PAK-RUSSIA RELATIONS
(VISITING MOSCOW IN 2007)

Dr. Shabir Ahmad Khan*

Introduction

This particular work presents a brief account of my visit to Moscow which took place in October, 2007 on the invitation of the Diplomatic Academy, Ministry of Foreign Affairs of the Russian Federation under the scholar exchange program a MOU signed between the Area Study Centre, University of Peshawar and the Diplomatic Academy Moscow. This paper argues that due to political and economic revival, Russia is re-asserting its role as a major world power and therefore Pakistan needs to have friendly relations with Russia while diversifying its foreign relations. The work as a whole presents an introduction of the Diplomatic Academy, highlights contemporary Moscow city, presents current socio-economic trends in Russia, describes its global role and discusses the importance and status of Pak-Russia relations during the post cold war era.

The Diplomatic Academy, Moscow

The Diplomatic Academy dates back to 1934 when it served as a training institute for state diplomats. In 1939 it was named as Higher Diplomatic School. In 1974 it was renamed and became the Diplomatic Academy which works directly under the Foreign Ministry of the Russian Federation. The Academy has research Centres for Middle East & North African Studies, Contemporary International Studies, International Cooperation and Public Relations and Directorate for Academic and International Relations. I had separate meetings with all the heads of mentioned centres and vice-president of the Academy Professor Dr. Evgeny A. Bajanov. I also met Ruslon Pukhov, Director of the Centre for Analysis and Strategy in Technology, Professor Vigasin of Moscow State University, Professor Belokrenethskii head of the institute of Oriental Studies of the Russian Academy of Sciences, Professor Sergey Kamenev Director Centre for Pakistan Studies, Institute of Oriental Studies Russian Academy of Sciences, and many others including Natalia Melekhina of Moscow State Institute of International Relations and Irina Serenko of Oriental Studies Institute. We discussed issues concerning terrorism, Pak-Russia relations, Russian policy towards Central Asia and SCO. Some of the professors expressed concern about terrorism and political uncertainty in Pakistan while others mentioned the issue of drug trafficking and continuous instability in Afghanistan. I also felt that they value their relations with India. Vice president and director of the Centre for Contemporary International studies of the Academy, Professor Dr. Evgeny Bajanov told that he does not see any hurdles in Pak-Russia relations and these will grow with the passage of time. I conveyed the message of peace and cordial relations from Pakistan. During my meetings in Moscow many intellectuals showed concern about drug trafficking. My answer was clear that Pakistan itself is a victim of drugs, now the Americans are there they must control it but they think that it (drug trafficking) is a European problem and therefore it appears that the Americans are less concern with it. Further, I felt that there was a hidden satisfaction in Russia on current situation in Afghanistan but at the same time Russians were most concerned about a probable attack on Iran.
The Diplomatic Academy works under its Rector and five Vice Rectors. The Academy has around 300 students, including foreigners, in its both graduate and doctorate schools. There are four dissertation committees in the Academy for evaluating and examining PhD thesis. Since 1991 the Academy has produced more than 300 PhDs among whom include some very important personalities such as: A. Dzasohov, Presidnet of North Osetia, A. Torkunov, Rector of Moscow State University of International Relations, diplomats, politicians and public figures from various fields including Kim De Jung, President of the Republic of Korea, K. Tokaev, Prime Minister of Kazakhstan1 and Mr. Rahmatullaev State Advisor to the President of Tajikistan.2 The curricula include 84 courses covering all aspects of social sciences of regional, national and international levels. The academy has published 42 books, thesis, and monographs during 2007. Some of its publications are:

• Essays on Philosophy and International Law
• Peace and Harmony in Independent States of early 21st Century: Problems and Prospects
• Chinese Diplomacy
• US War-Power Show: Rational and Irrational Approaches
• Philosophical Survey of Politics, Diplomacy and Culture
• International Law
• Growth and Development of the System of International Economic Regulation
• China: From Average Imperial Power to the 21st Century Super Power

