Pak-Bahrain Bilateral Relations: New Security Paradigm

Mehmood Ul Hassan Khan

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Most recently the King of Bahrain, Hamad bin Isa Al Khalifa visited Pakistan after 40 years. The King of Bahrain was accompanied by a high level delegation comprising heads of legislatures, ministers, senior officials and business leaders. During his stay in Pakistan the King met with Prime Minister Nawaz Sharif, President Mamnoon Hussain and many other high officials. The King had meaningful spells of meetings with adviser to the Prime Minister on national security and foreign affairs Sartaj Aziz; Finance Minister Ishaq Dar and Defence Minister Khawaja Muhammad Asif. The King also visited Joint Staff Headquarters.

King’s Determination

Bahrain’s King Hamad Bin Isa Al Khalifa, on his first visit to Pakistan, expressed determination that the existing ‘political goodwill’, between Pakistan and Bahrain should be translated to strengthen economic and trade ties between the two countries. “Although we are new countries, we have been trading partners since 7,000 years when the Indus Valley Civilisation had trade with Dilmun Civilization,” he added.

The king appreciated the reforms undertaken by the government and said that we had quite a long history of relationship. He said that Pakistan had a huge potential for development and investments.

He underlined that the kingdom was willing to work with Pakistan and it would encourage its investors. He added that the visit would give confidence to investors and business was always built on mutual confidence. He said that Manama had a strong financial base and Bahrain’s private sector could invest in Pakistan. He added that a mechanism should be put in place for the follow-up of the spirit of the meetings held during his visit.

The wide-ranging discussions were held in a sincere, friendly and forward-looking atmosphere with useful exchange of views on bilateral, regional and multilateral issues of mutual interest.

During the different official meetings, both sides underlined the close bilateral ties, deeply rooted in shared history and cultural affinities, sustained and nourished through growing economic linkages, multi-faceted cooperation and close people-to-people contacts.

Joint Statement

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According to joint statement, both sides agreed to further broaden and deepen their bilateral engagement in diverse fields of mutual interest especially in economic, trade and investment. The two countries agreed to further enhancing high level political exchanges, cooperation in the fields of economic, trade and investment, defence and security and people-to-people linkages.

Pakistan-Bahrain Joint Ministerial Commission

Moreover, the two sides stressed the importance of continuing regular consultations through the existing institutional mechanisms and welcomed the setting up of Pakistan-Bahrain Joint Ministerial Commission. Both sides emphasized the importance of bilateral consultations between the two Foreign Ministries which would serve as an umbrella framework for bilateral cooperation. The two sides decided that the next round would be held in the second half of 2014.

Strengthening of the Defence and Security Cooperation

Keeping in view the rapidly changing geo-political and geo-strategic scenarios in the region and the GCC.MENA the two sides stressed the importance of increasing the defence and security cooperation between the two countries and it was also agreed that the security dialogue will take place annually between the two countries at mutually agreed, appropriate level. In order to strengthen the bilateral relations and security cooperation the two countries also decided to strengthen sharing of information, intelligence and assessments.

Denouncing of Terrorism

According to joint statement both sides denounced terrorism in all its forms and manifestations and reaffirmed their desire to strengthen their cooperation in combating terrorism at both the bilateral level and within the multilateral system of the United Nations.

Peaceful Resolution

Both sides also reiterated the importance of peaceful resolution of all issues through dialogue, be they regional or international. The two sides exchanged views on regional and international issues of mutual interest, including the security situation in West Asia and South Asia.

Pakistan-GCC Free Trade Agreement

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The two sides acknowledged the close relations between Pakistan and the GCC countries and reiterated their commitment to further strengthen cooperation, including the finalization of the Pakistan-GCC Free Trade Agreement.

Positive Contribution Pakistani Expatriate Community

The King expressed appreciation for the role and contribution of the Pakistani expatriate community towards progress and economic development of Bahrain. The Pakistani leadership expressed the hope that the Kingdom of Bahrain will continue to employ more Pakistanis in different sectors of their mainstream economy.

Pakistan’s Political Leadership Bahrain’s Leadership
It welcomed the high-level business delegation accompanying the King and recognized the importance of the organizing of the Pakistan, Bahrain Business Forum meeting, which provided a good opportunity to realize the potential for further enhancement of trade and commercial exchanges. Bahrain noted the potential for increased mutual investments and agreed to provide a favourable environment for investors from both countries. The two sides agreed to regular and timely exchange of information on available investment opportunities.

