While millions of Pakistan watchers saw the theatrics of its domestic dysfunctionalities unfold yet again, much happened at the international level for our neighbour that is of direct concern to us. Though India consumes a relentless broadcast of Pakistan’s epic shenanigans through news and social media, little attention has been directed to how Islamabad’s concoction of geoeconomics and geostrategy with nonchalant desperation to hold itself together could be affecting India’s key foreign policy strongholds vis-à-vis relations with Russia and commitment to the Indo-Pacific.
What is going on?
The many faces of a failed State
Pakistan, in a stronger alliance with the West, is deftly navigating the frustrations incurred by denied IMF bailouts. Over the last year, it has also emerged as a major supplier of weapons to Ukraine. At the same time, Pakistan has also clinched an oil deal with Russia at discounted rates, just like India. Furthermore, Pakistan has successfully negotiated with Russia for a broad spectrum investment, and its ties with the US are working again. But the story doesn’t end here.
Pakistan’s Junior Foreign Minister Hina Rabbani Khar was in Stockholm at the recently held 2nd edition of the EU Indo-Pacific Ministerial Forum, at the joint invitation of EU High Representative for Foreign Affairs and Security Policy Josep Borrell and Swedish Foreign Minister Tobias Billstrom. The interesting bit is that Rabbani not only charmed the power echelons at Brussels in her signature chiffons, but she also ingeniously stated Pakistan’s desire to join the EU’s Indo- Pacific projects.
The first time Pakistan’s former Army chief, General Qamar Javed Bajwa, went to Brussels and stated a similar desire was on 22 February 2022 – one day before then Prime Minister Imran Khan visited Moscow on the eve of Russia’s Special Military Operation. Anyone following Pakistan knows that the army chief holds more power than even the elected prime minister. The symbolism of two powerful men, each simultaneously engaging arch rivals of the geopolitical divide, seemed laughable then but should have raised some concern in India.
A year later, Pakistan has positioned itself as the US’ sepoy in the Indo-Pacific against the bulwark of China. Of course, with Beijing giving $500 million to Islamabad’s dangerously depleting foreign reserves and making other significant investments, it is clear that Pakistan is no fortification against China. It is yet another success of the Pakistani deep State to sell its “many faces” story.
Pakistan has also entered into separate talks with the EU over deepening multidimensional relations with the bloc, a major investor in the region’s Global Gateway and Coordinated Maritime Presences. While the US and the EU are pursuing their own interests in the Indo-Pacific, Indians should know the mettle of their country cousins better. No matter how productively Pakistan places itself in the larger game of geopolitical rivalry, its engagement with the US and the EU shall be a win for China in undermining India’s interests and pre–eminent position in the region.
The Pakistani State’s actions adhere to often intersecting parallel realities of a global order currently undergoing a bifurcation of sorts with the war in Ukraine and the US-China rivalry.
Amid this divided global order, Pakistan is capitalising on the vulnerabilities of the combatants, playing all sides along three verticals that should matter most to India.
First, it has emerged as a core Western ally in supplying weapons to Ukraine. Second, it has struck a deal with Russia to buy discounted oil from the latter and is charting long-term trade and investment plans with Moscow without much opposition from the West. Third, it is making forays into the Indo-Pacific, riding on the US and EU’s shoulders – India’s allies in the region – to New Delhi’s annoyance and Beijing’s delight.
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Pakistan as a major weapons supplier
Ever since the onset of the Russia-Ukraine war, Pakistan has played a formidable role in supplying weapons to Ukraine against Russia. After supplying Kyiv with weapons in 2022, news came in January 2023 that Pakistan Ordnance Factories will send 159 containers of 155 mm artillery shells, M4A2 propelling bag charges, M82 primers, and PDM fuses to Ukraine. For the record, Pakistan has maintained close military ties with Ukraine since 1991, with the latter selling roughly $1.6 billion worth of weapons to Islamabad between 1991-2020.
However, this sounds rather strange for a country where millions are dying of food shortage and a worsening economic crisis. How could it afford to send another consignment of weapons and ammunition to Ukraine? What made the situation stranger was that these moves by Pakistan happened at the cost of ignoring Russia’s warning against sending ammunition and weapons to Ukraine. For the uninitiated, Russia and Pakistan had deepening military cooperation with increased joint exercises until months before the war began.