Moscow City

Moscow which lies in the western parts of Russian Federation is the capital and largest city of the country. Moscow River bisects the city flowing about 499 km (310 mi) eastward to the Oka River. The history of Moscow city dates back to the year 1147 which is considered as the year of its foundation by the prince of Suzdal Yuri Vladimirovitch Dolgoruky. Other popular princes who played important roles in the formation of Muscovy included Andrey Bogolubsky, Ivan Kalita, Dimitry Donskoy, Ivan III, Boris Godunov and Mikhail Romanov. Moscow became the capital of the principality of Muscovy during late 13th century3 and by the 15th century was the capital of the Russian state.4 Moscow replaced St. Petersburg as capital of Russia (1918) after the Bolshevik Revolution. Before that St. Petersburg remained capital of Russia since 1712.
Moscow has an area of about 879 sq. km (386 sq. miles) with a population of 10.5 million5, which is around 7 percent of the total Russia’s population. The metropolitan area of the city is largest in Europe. The climate is moderately continental and temperatures in summer and winter significantly vary from year to year. The winter season of the year begins at the end of September and ends in the beginnings of May. The rainfall normally ranges with in 550-650 mm a year. The first snowfall in Moscow was on 14th October in 2007. The average temperature in October was 4 degree centigrade, in July it is 22 degree centigrade while in January average temperature is -15 degree centigrade.6 Winter time in Moscow is two hours ahead of Pakistan while summer time is one hour ahead.
Moscow attracts a significant portion of foreign investment and therefore has been termed as Russia's economic capital as well. The city accounts for about 6 percent of industrial production and serving as the chief business centre of the country.7 Primary industries in Moscow can be classified as energy production, food processing, cotton processing, furniture, metallurgy, machine building, construction material and software development. Moscow homes most of Russia's foreign trade (export-import) industry and serves as the main hub for national and international trade routes. Consequently the living standard of Muscovites is much better than the rest of the federation. This is partly due to considerable economic restructuring being introduced since the break up of the command economy and partly due to the strong growth in finance and wholesale and retail trade. There has been particularly strong growth in finance and wholesale and retail trade8 but at the same time Moscow has been termed as the most expensive city of the world for 2006 and 2007 consistently. While some city residents have attempted to cope with the cost of living by renting their apartments and staying in dachas (country house) outside the city,9 others are doing 2, 3 jobs a day to afford live in Moscow.
The Metro system, most convenient transportation in Moscow, is popular for the sophisticated architecture of its stations. Opened on May 15, 1935, the Metro is Moscow’s main transport line providing a reliable link between the centre and remote districts. The Metro system consists of 12 lines with a total length of 280 kilometres and 172 stations. Entrances to the Metro are marked with signs carrying a large red letter “M”. The Metro is open between 5:30 a.m. and 1 a.m. On the maps of Metro system displayed at every wagon and inside stations each line carry different colour. Stations on the Moscow metro are always elegant and often palatial. Metro stations give look like palaces under the ground. The system has been termed as the busiest transport system of the world. While travelling in Metro one can see many people reading books and newspapers either sitting or standing.

