I am writing this column from Dubai. Although I travel to the UAE almost every month for work, this is my first visit since Iran-US war. The recent Middle East conflict and the crisis is triggered have affected Gulf countries particularly UAE and Dubai. City of Dubai is known for its busy airport, tourist attractions, and massive shopping malls, but the current situation has nearly paralyzed these sectors. Flight cancellations, airspace closures, and security concerns have reduced foreign tourist arrivals to almost zero. Iranian missile and drone attacks have not only caused loss of life in Dubai but also damaged civilian infrastructure. A large portion of Dubai’s population consists of expatriates, and due to fear and uncertainty, many have left the city. Roads are deserted, while shopping malls and hotels are nearly empty. Dubai’s economy, which heavily depends on tourism, trade, and services, is under severe pressure. The closure of the Strait of Hormuz has badly disrupted supply chains, affecting trade, imports, and business activities.
When I landed at Dubai Airport once a hub of activity before the Middle East conflict it appeared eerily quiet. Shopping malls had very few visitors. Real estate prices, which once soared, now have no buyers. Pakistanis were often said to have invested billions of dollars in Dubai’s real estate sector. During my stay, I met several major Pakistani developers who seemed deeply concerned about the situation. Some fortunate Pakistanis with funds in UAE banks are transferring their money back to Pakistan. However, fearing scrutiny back home, many prefer informal channels over official banking systems. My suggestion that government should introduce a scheme for overseas Pakistanis in Gulf countries to bring their investments back legally; such a move could attract $4-5 billion to Pakistan economy.
Rumors are also circulating in Pakistan that UAE, due to strained relations, has asked for the return of its $3.5 billion deposits held in Pakistan. These deposits had been kept in the State Bank for years and Pakistan was paying 6% interest. The Pakistani government maintains that the withdrawal is a routine practice. However, it is evident that the Middle East conflict has led to strained in Pak-UAE relations.
UAE has concerns that Pakistan is siding with both Saudi Arabia and Iran in the conflict and has emerged as a voice for Iran something that likely displeased the UAE. On the other hand, there is a perception in Pakistan that UAE is supporting Israel in the conflict and that India is using the UAE against Pakistan. Tensions further increased when UAE presented a resolution at the UN Security Council advocating the use of force to reopen Strait of Hormuz. Pakistan and China opposed this resolution, which UAE did not like, and subsequently demanded the return of its $3.5 billion deposit from Pakistan. At a time when Pakistan’s foreign exchange reserves are around $16 billion, the return of UAE deposits could put pressure on the rupee. Reports suggest that Pakistan has requested Saudi Arabia for $5 billion in deposits and $5 billion worth of oil on deferred payment, hoping it will not abandon Pakistan in difficult times.
Currently, around 1.7 million Pakistanis are employed in the UAE, sending $6-7 billion annually in remittances to Pakistan. In such circumstances, Pakistan cannot afford strained relations with UAE. Unfortunately, some individuals in Pakistan are spreading misleading narratives and giving the situation a negative spin, which is not in the national interest. It is crucial to address the UAE’s concerns and reassure it that Pakistan is not against it. Pakistan has already condemned Iran’s attacks on Gulf countries during the OIC Council of Foreign Ministers meeting. Prime Minister Shehbaz Sharif and Field Marshal Asim Munir both of whom have close personal ties with the UAE leadership should visit UAE at the earliest opportunity. They should thank UAE leadership for its financial support during difficult times and work to remove misunderstandings, reaffirming that UAE is a brotherly country and that Pakistan cannot even opposing it so that any attempts by India or Israel to harm Pakistan-UAE relations may fail.
