Exploring economic ties with Russia

Relations with the former USSR have been a roller coaster ride for Pakistan. Many times, efforts from both sides to develop a strategic alliance have failed to materialize into sustainable partnerships, despite the geographical proximity of the two countries.
Recently, the Consul General of Russia in Pakistan emphasized the importance of strengthening bilateral trade relations. In his opinion, both economies could benefit from a stable commercial relationship.
At present, the Russian Federation does not even account in the top 40 export markets for Pakistan. In the past few years, Pakistans exports to Russia hovered around $100 million - at a time when Russias imports have reached nearly $300 billion ballooning manifold in the past decade.
Historically, USSR has helped Pakistan in setting up much needed infrastructure. OGDCL and Pakistan Steel Mills, two of Pakistans largest corporations were setup with the financial and technical support of the USSR. In recent times, officials of the Russian Federation have spoken of their interest in modernizing the ailing Steel Mill.
In the past decade, Russias economy has grown substantially. Its GDP growth between 2000 and 2007 averaged about 7 percent. Interestingly, most of the growth came from non-tradable services and domestic demand for goods, not exports.
Pakistani businessmen have asked Russia to partake in the development of the IP gas pipeline, as it has been a strong supporter of the project. Russia was also the first country to deploy a civil nuclear programme. If the US is unwilling, perhaps Russia will be more accommodating in Pakistans demand to satisfy its energy needs.
Meanwhile, Pakistans strategic location on the Arabian Sea can potentially create a trade route for Russian oil to the export markets of Europe and beyond. In this light, Russia has shown interest in developing rail networks from the ports of Pakistan all the way to Russia.
The Consul General urged Pakistan to change its foreign policy away from the USA and towards its regional partners in China, Iran and Russia in particular. Pakistan can benefit from the technical expertise and capitalize on the geographic proximity, substantially reducing transportation costs for its exports.
In line with this thinking, Pakistan has applied for formal membership of the Shanghai Cooperation Organization, an inter-governmental alliance with mutual security and economic development as key points of interest. Some observers see this body as a counterforce to NATO.
Naturally, the biggest hurdle in shifting alliances is the threat of retaliation from the USA to such a move. Islamabad must play its cards right and realize that the future of the world economy is in the east, not the west.