Socio-Economic Trends in Russia

Russia controls 60% of the former Soviet territory, and has a population of 150 million. 25 million Russians live in other republics of the former Soviet Union. Russia has also inherited a large quantity of Soviet assets: 90% of oil, nearly 80% of natural gas, 62% of electricity generation facilities, 70% of gold, and 70% of the trained technical workers. Russian Federation has also inherited 80% of the industries including metallurgy, aeronautics, space, aircraft and nuclear and a vast military-industrial complex which earns precious foreign exchange.10 The Gross Domestic Product (GDP) composition by sector is: agriculture 4% industry 40% and services 56%.
The Russian currency is Rouble. The exchange rate is 24.4 Roubles per US Dollar. A rouble is equal to 2.5 Pakistani Rupee. The prices of different commodities were: Metro token for 17 roubles per ride (42.5 Rs/ride), bus fare 15 roubles (37.5 Rs), milk 30 roubles/kg (75 Rs./kg), meat 190 roubles/kg, chicken 80 roubles/kg, cooking oil 65 roubles/kg, tomatoes 90 roubles/kg (225 Rs/kg), potatoes 14 roubles/kg, grapes 112 roubles/kg, and banana 46 roubles/kg. Electricity is produced by gas and the price is 3 roubles per unit. Petrol prices 19 roubles per litre (50 Rs/litre). The average salary is about 600 dollars/month (15000 roubles). Corruption is wide spread mainly due to low average salaries particularly in public sector. Complicated structure of services is yet another problem faced by Russia. There is no proper structure like competitive exams or departmental exams to enter the services. It is said that some times whole ministry changes with a change of Minister due to nepotism and favouritism. Private schools have been opened with high tuition fees while education is free in government schools. The old state and collective farms have been destroyed and the directors and chairmen of these farms have become landlords by acquiring the social lands.
But despite all these problems of transition the Russians are displaying their wealth with pride on the streets of Moscow as well as on the arena of global geopolitics. The Retail sales in the country climbed 13% in 2006 that is well ahead of the rest of Europe.11 There is high consumption on dresses partly due to the weather conditions but most of the Russian people consider it important to be well and fashionably dressed and the Russian people can really afford it. Last year, the number of so-called “high net worth individuals” - people whose spending power exceeds $1m (£500,000) - in Russia rose 15.5% - compared with an 8% growth in their number globally, according to the Merrill Lynch and CapGemini World Wealth Report.12
There's been a fantastic transfer of wealth to Russia mainly due to energy exports. Since the economic crises 1998, Russia has witnessed an average economic growth of 7 percent per annum for the last nine years including 2007.13 During the period 2002-2006, Russia has trebled its GDP, amounting from $345bn in 2002 to $984bn in 2006, due to the economic growth and the ascended value of the rouble. Though a relatively cheap rouble and high oil prices initially drove this growth, however, high consumer demand and the FDI (Foreign Direct Investment) have also played important roles in the GDP growth since 2003. Foreign direct investment has increased from $14.6 billion in 2005 to an estimated $30 billion in 2006.14
Inflation rate has been reduced to fewer than 10 percent from almost 16 percent in 2002. Export growth, meanwhile, has exceeded the imports. Exports have grown to more than $350 billion, mainly due to oil, gas and metals. This has enabled Russia to enhance its foreign exchange reserves from just $12 billion to around $470 billion during the period of 1999-2007, the third largest figure in the world.15 Due to these achievements the business prospects are brighter and investors’ confidence has grown in the economy of Russia. Towering demand for oil, gas and metal in global market accompanied by the boom in their prices contributed chiefly to the Russian economy during the recent years. On its part, Russia has emerged as the energy hub for the world, with its huge oil and gas reserves. Russia is fulfilling 25% of European energy requirements through its own energy as well as transporting Central Asian gas. Russia produces about 10 million barrels of oil per day while it consumes only 2.5 million barrels oil per day. It has total proved oil reserves of 74.6 billion barrels while proved natural gas reserves amounting to 45.6 trillion cubic meters16, largest in the world. Though Russia has revitalized its economy, it still requires to channellise its revenue earned from hydrocarbon resources in capital making to achieve sustainable growth in modernization.
Politically Russia is undergoing a restoration process where the power of the centre is being restored, following its partial disintegration after the end of the Soviet Union. However, Russia needs a system of checks and balances compatible with its own culture and tradition, because this, together with the rule of law, is an indispensable precondition of a functioning political democratic system. Russia also needs to build a functioning party system, capable of sustaining Russian democracy. Considering the country's vast size, a two-party system seems to be the most appropriate.17 Currently there are 10-12 political parties in which United Russia has 64.5% representation in State Duma, CPRF has 11.5% representation and LDPR has 8%.18

