The money is widely believed to have come from Saudi Arabia — a donation aimed at cementing a new and potentially controversial security deal with the nuclear armed south Asian country.
Pakistan’s liquid foreign currency reserves unexpectedly swelled to about $9.5 billion dollars in early March. Prime Minister Nawaz Sharif’s government has refused to name the country which provided the funds, saying only that it came from a "friendly Islamic country" to support Pakistan’s weak economy.
Officials at Pakistan’s central bank confirmed that the money came from Saudi Arabia, and the government’s opponents want a full explanation.
Pakistan’s Prime Minister Mohammad Nawaz Sharif attends the opening session of a Nuclear Summit in The Hague
Pakistan’s Prime Minister Mohammad Nawaz Sharif attends the opening session of a Nuclear Summit in The Hague, Netherlands, March 24, 2014. AP
Sharif’s refusal to be more transparent on the terms of the Saudi cash infusion has only fueled skepticism over the motives behind it.
Defense experts note Pakistan’s long security relationship with Saudi Arabia, which in the past has seen Islamabad deploy troops to the kingdom.
"In the 1980s, Pakistani troops served in places like Tabuk (in Saudi Arabia) and the (Pakistani) troops served in Saudi uniforms. That deployment was part of Pakistan’s defense agreement with Saudi Arabia," explains defense analyst Farooq Hameed Khan, a retired Brigadier in the Pakistani army. "There is nothing new about Pakistan having a defense agreement with Saudi Arabia which involves Pakistani troops serving there."
Khan says the current scandal springs from reports which circulated last month suggesting a new agreement between the two countries is focused on Pakistan helping the Saudis bolster the opposition fighting forces in Syria, and — either in tandem or by default — shoring up Sunni Muslim ally Saudi Arabia in its regional standoff with Shiite-majority Iran. The problem is that Iran is Pakistan’s neighbor, and also a nation with which Islamabad has enjoyed relatively cordial relations.
"The danger now is of Pakistan getting caught in a Saudi-Iranian turf war," one opposition lawmaker, who didn’t want to be named, told CBS News.
Khursheed Shah, leader of the opposition Pakistan People’s Party (PPP) in the lower house of parliament, known as the National Assembly, says it is an issue he and his fellow lawmakers "need to discuss," adding that in his party’s view, "Pakistan should not provide weapons or troops (to Saudi Arabia)."
Though Shah gave the Prime Minister the benefit of the doubt, accepting a statement from Sharif insisting the money is not tied to any commitment to send troops to oil-rich Saudi, other PPP members and some diplomats in the region remain unconvinced.
The concerns are driven by more than three decades of uncomfortable relations between Saudi Arabia, where the ruling family and vast majority of residents are Sunni, and Iran, where the ruling clerics and vast majority of residents are of the Shiite sect of Islam.
The two powerful countries have sought to increase their influence in the region, including in Pakistan and Afghanistan, in part by pouring huge sums of money into all levels of society, from government right down to local Islamic organizations of the same sectarian leaning.
And while the money from Saudi "may help boost Pakistan’s finances in the short term," respected Pakistani security and political analyst Hasan Askari Rizvi says it "carries the risk of dividing Pakistan internally."
An estimated 20 to 30 percent of Pakistan’s total population (of about 200 million) is Shiite Muslim. Almost all other Pakistanis belong to the Sunni sect — only one or two percent of the population is non-Muslim.
"This is a very, very delicate situation for Pakistan," said the Western diplomat in Islamabad. "It would be very difficult for the Pakistani government to remain friends with Saudi Arabia and Iran at the same time."