After China, it is the United Arab Emirates (UAE)… Bankrupt Pakistan has decided to seek help from the West Asian nation in order to overcome the ongoing financial crisis. Pakistan recently received USD 700 million and USD 1.3 billion from its all-weather friend China as financial aid. However, there will be a different deal with the Arab nation, as Islamabad has decided to hand over terminals of the Karachi Port to the UAE in exchange for foreign currency. The Pakistani media reported on June 21 (2023) that the Government of Prime Minister Mian Muhammad Shehbaz Sharif recently formed a negotiating committee to finalise an agreement in this regard. Islamabad believes that the proposed move would strengthen the Foreign Exchange Reserves of the South Asian country.

Finance Minister Muhammad Ishaq Dar presided over a Cabinet meeting on commercial transactions in Islamabad on June 19. The Express Tribune daily reported that the Cabinet members decided to set up the committee for negotiating a commercial agreement between the Karachi Port Trust (KPT) and the Government of the UAE. Earlier, the UAE had shown interest in acquiring the Port of Karachi to further boost bilateral trade ties. However, Islamabad was not ready to accept the offer at that period of time. Now, the situation has changed and Shehbaz Sharif Administration is ready to handover Karachi Port terminals to Abu Dhabi.

Incidentally, Pakistan has been going through an acute financial crisis for the past few months, with the Foreign Exchange Reserves gradually decreasing. A couple of months ago, a Pakistani minister admitted that the National Economy was on the verge of collapse. At the same time, there has also been a sharp increase in prices of necessary commodities. It has become increasingly difficult for the Pakistani nationals to purchase food items. Earlier, China came forward to help Pakistan, and provided Islamabad with loans. This time, Islamabad has decided to seek help from the UAE.

As per a report, the Foreign Exchange Reserves of the State Bank of Pakistan, the Central Bank of the country, have hit a new low. The amount of debt, too, is constantly increasing. The Shehbaz Sharif Government requested the International Monetary Fund (IMF) to sanction loans for Pakistan. However, the global lender is yet to respond. Instead, the IMF expressed displeasure with the budget presented recently by the Government of Pakistan. A number of countries have refused to provide financial assistance due to the current political turmoil in Pakistan.

The Shehbaz Sharif Government has further decided to open up barter trade for certain goods, including petroleum and natural gas, with Afghanistan, Iran and Russia in order to release pressures on dwindling Foreign Exchange Reserves. In an order issued on June 1, the Government called it Business-to-Business (B2B) Barter Trade Mechanism. However, State- and privately-owned entities would require approval from the Government to participate in this trade mechanism.

Sajid Amin, the Deputy Director of the Sustainable Development Policy Institute, has claimed that Pakistan could gain particularly from oil and energy imports from Russia and Iran without adding to Dollar demand. He has said that the barter opportunity is the best option for the Government to revive the economy, considering the Dollar shortages. “While it may not solve currency smuggling, particularly at the Afghanistan border, it can discourage smuggling of goods from Iran, such as diesel, and Afghanistan which is hurting the economy,” stressed Amin.

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Published by Koushik Das

Koushik Das (born on May 16, 1976 in Kolkata) is a career journalist. Based in the Indian capital of New Delhi, Koushik writes mainly about foreign policies and current geopolitical issues, and rarely about other topics. His own political ideas are highly influenced by Antonio Gramsci, Louis Althusser, Michel Foucault, Michael Oakeshott and others. English philosopher and political theorist Oakeshott (Dec 11, 1901-Dec 19, 1990) says that “in political activity, men sail a boundless and bottomless sea. There is neither harbour for shelter nor floor for anchorage, neither starting-place, nor appointed destination. But we have to keep afloat”. (Rationalism in Politics, 1962) As a student of Political Science, Koushik loves to share his views on issues, which have great impacts on his thought process (and also on India, South Asia and of course on the global community), with his readers through his website – Boundless Ocean of Politics. By doing so, he tries to keep himself afloat. You will find some of his articles in https://inserbia.info/today/ (https://inserbia.info/today/author/kou_das13_i/), as he has been trying to assess the global geopolitics since 2003. You can also mail him at kousdas@gmail.com View all posts by Koushik Das