Foreign Policy Series FPS.UAE.1

Pakistan - UAE Relations

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Challenges

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Prospects

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The CPGS is an independent, non-partisan and not-for-profit think tank with a vision to innovate future prospects for peace and security through intellectual discourse, and contribute to sustainable social, political and economic development.

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Printed in Pakistan Published November 2014

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Office 101, Silver Oaks, F-10, Islamabad, Pakistan PO Box: 1486 Islamabad T: (0092-51) 2809814 F: (0092-51) 2809815 E: [email protected] W: www.cpakgulf.org

Foreign Policy Roundtable Series

Pakistan-UAE Relations Challenges and Prospects Roundtable Report IX

Introduction The Centre for Pakistan and Gulf Studies (CPGS) is a non-partisan think tank established with a vision to Innovate future prospects for peace and security in the region and beyond through intellectual discourse and contribute to sustainable social, political and economic development. To this end, the CPGS has organized this roundtable discussion under the initiative the Centre has embarked upon, i.e., 'CPGS Foreign Policy Roundtable Series' , with the aim to review the foreign policy of Pakistan towards its partner states and major powers of the world. 'Pakistan-UAE Relations: Challenges & Prospects ' is the ninth roundtable of the series; the first was on 'Pakistan-U.S. Relations: Convergences and Divergences' held in November 2013, the second was on 'Pakistan-Russia Relations: Prospects and Challenges', held in December 2013, the third was on 'Pakistan-Afghanistan Relations-U.S. Drawdown and its Implications for Pakistan', held in January 2014, the fourth was on 'Pakistan-China Relations: Prospects and Challenges', held in February 2014, the fifth was on 'Pakistan-EU Relations: Convergence and Divergence', also held in February 2014. The sixth was on 'Pakistan-India Relations: Challenges and Prospects', held in March 2014. The seventh was on 'Pakistan Iran relations; Challenges and Prospects', held in June 2014. The eight was on Pakistan-Saudi Arabia Relations: Challenges & Opportunities' held in September 2014.

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Background Relations between Pakistan and the United Arab Emirates (UAE) have been embedded with bonds of religion, history, culture, common faith, shared values and commercial linkages. Both the states have enhanced their cooperation in the sectors of defence and economy over the recent past. Pakistan was the first country to recognise the UAE as an independent state. Cultural, social and historical connection between Pakistan and the UAE dates back to the 5,000-year-old Harappa civilization of Indus Valley. The British administered Trucial States were succeeded by UAE which gained independence in 1971. A federation of seven states known as Trucial States; namely, Abu Dhabi (which serves as the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain; was formed. Pakistan supported UAE's stance of being the original successor of Trucial States and supported the incorporation of Qatar and Bahrain as emirates of the UAE. The founder of the UAE, Sheikh Zayed bin Sultan Al Nahyan, took personal interest to build stronger bilateral relation between the two states. Sheikh Zayed Hospital, Sheikh Zayed Medical College, Rahim Yar khan and Sheikh Zayed International Airport, also in Rahim Yar Khan are the symbols of friendship and fraternity between the two countries. Moreover, the current President of UAE, H.H. Sheikh Khalifa Bin Zayed Al Nahyan, and Prime Minister H.H. Sheikh Mohmmed bin Rashid al Maktoum have further worked to promote and expand these relations. The UAE is also a major investor in Pakistan's key sectors like oil and gas, telecommunications, real estate, aviation, banking and energy which is the backbone of the economic stability of the latter. According a report by the UAE's Ministry of Foreign Trade, UAE's public and private sectors invested about $3.74 billion in Pakistan from 2004 to 2010.The report also indicated that multinational companies have made investments in different sectors in Pakistan, including the Emirates National Oil Company, "Enoch"; The International Petroleum Investment Company "IPIC"; The Emirates Telecommunications Corporation "Etisalat"; Dana Gas; Al Ghurai; Emaar; DP World; Abraaj Capital; Thani; Danata; Atharihra agricultural Company; Gulf Pharmaceutical Industries "Julfar"; the Emirates Investment Group; the Arab Company for Packaging and Al Nasser Holdings. Pakistan has significantly cooperated with the UAE in establishment of its important institutions, such as armed force, police, health and education sectors. About 1.25-1.50 million skilled and semi-skilled Pakistani expatriates currently reside in the UAE, contributing significantly to the progress of both countries. Majority of the Pakistani expatriates currently working in the UAE have blue-collar jobs. According to an estimate, 20 percent of Pakistani expatriates are working white-collar jobs, whereas 80 per cent are working blue-collar jobs.