Russia’s Global Trade

In 2007, total exports of Russia amounted to $365 billion while imports were recorded as $264.4 billion providing a budget surplus of more than $100 billion. The EU is by far Russia's main trading partner, accounting for more than 54% of its overall trade. Russia-EU bilateral trade amounted to € 209 ($313.5) billion in 2006 (1.5$=1€). Russia has about $30 billion trade with China.19 China is second to the US in oil imports from Russia. Currently Russia is the fourth largest oil supplier to China after Angola, Saudi Arabia and Iran. A huge gas supply project is also under way to carry 60 to 80 billion cubic meter of gas from Siberia to China by 2011. Russia’s trade with India has reached to about $3 billion in 2007.20 Russia-Iran trade recorded as $2.3 billion during first nine months of 2007. Pak-Russia trade has touched the mark of $550 million in 2007. In arms export, 70-80% of exports went to just two countries China and India till 2006. In 2007 Russia boasting as many as five major clients: China, India, Algeria, Venezuela and Malaysia.21
Russia in World Affairs

Russia is still a global power and too important to isolate or even forget about. It retains enormous strategic weight and therefore again seeking a role as a major world power. In international politics one side’s weakness reflects other side’s strength and vice versa. High oil and gas prices, America’s self-inflicted global weakening due to its misadventure in Iraq and Afghanistan, China’s rise and Russia’s own economic and political revival have prompted Moscow to return to its old role in world affairs. Since July 2005, Russia has revitalized its influence in Central Asia by signing Alliance Treaty with Uzbekistan and striking energy deals with Turkmenistan, Uzbekistan and Kazakhstan. It is in close collaboration with China under the frame work of SCO to counter US presence in Central Asia. Along with all Caspian littoral states Russia held a demonstration known as “Caspian Summit” in Tehran on 16 October 2007. The declaration of the presidents of Russia, Iran Azerbaijan, Turkmenistan and Kazakhstan at the Summit was significant which stated that no Caspian Sea country should be used as a launching pad for a military strike against any other Caspian littoral state.
To its European side, Russia has emerged as the most critical supplier of energy to Europe.22 Russia has issued repeated threats to Europe on a planned deployment of American missile defense system and announced its intentions to build its own defense system. Russian President Vladimir Putin's decision to suspend Russia's participation in the Conventional Forces in Europe, or CFE, treaty is a potent political signal.23 The CFE treaty was signed in 1990. It was an important arms control agreement of Cold War period which set limits on the number of offensive weapons like - aircraft, tanks, artillery etc – which could be deployed by NATO and Warsaw Pact members in Europe i.e. from the Atlantic to the Urals. In addition, each winter there is a repeated threat of "problems" with oil and gas deliveries to Europe. In 2007 Russia also blocked a decision on the final status of Kosovo in the UN Security Council. Thus it can be observed that during the 19th Century, Russia used its mass army as a weapon of foreign policy while in the 20th Century, during the Cold War, it applied nuclear and rocket science to influence its enemies and friends. In the 21st century it has the energy tool and technology to influence foes and friends.

