Saudi Arabia's petrodollar diplomacy: Pakistan asked to return billion dollar loans

New Delhi, Delhi, IndiaEdited By: Gravitas deskUpdated: Sep 03, 2020, 09:27 AM IST


Story highlights

Saudi Arabia also won a seat at the United Nations Human Rights Council in 2019, despite its pathetic human rights record

A donation of $100 million does not sounds like a big amount for Saudi Arabia. Afterall, the kingdom has been linked to the 9/11 attacks and members of the royal family were being blamed.

So 100 million dollars is Saudi Arabia's PR and marketing budget, or as we can say, a small price to fix its image.

This is just one instance. The Saudis have mastered chequebook diplomacy into a fine art by buying heft with petrodollars.

In march last year, Saudi Arabia gave $334 million in assistance to Jordan after giving more than three billion dollars in 2018. In Egypt, Saudi Arabia agreed to provide a financial aid package worth $22 billion dollars in 2016. From the year 2000 to 2018, Ssaudi arabia gave Palestine six billion dollars in financial support.

There are more of such examples.

Saudi Arabia has used money to whitewash its crimes and exert influence the world over. Riyadh spends extensively on lobbying efforts in the United States.

In 2018, Saudi Arabia allegedly paid a little more than $18 million to an American lobbying firm. This was after the killing of journalist Jamal Khashoggi. As a result, despite all the outrage and a clear link to the royal palace in Riyadh, the death of Khashoggi did not hurt the relationship between Saudi Arabia and the United States.

The US President Donald Trump defied the US congress by swiping aside objections from lawmaker and allowing a sale of weapons worth eight billion dollars to Saudi Arabia.

Saudi Arabia also won a seat at the United Nations Human Rights Council in 2019, despite its pathetic human rights record.

Oil trump human rights

However, now the oil revenue is drying up and the influence may soon begin to wane.

In July, Saudi Arabia posted a budget deficit of close to $30 billion. Now, oil revenues have dropped by 45 per cent and the kingdom has a deficit of nine billion dollars.

As a result, Riyadh has imposed unprecedented austerity measures. The value added tax in Saudi Arabia had to be tripled from 5 per cent to 15 per cent. This is reflecting in Saudi Arabia's dealings with the world.

Paksitan is the first to feel the heat, though the reasons for hauling Pakistan over the coals are not just economic. Saudi Arabia is asking Pakistan to repay billion-dollar loans, and turning off the oil tap — an oil credit facility that has not been renewed.