Russia’s Revival: Opportunities and Limitations for Pakistan

The Islamabad Policy Research Institute (IPRI) organized a review meeting on “Russia’s Revival: Opportunities and Limitations for Pakistan” in IPRI Conference Hall on December 11, 2015.

Introduction

Vladimir Putin has been Russia’s dominant political figure since 2000 and Russia under him is reasserting its role in its immediate sphere of influence. In South Asia, Russia has close ties with India and over the past decade, relations grew with Pakistan with increased diplomatic engagement. Now, Russia offers new avenues for strategic and economic partnership for Pakistan. Both have many points of convergence. While  Pakistan  needs  Russian  investment  for  reviving its economy, Russia  is also eyeing  Pakistan  as  a  good  destination  for  its  investments  and trade. Afghanistan, India-US relations could be a challenging factor in Pak-Russia relationship, but both countries are determined to better their relations despite constraints that are manageable.

Russia’s Revival and Current Power Projection

Paul Kennedy writes in his famous book, The Rise and Fall of Great Powers, that the strength of a great power can be properly measured only relative to other powers in terms of available resources, economic durability and military stretch. Revival of Russia can be analyzed on its gaining military might, revitalizing economic strengths, enhancing energy exports, diplomatic sagacity and its geographical significance. Some of the contours of its revival are as follows:

1. Russian Military Might

Mr. Putin launched a modernization programme after Russia’s short war with Georgia in 2008. In 2009, the Kremlin jacked up military spending by nearly a third, and it has continued to grow ever since. Russia’s officially published 2014 defence budget of 2.49 trillion rubles makes it the third largest spender in the world behind the US and China. During 2010-2014, it has been world’s second biggest exporter of major weapons according to SIPRI. The Collective Security Treaty Organization (CSTO) has become an Intergovernmental Military Organization safeguarding Russia against the US and NATO. Russia is making alliances and is realigning the old ones. It has conducted biggest naval drills with China in the South China Sea and has a Naval Facility in Syria. The 2008 Russian politico-military intervention in Georgia, 2014-15 politico-military role in Ukraine Crisis and 2015 military support to the Syrian government showed the emergence of a more confident and assertive Russia and the uncertainty regarding the US policy. Russia also held naval exercises for the first time in the Arabian Sea with Pakistan.

2. Economic Strength

The Russian economy is the sixth largest in the world. China is Russia’s second largest trading partner after the EU. The Eurasian Economic Union is to counter the European Union. With emerging economies, it is building economic blocks like BRICS (Brazil, Russia, India, China, and South Africa) AIIB (Asian Infrastructure Investment Bank) and Eurasian Development Bank. It is also a member of the G–20 and Shanghai Cooperation Organization (SCO). Russia with other SCO members is prioritizing joint energy projects. Its economic power is its key natural resources, oil and gas. Russia has also signed a landmark thirty year gas trade agreement with China. It considers that China and Russia are natural partners, allies and neighbours.

3. Energy Exports

Along with weapon industry, energy exports are the major strengths of Russia and its natural resources are considered the lifeblood of the Russian economy. It is the world’s largest producer of crude oil and the second-largest producer of dry natural gas. It also produces significant amounts of coal. Europe is dependent on Russia as a source of supply for both oil and natural gas. In 2014, more than 70% of Russia’s crude exports and almost 90% of Russia’s natural gas exports went to Europe.

It is determined to maintain a dominant position in gas supply within the European market and is continually looking for new opportunities. It is ready to help establish the Iran-Pakistan (IP) gas pipeline and is very much interested in creating a north-south energy corridor and establishing closer commercial ties between South Asia and Europe via Russian territory.

4. Diplomatic Sagacity

Russia opposed the invasion of Iraq in 2003 and Libya in 2011. The American and European policies are on the back foot in Ukraine due to Russia’s strong role in the crisis. Russia’s new East Asian policy is stimulated by its bid for great power status in the region. Russian-Chinese relations are the axis of Russia’s East Asian foreign policy.  Russia also hails growing trade ties with ASEAN States.

5. Geography- A Pillar of Strength

Russia is the largest country on earth in terms of surface area. It is adjacent or close to all the areas that are strategically important to Russia and its vast natural resources are its strength.

