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17ECONOMY
Original article
DOI: 10.31696/2227-5568-2021-02-029-036
RUSSIA, PAKISTAN AND UZBEKISTAN: NEW TRANSPORT PROJECTS IN EURASIA AND THE DEVELOPMENT OF MULTILATERAL ECONOMIC
COOPERATION
Alexander Vorobyev a
a - IOS RAS, Moscow, Russia
a- [email protected], ORCID: 0000-0001-5100-8369
Abstract. The article is devoted to the analysis of the current state and prospects of multilateral cooperation between Russia, Pakistan and Uzbekistan. Currently, Central Eurasia is becoming a space for closer political, economic and humanitarian cooperation. Russia, Pakistan and Uzbekistan play important and active roles in the Eurasian political and economic field. In recent years, there have been trends in bilateral rapprochement along the lines of «Russia-Pakistan», «Pakistan-Uzbekistan». Relations between Russia and Uzbekistan were traditionally quite intense, but they reached a new level after the change of power in Uzbekistan in 2016. The article examines the prospects for cooperation between the parties in the trade and economic sphere, the development of transport communications, social and humanitarian areas, as well as in the field of political coordination. It also analyzes the risks and obstacles that may hinder the intensive development of multilateral cooperation of the three countries.
Keywords: Afghanistan, Central Eurasia, economic integration, Eurasian Economic Union, Pakistani-Uzbek relations, Russian-Pakistani relations, Russian-Uzbek relations, Sustainable Development, trans-Afghan railway, transport corridors, Pakistani Stream, Taliban
ЭКОНОМИКА
Научная статья
РОССИЯ, ПАКИСТАН И УЗБЕКИСТАН: НОВЫЕ ТРАНСПОРТНЫЕ ПРОЕКТЫ В ЕВРАЗИИ И РАЗВИТИЕ МНОГОСТОРОННЕГО ЭКОНОМИЧЕСКОГО
СОТРУДНИЧЕСТВА
Воробьев Александр Вячеславовичa
a - Институт востоковедения РАН, Москва, Россия a - [email protected], ORCID: 0000-0001-5100-8369
Аннотация. Статья посвящена анализу текущего состояния и перспектив многостороннего развития сотрудничества между Россией,Пакистаном и Узбекистаном. В настоящее время Центральная Евразия становится пространством более тесного политического, экономического и гуманитарного взаимодействия. Москва, Ташкент и Исламабад играют важную роль в евразийской политической и экономической жизни. В последние годы развились двусторонние связи по линии «Россия-Пакистан», «Пакистан-Узбекистан». Отношения между Россией и Узбекистаном традиционно были на высоком уровне, но получили дополнительный импульс в последние годы. Помимо анализа возможностей многостороннего взаимодействия
в экономической и политической сферах, в статье также рассматриваются риски и вызовы, которые могут помешать развитию сотрудничества.
Ключевые слова: Афганистан, Евразийский экономический союз, экономическая интеграция, Пакистанский поток, пакистано-узбекистанские взаимоотношения, российско-пакистанские отношения, российско-узбекистанские отношения, трансафганская железная дорога, транспортные коридоры, Талибан, устойчивое развитие
In the first decades of the XXI century, the role of Central Eurasia as a link between different parts of the Eurasian continent has increased significantly due to the development of transport links. First of all, we are talking about the development of latitudinal transport routes connecting East Asia with Europe. However, the transport links running in the meridional direction - from the North to the South - are no less important. The development of such a system of communications will contribute to connect the northern part of Eurasia, which is more industrially developed, with the southern part, which is densely populated and dynamically developing. Interaction between Russia, Uzbekistan and Pakistan could play an important role in these geo-economic processes.
The existing system of ties between the northern, «post-Soviet» part of Eurasia and the southern one, which includes Pakistan, India and other states of South Asia, is far from perfect today. There are established and stabely functioning economic ties in the northern, «post-Soviet» part, which tend to further strengthen. The Eurasian Economic Union has been functioning since 2015. Uzbekistan, which became an observer in the EAEU in 2020, is building up cooperation in this direction. Even as a result of a very difficult year in economic terms due to pandemic restrictions in 2020, the volume of rail and road transport between Russia and Uzbekistan increased by 27.4 and 27.9%. Russia ranks second after China in the list of Uzbekistan's partners in trade - the figure was 15 % at the end of 2020. The third place is occupied by neighboring Kazakhstan with a share of 8% of the total trade turnover of Uzbekistan1). Contacts with Russia in the humanitarian sphere are growing. Military cooperation is also at a high level, despite the fact that Uzbekistan is not a member of the CSTO. In April of this year, Russia and Uzbekistan signed a strategic partnership program in the military field for 2021-2025.
