Revival Of Pakistan Russia Economic Ties

A fast-changing regional security situation warms relations between adversaries of the cold war era. Pakistan and Russia have expressed their resolve to strengthen defence and economic ties besides cooperating in regional matters. Political will to improve relations is now being translated into economic cooperation and building projects. 

During his visit of Pakistan, Russian Federation’s Federal Drug Control Service Director and Russia-Pakistan Inter-Governmental Commission (IGC) Co-Chairman Victor P Ivanov acknowledged Pakistan’s role in regional stability. Victor P Ivanov also appreciated Pakistan’s stance on Ukraine and Syria, and on behalf of Russia, offered MI-35 helicopters to curb drug trafficking.

The areas of future cooperation between both the countries include defence, industry, finance, transport and energy. Ivanov, along with Minister of Finance Ishaq Dar also proposed direct air link between Moscow and Islamabad.

Both sides have also decided to set up five working groups on industry with a focus on Pakistan Steel Mills (PSM). These groups will be finance and banking group, food and agriculture group, transport and logistics group and education group.

Russia’s largest investment in Pakistan is through Inter-Government Agreement on North South Gas pipeline on October 16, 2015. Pakistan wants to complete the $2-billion North South Gas pipeline project by December 2017. The primary task for both countries is to implement the North South Gas Pipeline project by ensuring supplies from Russia.

Both countries also have signed two agreements on dispute settlement over $117 million Russian deposits and cooperation in science and technology besides setting new timelines to reach agreements on over a dozen projects and areas. Moreover Russia has also offered to supply Pakistan Sukhoi Super Jet (SSJ-100) prototypes and Jet airliner Irkut MC21.

Pakistan sought Russian cooperation in power generation, textile, construction, LNG, oil & gas and petrochemical sectors. Dar offered to set up a ‘Special Economic Zone’ exclusively for Russian investors.

Both sides also agreed to begin talks for Preferential Trade Agreement (PTA), terming the current volume of bilateral trade a “little disappointing”. Russia also showed interest in becoming a partner in four-nation Central Asia-South Asia 1000 electricity supply project. Russia wants to supply power through CASA transmission line during winter season when energy supplies from CASA partners will not be feasible.

To cement cooperation in the power sector, a joint coordination committee will be set up to follow progress on projects that have been picked for Russian investment. “Russia may finance seven mega energy sector projects”.

Moreover, the 1,200MW Guddu power project, 600MW Jamshoro power plant, exploration of Thar coal blocks 8, 9 and 10, setting up Hubco power transmission line and Thar-Lahore power transmission line and providing machinery for Dasu and Tarbela hydro power projects are the projects that have been finalized for seeking Russian investment.