Russia’s Revival: Opportunities and Limitations for Pakistan

KHURRAM ABBAS FEBRUARY 4, 2016 IPRI REVIEW ADD REPLY

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:

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.
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.

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.

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.

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 2nd 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 5th 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.