In the southern part of the system of interactions, one can observe a demographically growing densely populated region, which is characterized by an energy deficit, structural imbalances in the development of the economy with a large share of agriculture. According to the World Bank data the rates of economic growth of Pakistan reached 5.5% in 2017 and 5.8% in 2018 but slowed down in 2019 and 2020, showing a result of 0.99 and 0.53%, respectively2). Pakistan and
1 Export statistics. Ministry of Investments and Foreign Trade of the Republic of Uzbekistan https://mift.uz/ en/pages/statistika-eksporta(accessed 15.09.2021).
2 GDP growth (annual%) - Pakistan // https://data.worldbank.org/in dicator/NYGDRMKTRKD.ZG?locations=PK (accessed 13.09.2021).
neighboring states, due to demography, are promising sales markets, and they are also characterized by the so-called «low base effect».
At the same time, the level of economic interaction between the northern and southern parts of Eurasia is not yet too high. Thus, at the end of 2020, the volume of trade between Russia and Pakistan was 10 times less than the trade turnover between Russia and Uzbekistan: $ 5.6 billion against $ 0.73 billion. However, it is important to note a positive trend: at the end of 2019, trade turnover Russia and Pakistan amounted to 0.54 billion dollars3.
That is, the growth of trade turnover for the year amounted to 35%. Also, according to Pakistani Ambassador to Russia Shafgat Ali Khan, the parties plan to hold an economic conference between Moscow and Islamabad in 2021 or 2022.
A similar positive trend is observed in the economic relations between Uzbekistan and Pakistan. During the period from 2017 to 2020, the foreign trade turnover of the two states increased 3.4 times - from 36.5 million to 123.3 million. At the same time, the foreign trade balance is in favor of Uzbekistan: the country exported goods and services by $ 98.5 million and imported $ 24.8 million4. Uzbekistan exported foodstuffs, textiles and services to Pakistan, and imported chemical products and foodstuffs. In general, based on these figures, it can be noted that in absolute figures the trade turnover between Russia and Pakistan is six times higher than the trade turnover between Uzbekistan and Pakistanow. However, Tashkent has a consistently positive balance in trade with Islamabad, while Russia gets different indicators from year to year trade balance. In July 2021, Uzbekistan and Pakistan agreed to conclude a bilateral preferential trade agreement (FTA) over the next three months5.
Further disclosure of the potential for cooperation on the basis of multilateral interaction is beneficial for both Uzbekistan and Russia as well as Pakistan. The strengthening of cooperation with Islamabad and the development of transport infrastructure - the construction of a railway to Pakistan through Afghanistan -means obtaining additional opportunities for Tashkent due to access to the ports of the Indian Ocean. Opportunities for the export of Uzbek goods and services to the south, including Afghanistan, are also expanding. As noted above, Uzbek exports to Afghanistan and Pakistan are beneficial to Tashkent due to the positive trade balance, as well as the «low base effect». The transformation of a transit state, similar to what Kazakhstan has become within the framework of China's implementation of the Belt and Road Initiative and the construction of latitudinal highways from East Asia to Europe will also be a plus for Uzbekistan.
3 Torgovlya mezhdu Pakistanom I Rossiei v 2019 goduy // https://russian-trade.com/reports-and-reviews/2020-02/torgovlya-mezhdu-rossiey-i-pakistanom-v-2019-g/(accessed 03.09.2021).
4 Infografika: Vneshnyaya torgovlya Ubekistana s Pakistanom // https://review.uz/post/infografika-torgovo-ekonomicheskogo-i-investicionnogo-sotrudnichestva-mejdu-uzbekistanom-i-pakistanom(accessed 12.09.2021).
5 Pakistan, Uzbekistan agree to finalise PTA within three months // https://dailytimes.com.pk/791662/ pakistan-uzbekistan-agree-to-finalise-pta-within-three-months (accessed 15.09.2021).
