Ukraine Economy and Pakistan

Nations around the world are interlinked in a myriad of ways. Ukraine destroyed is not Ukraine destroyed alone. The war on Ukraine has created a havoc.

Let’s examine some core facts: The war and sanctions on Russia have had a negative cascading effect globally. In particular the European and Central Asian countries. Kyrgyz Republic, Belarus, Tajikistan and Moldova economies will go in recession owing to lower prioritizing and investing in the growth projects as a direct effect of the spillover outcome of the war. As predicted by the World Bank Ukraine economy will shrink up to 45.1% depending upon how long the war drags on and how hard the war is in terms of destruction. Russian economy is already in recession and expected to recede further.

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Ukraine and Russia produce ad export 40% of wheat to the region and roughly 75% to South Caucasus and Central Asia. There is a bottleneck in supply chains. Supply routes using Black Sea ports in Odessa and Mariupol both in Ukraine are cut off. Odessa is facing a blockade under Russian Navy whereas Mariupol stands completely destroyed. The government has banned wheat export to feed its own population.

Fast forward to Pakistan. Costs of food items, consumer items, energy rates among others have gone up. Kiev supplied 39% of Pakistan’s wheat imports last year. We also imported corn, barley, grain, seeds among other items from Ukraine. Outbreak of war has disrupted supply line. On the flip side of the coin, with the destruction wrought in Ukraine, it has now little to export even if can.

The T-80UD tanks are up for repairs and modernization bought by Pakistan from Ukraine in 1996 has gone in delay. Pakistan exports 28% of its polyester staple fiber to Ukraine. Furthermore, cost of oil per barrel shot up, hitting the country’s reserves hard.

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Pakistan in face of the war, is the first country to officially sign a trade deal with Russia as Russia faces sanctions. However, it is not the first time Pakistan will be importing wheat from Russia. In 2020 Russia exported $699M to Pakistan with leading product being wheat. That was then, now is now with changed global sentiments towards Russia post-Ukraine invasion. The political spillover effects will come later. However, Pakistan will have to weave around the sanctions.

In 2021, the Russia signed a national gas pipeline in Pakistan worth $2.5B. which the former Pakistan government confirmed going ahead with even after invasion of Ukraine. EU had granted the Generalised System of Preference + (GSP+) status in 2014. This status expires in 2023. Pakistan has to re-apply and commit to certain benchmarks to be re-awarded the status.

The prediction is not good for Pakistan. With a slower growth rate, regionally high energy subsidies, covid-19 effects lingering followed by the devastating effect of floods has introduced Pakistan to a next level crisis.

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Law and order situation is already deteriorating. This is the natural outcome of fewer jobs to go around, more people falling below the poverty line, inability to make ends meet and spiraling inflation. The failure of government to provide for the masses will lead to creation of a vacuum that will likely be filled by hardline organizations offering help, providing an extremist ideology as a side-dish.

All of the above boils down to one point: the Ukraine war has pushed Pakistan’s back up against the wall. She will have to make a choice to align herself with Russian or western interests. In case she chooses to navigate her way through a situation-to-situation basis, it will be like answering to too many masters making none of them happy.

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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: yasmeenali62@gmail.com and tweets at @yasmeen_9.

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