 20 billion dollars worth investment which Saudis promised but never materialized it even after 2 years. This keeping in mind that Saudis plan 100 billion investment which is already underway. There is also a demand by the brat to scale back our ties with China, Turkey and Iran. I bet the paranoia is running high after 400 billion investment deal with Iran which will help China cut reliance on Saudi oil which has American strings attached to it.
 

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