Recent History of Relations between Pakistan and Russia

The relations between Pakistan and Russia reached the lowest ebb during the 1980s. However, after the USSR disintegration in 1991, Russia re-established a political dialogue with Pakistan in February 2003 when President Musharraf visited Russia.

• The year 2007 was marked by a three day official visit of Russian Prime Minister Mikhail Fradkov, when both states discussed possibilities of economic cooperation.
• A breakthrough in relations between Russia and Pakistan was made possible by the annual quadrilateral summits between Afghanistan, Pakistan, Russia and Tajikistan, which included bilateral meetings between the presidents of Russia and Pakistan. Initially (in Tajikistan, 2009), an expansion of Russia-Pakistan cooperation was reflected in the establishment of more trusting relationship, the signing of several memorandums of mutual understanding and a number of other specific agreements.
• The expansion of bilateral relations continued in Sochi in August 2010. At that time, during bilateral meetings between the presidents of Russia and Pakistan, opportunities to collaborate in the financial sector were explored much as the opening of branches of Russian banks in Pakistan and Pakistani banks in Russia, the admission of Pakistani students to study in Russia and cooperation in many others.
• Most important, however, was the decision to hold the first meeting of the Russia-Pakistan Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation in September 2010, which took place as planned. On the Russian side, the commission is headed by the Minister for Sports, Tourism and Youth Policy, V.L. Mutko, while the Pakistani side at that time was headed by the Minister of State for Foreign Affairs, Hina Rabbani Khar.
• In 2011, Russian Prime Minister Vladimir Putin publicly endorsed Pakistan’s bid to join the Shanghai Cooperation Organization (SCO). Russia also offered assistance in the expansion of Pakistan Steel Mills (PSM) and the provision of technical support for the Guddu and Muzaffargarh power plants. It showed interest in developing the Thar Coal Project too. Russia also condemned the NATO strike on Salala check post in Pakistan and the then Russian Foreign Minister stated that it was unacceptable to violate the sovereignty of a state, even while planning and carrying out counter-insurgent operations.
• Similarly, Mr. Demidov AndreyVladimirovich, Russian Consul General, while speaking at the 65th year of diplomatic relations between Pakistan and Russia on May 1, 2013 stated, “The history of our bilateral relations saw both good and bad sides. But irrespective of the state of then relations, both countries always felt the necessity to maintain good contacts.”
• Moving on, Pakistan and Russia on October 25, 2013 pledged to make joint efforts in controlling traffic and production of drugs and narcotics, particularly in Asia. The two sides agreed to enhance their cooperation against drugs when the director of the Federal Drugs Control Service of the Russian Federation, Viktor P. Ivanov, called on President Mamnoon Hussain at the Presidency.
• Besides, defence collaboration between Russia and Pakistan was enhanced in June 2014 when Russia lifted embargo on arms supplies to Pakistan. However, it infuriated the Indian security establishment, which was opposing the sale of Mi-35 helicopters to Pakistan. But Russia told India that it was a limited cooperation with Pakistan to strengthen its capabilities to fight the war on terror.
• Both states moved forward by signing on November 20, 2014 an ambitious agreement to expand defence and military ties. The agreement was signed during an official visit by Russian Defence Minister General Sergei Shoigu with Defence Minister Khawaja Asif.
• Similarly, Pak-Russia Intergovernmental Commission on Trade, Economic, and Scientific and Technical Cooperation was established in the year 2000. The first session of the Commission was held in 2002, second in 2012 and third on 28 November, 2014. The Finance Minister of Pakistan, Ishaq Dar, while speaking at the third session hoped for a tangible economic cooperation with Russia by saying that “We are committed to translate the improving relations into a substantive economic partnership.”
• On December 23, 2014, Pakistan and Russia signed a most sought-after energy deal of $1.7 billion for laying a liquefied natural gas (LNG) pipeline from Karachi to Lahore.
• In July 2015, General Raheel Sharif paid a visit to Russia, where he was received by the military leadership of Russia at Kremlin. This was the 2^nd visit of the Chief of Army Staff to Russia. General Kiyani had earlier also visited. General Raheel Sharif was given a Guard of Honour and the National Anthem of Pakistan was played. This was seen as an improvement in ties as Russia’s longtime ally India had moved close to the US by signing an agreement of strategic partnership.
• Pakistan and Russia also signed a landmark defence deal in 2015. This deal includes sale of four Mi-35 ‘Hind E’ attack helicopters to Pakistan. Russia is also interested in joining CPEC, which will benefit CPEC and strengthen Pakistan’s economy. Another deal signed in 2015 includes Russia to invest $2 billion in the project of constructing North-South gas pipeline, the first part of which is expected to be completed by December