Pakistan sought Bahrain’s foreign direct investments in diversified fields of economy. Bahraini side expressed its readiness to consider investments in Pakistan.

Pakistan recognized Bahrain as an ideal gateway to the Gulf Cooperation Council (GCC) markets. Bahrain promised to assist Pakistan.

Different Agreements and MoUs

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The two sides signed eight agreements and memorandum of understandings (MoUs) details is given below as:

Different Sectors/Fields (MOUs/Agreements Details
Bilateral Cooperation Establishment of Joint Ministerial Commission
Investments Agreement for the Promotion and Protection of Investments
Security Cooperation between Ministries of Interior
Energy Cooperation in the fields of Water and Power
Food Security Cooperation in Food Security, in Particular Rice
Aviation Air Services
HRM Labour and Occupational Training
Economic Cooperation Economic Development Board of Bahrain and Board of Investment

Bahrain’s Principal Stance and West Propaganda

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Every country has its own unique internal power dynamics and national security compulsion. So, extended security and military ties should not be taken threat to any group or country in the region.

During the conference, Bahrain Foreign Minister Shaikh Khalid bin Ahmed bin Mohammad Al Khalifa said Bahrain has neither given Pakistan any money, nor sought from it military cooperation. He said that Bahrain wanted to promote relations with Pakistan in many fields, including defence and security. Describing the visit of Bahrain’s king to Pakistan as successful, he said several agreements had been signed during the current visit to augment bilateral relations in the areas of trade, economy, energy, food security, training of manpower, etc.

He said Bahrain was not going to extend any financial assistance to Pakistan under the umbrella of the Friends of Pakistan. He said no assurance had been given to Pakistan for the provision of any development fund on the pattern of Kingdom of Saudi Arabia (KSA). There were more than 450 business institutions in Bahrain, which were all set to make investment in Pakistan, he added. “We know Pakistan wants close and balanced ties with every country in the region. We recognise this right of Pakistan,” he remarked.

Syria Issue

He said all including the GCC countries wanted a political solution to the Syrian issue. “We have not come here to seek Pakistan’s help with reference to Syria,” he said, “We have discussed all regional issues including problem of Syria with the Pakistani leadership. We have held talks with Prime Minister Nawaz Sharif and Sartaj Aziz on all important matters. We want a political solution to the issue of Syria under the Geneva pact.”

Pakistan and Muslim Ummah

He observed that Pakistan was an important country of the Muslim Ummah, adding that no change had come in Pakistan’s foreign policy. He said “We will stand by Saudi Arabia like the GCC countries if it faces any threat. Saudi Arabia has decided that the Muslim Brotherhood organisation be declared a terrorist outfit due to its internal situation and threats received from the Muslim Brotherhood. We term this decision correct.

“We have discussed political cooperation with Pakistan. Defence cooperation between Pakistan and Bahrain is continuing for several decades. We have discussed at length the matters related to defence cooperation with the Pakistani authorities and this cooperation will continue in the days to come,” he said. Bahrain transportation minister said bilateral trade between the two countries currently stood at six billion dollars and there was a great potential to enhance this volume.

Strengthening of Military Ties

Pakistan and Bahrain agreed to enhance the military cooperation between the two countries. The King of Bahrain, Hamad Bin Isa Bin Salman Al Khalifa, along with his delegation visited the Joint Staff Headquarters in Rawalpindi.

On his arrival, King Hamad was received by Prime Minister Nawaz Sharif and Chairman Joint Chiefs of Staff Committee General Rashad Mahmood. Federal Defence Minister Khawaja Muhammad Asif, Chief of the Army Staff General Raheel Sharif, Chief of the Naval Staff Admiral Mohammad Asif Sandila and Chief of the Air Staff Air Chief Marshal Tahir Rafique Butt were also present on the occasion.

Both the sides discussed the brotherly relations between the two countries and vowed to further enhance the military cooperation. King Hamad particularly praised the professionalism, quality of training and commitment of the Pakistan armed forces and paid rich tributes to Pakistan’s military for its valour and sacrifices in defence of the motherland.

