Seizing opportunities with Russia

Russia is re-emerging as a major global player, establishing its credentials as a leader in the fight against the hegemonic global system. Once a struggling economy, it has transformed into one of the world's most resilient and sustainable. The Russian economy has experienced a remarkable turnaround under President Vladimir Putin's leadership, who has rebuilt a strong foundation and diversified the economic landscape. Before his tenure, the Russian economy faced significant challenges.

President Putin inherited an economy struggling with inflation, low growth, limited employment opportunities, a weak Ruble, and the dominance of an oligarchic group. The population struggled to find decent livelihoods amid economic hardships. According to statistics, when President Putin assumed power in 2000, Russia's GDP was approximately $260 billion. By 2023, it had risen to $2.23 trillion, reflecting a complete economic transformation. At the same time, per capita GDP increased from $1,772 to $15,173. Russia's trade balance also improved, from $52 billion in 2000 to $289 billion in 2021. In 2000, total exports and imports were valued at $114.3 billion, which had increased to $631 billion in exports and $341 billion in imports by 2021.

However, it's worth noting that in 2000, the trade balance accounted for more than 20.3% of the national GDP, while in 2021, this share decreased to around 12.6%, showing Putin's efforts to diversify the economy. Furthermore, the Russian economy has proven resilient, growing even under heavy US sanctions. Poverty levels have sharply decreased from 42% to about 11%, and unemployment has dropped from 13.3% to 3.87% in 2022.

On the diplomatic front, Russia is very active and has secured a prominent role in global decision-making. Russia, in collaboration with China, is pursuing reforms to the global system, emerging as a strong voice for the Global South. It has contributed to strengthening major international organisations like the Shanghai Cooperation Organisation (SCO) and BRICS, the latter proposed by Russia. Both groups are now considered the Global South's answer to the G7 and NATO.

In this context, it is crucial for Pakistan to engage with Russia and explore opportunities for economic cooperation, reassess security ties, and deepen diplomatic relations. Fortunately, Pakistan has already taken steps to strengthen its relationship with Russia over the past decade and a half. Both civilian and military leaders have played significant roles in these efforts, including President Zardari and Army Chief General Ashfaq Kayani, who were instrumental in driving this momentum. President Zardari's 2011 visit to Russia marked a turning point, as he advocated for stronger ties.

Since then, multiple steps have been taken to build the relationship. In 2016, Pakistan and Russia held their first-ever joint military exercises. Pakistan granted Russia access to the warm waters of Gwadar and signed an agreement for the Pakistan Stream Gas Pipeline from Karachi to Kasur. Most recently, the two countries signed a trade agreement aimed at boosting bilateral trade, and President Putin has declared Pakistan one of Russia's key partners in South Asia. China and the SCO have also played significant roles in facilitating this improved relationship.

Despite these advancements, Pakistan has been slow to translate its relationship with Russia into tangible economic benefits. In 2023, Pakistan's total exports to Russia amounted to just $88 million, while imports stood at $885 million. It's believed that the troubled histories of both countries have hindered stronger economic and trade ties.

However, both nations are now working to overcome their historical challenges. Efforts to amend past mistakes and enhance trade, investment, and cooperation in other areas have gained momentum. In September 2024, Russian Deputy Prime Minister Alexei Overchuk visited Pakistan with a delegation of officials from various ministries and corporations. Both sides held in-depth discussions and signed MoUs on trade, connectivity, and mutual cooperation, including one between the St Petersburg International Mercantile Exchange (SPIMEX) and the Pakistan Mercantile Exchange (PMEX).

In October 2024, Russian Prime Minister Mikhail Mishustin visited Pakistan for the SCO Heads of Government meeting, where he offered Pakistan access to the Eurasian Economic Union. His delegation also included high-level government officials, business leaders, and media representatives, all engaging in bilateral talks.

To fully capitalise on these opportunities and signed agreements, Pakistan must take several key steps. First, the efficiency of implementing agreements must be improved. For instance, the Pakistan Stream Gas Pipeline is still not operational, a delay that creates a negative perception. Second, Pakistan should conduct an in-depth study of Russia's governance structure, economy, and international economic cooperation to identify areas for collaboration. A SWOT analysis of the Russian economy and market would provide valuable insights. Pakistan must avoid relying on vague, wish-list policies.

Additionally, there is no second opinion. Russia has a long history of innovation and scientific contributions and Pakistan should prioritise developing linkages with Russia's scientific and academic communities. Special initiatives should be designed to foster collaboration between Pakistani universities and their Russian counterparts.

Public diplomacy and image-building are also critical for both countries. Efforts should be made to highlight positive contributions, such as the Soviet Union's role in building Pakistan Steel Mills. Engaging youth through joint start-up ventures could serve as a powerful means to foster better relations and mitigate the effects of past tensions.

In conclusion, Russia presents numerous opportunities for Pakistan. However, without proper preparation and improvements in governance and the business environment, Pakistan will struggle to realise the full potential of these opportunities. This is a golden opportunity for both nations to overcome past difficulties and begin a new era of friendship and cooperation. Moreover, this relationship should not be politicised or used for political point-scoring.

THE WRITER IS A POLITICAL ECONOMIST AND A VISITING RESEARCH FELLOW AT HEBEI UNIVERSITY, CHINA