For Pakistan and other South Asian states, increased interaction and transport connectivity with Central Asia will also mean greater export opportunities northward. At the same time, one need to understand that we are talking to a greater extent about exports to Uzbekistan and other countries of Central Asia. With regard to Russia, especially its European part, the sea freight transportation from the ports of the Indian Ocean to the ports of the European part of Russia can successfully compete with rail transportation in terms of price. However, the possibilities of using railways would also be a good addition to maritime transport.
As for Russia, on the one hand, the construction of transport arteries from Uzbekistan to the south in a sense means a further loss of the «monopoly» on transport from the Central Asian region. However, the process is inevitable. It is also very beneficial for Russia in general to strengthen cooperation with the capacious and growing markets of South Asia, which are of great interest for Moscow, including in terms of energy exports. An indicator of the importance of economic ties with Pakistan for Russia is, for example, the construction of the Pakistan Stream Pipeline, which will connect the south and north of Pakistan. The gas pipeline will have a length of 1,100 km from Karachi to Lahore and a design capacity of 12.4 billion cubic meters per year6. For Moscow, deliveries of Russian products by rail to the South are unlikely to be of the same interest as, for example, for Uzbekistan. However, they can be beneficial in two ways. The first is the export of products from the regions of Russia remote from the sea and close to Kazakhstan (Middle and South Urals, Western Siberia). The second is the export deliveries of products manufactured by joint Russian-Uzbek enterprises on the territory of Uzbekistan (for example, automotive products, building materials, agricultural machinery, etc.)
When it comes to economic interaction with Moscow, one cannot but touch upon the functioning of the Eurasian Economic Union, which, in addition to Russia, also includes Kazakhstan, Kyrgyzstan, Belarus and Armenia. Each of these countries has something to offer Pakistan and other South Asian states. Two EAEU states - Kazakhstan and Kyrgyzstan directly located in Central Asia and are close to Uzbekistan in terms of their economic and geographical location. It is also important that joint production chains are developing within the EAEU. Similar products manufactured in the EAEU states located in Central Asia, as well as the products of joint Russian-Uzbek enterprises, could be exported via meridional overland routes. In turn, this would increase the interest of official Islamabad in cooperation with the EAEU with the possible formation of a free trade zone in the medium term.
In the interests of all, without exception, participants in the Eurasian political and economic communication, there would also be such a consequence as strengthening of multilateral cooperation and the development of transport connectivity in Central Eurasia as the creation of more favorable conditions
6 Pakistan, Russia to firm up gas pipeline project agreement // https://www.dawn.com/news/1642846/ pakistan-russia-to-firm-up-gas-pipeline-project-agreement(accessed 15.09.2021).
for the «pacification» of Afghanistan. Of course, this is a lengthy process. The situation around Afghanistan is extremely turbulent, and the efficiency of the financial support allocated to Afghanistan is very small. But, nevertheless, such an alignment of forces, when the destabilization of the situation in this country becomes unproductive for any of Afghanistan's neighbors, increases the chances for a gradual improvement in the socio-economic and political situation in Afghanistan.
There are some serious obstacles to the development of multilateral cooperation between Russia, Uzbekistan and Central Asia. The obstacles can seriously harm most of the parties' good initiatives. Successful overcoming of the obstacles will be the key to the success of multilateral cooperation.
The first problem, of course, is the situation in Afghanistan, which is a «bridge» from Central Asia to South Asia. The situation is very turbulent due to the withdrawal of the US and NATO troops and it is already a fait accompli that the power in the country has passed to the Taliban. Perhaps the optimism emanating from a part of the expert community that the Taliban will be able to consolidate power in the country and become more moderate is excessive. In the medium term, the development of Afghanistan will be accompanied by a number of risks. Firstly, this is the lack of skills of the Taliban for effective political administration of the state and the risk of growing internal contradictions. The time of unification against a common enemy has passed, now the time has come for internal conflicts between the leaders of clans, groups, etc. Secondly, it is the most difficult economic situation in the country, which is hardly be improved even over the course of several years. Socio-economic discontent can provoke unrest and rebellion in the country. Thirdly, it is the factor of Islamist radicals. The Taliban's disengagement from Islamic State and al-Qaeda may be rhetorical rather than factual. The atmosphere of uncertainty can create difficulties for the development of economic projects in Afghanistan. It will also negatively affect the cost of delivery of goods, the cost of risk insurance.