The key to understanding this lies in the quid pro quo. According to media reports, Western countries will help Pakistan with supplies and the upgrade of some of its Western military equipment in exchange for its assistance in Ukraine.
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Russia’s emergence in the world of Pakistan’s ‘crude’ desires
Despite all the apparent backstabbing by Pakistan, Russian Energy Minister Nikolay Shulginov was in Islamabad for an annual intergovernmental commission on trade and economy where an oil deal was finalised. The first Russian consignment of Urals crude will reach Karachi this month. Imports are expected to reach 100,000 barrels per day (bpd), an overwhelming 65 per cent of Pakistan’s daily crude oil consumption (154,000 bpd).
One reason Russia would willingly do this is Pakistan’s nod to pay in “friendly currencies”, expectedly Chinese yuan, which India has never agreed to. New Delhi sticks to making oil payments in dirham, which is pegged to the dollar.
But is there also a win for Russia against the sanction regime?
Given the paltry state of Pakistan’s depleting reserves, its oil deal with Russia is being touted as a major success story of a Western ally circumventing Western sanctions. Nothing could be more half-baked.
With acute economic fragility, depleting foreign reserves and the desperation for the release of a $1.1 billion tranche of a $6.5 billion bailout agreed upon by IMF in 2019, Pakistan will never be foolish enough to shoot itself in the foot by bypassing sanctions to get cheap Russian oil, which it was already getting on deferred payments from the Middle East countries.
It is the West that is promoting this trade between Russia and Pakistan.
But is it also weakening its own sanction regime in the process?
Here comes the enigma of the price cap on Russian crude imposed in December 2022. The primary objective of the price cap was cutting Russia’s revenues by institutionalising heavy discounts on its oil bought by big consumers like China and India and ensuring global oil markets were well supplied to check for price volatility. Pakistan, too, has joined the bandwagon of getting cheap supplies from Russia.
It suits the West’s interests to allow Russian crude to flow to other parts of the world as long as it is cutting Moscow’s revenues. Although exact prices have understandably not been disclosed, the oil Pakistan is getting from Russia is heavily discounted and could be provided on a “Free on Board Basis”, where the shipping and insurance will be taken care of by Russia.
If the discount and the FOB costs are added, in most cases, Russia can barely reach the breakeven point of extraction, shipping, and insurance costs incurred per barrel. This extrapolation is turning out to be true after the Russian energy revenues dropped more than 50 per cent in the first quarter of 2023, and Russia’s federal budget deficit rose to 3.42 trillion rubles ($45 billion) in January-April 2023. That explains why the West is so comfortable with the outward flow of Russian oil. As for Moscow, this is a new outlet for its oil exports in trying times.
For Pakistan, discounted crude offers respite from an acute balance of payments crisis, risking a default on its debt obligations.
Further, the US has already deepened its engagement with Pakistan on financial matters to stabilise Pakistan’s economic mess.
The Russia-Pakistan oil deal came at the heels of the US Department of Treasury’s visit to Pakistan from 23-25th Jan 2023 to discuss different aspects of financial assistance and other issues.
Shortly before the first shipment of discounted Russian oil reached Karachi, Pakistan and the US held the US-Pakistan Energy Security Dialogue on 15 March 2023. Concerns over the purchase of Russian oil were very much a part of that deliberation.
So, how does Pakistan’s existential desperation fetch it the best of both worlds? Manipulating its key geography is one reason. However, there is more to how Pakistan runs with the hares and hunts with the hounds.
It may be an intriguing story of how the Pakistani State remains and shall remain in tatters, no matter what deals are struck worldwide. International smartness can do little to resurrect its subverted institutions and an eternal hollowing out of a fractured nation that exists in hyper emotions, thrives on corruption and grapples with the mystery of its despondent being – all to the relentless entertainment of watchers that behold the Pakistani antics.
For India, however, there is a caution to guard its foreign policy imperatives, both with respect to its relations with Russia and its focus on the Indo–Pacific.
The writer is an Associate Fellow, Europe and Eurasia Center, at the Manohar Parrikar Institute for Defence Studies and Analyses. She tweets @swasrao. Views are personal.
(Edited by Zoya Bhatti)