Pak-Russia Relations

It is generally agreed that in the immediate post Soviet period, there were divergent opinions on foreign policy making among the Foreign Ministry, Defence Ministry, the academic community and the parliamentary circles of Russia. In the initial period around 1992-1995, the Westerners or the ‘Atlanticists’ led by Andrei Kozyrev, the first Foreign Minister of the Post Soviet Russia, and his foreign policy establishment were in clear ascendance over the ‘Eurasianists’. There were talks in Russia of even joining NATO because the economic reforms and development of democracy necessitated much focus on America and Western Europe. Thus in this period, Asia in general, and South Asia specifically, was accorded a low priority in Moscow’s restructuring. In January 1993, the Russian Foreign Ministry published the ‘Concept of Russian Federation’s Foreign Policy’, in which South Asia was accorded seventh place in its list of ten priorities.24 The emphasis was on a ‘Look West’ policy. However, the ‘Look West’ policy of Russia, with an emphasis on forging a ‘Strategic Partnership’ with the US-led West on an equality basis, remained severely challenged. The US plan to install Anti-Missile system in Eastern Europe, Central Asian issue, Iran nuclear issue and Kosovo problem, all these have further deteriorated relations between US and Russia recently. Moreover, its policy of abandoning Central Asia and the Commonwealth of Independent States (CIS) was largely backfiring, with colour revolutions and NATO’s eastward expansion. All these developments have forced Russia to rethink its relations with its eastern and southern neighbours.
Pakistan, on the other hand, is faced with a tricky situation in the uni-polar world with both internal and external challenges to its development and sovereignty. The US, for the past few years, has focused more on the Indian markets, has recently forged a strategic alliance with India and talking of unilateral military action against Pakistan. It has accentuated Pakistan concerns and forced it to give second thoughts to its foreign policy provisions. Within the largely changing external environment since the end of the Cold War, Pakistan once more feels threatened that its allies of the Cold War period, the US and the West, would and could leave it in the lurch again. One thing Islamabad and our GHQ often overlooks is that America needs Pakistan more than Pakistan needs America. America is stuck in Iraq and Afghanistan, we aren’t. Plus, Pakistan is the sole lifeline to 28,000 American troops of the 82nd Airborne Division, the 3rd Brigade of the 10th Mountain Division and their special operations forces — in effect, GHQ, whether it realises or not, actually holds the balance of power in the current Pakistan-America equation.25
The right response to this changed global and regional scenario in particular, requires a diversified foreign policy of Pakistan. One of the major challenges for Pakistan’s foreign policy is the need for a constructive engagement with Russia, a nation spread over by far the largest landmass of any other state, having a vibrant, educated population and treasuring huge reservoirs of oil, gas and, in fact, all sorts of mineral wealth. In the emerging scenario, Pakistan and Russia have initiated moves to reach out to each other. There are broader trends at the global and regional levels explaining the significance that Pakistan and Russia are attaching to improving bilateral ties. Russia still enjoys her traditional influence in Central Asia through its pipeline system and other economic as well as military tools. The weakness of the US in Central Asia resulted in strength of Russia in the region. In this scenario Pakistan needs to diversify its foreign relations and should use good offices of China for better relations with Russia and consequently with Central Asia. The example of China can be followed that first moved towards Moscow to strengthen its influence in Central Asia.26 The emergence of Central Asian States as independent entities as well as the emergence of the capitalist mindset of these socialistic societies has shifted the global focus from geo-politics to geo-economics, trade liberalization and market economy rather than the pursuit of the specified strategic and ideological goals as followers of the two rival camps.
