The Qatar crisis is escalating as Gulf countries have cut ties with the Gulf state, but what does crisis mean for Pakistan? We, at BizUpdates, have analyzed the situation and its possible impact on Pakistan’s economy. Presently, no economic impact of the Qatar crisis is visible, but if Pakistan chooses a side, then it may have to face serious economic repercussions.
Last year, Pakistan has signed a $16 billion LNG deal with Qatar. However, trade opportunities with other Gulf countries cannot be ignored. Therefore, it is important for Pakistan to remain neutral in this situation. Presently, Pakistan is in a diplomatic turmoil as it looks to settle the dispute between the Gulf countries. Pakistan has not taken sides till now, but the pressure is mounting for the government to choose its ally.
Prime Minister Nawaz Sharif in his recent visit to Kazakhstan told journalists that Pakistan will try to resolve the issue between the Arab countries as it has friendly relations with all of them. It was reported that Pakistan has sent 2,000 troops to Qatar after the crisis erupted. However, Foreign Office spokesperson dismissed this as false news and said that it was an effort to create misunderstanding amongst the Muslim countries.
Pakistan receives a large revenue from Pakistanis who are working in Saudi Arabia and UAE. Currently, there are 1.9 million Pakistanis in Saudi Arabia and 1.2 million in UAE. Remittances that these people send are a major source of revenue for Pakistan and contribute in the economic growth.
If Pakistan cuts ties with the Saudi government then it is highly likely that all these people will lose their jobs. However, joining Saudi led block will put the $16 billion LNG deal in danger. Qatar is set to host the 2022 FIFA World Cup and as many as 115,000 Pakistanis are working in Qatar. Moreover, Pakistan received approximately $342 million in the first 11 months from Qatar i.e. 2% of the country’s total remittances.
During the month of May, remittances from Saudi Arabia stood at $514.40 million while Pakistan received only $37.07 million from Qatar. Despite the pressure, Pakistan has decided that it will try to remain neutral in the Qatar crisis and will try to put an end to it so that it can get out from the awkward position and can ensure the economic stability of the country.