“Russians are coming” to Pakistan
Before dealing with the Russian prospective investments in Pakistan, I would like to shed some light on drivers of the evolution of the new relationship and how it may shape the future of the two great nations of Eurasia. Taking a cue from my previously published articles in Geopolitica.ru, I will attempt to summarize the whole gambit of new found love between Pakistan and the Russian Federation.
The Chequered History: Why Pakistan could not reach out to Russia in the Cold War?
Cold War compulsions of Pakistan kept her away from the Soviet Union as well as Russian Federation; however more pronounced factor was the absence of a meaningful people to people contact. Since Pakistan had historic relations with her erstwhile colonial masters in UK, it led to maintaining of the umbilical cord and overdependence on the Anglophone countries like UK and the US.
The Anglophone logic bubble had its own pitfalls:
- It kept the people of Pakistan in the Anglophone logic bubble and denied them opportunities to interact with closer Eurasian nations like Russia and her periphery and even Eastern Europe. From history to international relations and from trade to commerce and exchange of technology Pakistan remained connected with far flung lands of Europe and North America, without realizing that Eurasian giants like Russia were more approachable and convenient. I must mention some major strategic initiatives between Russia and Pakistan like Karachi Steel Mill, which became a reality despite the Cold War.
- For people in our part of the world and especially in Pakistan, the word ‘International Community’ meant essentially the West, even our intellectual debates in media and academia was dominated by western schools of thought. Despite Russia’s special geostrategic position in Eurasia and Pakistan’s within SCO, we have paid less attention to the ‘rising rest’ including Russia. The CNN and BBC effect further augmented by Al Jezeera effect (all being the same) has almost blinded Pakistani public from what is happening in larger Eurasia.
The Drivers of current Russia Pak Relations
Gradually Pakistan learnt that her diplomatic and economic relations have to follow the concept of multi-alignment. While Pakistan has maintained strategic partnership with China since two decades, its growing ties with the Russian Federation should be seen through the prism of multi-alignment. Russia may join the CPEC venture, through actively using the Shanghai Cooperation Organization platform; after all, CPEC has the potential to directly and indirectly connect and benefit more than sixty countries of Eurasia and Africa.
Pakistan is not only the watcher of strategic chaos ushered in during first decade of 21st century but also a victim. By the end of 20th century, the West intoxicated by victory in Cold War trumpeted the themes of End of History and Clash of Civilizations and tried to create cleavages amongst cultures and civilizations, resulting into further chaos.
While we thought that humanity had reached a stage where larger understanding between different faiths and cultures will result into a more balanced and accommodative global order; the holders of these ideals in the west failed on many accounts and treated the globe as a big market place where one currency and one culture was to prevail, the culture of McWorld.
Contrasting Narratives, Connectivity vs Chaos
21st century is a century of global connectivity, some of the leading powers of Eurasia like China and Russia are actively working to connect the globe through a system of land and maritime routes, on the other hand, the old globalists led by the West, who thrived on creation of blocks, division of regions and creation of shatter zones and barrier belts, are trying hard to create a fear of the rise of new powers so as to maintain the status quo.
Science and technology developments, especially in the field of infrastructure and material sciences have made it possible to surmount physical and geographic challenges, bringing down strategic barriers.
The costs of wars in Middle East and North Africa (MENA) and West Asian regions has run into trillions of dollars and have devastated the entire landscape of number of states, could we turn the tables on war mongers and usher in an era of peace and economic development for the entire world? This is the major moot point of entire deliberation of this paper .I leave it to the people of Eurasia to ponder on this point and develop a universal brotherhood of peace, there is no other way.
As global connectivity brings down barriers of language, distance and culture, there are many areas of cooperation between Pakistan and Russia, these could include energy sector, information technology, agriculture, health sector, security and defence and cultural exchange.
New Strategic Initiatives in Energy sector of Pakistan, the Russian are coming
The review of drivers of Russia Pakistan relations brings us to the aspect of practical manifestation of things on ground. Moscow has conveyed to Islamabad that it would invest $8 billion in Pakistan’s energy sector and the Pakistan Steel Mills. But according to Russian law, it cannot invest in countries with which it has disputes. It would be important to discuss the history of trade dispute between Russia and Pakistan and how both sides have ironed out the issue to create space for real cooperation in energy sector. Taking help from a report published in Express Tribune, I will give a summary of why a small dispute kept both countries apart.