A cursory glance on developments in our foreign policy history would tell us that we ignored Russian gestures in our zest to have closer relations with the United States and the West. And we have not changed this approach even after changed ground realities. Now Americans and Europeans themselves are trying to forge a cooperative relationship with the Russian Federation and in many areas consider it as an ally. Similarly, with a U-turn in our Afghanistan policy, there should not be any irritant blocking progress in trying to have friendly relationship between the two countries: Pakistan and Russia. Entering into a meaningful cooperative relationship with Russia can also help remove misunderstandings on regional and international issues as well as neutralise New Delhi's influence on Moscow to a great extent. On the other hand Russia must realise Pakistan’s geo-strategic location and its increasing role in regional security. In fact good will exists at top policy making levels in Russia for Pakistan. For example in May 2002, a six-member parliamentary delegation from Russia headed by the Chairman of the Standing Committee on Foreign Affairs of the State Duma expressed much optimism about prospects of improvement in bilateral relations with Pakistan.27 Russian leaders have off and on been expressing their desire to have good relations with Pakistan but unfortunately these gestures could not materialize into reality due to a host of factors. No doubt the Russian leaders have heavily been tilting in favour of India but this does not necessarily mean hostilities with Pakistan. In fact, the blame rests on both Pakistan and Russia who did not care much to improve their relations with each other. In a significant departure from Moscow’s policy of blaming Pakistan for so-called “terrorism” in the region, Russia has clearly appreciated Pakistan’s own policies and practices from what was taking place within the region. An important and welcome statement came from the former Russian Prime Minister, Primakov during a conference “Eurasia Medium Forum” held in Almaty on 19-20th April 2007, which stated that the nuclear explosion of Pakistan in 1998 had become imperative for balance of power after that of India. This is the acknowledgment of the fact that Pakistan’s failure in nuclear explosion would have created strategic imbalance in South Asia. High level bilateral contacts took place between Pakistan and Russia in the immediate post Soviet period which continued on regular basis. These exchanges of delegations consequently lead to the visit of Pakistani President General Pervaiz Musharraf to Moscow in February 2003 and the visit of Russian Prime Minister Mikahil Fradkov to Islamabad on 11th April, 2007. It seems that in the changed geo-political global scenario, particularly after 9/11, Islamabad and Moscow both tended to accord greater attention to each other. Improved Pak-Russian relations, undoubtedly, could contribute to enhanced regional stability and security.
The SCO provides a platform to Pakistan and Russia for active and serious engagement for cementing their political and economic relations. Russia would also like Pakistan to become a full member of the SCO, along with India, because then it intends to use the bloc a bulwark against the expansionist designs of America. Despite the assertion that the SCO is not designed as a vehicle to thwart US aims in Central Asia or the wider region, it remains a fact that the SCO is a group of countries opposed to US.28 Uzbekistan’s evacuation of US basis form its territory is no less than an eye opener for the Americans, after which Washington had to re-do its Central Asian policy. Russia and China, on the other hand have found in Uzbekistan a country that has the guts to challenge even the Americans. As far as the Indian factor is concerned within SCO, Pakistan can balance it with its time tested ally China. Regarding US-India nuclear deal Russians were also concerned and want to prevent one of the largest Russian arms buyer India from falling into western camp including in military affairs. P.V. Topichkanov in his paper “Dialogue and Conflict in Contemporary US-India Relations” stated the deal is far from materialising as it will have some grave obligations for India. “Firstly India would have to provide the US and International Atomic Energy Agency (IAEA) with a plan separating India’s nuclear program into civil and military uses and secondly India would have to sign agreement with IAEA to observe and supervise its nuclear program and to develop it with in the regulations of IAEA”.29
One can conclude that both the countries Pakistan and Russia share common views on major strategic issues in world affairs such as the concept of multi-polar world and the supremacy of UN role in resolving international issues, unacceptability of the unilateral use of force to change the world order, struggle against drug trafficking and terrorism, augmenting nuclear non-proliferation, facilitating the process of regional cooperation and strengthening the bilateral political and defence cooperation. Creation for the new dimension of the regional system of international relation – Central Asian countries, Afghanistan, Pakistan, Russia and China – is visibly underway. Fruitful development of bilateral relations between Pakistan and Russia determine the necessity of dealing with regional problems in that format.

