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Money Matters

Mending economic fences

By Zeeshan Haider
Mon, 12, 19

It was back in 1973 when the erstwhile Union of Soviet Socialist Republics (USSR) helped build Pakistan Steel Mills in Karachi – the first concrete manifestation of cooperation between Moscow and Pakistan, a traditional US ally, during the Cold War era.

It was back in 1973 when the erstwhile Union of Soviet Socialist Republics (USSR) helped build Pakistan Steel Mills in Karachi – the first concrete manifestation of cooperation between Moscow and Pakistan, a traditional US ally, during the Cold War era.

However, the ensuing geopolitical and geostrategic developments in the region halted that cooperation particularly after Soviet invasion of Afghanistan, when Pakistan took part in the US-backed jihad as a frontline state.

However, after Soviet Union’s disintegration and end of Cold War, there has been a gradual realisation both in Islamabad and Moscow they need to normalise their relationship and step up cooperation in security, economic, commercial, energy, and political fields particularly in the wake of regional and global realignments of the countries in different groups and alliances.

Over the last nearly two decades, there have been more visible efforts by Islamabad and Moscow to improve their ties in different fields.

The military leader Pervez Musharraf became the first Pakistani leader in over two decades to visit Moscow in 2003. It was followed up by a visit by Asif Ali Zardari as President in 2011 during which a number of agreements and memorandums of understanding were signed to enhance political, security, economic, and commercial ties between the two countries. Meanwhile, there also has been some exchange of high-level military delegations between the two countries.

This month, Pakistan-Russian Inter-Government Commission met in Islamabad to explore opportunities for cooperation between the two countries.

Russian Trade Minister Denis Valentinovich and Federal Minister Hammad Azhar led their respective sides in the deliberations.

After the meeting, Valentinovich assured Russia’s help in the revival of the ailing Pakistan Steels. He also offered to enhance Pakistan Steel Mills productivity, which currently has the capacity of over one million tons of production of steel and iron foundries.

He said that his country was interested in cooperating with Pakistan in the aircraft manufacturing.

Azhar on his part said there was a huge scope of cooperation between the two countries in the energy sector.

Pakistan also offered Russia to become strategic partner by acquiring government’s shares in the Oil and Gas Development Company Limited (OGDCL) as well as in Pakistan Petroleum Limited (PPL) through divestment.

Russia also showed keen interest in the modernisation of Pakistan Railways.

Both sides also agreed to increase bilateral trade from the present levels to its true potential and also encourage business partnership between private sectors of the two countries.

The Russian side invited Pakistan to organise a roadshow in Moscow to provide an opportunity to the Russian private companies to explore new avenues in Pakistan.

Pakistan and Russia need to come out of the Cold War era mentality and bolster their relationship on mutual interests. Regional proximity provides a strong basis for them to enhance their cooperation in diverse fields.

Russia has also offered to construct a 1,500 kilometer offshore pipeline to supply gas from Gazprom’s sources in the Middle East to Pakistan. An initial agreement in this respect was signed last year and this project needs to be expedited.

Energy security is considered a cardinal element in the overall security of a country and Pakistan needs to actively pursue projects with its energy-rich neighbours as well as regional giants in this regard.

Pakistan should also explore possibility of Russia’s participation in the China Pakistan Economic Corridor (CPEC) projects as involvement of maximum countries in the gigantic project would not only spur regional connectivity but would also allay concerns of many countries.

Reacting to recent concerns by the United States on CPEC, Pakistan has very rightly stated it would no longer like to act as a pawn in the war between global powers and would like to establish and enhance cooperation with these powers on the terms of mutual interest.

Pakistan has already offered US to join CPEC-related projects and a similar offer to Russia would give out a clear message to all three major powers – China, US, and Russia – that it does not want to be bracketed with a particular group of countries and seeks mutually beneficial relations with all countries.

Pakistan has made a similar offer of cooperation to two other regional rivals – Gulf’s Arab countries and Iran. Saudi Arabia has already signaled to invest in energy projects under the CPEC and a similar offer is on the table for its main rival, Iran.

Pakistan’s relentless efforts for peace in Afghanistan have been acknowledged world over as peace in the war-torn country would go a long way in spurring regional connectivity and cooperation.

The only major hurdle in the regional cooperation is the uneasy relations between Pakistan and India. Despite repeated efforts by Pakistan, India under Modi is refusing to normalise relations with Pakistan.

Though, India, owing to its large size, believes it could ostracise Pakistan from any regional cooperation initiative, this dream will never come true because of the geostrategic location of Pakistan.

Geographically, Pakistan provides the most economical and easiest land route for India to the west and central Asia as well as to Iran.

The energy-starved India badly needs to be connected to the central Asia to meet its growing needs and some of them can only be met through bringing about peace in Afghanistan and making peace with Pakistan.

While Pakistan’s economy is in dire straits, the Indian economy too is in the woods and analysts have warned it could drift into abyss if Prime Minister Narendra Modi pressed with his Hindutva agenda instead of focusing attention on his country’s economic woes.

Japanese Prime Minister Shinzo Abe was forced to put off his visit to India in the wake of violent protests in the Assam state over the discriminatory citizenship law passed by the Indian parliament.

It is time for Pakistan and India to mend fences in an effort to promote regional cooperation and Modi has a big onus to take a positive initiative in this regard.

Any further delay in normalisation of ties would not only hamper regional progress but also exacerbate economic woes of the two poverty-stricken nations.


The writer is a senior journalist based in Islamabad