Defence Minister Khawaja Mohammad Asif also called on King Hamad and discussed matters of mutual cooperation in the field of defence and defence training. The defence minister stressed that Pakistan had always looked to its Muslim brothers and consistent support from Muslim friends was commendable.

Prospects of Joint Ventures

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Federal Minister for trade, Khurram Dastgir offered joint ventures in textile sectors for fully harnessing the Free Trade Agreements (FTA) signed by Bahrain with the US as well as providing opportunities for Pakistan to get benefits from the GSP Plus facility granted to Pakistan by the European Union.

On his part, the Board of Investment Chairman Miftah Ismail said Pakistan was going to initiate work on 20-25,000MW electricity generation projects and construction of motorways, and urged Bahrain to take advantage of these investment opportunities.

He told that Pakistan offered 17 percent returns on investments in alternative energy resources and the business community from Bahrain could benefit from this opportunity. Nawaz Sharif, the government had overcome the initial economic difficulties. He said the economic scenario was now very optimistic and conducive for foreign investment.

Bahrain Minister for Industries and Commerce Dr Hassan A Fakhro said that current volume of trade between Bahrain and Pakistan stood at only US$400 million, which would be further increased during the days to come. He sought Pakistani investment in red meat, poultry, rice, fresh vegetables and textile sectors as a demand exists for Pakistani products in the Bahraini market.

Investments Opportunities

Economic and trade relations between the two countries have been gradually improving, however, these were still well below the real potential existing between Pakistan and Bahrain. Regular holding of the Joint Commission’s meetings as it provides a good platform for reviewing status of bilateral economic and trade cooperation. The Chambers of Commerce and Industry of both countries need to be encouraged to have regular interaction and revitalize the Joint Business Council.

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Investments Opportunities Details
Trade Bilateral trade volume is at moderate level i.e. US$ 400 million which needs to be enhanced by the diversification of trade mix
Energy Pakistan badly needs FDIs in the field of energy production and supply in the country. It needs energy diversification. It offers ideal situation to Bahrain public-private companies to invest in Pakistan
Agriculture Food security is one of the emerging threats in the GCC and Pakistan could provide the sustainable food supply chains. So cooperation in the diversified field of agriculture is win-win situation for both the countries.
Livestock Red meat, poultry and fisheries provide bright prospects for both the countries
Textile After the award of GSP+ Pakistan is a much better position for Bahrain public-private companies to invest in the country.
Port Development Port communications is the key for future trade and commerce.
Mining & Minerals Pakistan blesses with huge reservoirs of mining and minerals which must be explored by the Bahrain public-private companies
Infrastructure Low-income houses are urgently needed in the country which could ultimately open when chapter in the bilateral relations of both the countries.
Banking and Financial sectors Banking and financial sectors close cooperation is the need of the hour.

Greater Economic Cooperation

It is strongly suggested that translating the political goodwill and fraternal bonds existing Pakistan and Kingdom of Bahrain into a strong economic and trade partnership to the mutual benefit of the people of the two countries.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that Pakistan is experiencing a new dawn of economic revival and Bahrain should partner with it for mutual benefits. Bahrain should look into the unmatched business opportunities in Pakistan with a special focus on the project-based financing and Islamic banking.

Almost 400 Pakistani companies are working in Bahrain and the number is rising. Bahrain has central location in the Gulf with a highly diversified economy and enhanced linkages will boost flow of investment. Pakistan can learn from Bahrain’s economic diversification and expertise in the energy sector. An early trade treaty between the two countries will benefit each other, as Pakistani textiles should find place in the US market due to Bahrain’s free trade agreement (FTA) with the US and Manama can explore markets in Pakistan.

Cooperation & Coordination of Cyber-Crime

Cyber-crime poses a serious threat to us. Federal Minister for Interior and Narcotics Control Chaudhry Nisar Ali Khan said Pakistan values its close ties with Bahrain and wishes to strengthen them in all fields, particularly cyber-crime, border security, civil defence and international crime.

The minister invited his Bahraini counterpart to pay a longer visit to Pakistan at his convenience so that matters agreed upon in the MoUs signed between the interior ministries of the two countries, could be discussed in detail.

In the meantime, he proposed that committees should be formed by both sides to look deeper into specific areas of cooperation setting timelines. He said that Pakistan has a state-of-the-art system of registration under Nadra and the Kingdom of Bahrain could benefit from our expertise in this field.