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Participants The discussion was attended by renowned scholars, practitioners and members of the CPGS Team. The complete list of participants is as follows:

Chair

Lt. General (R) Syed M. Owais, HI (M)

Speakers

Lt. General (R) Asif Yasin Malik ,HI(M) Ambassador (R) Javed Hafiz

Moderator

Mr. Nasir Hafeez

Participants

Senator Sehar Kamran (T.I.). Ambassador (retd.) Arif Kamal Ambassador (retd.) Rizwan-Ul-Haq Ambassador (retd.) Amir Shadani Mr. Andrey Shabilan Dr. Muhammad Khan Dr.Bakar-e- Najamuddin Mr. Fawad Haider Mr. Tahir Mehmood Mr. Basharat Hussain Mr. Akif Sattar Mr Ghani Jafar Ms. Adeela Bahar Khan Ms. Ifrah Waqar Mr. M. Suleman Shahid Mr. M. Rizwan Mr. Tahir Ahmad Maj (retd.) Farrukh James Mr. Sumer Iqbal Mr. Tairque Ahmed Mr. Almas NAqvi

*Various Research Scholars, HEC Scholars, M.Phil and PhD Students also attended the event.

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Introduction Pakistan and the UAE have extremely close fraternal relations. These relations date back to the UAE's formation in 1971, and have since evolved into wide-ranging co-operation in various fields. Pakistan was the second country after Britain to have constructed an embassy in the UAE. These time-honoured relations are based on strong pillars of joint trading and collaborative understanding. The foundation of these exemplary relations was laid by the founder of modern UAE, late Sheikh Zayed bin Sultan Al Nahyan, a clear evidence of his insightful thinking and vision. The relationship between the two states mainly comprises trade, political and defence cooperation. The following factors make Pakistan-UAE relations even more important and deeper; these vital factors are: ! ! !

Geostrategic locations of Pakistan and UAE; UAE is located on Gulf which is the passage of 40 per cent of world oil trade, while Pakistan is situated significantly in South Asia and Indian Ocean. Economic factor: UAE ranks as Pakistan's second highest importer in terms of trade. UAE is an important source of remittances as 1.25-1.50 million Pakistan expatriates work there. Religious fraternity

When UAE gained independence from the British, due to its bulk of natural resources, mainly oil, it felt insecure, especially from international players. The UAE opted for external help in order to strength its defence. Pakistan was the major country which helped out the UAE to make it secure and safe during those testing times. After Oman, the UAE is the closest neighbour of Pakistan by sea and is seen as a major economic hub near Pakistan. The country has the seventh largest oil reserves. Its proven oil reserves account to 97.8 billion bbl, and its proven gas reserves are estimated to be about 6.089 trillion cum.

Defence Cooperation Pakistan has been playing a pivotal role in the security of Gulf countries for more than forty years. Pakistani military troops which were stationed in Saudi Arabia, Kuwait, Oman, the UAE, Syria, Jordan and Libya helped these states establish robust and strong forces. Initially, Pakistan provided two types of security assistance to the UAE. First, it sent advisory teams and stationed military to counter any internal and external threats. Second, it provided modern and sophisticated military equipments to the UAE. Before the British withdrawal from the UAE, Sheikh Zayed bin Sultan Al-Nayhan requested Pakistan's then President Ayub Khan in 1968, troops for the training of Abu Dhabi military so that they could be capable of taking command from the British defence forces. This friendly cooperation continued till mid 1970 without any formal written agreement. In 1970s a defence protocol was signed between the two countries and defence cooperation endured in next decades. Pakistan armed forces personnel were appointed in high ranks in the UAE military to train them. In 1980s, the UAE purchased large number of small arms and ammunition from Pakistan. In June 1994, both the states formally signed an accord, Defence Consultative Group, to further strengthen their relations. The purpose of this agreement was to enhance defence collaboration through military exercises, training, intelligence-sharing and joint military production. Pakistan created the UAE Armour Training 6

School in UAE and trained its military commandos. In addition, Pakistan also trained the UAE military brass at Command and Staff College, Quetta, and other Pakistan-based military institutions. In 2003, the UAE showed interest to purchase Al-Khalid tanks and other military equipment from Pakistan. In 2006, Pakistan and the UAE signed a Defence Cooperation Agreement to step up their relationship. UAE Air Force was at one time like an extension of the Pakistan Air Force. After the country's independence, UAE's Sheikh Zayed appointed Air Commodore Sadar-ud-Din of Pakistan Air Force as Chief of Staff Abu Dhabi Air Force. In 2004, 55 flying instructors from Pakistan were serving in the UAE Air Force, ten personnel in Navy and a number of officers in the UAE army. Since initiation of the Global War on Terror, the UAE has been assisting not only the U.S. but also Pakistan in combating the menace of terrorism.

