The global sanctions imposed on Russia have hampered the trade process and has impacted it’s economy. However, with the historic grain export agreement from Turkey and the UN, and exports to the countries like India and Pakistan, the Russian economy has seen a significant increase.
Russia is the largest fertilizer exporter in the world; however, its conflict with Ukraine has hampered the trade process, which has also driven the price of gas, a natural ingredient in the fertilizing process. Previously, the COVID-19 personnel shortages and factory closures in 2020 had already disrupted and caused instability in the fertilizer market. Furthermore, the international community’s sanctions amid the war have restricted several imports from Russia. Fertilizer costs in the US and around the world surged as a result of shipping companies and insurance companies avoiding Russia. According to a World Bank report, there was an increase in fertilizer prices worldwide by 80% in 2021 and 30% since the beginning of 2022.
The historic grain export agreement that was reached between the warring parties with support from Turkey and the UN was unilaterally suspended by the Russian Federation on October 29, 2022, Fortunately, on November 2, 2022, Russia agreed to rejoin the agreement with the help and efforts of the UN and Turkey.
One of the countries that also remained neutral and did not join the Western coalition arrayed against Russia was India. According to government and industry sources, Russia captured more than a fifth of the market share in the first half of the 2022–23 fiscal year, becoming India’s largest fertiliser supplier for the first time. During the first half of the year, India’s imports of fertiliser from Russia increased by 371% to a record 2.15 million tonnes, according to a senior government official’s statement to Reuters. Moreover, India’s imports during this period spiked 765% to $1.6 billion. In the last entire fiscal year, India imported 1.26 million tonnes from Russia. “India was struggling to secure fertilisers at reasonable prices after the conflict escalated between Russia and Ukraine. Russian supplies were timely and at reasonable prices. It helped us avoid possible scarcity,” the official said.
On the other hand, during the conflict in Ukraine, countries like the US have actively collaborated with allies and partners to impose an unprecedented set of sanctions and export restrictions on Russia. In October 2022, Russia’s foreign ministry stated that Moscow was ready to boost exports of food and fertilizers to help avert a global food crisis, but was being blocked from doing so by the United States. Foreign Ministry spokeswoman Maria Zakharova said Washington was “blackmailing” and “persecuting” those that try to trade with Russia and was therefore compromising global food security. The US has not directly targeted Russian agricultural exports, but sanctions on Russia’s shipping, insurance, logistics, and payments infrastructure are thwarting Russia’s ability to export crucial fertilizers and chemicals.
In a recent interview with Bloomberg News, US Secretary of State Anthony Blinken stated that it has convinced its allies in Europe, that in the long-term, it should move away from its dependence on Russian energy requirements and highlighted how the US has increased its production and exports of LNG to Europe, to offset any shortages.
Pakistan, similar to India, had maintained a neutral approach to the war crisis rather than supporting any state. The government of Pakistan has approved a deal worth nearly $112m to import 300,000 tonnes of wheat from Russia to meet its domestic shortfall. It comes at a time when Pakistan is struggling to balance its fragile economy and manage the aftermath of devastating floods. Under the agreement, the wheat will be supplied by Prodintorg, a Russian state corporation.
Also, earlier this month (November 2022), Pakistani Finance Minister Ishaq Dar expressed great interest in buying fuel from Russia even more so now that India has been doing so frequently, and that too at a highly cheap price. He put forward the condition, that the nation would buy Russian oil only if the fuel is supplied at the same rate as that of India.
The US government was initially critical of these purchases but has now made it clear that it accepts that India and any other country can continue to buy discounted Russian oil. “The United States does not currently have sanctions in place against Russian energy exports to other countries,” a US State Department spokesperson told Dawn when asked to comment on the development. “We have been very clear that each country will have to make its own choices based on its own circumstances in terms of energy imports,” said the US official when asked if Pakistan, and other countries, could also import Russian oil in the same way as India.
Under the present circumstances, there is no reason why Pakistan should not pursue an independent policy and conduct business transactions with Russia, for its national interest. India should not be the only exception to refuse to join Western sanctions against Russia and maintain its relationship for economic benefits.
