PAKISTAN’S ROLE IN THE EURASIAN TRADE NETWORK

In the realm of international relations, alliances shift as states pursue national interests, often moving beyond fixed allies or adversaries. Russia’s increasing engagement with Pakistan is one such shift, reflecting both nations’ alignment on economic and security needs. This partnership also highlights each country’s goal to diversify trade routes and reduce dependency on Western-controlled corridors, using concrete economic and security metrics to underpin their strategic choices.

Historically, Pakistan and Russia had minimal bilateral trade, amounting to only $695 million in 2021. In 2023, trade volumes rose to approximately $920 million. Russia’s exports to Pakistan have increased annually by 10.3% over the past five years and now aims to increase exports to Russia upto $4billion in the next five years. For Pakistan, increased access to Russian markets offers opportunities for exporting textiles, food, and agricultural products, which constitute roughly half of Pakistan’s export revenue. For Russia, sanctions imposed by the West following the Ukraine crisis have driven its “pivot to Asia,” with Pakistan providing a strategic alternative through access to the Indian Ocean and South Asia’s growing consumer markets.

In recent months, Pakistan and Russia have moved to deepen economic and strategic ties through high-level exchanges and significant agreements. In September 2024, Russian Deputy Prime Minister Alexei Overchuk led a delegation to Pakistan, where multiple Memorandums of Understanding (MoUs) were signed, including one between the St Petersburg International Mercantile Exchange (SPIMEX) and Pakistan Mercantile Exchange (PMEX) to enhance trade collaboration. Shortly after, Russian Prime Minister Mikhail Mishustin attended the SCO Heads of Government meeting in Pakistan, proposing Pakistan’s potential inclusion in the Eurasian Economic Union, opening new economic avenues. The Russian Ambassador to Pakistan, Albert Khorev, recently highlighted Russia’s commitment to developing the North-South Trade Corridor (NSTC) with Pakistan, Kyrgyzstan, Uzbekistan, and Afghanistan, while also beginning technical talks on revitalizing Pakistan Steel Mills.

The North-South Transport Corridor (NSTC) is a transformative multilateral initiative aimed at linking the Indian Ocean to the Caspian Sea, and beyond, facilitating smoother trade between key regions in Eurasia. Spanning over 7,200 kilometers, the corridor connects India, Iran, Russia, and Azerbaijan, with potential links to Central Asia. Initially established in 2000, the corridor was ratified in 2002 by India, Iran, and Russia, and has since evolved into a strategic infrastructure project. The corridor initially projected to save up to 40% in transport time and cut freight costs by 30%, spans over 7,200 kilometers and links India, Iran, and Russia, with potential extensions to Central Asia and Pakistan. By offering a 25-day route from Mumbai to Moscow—compared to the 40-day journey via the Suez Canal—the NSTC stands to improve supply chains and economic connectivity between South Asia, Central Asia, and Europe.

Pakistan’s inclusion in NSTC could enhance the China-Pakistan Economic Corridor (CPEC), valued at $62 billion, by aligning with Gwadar Port’s capabilities. The port would also serve as a transit point for landlocked Central Asian states seeking global markets, enhancing their export volumes and transit revenue.

In defense, Russia and Pakistan’s relationship has strengthened, demonstrated by the Druzhba VII joint military exercise. Held from October 13, 2024, at Pakistan’s National Counter-Terrorism Centre in Pabbi, the exercise involved Light Commando troops from both nations. This represents one of over 10 joint exercises held since 2016, underscoring Pakistan’s interest in Russia’s counter-terrorism expertise. Russia’s annual $45 billion defense exports also reflect its significant capacity to provide Pakistan with defense equipment and training support, a strategic alternative to Western arms.

The energy sector marks one of the most tangible developments in the Russia-Pakistan partnership. In June 2023, Pakistan received its first shipment of 100,000 barrels of Russian crude oil, part of a larger agreement targeting 20% of Pakistan’s annual oil imports by 2025. Russia’s supply diversification is essential as Pakistan consumes about 584,000 barrels per day and imports 85% of its oil. Reducing its reliance on Middle Eastern oil could save Pakistan a great sum of dollars.

Russia’s backing of Pakistan’s potential BRICS membership reflects their shared commitment to multipolar economic systems. Pakistan’s economy, worth roughly $375 billion, could benefit from access to BRICS markets, including over 40% of the global population and combined GDP exceeding $24 trillion. Membership could increase Pakistan’s GDP through trade with member states, generating new investments and easing economic pressure on its external account. Within BRICS, Pakistan and Russia would align on sustainable development, security, and trade, further reducing dependency on Western institutions.

Central Asia, holding up to 3.3% of the world’s oil reserves and nearly 30% of the global gas supply, is crucial for both Pakistan and Russia. Pakistan’s location offers Central Asian nations like Kazakhstan and Uzbekistan a much-needed maritime link to export energy resources and goods. Central Asia’s annual trade could expand by 25% through direct access to Pakistani ports, generating transit fees and boosting Pakistan’s GDP by an estimated 1% each year. By linking Gwadar with Central Asia and integrating it into NSTC and CPEC, Pakistan aims to capture a substantial share of the trade and energy transit, strengthening regional connectivity.

Russia and Pakistan’s emerging partnership presents substantial opportunities for both nations in trade, energy, and security. This cooperation aligns with Pakistan’s goal to enhance its role as a regional hub, while Russia gains a stable partner in the Indian Ocean. Through careful alignment of economic incentives, military collaboration, and multilateral engagement, Russia and Pakistan are well-positioned to build a lasting partnership that redefines South Asia’s connectivity and stability.