Research interest in Russia’s role in the Eastern Mediterranean region remains high. The increasing Russian presence in the Eastern Mediterranean is explained by energy and security issues. It is noted that Moscow has opted for a more balanced policy of maintaining non-aligned relations. This approach implies political risks, but it appears to be working in terms of the flexibility of Russian policy in the face of increasing pressure from other global actors, a competitive environment and the next round of transformation processes in the region. At the same time, this resilient approach of Russian policy includes and promotes ideas of inclusiveness, finding a balance of interests between global and regional powers, and the need to stabilise the region.
Russia’s Energy Policies in the East Med
One of the key elements of Russian foreign policy in the Eastern Mediterranean subregion—and more broadly in the Middle East—is the desire to ensure stable interaction with major players in the energy market. From this perspective, Moscow’s intensified attention to regional issues is linked to three factors: 1) the need to ensure stability in the oil market by creating coalition formats to regulate oil prices; 2) nuclear energy exports; and 3) surveillance of and partial inclusion in the most promising energy exploration, production and export projects from the region. COVID-19 has forced adjustments to be made to these plans, but Moscow is successfully adapting to the new realities.
Energy price regulation
The intensification of Russian foreign policy in the Eastern Mediterranean has facilitated contacts with influential actors. Given the importance of the Eastern Mediterranean and the often-overlapping interests of regional powers in the Middle East, Russia and the Gulf monarchies have been able to advance both the bilateral agenda and key energy issues. The increase in official visits from Middle Eastern capitals to Moscow in the second half of the 2010s, like the historic visit by the king of Saudi Arabia, was a clear indication of Moscow’s increased role in the region. Meanwhile, the effect of the OPEC+ deal to keep oil prices at an adequate level—in which Russia and Saudi Arabia were the key players—allowed Moscow to receive an additional US$100 billion (according to Russian officials) to its budget. The Syrian operation can thus be considered a springboard to the Persian Gulf, among other things.
At the end of 2016, OPEC and several non-member states (OPEC Plus), including Russia, agreed to reduce oil production to stabilise prices. Thus, Moscow sought to develop systematic interaction with influential international organisations, whose key members are the energy exporting states of the Middle East and North Africa. Joint monitoring of the oil market, production adjustments and other measures stabilised the situation. However, with the coronavirus crisis, the global oil market began to falter again and energy prices became volatile. Negotiations between OPEC Plus members became more difficult, partly due to the non-participation in the negotiations of the US, the third-largest oil producer after Russia and Saudi Arabia. Demand in the COVID-19 era began to fall sharply and additional cuts in oil production were required. However, oil players did not immediately manage to reach a compromise. In March an oil conflict broke out between Russia and Saudi Arabia when Russia did not agree to the terms proposed by OPEC. The result was a precipitous drop in oil prices, with Brent crude falling by 30% in March 2020. Saudi Arabia and many other players started to sharply increase production. Eventually the parties managed to reach an agreement again, not without the attention of the US. Russia and Saudi Arabia returned to dialogue, becoming the key guardians of order in OPEC Plus, leading to a relative stabilisation of the market. However, price increases and rising demand only appeared in early 2021. A market recovery—in the optimistic scenario—is expected precisely at the end of 2021.
Rapid population growth, urbanisation, and other factors have led a number of developing nations—including those in the Eastern Mediterranean region—to diversify their energy sources. In this context, the Russian state corporation Rosatom is creating a fundamentally new industry for its Eastern Mediterranean partners in the form of “peaceful atom”. Moreover, Russia is the only global power building nuclear power plants (NPPs), in the north of the Eastern Mediterranean in Turkey and in the south in Egypt. Both the Akkuyu nuclear power plant in the Turkish province of Mersin and the planned Ad Dabaa nuclear power plant near the Egyptian city of El Alamein, 3.5 km from the Mediterranean Sea, are strategic to Russia’s relations with the Eastern Mediterranean states. Such costly and long- term projects will help to strengthen the multifaceted relations between Moscow and its partners and take them to a new level. The Akkuyu NPP project in Turkey is well underway and construction is at an advanced stage. Despite COVID-19, the parties have remained committed to the project, taken strict measures to protect the employees of the organisations involved in construction against the coronavirus, and managed to begin construction of Unit 3 on time. As Russian President Vladimir Putin noted in the video-conferenced ceremony marking the start of construction of Unit 3 of the Akkuyu NPP, “all of the construction works have been completed on the Akkuyu NPP site”. A total of four power units with reactors providing a total capacity of 4,800 MW will be installed at the Akkuyu site, producing up to 37 billion kWh of electricity annually. The construction is being carried out with the involvement of Turkish business, and more than a hundred nuclear engineers are being trained at Russian universities for Turkey. The first unit of Akkuyu NPP is due to be commissioned for the 100th anniversary of the Turkish Republic in 2023.
In Egypt, the start of construction of the Ad-Dabaa NPP, scheduled for 2020, has been delayed due to the coronavirus crisis. Nevertheless, the parties have worked hard and reached agreements on all aspects of the US$30 billion project. Most of this amount, about US$25 billion, will be financed by a Russian loan. The first of four units is expected to be operational in 2026. Rosatom’s projects in Turkey and Egypt are implemented under the Built-Operate-Own system.
