Saudi-Pak Ties More Than Friendship: Aziz
Maha Akeel, Arab News

SLAMABAD, 11 February 2006 — Saudi Arabia and Pakistan enjoy close strategic relations that have grown over the years. Custodian of the Two Holy Mosques King Abdullah recently visited Pakistan on the last leg of his four-nation tour that also took him to Malaysia, India and China. The visit was successful by all standards and gave a fillip to the already excellent ties between the two countries.

On the occasion of the king’s visit, Pakistani Prime Minister Shaukat Aziz spoke to Arab News in an exclusive interview that covered a wide range of domestic, economic and political issues.

The interview took place at the prime minister’s residence perched on a hilltop overlooking the sprawling federal capital of Islamabad. The PM’s house, surrounded by an immaculate green garden and furnished with an opulent classically designed interior, made the atmosphere apposite for an interview.

In his usual easy manner and confident attitude, the prime minister spoke about the tremendous economic growth his country is witnessing and where it stands on certain issues.

“I think the visit of King Abdullah was part of the continuing process of the very close strategic relations between Saudi Arabia and Pakistan,” said the prime minister.

He described the Saudi-Pakistani relationship as a strategic partnership that goes beyond friendship.

“We have supported each other, stood by each other, we have strong links, and it is a very rich relationship. There are a million Pakistanis working in Saudi Arabia, as the king mentioned in his speech. We have lots of Saudi investors here. We support each other in terms of promoting the cause of the Muslim Ummah, as well as increasing trade and investment.”

He thanked Saudi Arabia for its generous donations to the victims of the Oct. 8 earthquake, and he praised the way the Kingdom handles the Haj and Umrah traffic.

“We see the Custodian of the Two Holy Mosques as the leader of the Ummah. Islam is not well projected in the world and we all need to work together to explain our faith. We look at Saudi Arabia as playing a leading role in this regard. Our close historical ties and shared faith and shared sense of values bring us very close together. This relationship is a source of strength for Pakistan. The king is a true friend of Pakistan, a world leader and a leader of the Ummah. This visit touched the hearts and minds of Pakistani people,” said the prime minister.

He considers the king’s visit to India and China as a positive step for the region.

“Relations between any two countries are not directed against another,” he said. “We see that the more Saudi Arabia is engaged with these countries the better. The more interaction Saudi Arabia has with China and India the better it will be to improve the atmosphere in the region. India and Pakistan have a row over Kashmir, which is a Muslim part of South Asia. There are unresolved disputes and human rights violations against Muslims in that area. So, that creates a lot of anxiety in Pakistan and the whole Ummah.”

Speaking about Pakistan’s economy, Aziz was very proud and optimistic.

“Pakistan’s economy has seen major transitions in the last six years,” he said. “Today it is a growing economy, one of the fastest growing economies in Asia. Last year it was the second fastest growing economy after China. The per capita income is rising; it is close to $730, which is higher than neighboring countries. It is attracting large amounts of foreign investment, and generating large amounts of domestic investment, too. The growth of the economy has resulted in the emergence of a growing and a larger middle class, which is creating the backbone of our society. Poverty is declining. Unemployment is declining. Frankly, it is one of the most exciting economies in the region.”

He attributed the economic growth to consistency and continuity of policy — a policy based on a broad agenda of structural reform driven by deregulation, liberalization, privatization and tremendous focus on the private sector as the engine of growth with the government as the policymaker and regulator, as well as a total level playing field for all investors, local and foreign.

“In Pakistan you can own up to 100 percent of a company or property,” said Aziz.

According to the prime minister, Pakistan’s reforms have resulted in strong growth in the financial services sector, in the services sector, in the capital market, in telecom, in the IT sector, and in manufacturing and engineering. Tremendous potential still exists for real estate development, and tourism.

“The economy has moved really fast and the infrastructure has to catch up. We, as a government, are investing and improving our ports and airports. Airports in major cities are very good; Islamabad is getting a brand new one. The highways here can match any in the world. The ports are getting more efficient and there is constant improvement in processes in the government through the use of automation to minimize delays and minimize interaction between government and people. Our credit ratings are improving and the world has recognized Pakistan’s transformation and turnaround.”

As for the challenges, he said that Pakistan has to invest more in education, health and infrastructure, in addition to maintaining the same direction of policies, maintaining discipline in financial management and making sure there are no impediments to domestic and foreign investment.

