Russia-Pakistan’s Paradigm Shift

Mehmood Ul Hassan Khan

Russian President H.E. Vladimir Putin
Russian President H.E. Vladimir Putin

For such a long time, Russia and Pakistan one again are being engaged through series of meaningful dialogues. From defence cooperation to gas supply and from investment conference to business forum, bilateral relations between Russia and Pakistan has got momentum. Serious efforts are being carried for the further strengthening of bilateral relations through rigorous commercial diplomacy and energy cooperation. Both sides termed the business forum and IGC meetings very fruitful and productive for strengthening bilateral trade and investment relations between the two countries.

Most recently, Pakistan-Russia Inter Governmental Commission (IGC) on Trade, Economic, Scientific and Technical Cooperation was held from 18-20 November. It was its 4th meeting. The main objective of the said event was to enhance bilateral trade and investment cooperation between two countries, besides introducing the Russian investors with local trade and investment opportunities existing in different sectors of national economy. The investors from other sectors including agriculture, manufacturing, food processing, pharmaceutical and infrastructure development also attended the event.

The local investors and representatives of different trade bodies, chambers of commerce and Federation of Pakistan Chamber of Commerce and Industry participated in the event to find scope for enhancing bilateral trade and investment.

There was a vast scope for the exports of Pakistan’s agriculture products including mangos, kinnow, potato and other horticulture products.

Finance Minister, Senator Mohammad Ishaq Dar led the Pakistan side while the Russian side was headed by the Mr. Viktor P. Ivanov, Minister and Director Federal Drug Control Services, Russian Federation. The IGC had settled over 18 years old trade disputes involving claims of the private businesses of the two countries.

The government of Pakistan underlined the need for early completion of the North-South gas pipeline project to meet growing energy need of power generating plants and fertiliser units. The government wants to start construction work on the North- South pipeline immediately so that its first phase can complete by December 2017,

Both sides stressed the need to have high level contacts between the two countries for further strengthening of ties. Both sides reviewed the bilateral relations and discussed possibilities of enhancing cooperation in finance, trade and investment, science and technology, industry, energy, oil and gas exploration, food and agriculture, textile, drug and narcotics control and other areas of mutual cooperation.

During the two meeting the Russian Co-Chair proposed to have direct air link between Moscow and Pakistan. The Pakistan Co-Chair welcomed the proposal which aims to enhance business to business and people to people contacts between the two partners.

Mr Ivanov said that bilateral relations had entered a new phase. Over 60 top businessmen and delegates, besides government officials, had attended the Pak-Russia Business Forum and the IGC meeting had remained productive.

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He said the forum had set a new direction for private sectors of both countries and the IGC emerged as the best driving tool to strengthen the trade ties.

The IGC expressed satisfaction at the progress made in finalization of the long outstanding DRAFT Agreement on settlement of mutual financial claims and obligations, Memorandum of Understanding on Science and Technical cooperation and the Protocol i.e. Joint Statement on conclusion of the 4th Session of the IGC.

The Working Group on Energy, comprising the Ministry of Water and Power and Ministry of Petroleum and Natural Resources also signed a Protocol engaging the Russian counterparts in energy sector.

Pakistan’s finance Minister also appreciated the largest investment of Russia in Pakistan through Inter Government Agreement on North South Gas pipeline on 16 October 2015. Moreover, both sides agreed to developing a time frame for the north-south gas pipeline and to setting up of a monitoring mechanism. He further said that Pakistan’s agricultural exports to Russia had gone up by 60 percent during the last two years as the Moscow lifted ban on export agricultural products. Bilateral trade between Pakistan and Russia is currently stood around 500 million dollars which could be increased by enhancing agricultural products.

Minister Dar stated that it was encouraging to note that over 60 delegates from the Russian Federation including officials and the experts participated in the 4th IGC at Islamabad.

On the sidelines of the IGC, holding of first ever Pakistan Russia Investment Forum at Islamabad with wide representation of the private sector and the business community from Russia and Pakistan was appreciated. Mutual desire was expressed to enhance bilateral trade relations and investment, particularly in the field of energy and agriculture.

The Russian side appreciated high quality of Pakistan’s agricultural products and expressed an interest for an increasing their exports to Russia.

The Commission also decided to look into the possibility of establishing five working groups on Finance and Banking, Industry (with sub group on Pakistan Steel Mills), Food and Agriculture, Transport and Logistics and Education including professional training.

Both sides decided to hold the 5th session of the Inter-Governmental Commission in 2016 at Moscow, Russia on mutually convenient dates.

It was concluded with the signing of three memorandums of understanding to promote bilateral trade and investment relations, besides settling trade disputes between the two countries.

Russia-Pakistan’s energy cooperation is getting new dimensions. Most recently, Petroleum Minister Shahid Khaqan and Abbasiand Russian Energy Minister Alexander Novak signed the agreement for a gas pipeline project. Under the agreement, Pakistan would provide 15 per cent equity whereas 85 per cent funding would be provided by the Russian firm. The first phase of the project is expected to conclude by December 2017. It is a government-to-government deal to construct a pipeline to transport liquefied natural gas (LNG) from Karachi to Lahore. Moscow will lend Islamabad $2 billion for the project. The said pipeline would be laid on Build, Operate and Transfer (BOT) basis. The Russian company would transfer it to Pakistan after 25 years.

While Pakistan and Russia have signed a defence cooperation deal earlier, this is first energy deal between the two countries after 30 years which shows the shift in Pakistan’s policy to attract investment to overcome its energy crisis.

Russian President Vladimir Putin is likely to visit Pakistan within the next two months to perform the groundbreaking of the pipeline project, for which Prime Minister Nawaz Sharif had handed over the framework to the Russian president in Ufa earlier this year.

Russian firm RT Global Resources is a State Corporation will lay the 1,100-km-long pipeline with a capacity of 12.4 billion cubic metres (bcm) per annum to connect LNG terminals in Karachi with those in Lahore. Russia is the second-largest producer of natural gas in the world, and is seeking to diversify its export markets.

Concluding Remarks

Russian Ambssador H.E. Alexey Dedov

Russia-Pakistan’s bilateral relations have been further strengthened due to series of high officials meetings, conferences, forums and the last but not the least meaningful dialogues in recent times. Both sides want to foster inflows of investments, joint ventures, development in trade and commerce, energy cooperation, cooperation in science and technology and above all better geo-political understandings on many regional and international issues relating to security, terrorism, peace and development.

Trust deficit between Moscow and Islamabad has been reduced by reliable diplomatic posturing, mutual realization of peaceful co-existence and compulsion of commercial diplomacy. Greater economic cooperation means greater better geo-political and geo-strategic understandings between the two countries. Russia-Pakistan’s deepening economic ties would determine the pace of peace in the region in the days to come. Let us hope expected visit of President Putin would be a “paradigm shift” for both the countries in the days to come.

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