In the 1980s the then USSR and its companies used to buy textile and other material from Pakistani companies. To ensure the smooth functioning of the barter trade, former USSR opened two bank accounts in the National Bank of Pakistan (NBP). The funds in these accounts were deposited by the Economic Affairs Division (EAD) through the State Bank of Pakistan (SBP). After Soviet Union became Russian Federation, some exporters remained unpaid. In addition, there were also claims by Pakistani companies for unshipped goods as they had paid sea freight charges. As the dispute prolonged, some Pakistani companies acquired stay orders from the Sindh High Court (SHC) restraining the NBP from transferring funds of the Russian banks held in its accounts since 1996, which amount to $104.93 million.
During the 3rd Pakistan-Russia Inter-Governmental Commission meeting held in Moscow from November 28 to 30 in 2015, both sides initiated an agreement between the two governments wherein Islamabad agreed to return $93.5 million within 90 days of the signing of the agreement.
A committee headed by the then chairman of the Board of Investment held a meeting with the exporters and negotiated a settlement agreement on October 6, 2016.
A new settlement agreement was reached between the government and three of the five claimants namely Tabani Group, Mercury Group and ABS Group. Under this agreement, an amount of $19.38 million was to be distributed among the three exporters. However, the other two claimants, Fateh Industries/ Fateh Sports and Fateh Jeans, did not sign the settlement agreement and their suits remained pending in the SHC. The commerce division then sought the help of the attorney general for Pakistan, who was able to persuade the two claimants to withdraw their cases by reaching an out-of-court settlement in line with the agreement reached on October 6, 2016. The high court in its decision on October 4, 2019 allowed an application for the passing of a compromise decree as the parties had reached a settlement agreement outside the court. Therefore, the money in the two NBP accounts of Russia can be disbursed to settle the claims as per the agreements. The amount maintained in the two accounts is sufficient pay off $93.5 million to Russia as well as clear the pending claims of exporters to the tune of $23.8 million.
The deal will enable Russia to invest in different sectors in Pakistan, officials told The Express Tribune.
Tass news agency report of 20 Feb 2018 suggested that Russian gas holding Gazprom is considering an opportunity of liquefied natural gas (LNG) deliveries to Pakistan, Russia’s Foreign Minister Sergey Lavrov broke the story after meeting with his Pakistani counterpart Khawaja Muhammad Asif.
"The flagship project is construction of the North - South gas pipeline from Karachi to Lahore. Other options are also examined, including deliveries of liquefied natural gas to Pakistan by Gazprom," Lavrov said.
Reuters disclosed on 7th Feb this year, that Pakistan has signed a provisional agreement with Russian energy giant Gazprom on a feasibility study for an offshore pipeline that would supply natural gas from the Middle East to Pakistan and other parts of South Asia.
Pakistan’s Liquefied natural gas (LNG) imports in nine months (July-March 2018-19) stood at $2.404 billion, up 49.30 percent as compared with LNG imports of 1.61 billion in the corresponding period last year, as the country fast switching to LNG import addiction.
As per Reuters 18 Jul report,four companies have submitted offers into a 10-year import tender for deliveries of liquefied natural gas (LNG) to Pakistan .The companies that placed the offers are Italy’s Eni , Azerbaijan state oil company SOCAR, PetroChina International Singapore, a unit of PetroChina Co Ltd and global trading house Trafigura.
There is a need to review the potential of connectivity and geographic proximity within Eurasia and Africa to develop a framework of global peaceful coexistence, economic development and interaction between various nations, civilizations and societies.
Russo Pak relations have to move beyond military cooperation and morph into a more robust and strong partnership for peace and regional connectivity, within the larger Eurasian context. It is heartening to note that Russia has led the Afghan peace process and has been able to bring regional states and actors together in Moscow and all stake holders are not only listening to Russia but also appreciating role played by President Putin and his team in providing a platform for sustained dialogue.