Asked how come products from India, China and Malaysia are more commonly found in Saudi Arabia than products from Pakistan, and whether that means that Pakistani exporters have not made enough inroads in international markets, Aziz explained that Pakistani exporters are not focusing enough on Gulf markets.

“Pakistani exporters are very active internationally but their focus is on the markets in the United States and Europe. Those are big markets where we are dominant in the products we sell which are mostly textiles. Pakistan is a leader in textiles,” he said.

As for the Saudi market, Pakistani exporters focus largely on edible items and textiles but not on consumer goods.

“They are more in intermediate goods so you won’t see them on the shelves,” he said. “We are trying to get our businessmen to diversify and to look at markets closer home.”

He asserted that Pakistan’s trade with Saudi Arabia is increasing.

“Saudi investors are coming, they just bought the Karachi Electricity Supply Corporation, and they own Hubco, which is a major electricity producer. Many other investors have investments in property, Prince Alwaleed ibn Talal was here looking into investments in hotels.”

The Pakistani exporters are also working hard to diversify their exports, from textiles and leather garments. Pakistan, he said, is a major exporter of leather to Italy where shoes are finished and resold.

“They are now making finished products and leather jackets are now being exported to top brands in the world, ‘but clearly the first phase of value-added leather goods we don’t export anymore.’”

Regarding Pakistan’s ability to attract foreign investments in view of bureaucratic hurdles and red tape, Aziz said that problems arising out of bureaucracy and red tape in Pakistan are much less than any country in the region.

“There was a recent survey by the International Finance Corporation (a member of the World Bank Group) where they rated Pakistan 60th out of 150 in terms of ease of doing business. India is 90th and China is 110th. This was a very broad and significant survey and we are very proud of it because it exactly matches what we are doing,” he said.

Asked why then it seems that India and China are more favored by foreign investors and are hailed as the next superpowers, Aziz explained that is because they are two big countries.

“Compared to other South Asian countries, if you look at economic reform and ease of doing business and lack of red tape, Pakistan is ahead. It is a big country with 150 million people and over $100 billion GDP, but we are not as big as some of the other countries.”

According to Aziz, the perception of Pakistan and the government today is one that is professionally run, transparent and fast in making decisions unlike any other country in the region.

Asked whether security is an issue especially after the recent US missile attack, insurgency in Balochistan, bus bombs and other incidents, Aziz affirmed that security is not an issue when it comes to business.

“If something is happening in one part of the country it does not affect other cities. As you can see there are so many foreigners here you can’t find a hotel room,” said Aziz.

As for the US missile attack and whether that will affect relations with the US, Aziz said that relations with the US at the moment are very good.

“Relationship between Pakistan and US is historical and multifaceted; it covers security, defense, diplomatic, political, economic, and social fields and many Pakistanis work in the US,” he said.

“There are about 60 US companies working here. US companies pay 9 percent of the taxes in Pakistan and they are expanding because they see growth in the economy. The relations are broad-based, we share a lot of common policies and we also have disagreements. Pakistan is an independent sovereign country and an important member of the Ummah and we believe in peace and settling issues through dialogue and discussion.”

President Bush will be visiting Pakistan and India in March, and in his budget proposal to the Senate, President Bush has proposed $600 million a year for Pakistan, which was agreed on when President Gen. Pervez Musharraf visited Camp David.

On the insurgency in Balochistan and whether it will have an effect on construction and operation of the Gwadar seaport, Aziz said that the seaport is almost complete and there will not be any problems in operating it.

“The problem we have in Balochistan is in a small district where some people are creating trouble and the law enforcement agencies are dealing with it. People in Balochistan want development,” he said.

As regards the water reservoirs and the problems over the dams to be built, Aziz said that the Cabinet and the president announced that several dams would be built.

“Pakistan is an agricultural country, 60 percent of its population lives in rural areas. The water reservoirs are very important and we are going to start with the Bhasha dam, then Munda and then look at other dams. We have announced five — Bhasha, Munda, Kalabagh, Kurrum Tangi and Akori,” he said.

And about the criticism and objections by some of the provinces he said: “This is a democratic country, the view of the people is openly expressed. We are proud of our political process; the Parliament is free to criticize the government. In terms of the press you won’t find a freer press in the region.”

Finally, on the conflict and outrage over the cartoons published in a Danish newspaper and reprinted in other European countries, he said: “We have condemned these incidents. No one has the right to demean any faith. Islam is a religion of peace, harmony, compassion and understanding. Anybody who tries to present Islam in a different way is not doing a service to his own society.”