General Rashed briefed the minister about security situation in his country and the steps the Bahraini government was taking to increase the use of technology in maintaining order in the country. He informed the minister that quite a number of Pakistanis are working in Bahraini government and the private sector.

Bahrain’s Macro-Economy 2013-2014

According to Bahrain Economic Quarterly (BEQ) issued by the Bahrain Economic Development Board (EDB), the robust expansion of the Bahraini macro-economy gathered further momentum this year with headline GDP growth now projected close to 5 percent. Key sectors/drivers in the nonoil sector are strengthening and will make an increased contribution to the continued expansion of Bahrain’s economy in 2014.

Moreover, the adoption of the national budget half way through the year has lent a significant stimulus to economic activity, and the annual pace of nonoil growth picked up markedly from 2.5 percent in Q2, 2013 to 3 percent in Q3, 2013. Overall growth is set to stabilize to around four percent in 2014, but the contribution of the nonoil sector is set to increase significantly due to the prospect of a large increase in project spending.

A number of significant undertakings, whether funded locally or from the GCC Development Fund, are either starting or about to be launched. This move should in turn have significant positive implications for activity in a number of other sectors, for business and consumer confidence, and for bank credit growth.

Some important longer-term projects for the oil and gas sector are also moving forward, including consultancy work for the planned offshore LNG import terminal, which is expected to be operational in 2016, the modernization and expansion of the Sitrah refinery is due to be completed in 2017, capacity of the oil pipeline from Saudi Arabia is being expanded by over fifty per cent, and exploratory deep gas wells are due to be drilled next year.

Vision 2030

It presents an attractive opportunity for foreign investors. The government, with its vision for 2030, is actively fostering a spirit of entrepreneurship and removing obstacles to setting up new businesses. It aims to explore new ways of boosting the economy and promoting investments. It is to shift from an oil-based economy to a more competitive one driven by the private sector and a strong Bahraini middle class.

An all-encompassing government strategy to stimulate the private sector is already showing results. According to data from the Central Informatics Organisation finance and manufacturing sectors have already overtaking oil as the largest. Financial services account for 25 per cent of GDP and manufacturing makes up 16 per cent, while petroleum and natural gas make up 13 per cent of the total.

Tamkeen an integral part of Economic Vision 2030

The government organisation Tamkeen is an integral part of Economic Vision 2030. Working in collaboration with the Bahrain Development Bank (BDB), Bahrain Islamic Bank (BISB), and BMI bank, it supports Bahraini businesses by providing them with low cost financing solutions. Tamkeen pays the banks’ profits on the financing on behalf of the enterprises, among other incentives. More than 77,000 Bahraini individuals and enterprises have benefited from Tamkeen’s programmes since its inception in 2006, 80 per cent of which have been SMEs. The total figure is expected to rise to 150,000 in the near future.

Objectives

• Fostering a fair and transparent regulatory environment
• Increasing the level of competition
• Facilitating entrepreneurship in the Small and Medium Enterprises (SME) Sector
• Strengthening the manufacturing sector
• Maximising benefits from foreign trade relations Foreign trade relations
I. Rigorous commercial diplomacy, in 2004 Bahrain became the first GCC state to sign a free trade agreement (FTA). Bahrain’s overall objective for the FTAs is to facilitate trade flows, stimulate inward flows of investment, expand key manufacturing and services sectors, and encourage the exchange of expertise to create employment opportunities and stimulate economic growth in Bahrain.

Conclusion

Pakistan and Bahrain enjoy close and cordial relations based on mutual trust and understanding and deeply rooted in our culture and history. Two countries have always stood by each other in testing times and appreciated the assistance extended by the Kingdom of Bahrain to Pakistan in difficult times including the natural calamities in Pakistan over the years.

Enhanced cooperation in the fields of human resources, military ties, defence production, cyber-crime, tourism, textile, aviation, port development and the last but not the least, energy would solve many mutual issues confronting the countries security, economy and society in the days to come.

Bahrain was ranked 12th on the Heritage Foundation Economic Freedom Index 2012 for its mature financial, commercial, and banking services. Foreign investors are allowed to have 100 per cent ownership of their business, with no restrictions placed on capital repatriation, currency exchange and transfer of dividends. So, extended volumes of investments would bring desired dividends of greater economic integration, socio-economic prosperity and conflict resolution in the days to come.

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