In such an uncertain situation, the similarity of the positions of Russia, Uzbekistan, Pakistan, and also China with regard to the situation in Afghanistan is very important. All sides proceed from the fact that it is necessary to maintain a dialogue with the Taliban movement and help the new authorities of Afghanistan to pacify the country, reduce the degree of tension in society and support the Taliban's initiatives to disengage from radical extremist groups such as Al-Qaeda and the Islamic State. At the end of September 2021, the special envoys of Russia, China and Pakistan for Afghanistan Zamir Kabulov, Yue Xiaoyun and Mohammad Saddiq met with the Taliban. They discussed a wide range of issues related to the latest political changes» in the country, according to the Russian Foreign Ministry's website on September 227. The visit to Kabul took place «at the invitation of the Taliban authorities.» The militants have paid particular attention to «promoting
7 Taliban stress role of relations with Russia, China, Pakistan - Russian Foreign Ministry // https://tass.com/ world/1341039(accessed 25.09.2021).
relations» with Russia, China and Pakistan and declared their special role in consolidating peace in Afghanistan. It is noteworthy that in September of this year in the south of Russia the annual joint exercises of Russia and Pakistan called «Friendship - 2021» started. They continue a series of joint maneuvers and contacts between high-ranking military officials of the two countries, the latest of which was a visit to Moscow by the chairman of the Joint Chiefs of Staff of the Pakistani Armed Forces, Nadim Raza. The intensification of military cooperation between the Russian Federation and Pakistan is taking place against the background of the growing threat of the spread of terrorist activity from Afghanistan8.
One should not discount the risks of competitive relations between the Eurasian powers: in particular between Pakistan and India. The risk of armed confrontation between Pakistan and India is real. It is also necessary to take into account the fact that the Pakistani territory is not large in terms of its length from the West to the East. Islamabad has practically no strategic depth. In case of rising international tension infrastructure routes on the territory of Pakistan may be under threat.
The third difficulty lies in the specific filling of multilateral cooperation with goods and services. Economic relations between Russia and Uzbekistan are well-established and institutionalized, but the same cannot be said about the economic relations between Russia and Pakistan or Uzbekistan with Pakistan, even despite the increase in mutual trade.
Finally, the fourth barrier is a significant difference in the legislation of all three states, as well as differences in the culture of doing business. If the development of the legal systems of Russia and Uzbekistan, for obvious reasons, for a long time took place within the framework of common standards, and this interconnection has largely remained in our days, then the development of the legal system of Pakistan was carried out in completely different concrete historical conditions. There is British and Islamic influence and the influence of the Anglo-Saxon system of law. Naturally, significant differences will inevitably complicate business cooperation and increase the costs of business to overcome them. In the Doing Business - 2020 ranking, Russia ranks 28, Uzbekistan - 69, and Pakistan only 1089. In the rating of states for achieving the global Sustainable Development Goals Sustaianble Development Ranking -2021, which, among other things, reflects the conditions of economic activity in the country, as well as the general socio-economic climate, Russia is in 46th place, Uzbekistan is in 77th, and Pakistan is in 129th position10.
This may indirectly indicate that both Russian and Uzbek businesses in practice will find it quite difficult to adapt to Pakistani business and socio-economic
8 Pakistan, Russian special forces take part in Druzhba-VI exercise // https://tribune.com.pk/story/2322519/ pakistan-russian-special-forces-take-part-in-druzhba-vi-exercise(accessed 29.09.2021).
9 Doing Business - 2020 Report // https://openknowledge.worldbank.org/bitstream/han dle/10986/32436/9781464814402.pdf (accessed 15.09.2021).
10 Sustainable Development Report 2021 // https://s3.amazonaws.com/sustainabledevelopment. report/2021/2021-sustainable-development-report.pdf(accessed 25.09.2021).
realities without the help of the state and a loyal, benevolent attitude towards investors and entrepreneurs on the part of Pakistani government bodies.