Trade and Economic Links

Economic cooperation constitutes an extremely important aspect of any bilateral or multilateral interaction. Pursuit of this aspect of relationship by developed states means having an additional tool for the extension of their influence. On the other hand, the developing or the underdeveloped states pursue this aspect of relationship for their physical survival and well being of their citizens. In doing so it is always prudent for states to first create linkages from amongst its immediate neighbors as well as countries in close proximity and gradually reaching out to nations in other regions and continents. Economic relations with other countries help the cause of well being through varied activities. These include trade, various forms of investment, credits, development and sharing of technology, joint ventures and domestic infrastructure development projects. All these involve a variety of issues, like tradable items, tariffs, quotas, guarantees for foreign investment, debt rescheduling etc.
During the last 60 years Pakistan’s foreign economic relations have largely remained America and West oriented. The relationship was meaningfully functional only for the periods when Pakistan was felt to promote American and Western interests and hence proved to be unreliable. Also, aid has been the focus of this relationship instead of easing market access, transfer of technology and investment in strategic areas of Pakistani economy. Thus in Pakistan a need has always been felt for diversification of external trade. These efforts had met with little success in case of the former Soviet Union. During the initial years of the emergence of Russian Federation, political issues hampered the materialization of mutually beneficial relationship between the two countries. Yet, during the last 15 years, both the countries exhibited a keen desire to open a new chapter in bilateral economic relationship.
Russian Gasprom has shown its interest in the $7 billion Iran-Pakistan-India gas pipeline project and in November 2002 a Memorandum of Understanding on Cooperation between “Gazprom” and the Ministry of Petroleum and Natural Resources of the Islamic Republic of Pakistan was signed. In July 2005, a high-level delegation of Russian firm Gazprom, headed by Gazprom’s Chairman Alexey Miller Borisovich, visited Islamabad to formally discuss the construction of Iran-Pakistan-India (IPI) gas pipeline and other projects of gas storage in Pakistan. The major shareholders of Iranian gas field from where the IPI originates and will supply gas are the Russian Gazprom, French Total and Malaysian Petronas. Currently India seems unwilling to participate in this project but the so called IPI can be diverted with in Pakistan to China, instead of India. According to a report on 11th February, 2008, China has agreed to participate in the said project and the pipeline might pass through Gilgit.30 It would be undoubtedly of great economic benefit for Russian Oil and Gas companies if it participated in the project. Gazprom has also agreed to construct oil and gas storage facilities and would also help in the training of Pakistani oil and gas experts. Then experts from leading Russian oil and gas companies like M/s Vniigaz, Hanover Company and International Steel and Tube Industries (ISTI) have also visited Pakistan. All these companies have the experience of designing and implementing mega projects like, gas storage, installation of high pressure gas pipelines, compressor stations, gas processing facilities, LPG (liquefied petroleum gas) extraction plants and LNG (liquefied natural gas) stations. Similarly Russian Oil Company Rosneft and gas trader Itera could also benefit from commercially viable project of Trans Afghan Pipeline. Pakistan always hoped for a positive Russian role in TAP (Trans Afghan Pipeline), which could also be extended to India. A Russian Company Stroytransgaz has expressed keen desire to build transnational gas pipeline projects from Turkmenistan, Iran or Qatar.
Russia is opening up its economy and it should not be difficult for our public and private sector to increase exports to that country. The countries like Pakistan can gain a lot by coming out of their restricted option in trade and foreign relations by opening up to Russia. It becomes more relevant particularly when Russia and China are cooperating in Asia for the benefit of a more balanced system. Pakistan needs new markets for its agricultural and textile products and demonstrates keen interest to increase trade and economic relations with the Russian Federation. It is worth mentioning that textile sector, heavy machinery, agricultural products, manufacturing and oil and gas sectors in Pakistan present a wide range of opportunities for Russia to invest in. The Textile sector of Pakistan which provides 75% of the country’s total exports presents good opportunity for investment. While on the other hand, Russia with a massive population, together with the neighbouring countries forms a potential market of great importance which imports textiles and garments worth over $17 billion.31 At present Turkey holds a 70% share of the market of home textile in Russia and also products sold to Europe trickles-in through various channels.32 The number of directly imported goods from Pakistan into Russia is very small. Pakistan’s textile products, mainly different kind of fabrics, are not reflected in the official statistics because they find their way into Russia via Dubai, Turkey and Eastern Europe. Many indirect importers of Pakistan made fabrics are settled in Moscow and they distribute cotton, silk, apparel and woollen fabrics and home textiles like fabrics for bed linen and table linen.
After the 1998 financial crises in Russia, the Russian economy grew at a high rate, as mentioned earlier and consequently the purchasing power of the population in Russian Federation increased many fold. The dynamic countries in the world thus focused their attention on the Russian potent market for consumer goods. China, Turkey, India, Poland, Taiwan, Korea, Italy and some countries from Western Europe became major exporters of consumer products to Russia. Unfortunately, the public and private sectors of Pakistan were not able to capitalise opportunities in Russian market. Major reasons for hampering our exports to Russia might be: Lack of awareness regarding consumer goods market, not much enthusiasm by export bodies to explore new markets, especially in Russia, non availability of warehouse facilities in Moscow, non-availability of Pakistani banks in Moscow less competent commercial section of Pakistan’s embassy in Moscow.
It is, therefore, recommended that; Pakistani warehouses and display centres should be establish in Moscow and other CIS countries, acquiring spaces in supermarkets of Moscow, subsidies should be provided to textile exporters and the establishment of Pakistani banks in Moscow. The commercial section of our embassy must facilitate the Pakistani business. All this would ensure the continuous presence of Pak textile products and other goods and more importantly direct contact with end users and cooperation with local distributors. The price of petrol is less than that in Pakistan because Russia is a major producer and the second largest exporter of oil in the world after Saudi Arabia. Russia is the second larges exporter of oil in the world but the transportation cost is high. Russia has plenty of wood but due to poor governance it has been smuggling instead of exporting. A bag of cement priced 360 roubles in Russia means 900 Pakistani rupees. While we are producing it fewer than 200 rupees, so there is great scope for cement export to Russia and the government of Pakistan and private sector have plans to export cement.
Russia can launch joint ventures with Pakistan and can expand the present relatively low trade volume between the two countries. The six member parliamentary delegation from Russia that visited in May, 2002 showed interest in investing in Pakistan, particularly in the field of heavy machinery construction equipment and agricultural products. Russian Federation Deputy Trade Representative Stanislav B. Ovsyannikov visited Pakistan in November 2005 and met with Pakistan entrepreneurs to explore ways and means for enhancing trade and economic relations. There is great scope for joint ventures in food processing, cement, automobiles, oil & gas sector, textile engineering and agricultural sectors for the economies of both Russia and Pakistan.
During the decade of 1990s the annual trade turnover between Russia and India in the armament sphere alone had reached 1 billion dollars, while the whole rate of the Pak-Russia trade turnover was not more than 100 million dollars. However, as the Russian Ministry for Economic Development and Trade reports, the trade turnover between Pakistan and Russia increased by 118% in 2002 as compared to 2001 and currently (2007) it is more than $550 million. If we look at the trade between the two countries it has been recorded as:
63 million $ in 1998-99,
93.34 million $ in 1999-2000,
69.64 million $ in 2000-001,
83.45 million $ in 2001-002,       
60.47 million $ in 2002-003,
154.53 million $ in 2003-004.