Areas of common Interest between Pakistan and Russia, and opportunities for Pakistan

The Ukraine crisis posed strategic implications not only for Europe, but also for other theatres where Russian interests and objectives intersect with those of the US and Europe. Similarly in South Asia, with the US decision of withdrawal of forces from Afghanistan, Pakistan and Russia look for forging closer relations based on new strategic realities. Pakistan  and  Russia  find  it  mutually  advantageous  to  cooperate  in  the  economic,  military  and  regional  politico-strategic  and  security  areas.  Some of the areas of common interest and some opportunities for Pakistan are as follows:

• Russia recognizes Pakistan’s strategic significance in the region, particularly with respect to final settlement of Afghanistan, where instability  can  have  a negative impact  on  the  security  of  Central Asian Republics (CARs)  and  North    Pakistan can be helpful in dealing with drug trafficking emanating from Afghanistan to Russia through CARs.
• As far as Pakistan is concerned, in the wake of many geo-political, geo-economic and geo-strategic  changes  taking  place  in  the region, it  has felt the strategic need to  diversify its foreign and defence policies and strengthen  its relations with  all  major  regional  players  including    Pakistan believes  that  a  sustainable  political  settlement  of  Afghanistan  before  completion  of  the withdrawal will  greatly  help  in  achieving  internal  stability  in  Pakistan.
• Following the withdrawal of the majority of NATO troops from Afghanistan in 2014, approximately 10,000 American servicemen are staying in Afghanistan. Those troops will need supplies of food, fuel and other products and these will be delivered to Afghanistan via tried and tested routes through Pakistan and Russia. So the coordination of actions between Moscow and Islamabad is also important from this angle. Russia already controls the Northern Distribution Network in Uzbekistan and Tajikistan that borders with Afghanistan and Pakistan has allowed use of the southern route to the US from Karachi to Chaman and Torkham. Moreover, the improving relations between Russia and Pakistan could have a positive influence on the situation both in Afghanistan itself and in Central Asia.
• Pakistan has become a member of the SCO. The SCO can play a constructive role in pushing for the improvement of bilateral relations among its member states including Russia. This would enable Pakistan to cooperate in a number of high-tech sectors, such as biotechnology, aviation and space, climate change adaptation, disaster management, drug trafficking and disease mitigation.
• The severe threat that Pakistan faced is terrorism. Similarly, Russia is also faced with a threat of terrorism. So, both Pakistan and Russia are confronted by the monster of terrorism and can co-operate in this regard. The statement by Russian authorities forbidding the use of word ‘Islam’ with ISIS terrorism is praiseworthy. Both countries can jointly formulate a mechanism to fight terrorism, and can initiate a mechanism for intelligence sharing and joint operations.
• The Islamic Movement of Uzbekistan (IMU) is the largest Islamist political organization in Central Asia which is based in Afghanistan and is a source of concern for Russia. With Pakistan’s help, Russia would be able to control the IMU related terrorist activities in Central Asia. During defence expo in Karachi, IDEAS 2014, the Russian Defence Minister appreciated the skill and expertise of Pakistan’s armed forces in fighting the war against terrorism as well as Pakistani defence production. He stated that “IDEAS itself signifies the leap Pakistan had taken in manufacturing defence equipment. The world community, not only praises, but wants to do business with Pakistan now.”
• Russia is the world’s largest producer of oil and gas and Pakistan welcomes Russian investment in the energy sector. The expertise of Russia’s oil company like Rosneft and Gazprom Gas Company can contribute significantly in developing Pakistan’s oil and gas potential. On September 20, 2013, a Russian delegation led by the Deputy Minister for Energy, and comprised of representatives of major energy companies called on Federal Minister for Planning, Development and Reforms, Ahsan Iqbal and discussed cooperation in the energy sector. Russia has offered Pakistan investment in the energy sector, and the export of 5000 MW electricity through Kyrgyzstan-Afghanistan route. It can play its part in meeting Pakistan’s energy needs. Russian company Gazprom is ready to invest in Iran-Pakistan-India (IPI) gas pipeline. It also offered its cooperation in trans-national energy projects, including CASA-1000 and TAPI gas pipeline. In the wake of the Western embargoes, Russia is looking for alternate markets for its gas sales. Its $400 billion gas deal with China has been the most prominent response to Western sanctions. Major Russian companies in the energy sector, including Techno promexport, Rostec-Global Resources, Rushydro International, Power Machines, Inter RAO, United Engine Corporation, and Stochinsky Institute of Mining have shown keen interest in cooperation with Pakistan.