To overcome the above barriers, it would be advisable to take a number of measures. First, it is necessary to jointly exert maximum efforts to «pacify» Afghanistan, including through the creation of platforms for political negotiations and the establishment of support funds. At the same time, one must be prepared for the fact that investments and infusions into Afghanistan will bring minimal returns. Second, to the extent possible, it is necessary to maintain inclusiveness and at all costs avoid escalating tensions in Central Eurasia and South Asia, pursue a policy of engaging as many Eurasian players as possible and creating favorable conditions for all, without trying to play a zero-sum game. A successful platform for such a dialogue is the platform of the Shanghai Cooperation Organization. Thirdly, it is necessary to pay attention to the development of the legal framework of relations between Russia - Pakistan, Uzbekistan - Pakistan, the conclusion of framework interstate agreements that would create a clearer legal framework for business cooperation between Russia, Uzbekistan and Pakistan, would reduce the risks of potential business failures. cooperation due to differences in legislation and business culture.
Fourth, it is necessary to take measures in advance to increase the number of commodity deliveries in relation to each other, both in terms of assortment and volume. The question of WHAT will be transported by rail, both in one and the other direction, is important. What kind of products is Russia ready to supply to Pakistan through Uzbekistan? What will Uzbekistan send to Pakistan and Indian Ocean ports? What is Pakistan ready to offer for export to the north? Are the parties ready to accept each other's goods and are they not worried that this may create additional stress in national markets? These questions require reflection and inquiry. It would also be useful to hold joint business forums, business missions, mutual participation in business exhibitions in order to present the existing product range and help entrepreneurs to establish personal and business contacts with each other.
Finally, it is also important to note that speaking about multilateral cooperation it would be wrong to talk only about the economy, even despite the importance of this topic. The potential for multilateral cooperation between Russia, Uzbekistan and Pakistan, of course, is not exhausted by this. At present, «People-to-People» contacts (albeit adjusted for the pandemic), cultural cooperation, and tourism are acquiring an increasing role. As for the latter, the potential of this industry in multilateral cooperation between the countries is drastically underutilized. If tourism from Russia to Uzbekistan has a decent turnover in the pre-pandemic years, then Russian-Pakistani mutual tourism, as well as Uzbek-Pakistani tourism, is rather poorly developed. Meanwhile, this is a very attractive direction. Part of Pakistani society has a very strong interest in Russian culture.Tours to Moscow, St. Petersburg, the cities of the «Golden Ring» around Moscow could be in great demand.
There are also traditionally Islamic regions in Russia, such as Tatarstan, Chechnya, Bashkortostan and others. Religious tourism in these areas, as well as in the direction of historical pearls and religious shrines of Uzbekistan, such as Samarkand, Khiva, Bukhara, would be in great demand in the new everyday reality and would bring significant mutual economic benefits. At the same time, for tourism from Pakistan to Uzbekistan and especially Russia, it is still advisable to develop regular flights. Recall that at present it is impossible to fly from Russia to any city in Pakistan by direct flight.
Another important area of cooperation between Russia, Uzbekistan and Pakistan can be interaction in the field of urbanism and urban development. This area includes a wide range of issues, ranging from planning and urban planning, issues of development of the transport system and ending with the problem of waste collection and processing. Pakistan, whose population is rapidly growing and urbanizing, faces challenges in this area. As for Russia, Moscow has accumulated a fairly solid urban development potential and experience in this area. This is especially true for the Moscow region. The Moscow authorities certainly have the valuable experience to share with Pakistan. Speaking about Uzbekistan, one should pay attention to the fact that the country's authorities are paying big attention to interaction with the United Nations in the field of achieving the Global Sustainable Development Goals. A number of defined Sustainable Development Goals are both aimed at the development of a comfortable and environmentally friendly urban infrastructure, and the development of the urban environment.
Cooperation in the field of healthcare and education could also become important points of humanitarian interaction between Russia, Uzbekistan and Pakistan. Mutual exchange of experience in the fight against the coronavirus pandemic, cooperation in the field of vaccine circulation is likely to remain a significant area in the coming years. Educational programs for Pakistani students at Russian universities could play a role in strengthening ties between the states. In contrast to Uzbekistan, the difficulty here is the language barrier. It could be overcome through teaching in English, or through the formation of a network of Russian-language schools in Pakistan.
ИНФОРМАЦИЯ ОБ АВТОРАХ / INFORMATION ABOUT THE AUTHORS
Воробьев Александр Вячеславович - Vorobyev Alexander - PhD (History), к.и.н., научный сотрудник ИВ РАН, Мо- Researcher, IOS RAS, Moscow, Russia. сква, Россия.