In the post Soviet period, until 2006, only two fiscal years 1994-95 and 2003-04 have witnessed that bilateral trade exceeded the figure of $150 million precisely $154.75m and $ 154.53m respectively. The speciality of 1994-95 trade was the Russian sale of raw cotton to Pakistan along with iron and steel manufactures. In trade of $154.53 million in 2003-04, Pakistan exported cotton fabrics, sport good, toys etc, medical/surgical instruments, made up articles of textile materials and other commodities totalling $20.5 million. Russia exported fertilizers manufactured, paper and paper products, iron and steel, crude rubber, and machinery and its parts totalling $134 million. Analyzing the above figures it becomes clear that balance of trade has been very much in favour of Russia and thus it is imperative for Russia to grant special concessions for Pakistani exports and to establish most-favoured-nation status in trade and investments.
More importantly, trade between the two countries has increased many folds during the last 3 years (2005, 006 & 007). According to the Ambassador of Pakistan in Moscow, his Excellency Mustafa Kamal Qazi, Pak-Russia trade had reached to $520 million during 2006.33 He also gave the idea to conduct trade via Iran instead of Sea root where it takes 5 days in reaching destination. However, in trade relations between the two countries, Pakistan’s minute share is only 0.6% of its global trade which means economic and trade relations between Russia and Pakistan are far short of their real potential and there is great scope for further development in this direction. This was also acknowledged by the Chairman, Export Promotion Bureau (EPB) of Pakistan at a seminar on “Pakistan’s economy, investment opportunities and Pak-Russia trade relations” held in Moscow in October, 2003. Pakistan can supply all types of textile products, leather and leather products, surgical goods, sports goods, agro-based products, fresh fruits and vegetables fish and fish preparations, carpets ad rugs and pharmaceutical products to Russia.
Further, Pak-Russian Intergovernmental Commission on Trade, particularly the Joint Economic Commission which was established in 2000 must be re-activated to play its role effectively in making strong the mutual beneficial economic relations between the two countries and consequently paving the way for drawing the two counties closer. Russia has already offered a 25% concession in import duty on around 26 items under its generalised system of preferences scheme.34 Both the countries must start negotiations on an early preferential trade agreement, which would lead to a free trade agreement (FTA) between the two states.

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