Pakistan is on the brink of bankruptcy after its post-modern coup regime proved itself incapable of resolving the country’s systemic economic crisis since coming to power in April 2022. There’s now a credible chance that they won’t be able to receive the rest of the IMF’s bailout package before its expiry, which could plunge their already largely impoverished people further into despair. That poses a regional security threat if newly desperate people start doing the bidding of bad actors to make ends meet.
It’s in this context that the decision was made to allow barter with Afghanistan, Iran, and Russia. This is by no means a solution to Pakistan’s systemic economic crisis, nor a so-called “Plan B” if it fails to receive the rest of the IMF’s bailout package. Nevertheless, it could possibly keep average folks’ living standards at a comparatively more respectable level than if this arrangement wasn’t available since agricultural, pharmaceutical, and textile products can be exchanged for commodities like energy, metals, and wheat.
Understanding the matter better
Parts of the real economy could thus remain alive while the authorities race to replenish the state’s rapidly depleting funds, which would help avert the worst-case scenario of newly desperate people being exploited by bad actors. All responsible stakeholders have an interest in this, especially since it’ll strengthen bilateral ties with those three states that Pakistan just approved bartering with. As regards the Afghan dimension, this might also contribute to easing Pakistani-Taliban tensions too.
The Iranian and Russian dimensions are of similarly strategic importance, albeit in a non-security-related way. Those two are part of the North-South Transport Corridor (NSTC) that aims to connect Russia and India via the Islamic Republic. Former Prime Minister Imran Khan envisaged integrating his country into Eurasia’s emerging geo-economic corridors prior to being deposed so there’s a chance to explore the partial revival of his plans via Pakistan’s barter arrangements with Iran and Russia.
Even if this only goes as far as establishing closer overland connectivity with Iran, the Russian vector could still be advanced via the newly opened direct shipping route between Karachi and St. Petersburg. There’s also the chance that this maritime corridor could be expanded to Vladivostok in Russia’s Far East considering the Kremlin’s interest in having that port play a larger role in its Asian trade. Of course, that would depend on exactly what they end up bartering and on what terms, but it’s still worth considering.
The details of Pakistan’s business-to-business deals with Russia will likely be discussed during its Senate delegation’s trip to Moscow this week. The Kremlin can potentially satisfy one-third of its partner’s oil needs, but without the cash to consistently pay for this, Islamabad will have to propose a very appealing quid pro quoin order at least partially tap into this opportunity. One possibility is to give Russian entrepreneurs build-operate-transfer rights in various industries in exchange for fuel.
Unlike Pakistan’s traditional Western partners, Moscow has no ulterior motives in doing business with Islamabad and hasn’t ever attached political strings to the deals that they’ve clinched. The Kremlin’s sole interests in this proposal are to obtain long-term revenue streams while also averting the worst-case scenario of its non-traditional South Asian partner slipping into instability if no tangible relief for its people is forthcoming in the event that the rest of the IMF bailout package isn’t received.
From Pakistan’s side, it has an obvious interest in receiving that selfsame tangible relief for its people via reliable fuel imports in exchange for giving Russian entrepreneurs build-operate-transfer rights in various industries, which also entails establishing long-term educational and training programs too. Any such deal would therefore be mutually beneficial since Russia’s financial interests would be met in parallel with Pakistan’s developmental ones.
It’s premature to predict whether any associated agreement will emerge from the Pakistani Senate delegation’s trip to Moscow this week, but there shouldn’t be any doubt that those two’s business-to-business ties will figure prominently in their discussions. Pakistan’s barter with Afghanistan and Iran is also important for security and connectivity reasons, not to mention meeting the needs of the Pakistani people, but the non-cash quid pro quo that it might clinch with Russia is arguably the most promising.
Andrew Korybko is a Moscow-based American political analyst, radio host, and regular contributor to several online outlets. He specializes in Russian affairs and geopolitics, specifically the US strategy in Eurasia. The article has been republished and the views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.