What might be termed as the gigantic effort at widening its connectivity with the outside world for improved and sustainable economic gains, Pakistan has embarked upon a comprehensive strategy aimed at firming links with Russia. Direct railway connectivity and trade routes that by-pass all threats from US Sanctions will be the core of this move. Such strategic makeover aims at cementing trading and investment through multifaceted means.
According to exclusive sources, the government is promoting a multi–dimensional approach aimed at further improving relations with Russia, including G2G frameworks development, expansion of B2B cooperation, and mechanisms for safe and efficient trade operations. The Ministry of Foreign Affairs has given its nod to this forward–looking proposal, thus signalizing moral support to the initiative.
However, the State Bank of Pakistan has warned about the transactions with Russian entities, which are under international sanctions at present. SBP added that countries like Turkey are finding ways out of these problems by engaging in transactions in local currencies. This can set precedence for a model for Pakistan.
It was further added that the officials of the Ministry of Foreign Affairs were bent on adopting practical strategies that could be presented by an upcoming high-powered delegation slated to visit Russia during a recent high-level meeting at the Planning Commission. During this interactive session, the railways secretary outlined three pivotal rail routes designed to forge closer links with Russia and Central Asian countries.
First would be the upgradation of Quetta–Taftan rail network for which an MoU was signed in June 2024. A bilateral meeting is expected this month to take the MoU forward and identify areas of cooperation.
Secondly, the linking of Kohat–Kharlachi rail network with Central Asian Republics via Afghanistan after a proper feasibility study.
The third route has the Minelik Express that connects Reko Diq with Gwadar and thus accesses the markets of Azerbaijan and Russia. This route would provide a direct access to the Arabian Sea, thus lowering the cost of transportation for the mineral export.
According to the Minister for National Food Security and Research, the Industries and Production Minister agreed to fully back a holistic strategy presented by the PM’s Special Assistant on Foreign Affairs, detailing plans with regard to the negotiations with Russia, as the SBP would spell out guidelines for trade and business engagements. According to the central bank, there is not going to be much of a problem for transactions with non-sanctioned entities, though banks still will exercise due caution under the broader sanctions regime and in compliance with the FATF.
Minister for Planning, Development, and Special Initiatives Ahsan Iqbal pointed out the huge potential for manifold increase in exports to Russia and inquired about the trade practices followed by Turkey, the BRICS bloc, and other countries with Russia. SBP proposed opening up a barter trade system, referring to the example of regional banks that only trade in their local currency.
The Additional Secretary (Europe) of the Ministry of Foreign Affairs informed the meeting that a report about the mechanism of trade with Russia would soon be shared with the Ministry of Planning. The Planning Minister said once again that three sets of documents needed to be prepared viz., G2G frameworks and projects, B2B cooperation strategies and mechanisms for secure trade and business operations.
The Ministry of Foreign Affairs suggested that the delegation’s visit to Russia be aligned with the meeting of the Inter-Governmental Commission, due in September 2024. Matters relating to the Pakistan Steel Mills were also discussed at the Planning Commission, where the setting up of an Export Processing Zone on PSM land remains pending subject to approval. It was also noted that the Sindh government had sent a proposal for a new steel mill on more than 700 acres, with the possibility of collaboration from Russia.
The Director General of the Power Division further proposed to use the Russian expertise in the laying of electricity transmission lines during the high altitude and extreme weather conditions for the hydel projects underway. Directions were issued by the Planning Minister to undertake the feasibility study for exporting electricity to China with specific reference to the Three Gorges Dam.
Russian President Vladimir Putin had offered Pakistan enhanced supplies of energy products, including crude oil, during a meeting with Prime Minister Shehbaz Sharif on the sidelines of the Shanghai Cooperation Organisation summit in Astana earlier this month. It was their second meeting in six months after their maiden meeting in Samarkand in September 2022.
The relations with Russia will be extended as part of the multidimensional foreign policy, impervious to Western pressures. The country had received its first shipment of Russian crude oil last June under an accord between the two sides, as a cargo of 45,000 tonnes arrived in Karachi to be followed by another cargo of 50,000 tonnes the next week.