22 March 2016

A Surprise Turnaround in Russia-Pakistan Relations

The future looks bright for bilateral trade and economic relations between Pakistan and Russia
Putin is expected to visit Pakistan in the coming months
Russia is immensely rich in natural resources and is well positioned, geographically, to trade with Europe as well as Asia. Bilateral trade between Pakistan and Russia has always suffered due to Pakistan’s long lasting orientation towards the US which stretches back to the Cold War. As a result, trade between Pakistan and Russia has remained relatively stagnant. From 2009-2014, Pakistan’s total share of exports to Russia has never exceeded 0.85%; its share of imports from Russia during this time frame is even less impressive, at 0.62%.
According to the Trade and Development Authority of Pakistan, in 2014, Pakistan’s trade with Russia made up only 0.07% of total exports to Russia. For comparison, China enjoys the largest share of the Russian market, at 17.95%.
However, 2014 proved to be a watershed year for relations between Pakistan and Russia; both countries started re-bridging diplomatic relations in reaction to western sanctions against Russia for the annexation of Crimea and the USA-led dual policy against Pakistan in South Asia. Since then, positive political and military cooperation developments between both countries has given a sudden rise to economic uplift and has opened new windows of bilateral investments in the fields of energy, leather, cosmetics, pharmaceuticals and defense.
Mr. Alexey, Russia’s Ambassador to Pakistan, has stated that “Russia will spare no effort to boost the partnership in economy, trade and finance with Pakistan. The common task of both countries is to expand economic contacts to the level of an advanced political dialogue that Pakistan and Russia enjoy today.” Currently, the trade figure between both countries is not encouraging – around $400 million. The low figure certainly does not correspond to the potential trade of both countries which is around $ 1 billion, as per the FPCCI of Pakistan.
The year 2014-2015 has seen some results oriented initiatives from both sides to enhance trade: The first ever Pakistan-Russia Investment Forum held in Islamabad, as well as the Pakistan-Russia Business Council meetings in October 2015, show that cooperation is improving. Additionally, Russia’s interest in various energy-related projects in Pakistan is encouraging. CASA-1000, a new electricity transmission system between Kyrgyz Republic, Tajikistan, Pakistan and Afghanistan, development of Gwadar Liquefying Facility and the construction of pipeline between Lahore and Karachi (North-South Cooperation Agreement) and other joint ventures among business communities of both countries indicate willingness from both Russia and Pakistan to increase investment opportunities in energy, oil/gas explorations, leather products, pharmaceutics, vegetables and fruits.

These developments between Pakistan and Russia will also help revive economic, diplomatic and cultural ties which have been neglected for many years. 
Russia is comprised of 85 regions which offer a huge market for Pakistani products in general; Pakistan’s Halal products could find new markets in Russia, where 14% of the population is Muslim. Similarly, the geo-strategic location of Pakistan, its 200 million population, cheap work force, economic outlooks and the Special Economic Zones are all attractive reasons for Russian firms to invest in Pakistan.

It would be safe to say that Pakistan and Russia have turned a new page on bilateral relations and these relations should be strengthened with reciprocal cooperation in educational exchange, trade and investment, knowledge sharing and peace building efforts. Going forward, cooperation between the two nations can be greatly enhanced by the following: 
Russia should join the China-Pakistan Economic Corridor and make use of the Gwadar Port. Russian firms that seek to supply their goods to the Middle East could send cargo to the Persian Gulf via the Gwadar Port. 
Pakistan is well positioned to capture Russia’s vast market for vegetables and fruits amidst Russia’s latest restriction on organics from European countries. 
Frequent visits of diplomats between both countries must be assured for technology transfer, trade enhancement, knowledge sharing, tourism and cultural exchange. 
The Shanghai Cooperation Organization is an important regional initiative to bring peace and economic stability in the region for Pakistan which also can compensate the western privileges Pakistan is enjoying at the cost of incurring a never ending war in tribal areas. 
Pakistan and Russia should work together to create free trade zones which could create more possibilities for business communities from both the countries. 

I maintain that Pakistan and Russia have enormous potential for bilateral cooperation. The planned visit of President Putin to Pakistan before July 2016 is expected to open new avenues for Russia-Pakistan relations.

Asif A. Malik is Pakistan-based academic. He is a member of the National Academy of Young Scientists (NAYS) of Pakistan and tweets at @AsifMalik30

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