President Asif Ali Zardari's visit to Kuwait has led to a range of economic and security co-operation arrangements that would benefit both the countries. The two countries agreed on setting up a high-powered special committee that will identify areas of investment and joint ventures on an emergent basis.
While such memoranda of understandings with other countries have either failed to materialise or been inordinately delayed due to other negative factors including law and order concerns in Pakistan, yet because of the adjacent security co-operation it is highly unlikely that expanding economic co-operation with Kuwait would not be implemented in letter and spirit. It is such win-win situations for all parties that have the greatest possibility of implementation and one would hope that the government would explore all possible avenues of economic co-operation.
The President assured the Kuwaiti investors that Pakistan has steadfastly pursued liberalisation and deregulation of the economy as well as privatisation and there is no upper limit of foreign equity and no restrictions on repatriation of capital, profits and dividends. While such exhortations to attract foreign investment had not worked in the past because of numerous other impediments to foreign investors yet it is likely to succeed now. Additionally, the President urged the Kuwaiti investment and financial giants to assist Pakistan overcome its huge energy shortage.
Kuwait-Pakistan co-operation has traditionally been in both security and economic fields. After the end of the first Gulf War, the Pakistani army engineers were engaged in a programme of mine clearance. Pakistani exports to Kuwait are just $50 million - a low figure by any standards. However, the economic relationship between the two countries does leave a lot of room for expansion: only $332.75 million worker remittances were received between July-March 2009-10 (5.08 percent of total remittances) from Kuwait and total loans contracted from Kuwait for the period were $49.9 million with $6.02 million debt repayments of Kuwait's medium and long-term loans. During July-March 2009-10, for which data is available from the Economic Survey, total imports (largely furnace oil/HSD) from Kuwait accounted for 6 percent of total import share (Kuwait was behind only Saudi Arabia with 10.2 percent of total share).
The outcome of the President's visit is already visible in tangible terms as the Kuwait Fund for Arab Economic Development (KFAED) announced that it would participate in the financing of Bhasha Dam and desilting of the Tarbela Dam projects in Pakistan. Participation in these projects would go a long way in enhancing ties between the two countries as well as further cement the warm regard that the Pakistani public has for the Kuwaitis.
What has so far not been revealed and is, no doubt, the Pakistan government's major priority at this juncture is the need to purchase furnace oil and HSD on deferred payment. The need for this is evident as the International Monetary Fund's tranche release under the stalled Stand-By Arrangement (SBA) is unlikely during the current fiscal year and the assistance through the Kerry-Lugar bill is expected to be further delayed because the US-Pakistan relations have come under enormous strain after bin Laden's death.