EDITORIAL: As expected, Russian forces began their march into the breakaway regions of Ukraine in the early hours Thursday 24th February. Prime Minister Imran Khan had arrived in Moscow only hours earlier.
It is hoped that this development would not disturb the schedule of meetings and other interactions that have been planned well in advance between the two countries. A near consensus had emerged that the timing of Prime Minister Imran Khan’s ongoing visit to Russia, scheduled well before the recent escalation in Ukraine-Russian conflict, may prove propitious on two counts.
First, it may give Pakistan additional leverage in negotiating the pipeline deal as well as a trade deal, given President Biden-led “first tranche sanctions” that include two banks, notably VEB and Promsvyazbank with close ties to the Kremlin and the Russian military with 80 billion dollars in assets frozen as well as blocked Russia from trading its debt on US markets; while the 27-member European Union has agreed to sanction banks financing decision-makers in Russia with Germany halting the approval of Nordstrom 2 but with Nordstrom 1 continuing to supply gas from Russia.
The UK has targeted 5 banks and three Russian multibillionaires and stopped Russia from selling its sovereign debt in London while Japan and Australia have also imposed stringent penalties on Russian individuals connected to ‘aggression’ against Ukraine.
These first tranche sanctions will be supplemented with second tranche sanctions if the Russian military enters the Donetsk and Luhang regions, the West and Japan have warned. Thus in this scenario for Pakistan’s Prime Minister not to cancel the visit may partly explain the red carpet reception accorded to him backed by messages from Russian students — a factor that no doubt would raise the country’s image in Russia.
And secondly, Pakistan at present is in the throes of an economic impasse though the leadership is unwilling to publicly acknowledge it — an impasse reflected by the inordinately heavy reliance on foreign borrowing to shore up reserves, including the 3 billion dollar one-year loan by the Saudi government at one of the most challenging terms in the history of Pakistan, continued placement on the grey list by the Financial Action Task Force even though only one of the 27 conditions remain unmet and the extremely harsh upfront politically challenging conditions of the sixth International Monetary fund (IMF) review with the general consensus being that they reflect singular lack of Western support, particularly the US support.
While at the same time one is fully aware of the large remittance inflows from the West, a source of desired foreign exchange earnings and the GSP plus status extended by the EU to Pakistan which led to an appreciable rise in exports yet there clearly appears to be Pakistan’s geo-political repositioning that began with the China Pakistan Economic Corridor, with Western governments and multilaterals giving dire warnings, raising the country’s indebtedness and one may assume the deals struck in Russia may simply exacerbate this sentiment.
Prime Minister Imran Khan explicitly stated in an interview to Russian channel, RT, that Pakistan is not interested in being part of any bloc yet there are some concerns about Western reaction to any deals struck during this visit — a reaction that would depend if there is an escalation to second tranche sanctions against Russia.
There is a widespread perception that Germany, a major player in the EU decision-making, is unlikely to take the sanctions to the level of stopping the supply of Russian gas to Nordstrom 1 pipeline, besides China has already indicated its desire to purchase more gas from Russia which may well be in excess of Russian supply through Nordstrom 1.
Additionally, there has been no war between countries in Europe since 1945, a valuable lesson learned from the devastation in Europe during the Second World War, which may deter Europe from engaging in one now irrespective of its alliance with the US.
One would also assume that sabre rattling by American President Joe Biden by sending troops, attack aircraft and fighter jets into Eastern Europe is to reassure NATO allies and deter any aggression from Russia rather than a desire not to engage with Russian forces in Ukraine. Notwithstanding this background one would advise the prime minister to tread with care and refrain from commenting on the conflict in Ukraine though this question is almost certainly going to be asked while he is in Russia.
Copyright Business Recorder, 2022
Comments
Comments are closed.