Pakistan’s “expanded” economic wings

By Yasmeen Aftab Ali

Pakistan has finally decided to broaden her economic base by entering into various agreements with nations other than China and Saudi Arabia. This is a welcome step.

A recently signed inter corporate agreement with Russia, including a 1,500 km offshore gas pipeline, aimed at transporting natural gas from Gazprom’s sources in the Middle East to Pakistan (a Russian company) and costing  $10 billion, has all the ingredients of opening various “economic doors” in the region. The project, seeking completion in three to four years, entails a feasibility study by Gazprom at its own expense.

The project will have an integrated approach and, as per news reports, includes projects of ‘Underground gas storage, desalination and other power projects.’ Gas will be transported through a sea link. Not only to Pakistan, but Russia has also offered India to lay offshore pipelines passing via Pakistan’s Gwadar. Russia and India have also inked a Memorandum of Understanding (MoU) for gas import. Iran had tried to sell gas to Pakistan and onward to India, but India withdrew from negotiations due to US pressure.

Russia understands the strategic location of Gwadar Port in Pakistan. Increased investment in the region will, therefore, undermine the US influence, which, to a certain degree, has already waned in Pakistan. With China’s huge investment in CPEC and Gwadar, this agreement is a smart move by Russia to stake its claim in the region.

It is pertinent to note that, in a speech, Rex Tillerson had recently stated that “the Indo-Pacific – including the entire Indian Ocean, the Western Pacific, and the nations that surround them – will be the most consequential part of the globe in the 21st century” and that “the greatest challenge to a stable, rules-based Indo-Pacific region is a China that has taken to reworking the international system to its own benefit.” (Oct 21, 2017). 

On the other hand, Afghanistan, being strategically located, can offer a transit route for both gas and oil transportation to Arabian Sea from Central Asia. The country also offers space for constructing the TAPI; Turkmenistan–Afghanistan–Pakistan–India Pipeline, offering economic advantages to Afghanistan.

In spite of Afghanistan and India having signed an agreement to procure gas from Turkmenistan, both India as well as Afghanistan failed to come to a mutual agreement for gas tariff, passing via Afghanistan. Owing to this failure, India and Pakistan could not ink an agreement determining the fee structure for the part of pipeline that passes through Pakistan, as this fee structure was linked with any agreement undertaken by India and Afghanistan.

The issue of fee structure between Afghanistan and India was resolved in 2012. Construction from Turkmenistan’s end started in 2015, but it was not till early 2018 that the construction in Afghanistan started. Safety on the Afghan side of the pipeline was viewed as risky, owing largely to the ongoing conflict with extremist groups in the country. However, the TAPI lines have not been harmed in the current situation. According to a statement published in the B/C/S Global Markets, “on February 23, 2018, the Taliban pledged its cooperation and protection for the project, noting the pipeline’s importance to building up Afghanistan’s economic infrastructure. ‘There will be no delay in this important national project’, the Taliban said” (February 26, 2018).

On the other hand, the Guardian also reported that “The Taliban declared that it supported the pipeline and other infrastructure projects that could benefit Afghans. ‘We announce our cooperation in providing security for the project in areas under our control,’ a spokesman said. Like Ghani’s government, the Taliban is eyeing a share in an estimated $500m-$1bn in annual transit fees” (February 28, 2018). Since Inter State Gas Systems (ISGS), a Pakistan state owned company designated to execute the project with Russia, is also working on TAPI, the project is a win-win situation for all the stakeholders. Especially in light of the Taliban’s commitment to support projects that offer betterment for Afghanistan.

Russia is looking towards markets other than Europe, especially after its standoff over Crimea. With possible exit of the US forces from Afghanistan, the energy deals will offer an opportunity for the incoming political dispensation in Afghanistan to work closely with the government of Pakistan for mutual economic benefits.

In wake of recent regional developments, the world economic dynamics are undergoing a drastic change. In 2018, China has helped Nepal become a part of the Belt and Road Initiative, connecting it with both dry and sea ports of China. This development will strengthen the trilateral agreements between China, India and Nepal. China wants India to be part of the BRI. So far, India has refrained on the grounds that the route passes through what India feels is Pakistan-Occupied Kashmir. Since CPEC is a star-studded project of the BRI, this has not gone down well with India. Hence, complications still remain when it comes to promoting regional connectivity in South Asia.

“Economics” of the region will drive politics in the near and distant future. The more partnerships there are for development between nations, the more it will help in offering mutual benefits.

The writer is a lawyer, academic and political analyst. She has authored a book titled ‘A Comparative Analysis of Media & Media Laws in Pakistan.’ She can be contacted at: and tweets at @yasmeen_9




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