Pakistani Diaspora in UAE The UAE has one of the largest expatriate communities of 85 per cent of its population, which translate to 4.588 million labour force. Pakistani expatriates in the UAE have contributed in a significant manner to promote the bilateral relations of the two countries and to the economy of Pakistan through remittances. Around 1.5 million Pakistani expatriates are working in UAE. Every year, Pakistanis workers send valuable remittances surpassing $2.5 billion, the highest remittances in the current fiscal year. According to the latest report of the State Bank of Pakistan (SBP) (2014), overseas Pakistani workers remitted an amount of $5,275.61 million in the first four months, July to October, of the current fiscal 201314, showing a growth of 6.27 per cent when compared with $4,964.21 million received during the same period of last fiscal year, July-October FY-13.

Pakistan and Economic Support from UAE The fraternal bond between the UAE and Pakistan is time-tested and appears overwhelming. In the time of crises and natural disasters, UAE has supported its brotherly country wholeheartedly. At numerous occasions, the UAE has proved to be the biggest economic supporter of Pakistan and has carried out relief operations of various kinds and forms. In the wake of the 2005 earthquake, the biggest help was from the UAE. The UAE was the first country to stand by Pakistan when floods swept most parts of Pakistan in 2010 and 2011, and vast philanthropic support was also observed for providing humanitarian assistance and financial aid to affected parts of Pakistan. The UAE also contributed in the form of developmental projects in Pakistan in the vicinity of Khyber Pakhtunkhwa in education, health and infrastructure sectors, worth about $120 million. Since 2001, Pakistan has received $ 800 million aid from the UAE.

Bilateral Trade Relations The UAE is a global trading hub and a major trading partner of Pakistan and both countries are keen to further boost and strengthen bilateral trade ties. In February 1977, the first meeting of the U.A.E.-Pakistan Joint Committee took place in Abu Dhabi. The two countries signed an agreement on avoidance of double taxation in 1999. 7

According to Pakistan's Ministry of Commerce (2013-14), the UAE has become Pakistan's largest trading partner with annual bilateral trade reaching total trade volume between Pakistan and UAE was $9 billion, of which Pakistan's total imports stood at $6 billion, while products worth $3 billion were being exported, depicting a trade deficit of $3 billion . The UAE is also the second-largest investor in Pakistan with $21 billion investment, mainly in banking, real estate, energy, infrastructure, telecommunications, ports, housing and aviation, and the two sides are taking interest to hold international expos and joint investments in both countries for the development of this sector and promotion of economy. The UAE is the first country which organised a conference to promote investment in Pakistan; that was in Dubai in March 2010. According to State Bank of Pakistan, trade between the two countries is increasing day-by-day. It surpassed U.S. $ 10 billion during 2012-2013. The share of exports to the UAE was eight per cent worldwide in FY-14, according to the State Bank of Pakistan. According to the State bank of Pakistan, from July to October 2014, the UAE withdrew investment of about 8 million dollars from Pakistan which sounds an alarming situation for Pakistan. There is a dire need that policy-makers in Pakistan reconsider their current policies towards the UAE and revitalize the economic relations. In addition, a need to promote the commercial diplomacy, also supported by the people of UAE, is also required for a robust relationship between the two countries.

Recommendations Formation of a strong and unified relationship between the both countries depends on a strong, trusted and credible support with most cordial and brotherly relations based on the aspiration and sentiments of their peoples, shared history, religion and cultural affinities. To further strengthen the historical ties, it is very important to understand each other's fundamental interests. The vital factors that could promote shared perceptions and enhance cooperation between these two states are: !

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! ! ! !

Both the states needs to build strong institutional network for bilateral consultations, relationships and formulate strategies for a robust bilateral relationship rather than its being personality oriented one. Promote joint investment between the two countries for the stability factors are vital. As far as friendship is concerned, the two countries should promote their friendship on the basis of interestdriven and cross-investment between the two countries should be implemented. Trade relations can be improved if focus on the value-added trade as UAE is laid. The Pakistan-China corridor, if extended by linking Gwadar and Dubai, has the potential to transform this region into a new global economic hub. A student exchange programme/educational programme should be initiated. It will cultivate the new generation elites towards a more modern world through education. Pakistan needs to engage in expertise with the UAE. There are hardly any persons in the UAE and Pakistan who are experts on each other's country. Both the countries should encourage people-to-people contacts, visits of delegations, the media and civil society. Pakistan should offer skilled workers to the UAE by establishing vocational training/skills centres to prepare best technicians and provide best labour to the market. 8

Conclusion The relationship that began with the advent of Islam and common civilization was further enriched by the military and trade links. Since forty three years, both the countries maintain long-standing and close friendly relations. Pakistan and United Arab Emirates are strategic partners. Bilateral relations would be further enhanced by initiating meaningful policy measures in the fields of energy production/supply, food security, civil aviation and banking & finance. Enhanced cooperation in the fields of alternative sources of energy especially the solar energy would be game changer in the bilateral relations of both the countries. Both the states have close ties, but their cooperation does not proportionate with their commercial ties. In the most recent past, the two regions have been cooperating at a much bigger scale through joint ventures mainly in trade, politics, defence and most recently in agriculture. Both Pakistan and UAE need to bolster their cooperation.