• Russia’s Magnitogorsk Iron and Steel Factory (MMK) also offered help to expand the capabilities of Pakistan Steel Mills (PSM) from one million to three million tons of production a year. Russia in the past had supported the Oil and Gas Development Company Limited, which is still using old Russian machinery in exploring oil and gas. It also offered help in construction of floating LNG terminals and North-South gas pipeline from Gwadar to Nawabshah. Russia is engaged in negotiations on the project of conversion of the Muzaffargarh power house to the coal-fired station.Russia can also help in gas purification plants, modernization of oil and gas infrastructure, and building/renovation of various power generating units in Pakistan, especially those of Russian origin like Tarbela 4th and 5^th extension hydro power project and up-gradation of the Jamshoro power plant.
• Russia is part of China’s One Belt One Road (OBOR) initiative. The OBOR is a combination of two routes; the New Silk Road Economic Belt will run westward overland through Central Asia and onward to Europe. The second route, the 21st Century Maritime Silk Road (MSR), will run south and westward through sea to Europe, with stops in South East Asia, South Asia and Africa. Under the auspices of OBOR, at least six arteries are being developed. China-Pakistan Economic Corridor (CPEC) is just one of the tributaries of the OBOR vision and it is the most important one. It is important to remember that Pakistan sits at the crossroads of east to west and north to south trade corridors, including the CPEC. The CPEC increases the importance of Gwadar port for Russia. Pakistan can offer Russia the western corridor so that it can draw benefits from use of Gwadar port. Russia could receive access to the Indian Ocean through the Arabian Sea and the ports of Gwadar. Connecting Russia and CARs to Gwadar Port should add to Pakistan’s economic growth and development.
• Enhancement of trade and economic cooperation with Pakistan is high on the Russian agenda. If Afghanistan becomes stable, it would open the way for expanded trade between Pakistan, CARs and Russia. Pakistan could also offer Russia trade access to India when Pakistan’s relations improve considerably.
• Pakistan and Russia wrapped up their first strategic dialogue on 31 August 2013. During the talks held in Moscow, the Pakistani side was led by Foreign Secretary Jalil Abbas Jilani and Russia’s First Deputy Minister of Foreign Affairs Vladimir GennadievichTitov led his side. Russian Deputy Foreign Minister Igor Morgulov also participated in consultations. The dialogue laid an institutional framework for building closer relations between the two countries through discussions for cooperation in political, economic, defence and other sectors. The two sides exchanged views on regional and international developments. Broadly, Pakistan and Russia agreed for increased higher level contacts, closely coordinating positions on regional and international issues, and expanding trade and investment relations as well as cooperation in the field of energy and power generation. On 21 October, 2014, second round of strategic dialogue was held in Islamabad to enhance bilateral cooperation in diverse fields including economy, energy and culture. Both sides shared their resolve to undertake concrete steps to enhance their cooperation, especially in the economic sphere to strengthen the existing cordial relations.
• A strategic partnership between China and Russia is evolving for the promotion of regional peace and stability. Apart from its close cooperation with China, Pakistan seeks Russian economic assistance in the form of foreign direct investment and technological cooperation particularly in the energy field. Russia seems inclined to responding to these needs in addition to increasing trade volume from current $600 million to $1 billion in the next decade.
• Russia has a large segment of Muslims living in its different regions and the newly independent energy rich Central Asian states. There is a problem of religious and narco terrorism where Pakistan can assist Russia. The vast potential that Pakistan offers to its neighbourhood including India needs to be exploited as the most pivotal trade route that can also open new chapter in Pakistan-Russia relations. It will be the most appropriate and opportune approach, a bold step in the right direction.
• Pakistan can be a competitive source of agricultural and textile goods to Russia. Russia has banned agriculture imports specially food from Europe. Pakistan could position itself nicely in a new, and large, trade frontier. Pakistan can export agriculture products to Russia by utilizing this void of $16 billion food imports of Russia. Relevant ministries and the Trade Development Authority of Pakistan (TDAP) are preparing working papers for increased agri-exports to Russia but this policy needs quick finalization and implementation.
• Russian achievements in sports are noteworthy. Games like boxing, basketball and soccer where Russia has dominated the world arena, are also played in Pakistan, though we have not performed as per our potential. Russian coaches can be invited and friendly fixtures can be arranged between the countries. This will provide the opportunity for Pakistani teams to nurture and groom, and earn a higher position in the world.

