Syed Firasat Shah
At a time when Pakistan faces economic strain and is recalibrating its foreign policy, its relationship with the United Arab Emirates (UAE) requires a more strategic and balanced approach.
Despite recent regional tensions, this is neither a moment for disengagement nor rhetorical posturing.
Instead, Pakistan must anchor this relationship in long-term energy infrastructure and investment, while maintaining a broader diplomatic vision that avoids strategic isolation.
An amicable resolution is long overdue on the lingering issue of the PTCL sale to Etisalat. Such unresolved matters risk becoming major irritants in bilateral relations.
Pakistan urgently needs the remaining USD 800 million stuck for decades due to disputes over PTCL properties and related concerns. Addressing this issue should be a priority to restore confidence and goodwill.
Recent developments, including the repayment of UAE deposits, underscore an important reality: Pakistan must shift from a cycle of debt dependence to investment-led partnerships.
While deposits parked in the State Bank provide temporary financial relief, they do not contribute to productive capacity. The real opportunity lies in converting such financial flows into equity-based investments in sectors like refining, storage, and logistics.
In this context, the proposed PARCO refineryin Balochistan holds central importance. As a joint venture between Pakistan and Abu Dhabi, it can serve as a bridge for deeper UAE participation in Pakistan’s downstream energy sector.
Similarly, the proposed AIS refinery project, backed by a German–Pakistani consortium, reflects sustained private-sector interest in the same coastal region. Its recent revival through a Memorandum of Understanding, after years of delay, indicates that investor confidence, while cautious, is beginning to return. This may be an opportune moment to reengage with the long-pending PARCO proposal.
Author’s experienceas CEO of Balochistan Energy Company, highlights that the primary barriers to such projects are not a lack of investor interest but structural challenges. Issues such as land allotment difficulties, regulatory fragmentation, and policy inconsistency have repeatedly delayed economically viable projects.
Procedural bottlenecks and weak coordination between federal and provincial institutions have hindered progress.
If Pakistan is serious about attracting foreign investment, these structural constraints must be addressed. Transparent land allocation, policy continuity, and reliable regulatory frameworks are essential. Without these reforms, even the most promising initiatives risk remaining confined to feasibility studies.
Beyond refining, the UAE has strong interest in oil storage, port logistics, and integrated energy corridors along Pakistan’s coastline. Developing such infrastructure in Balochistan could transform Pakistan into a regional energy and trade hub, linking the Middle East with South and Central Asia.
More importantly, it would enable Pakistan to transition from short-term financial dependence on the UAE to a long-term economic partnership.
This economic strategy must be aligned with geopolitical realities. Pakistan should ensure that it does not allow the UAE to drift away or align too closely with India in ways that constrain Pakistan’s strategic space. While the UAE’s growing engagement with India is a reality, Pakistan’s response should not be disengagement but rather enhancing its own relevance through credible economic and strategic offerings.
At the same time, Pakistan must avoid isolating or alienating the UAE over differences, including sensitive issues such as its relations with Israel.
History provides an important lesson: when Egypt faced isolation after its peace accord with Israel, Pakistan played a constructive role in facilitating its return to the Organization of Islamic Cooperation without compromising its principal stance.
Engagement, rather than exclusion, creates space for dialogue and gradual policy reconsideration.
Amid ongoing regional tensions, including the crisis in Gaza, broader Middle Eastern instability, and rising geopolitical frictions, a reset in international relationships is underway. In such a volatile environment, closer coordination with long-standing partners like the UAE becomes even more critical. This relationship is rooted in a shared history and the vision of leaders such as Sheikh Zayed bin Sultan, who held Pakistan in high regard.
Maintaining close ties allows Pakistan to retain influence and engagement, rather than losing diplomatic space. In a fragmented Middle East, Pakistan also has an opportunity to act as a bridge-builder.
Its balanced relations with key regional actors position it to quietly support dialogue, whether between the UAE and Saudi Arabia or between the UAE and Iran.
Ultimately, the future of Pakistan–UAE relations depends on moving beyond transactional interactions toward a strategic partnership grounded in tangible economic assets. Energy infrastructure including refineries, storage facilities, and logistics networks offers the most practical foundation for this shift.
The opportunity is real. Projects like PARCO, if pursued with clarity and consistency, can anchor a new phase of bilateral cooperation. However, this will require Pakistan to implement reforms, ensure institutional coordination, and present itself as a reliable destination for investment.
If Pakistan succeeds, it will not only strengthen its partnership with the UAE but also reposition itself as a credible economic and diplomatic actor in the region. At a time of uncertainty, this is both a necessity and an opportunity.
