Pak-Russia trade deal
TRADE and economic relations between Pakistan and Russia on a bilateral basis have been going on since the days of the Soviet Union.
It began in the early 1960s during the Ayub Khan era when Pakistan entered into an agreement with the Soviet Union for technical assistance in oil and gas exploration.
The project is still in its early stages and many details are yet to be finalized. The joint statement issued after the Islamabad meeting said that all these details will be finalized by March this year.
The parties are confident that the supply of energy from Russia to Pakistan will start soon as Pakistan is in desperate need of cheap energy and Russia is looking for new customers to sell its gas and oil.
The reason for this is the ongoing Russia-Ukraine war since last February, as a result of which the United States, Great Britain and the European Union, which were the largest buyers of Russian oil and gas, have stopped buying oil and gas from Russia.
Russian after Saudi Arabia is the largest exporter of crude oil. All of Western Europe depends on Russia for its energy needs.
Russia before the Ukraine war, EU member states imported 22 million barrels per day of oil and 12 million barrels per day of oil products from Russia.
In addition to this, heavy supply of gas from Russia to Western Europe via Ukraine, but due to the Russia-Ukraine war, oil and gas market of Western Europe has left the hands of Russia, and now it is supplied to Eastern countries instead of Western Europe, where China and India are main customers of its oil and gas for their growing industrial needs.
Although not publicly announced, it is believed that China and India have secured oil and gas deals from Russia at very cheap rates.
This is the reason for Pakistan’s desire to buy Russian oil and gas, and efforts for this have been going on since 2015, but the formal agreement has been finalized in January 2023 this year.
A joint statement issued after the agreement was reached indicated that the parties are willing to implement the agreement fully and as soon as possible by forming a joint working group to provide the necessary facilities for this purpose.
The general perception is that both land and sea routes will be used to supply oil and gas. Apart from this, direct air service will also be established between Pakistan and Russia.
This will not only facilitate communication with Russia but also with the states of Central Asia and stabilize the relationship as currently, it takes 21 hours to fly from Islamabad to Russia and Central Asia, if there is an agreement to use its Central Asian Air Corridor, the journey will be reduced to just 4 hours.
Russia’s agreement with Pakistan is not only important in the light of its economic aspects but also has far-reaching strategic implications.
Until now, the focus of Russian diplomacy has been on Europe and North America, but for the first time since the last decades of the 19th century, Russia has turned its attention to the East.
Although this process started immediately after the end of the Cold War and the disintegration of the Soviet Union, after the annexation of the Crimean Peninsula by Russia in 2014, when the United States and Western countries launched economic sanctions against it.
After sanctions were imposed, Russia focused on expanding relations with China and West Asian countries such as Iran, Saudi Arabia and Pakistan.
However, the implementation of a comprehensive and long-term energy sales plan between Pakistan and Russia will strengthen Economic Corridor Project between Pakistan and China ie CPEC, which will help Pakistan to come out from deep economic crisis which Pakistan is badly facing these days.
—The writer is contributing columnist, based in Islamabad.