Limitations for Pak-Russia Relations

The past hard baggage of historical bitterness in bilateral relations of Cold War era will have to be overcome to improve mutual relations. Both countries have already considerably improved their ties. Recently, Russia has decided to lift its embargo on weapons supplies to Pakistan despite India’s objections, since, India and Russia still have strong defence ties. According to a former Indian diplomat, “It is this strong decades-old partnership that makes the recent Russia-Pakistan defence pact hard to digest. India’s warming relations with the US over the past decade, especially its rising defence purchases from Washington would play an important role in Russia making friendly overtures to Pakistan. Besides, Pakistan also wants to have good relations with all major powers including Russia. A Russia-Pakistan confluence is inevitable in these circumstances. Unlike India, which blames Pakistan for being a source of terrorism, Russia appears to have come around to work with Islamabad on the issue. But since India is still very close to Russia, it can influence Russia’s policy towards Pakistan. Therefore Russia is also likely to be constrained by Indian pressure regarding advancing its relations with Pakistan.

Pakistan and Russia also have perceptional differences over the issue of Afghanistan’s peace talks with Taliban. Whereas, Russia is not in favour of any kind of influence of Taliban in Afghanistan, Pakistan believes that for long term stability of Afghanistan, national reconciliation between all ethnic groups including Taliban would be beneficial. Hence, both countries need to overcome these differences through mutual consultations. However, despite above mentioned limitations, Pak-Russia relations are likely to improve in future in view of changed geo-political realities in this region and at world level.

The Way Forward

• Pakistan needs a sustainable and gradual shift in its foreign policy. It should continue to diversify its foreign relations and develop good relations with all major powers. This will be better for regional peace and prosperity.
• Pakistan should however assure the US that its relations with Russia will not hurt American strategic interests in the region. It should also convince Russia that both countries can play and coordinate their efforts to achieve early peace in Afghanistan.
• Over the years, China has developed friendly relations with Russia and therefore it will also welcome the growth of Pak-Russia relations.
• Pakistan should aim at making Russia a long-term trading partner and supplier of military hardware. Pakistan should provide incentives  to  Russia  to  attract  its  investment  in  energy  producing  and  import  projects,  steel mill,  infrastructure  development and agriculture sector including water management.
• Pak-Russia trade was $865 million in 2013. Presently, no current data is available. Pakistan needs to post a Commercial Counsellor in the Embassy of Pakistan, Moscow. Both countries should encourage private entrepreneurs to boost bilateral trade, commensurate with existing potential.
• The agreements between Pakistan and Russia have been signed in the past too, but this time Pakistan needs to attain something concrete. The recent agreements need quick implementation.

Conclusion

The  current  geo-political  and  regional  environment  appears  to  be  quite  favourable to the advancement of Pak-Russia relations. The way for the implementation of new projects between Russia and Pakistan is open. From the point of view of the needs of Pakistan’s economy, cooperation with Russia would be most productive in infrastructure, energy production and in the sectors of communication, metallurgy and irrigation, etc.