Saudi investment seen as a lifeline for Pakistan amid its economic struggles

Move also coincides with rising Mid-East tensions, in particular Iran-Israel conflict

- Ashraf Khan

ISLAMABAD – Pakistan, facing deep political instability and an economic crisis, secured a crucial US$2.2 billion (S$2.9 billion) investment from Saudi Arabia in October, as the kingdom ramped up its financial support to its troubled South Asian ally.

The move, which coincides with rising tensions in the Middle East, in particular the Iran-Israel conflict, also speaks to Pakistan's strategic importance, bordering as it does Iran, Afghanistan and China to its west, north and east.

Saudi Arabia is a key ally of the United States and the investment, say analysts, could be viewed as part of broader US-Saudi efforts to counter-balance Iran's influence in the region and to keep Pakistan aligned with the US as a reliable regional partner, especially as tensions rise between Iran and Israel.

"Pakistan holds a strategically crucial position for the US and its allies, especially in the event of an Israel-Iran conflict," said Professor Muhammad Arif, former head of the international relations faculty at the University of Balochistan.

"Its proximity to Iran could make it a significant player in the region's dynamics if tensions escalate," he added.

Already, there is speculation that Iran might have acquired advanced missile technology from Pakistan. Islamabad has denied any involvement in supplying weapons to Tehran, with its Foreign Ministry spokeswoman Mumtaz Zahra Baloch saying "there is no truth to these allegations".

"Saudi Arabia recognises the strategic geographical significance of Pakistan," Saudi Investment Minister Khalid A. Al-Falih told President Asif Ali Zardari in his courtesy call on the Pakistani leader during his Oct 9-11 visit to Islamabad.

During Mr Al-Falih's visit, the two sides signed 27 memorandums of understanding in sectors including agriculture, mining, information technology, food and energy.