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CPGS Vision Innovate future prospects for peace and security in the region and beyond through intellectual discourse and contribute in sustainable social, political and economic development.

About the Centre The Centre for Pakistan and Gulf Studies (CPGS) is a non-partisan platform established to undertake studies in policy research, advocacy and consultancy to enhance understanding and relations in diverse fields between Pakistan and the Gulf countries. We regularly conduct seminars, workshops, roundtables and conferences with dignitaries, academics and experts from every walk of life, in order to actively promote regional harmony, global peace, security and stability by making substantive intellectual, academic and diplomatic contributions. The Centre aims to harness the immense potential for increasing cooperation in the region to attain peace, security and economic development and to assess emerging trends in regional policies and devise strategies for possible future challenges.

Operational Framework & Objectives ! ! ! ! ! ! ! !

Promote regional peace and harmony through integrated and comprehensive understanding of issues between peoples, governments and other entities; Strengthen strategic, political, economic and social cooperation among countries of the region and beyond; Present view point of Pakistan and the Gulf countries to the rest of the world through academic engagements, discussion and dialogue among all stakeholders for sustainable development; Identify opportunities and areas of common interest for potential cooperation between Pakistan and the countries of the Gulf region at all levels including both public and private sector; Contribute towards development of ideological and social ideas to promote tolerance and co-existence for building multicultural human society based on shared ideas and common goals; Conduct Research and compile reports for the governments and private entities to explore alternative options for efficient management and resolution of regional and international issues; Organize workshops and events to develop strong working relationship between academia and practitioners; Collaborate with the other research institutions and Think Tanks for achieving the core objectives.

Activities and Services !

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Organize periodic seminars, workshops, lectures and other events which would bring together leaders, academics, practitioners and other stakeholders, to study and discuss issues of importance for the overall good of the society; Map out future policy options by analyzing existing trends and emerging scenarios; Compile, edit and publish (print and electronic) relevant information, data, commentaries and analysis regularly; Offer training and academic services for Skill Development and Strategic analysis; Provide dedicated Consultancy and help create conducive environment for development of our society; All such other activities which help in achieving core objectives of the Centre and its programs, projects and initiatives; Prepare annual report of all activities for interested parties and stakeholders.

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About KAS Freedom, justice and solidarity are the basic principles underlying the work of the Konrad-Adenauer-Stiftung (KAS). The KAS is a political foundation, closely associated with the CDU party. As co-founder ofthe CDU and the first Chancellor of the Federal Republic of Germany, Konrad Adenauer (1876-1967)united social, conservative and liberal traditions. His name is synonomous with the democraticreconstruction of Germany, the firm alignment of foreign policy with the trans-Atlantic community ofvalues, the vision of a unified Europe and an orientation towards the social market economy. Hisintellectual heritage continues to serve both as our aim as well as our obligation today. In our european and international cooperation efforts we work for people to be able to live self determined lives in freedom and dignity. We make a contribution underpinned by values to helping Germany meet its growing responsibilities throughout the world. We encourage people to lend a hand in shaping the future along these lines. With more than 70 offices abroad and projects in over 120 countries, we make a unique contribution to the promotion of democracy, the rule of law and a social market economy. To foster peace and freedom we encourage a continuous dialog at the national and international levels as well as the exchange between cultures and religions. Human beings in their distinctive dignity and with their rights and responsibilities are at the heart of our work. We are guided by the conviction that human beings are the starting point in the effort to bring about social justice and democratic freedom while promoting sustainable economic activity. By bringing people together who embrace their responsibilities in society, we develop active networks in the political and economic spheres as well as in society itself. The guidance we provide on the basis of our political know-how and knowledge helps to shape the globalization process along more socially equitable, ecologically sustainable and economically efficient lines. We cooperate with governmental institutions, political parties, civil society organizations and handpicked elites, building strong partnerships along the way. In particular we seek to intensify political cooperation in the area of development cooperation at the national and international levels on the foundations of our objectives and values. Together with our partners we make a contribution to the creation of an international order that enables every country to develop in freedom and under its own responsibility. In 2008 the Konrad-Adenauer-Stiftung opened an office in Pakistan. In the field of international cooperation we support the G8 Afghanistan-Pakistan Initiative, the general exchange of the Pakistani and Afghan Civil Society, and the strengthening of rule of law. Moreover, we intend to assist in the development of an economic system that takes into consideration social justice and concern for the environment. The KAS sponsors conferences, seminars and publications of its partners and conducts its own programmes.

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