Russia and Projects in the Eastern Mediterranean
Russian oil and gas companies had an interest in the Eastern Mediterranean even before the Russian military operation in Syria. Several contracts from Russian oil and gas and construction companies signed before 2011 were disrupted in Libya and Syria by wars, external interference, and US support for the policy of “overthrowing undesirable regimes”. The discovery of new fields in the Eastern Mediterranean (Tamar, Leviathan, Zohr and others) raised the question of Russian companies’ activism in a region already destabilised by social and political turmoil. Russia began to explore the possibility of joining the most promising projects for exploration, extraction and export of energy resources from countries in the region. The development of the Eastern Mediterranean projects themselves was hampered by long-standing conflicts, the absence of maritime border demarcation, the policies of regional powers (competition) and external interference. The US sees Eastern Mediterranean gas as a tool to reduce the role of Russian gas in the European market and subsequently to increase the share of American gas in Europe. As Sergey Lavrov said during the Rome MED 2020 — Mediterranean Dialogues international conference: “We are not against the implementation of energy projects aimed at diversifying gas supply routes to Europe, including in that region. At the same time, we refuse to accept political bias in cooperation in this sphere. The choice must be made by the consumer countries themselves based on the logic of free competition, economic expediency and benefit, rather than under the influence of ultimatums and threats made across the ocean”.
With their technological and organisational capabilities, as well as their vast experience in the energy sector, Russian oil and gas giants entered many new Eastern Mediterranean projects in the second half of the 2010s. Regional nations themselves have been receptive to Russian interest. Several contracts were signed between Russian companies and Eastern Mediterranean states, but Russian participation in the projects was generally rather restrained. Russia’s Rosneft, which is looking to compete with Gazprom on the European gas market, has been most successful in Egypt. Egypt’s largest project, Zohr, is being run as a concession by Italy’s Eni S.p.A. (50%), Rosneft (30%), Britain’s BP (10%) and Mubadala Petroleum (10%).
Using Egyptian LNG capacity, Rosneft can achieve the coveted goal of supplying its own natural gas to the European market to compete with Gazprom. Gazprom itself also supplied LNG to Egypt until recently. However, the situation has changed in recent years. For the time being, only LNG from the Egyptian Damietta terminal has come online.8 The key players here are not Russian, but US Chevron with 39.66% of the Leviathan project and 32.5% of the Tamar project, as well as the Israeli Delek Drilling and others. By linking the Israeli fields with Egyptian LNG terminals, all these players plan to take a share of the gas market. To do so, they are investing in improving the gas pipeline infrastructure to the Egyptian terminals, expanding their capacity. This will allow them to export up to 7 billion cubic meters of gas per year.
While this approach by Chevron and its partners could weaken the position of Russian companies, it also calls into question the need to build the EastMed pipeline (planned at 10 bcm/y) under an agreement between Israel, Cyprus and Greece.
In January 2019, an intergovernmental organisation, the Eastern Mediterranean Gas Forum (EMGF), was established to unlock the potential of the region’s gas resources and monetise their reserves. Many Eastern Mediterranean states (apart from Turkey and Syria) joined the organisation, along with European states with interests in the region (France and Italy are members) and even an external one, the US (as observer). Th United Arab Emirates’ (UAE) desire to join the EMGF in March 2021 was vetoed by one of the founding members, Palestine. Russia, on the other hand, is still absent from the organisation, and the reason may be that the Eastern Mediterranean Gas Forum is seen to compete with Russian plans. Th Forum has also yet to prove its worth, both in terms of gas prices (which have been kept low for the last year, though this situation may not continue) and competition from US, Russian and Qatari gas. Th is not to mention the competition between Turkey and Egypt for the role of main gas hub. Russia’s energy policy in the subregion should also be seen in the context of current realities and security threats.
Security Is Key
Despite the importance of energy for Moscow, geopolitics and security issues have underpinned Russian foreign policy. Firstly, in the second half of the 2010s, the need to respond to terrorist threats from the Middle East became apparent. Secondly, the deterioration of relations between Russia and NATO, and especially the US, underscored a need to demonstrate Russian capabilities. Thirdly, Russian military presence required working relations and contacts with regional powers and the consolidation of Russia’s position in the Eastern Mediterranean.
The second half of the 2010s drew a line under the previous period of Moscow’s absence from the Eastern Mediterranean. This was primarily due to the activation of Russian diplomacy and economic cooperation with the states of the region: Russia became an important trade and investment partner for a number of states (e.g. Cyprus). Secondly, it was a result of the Russian troop grouping in Syria in 2015, marking the start of the counter-terrorism operation in that country. At the beginning of the crisis in 2011, the US did not want to get actively involved in the Syrian question. It was simply not a priority, as the US was still to overcome the results of its activities in Iraq and Libya. However, while for many Russia filled the vacuum created by the US’ desire to rebalance its policy from the Middle East to the Asia-Pacific, for Moscow itself, it was the threat of terrorism that was at the heart of the move. Thus, the first tasks of the Russian military in Syria, according to Defence Minister Sergei Shoigu, were “to eliminate terrorist groups in Syria and also to prevent fighters from coming back to Russia”. These were very practical issues requiring the attention of Russian decision makers. The outcome of the Russian operation showed that Moscow had succeeded in preventing the creation of a “terrorist safe heaven”. As Chiara Lovotti says: “The Russian military intervention was furthermore fundamental in destroying the Islamic State: this is an unquestionable fact”. It is worth recognising, however, that Moscow was also addressing geopolitical concerns along the way.
In Moscow’s calculations, the issue of its own security from its southern borders was on the agenda. Following Russia’s increased positioning in the Black Sea, access to the Mediterranean retained and intensified its importance. For Russia, access through the Bosphorus and Dardanelles straits is crucial, in the context of addressing issues of state development as well as its presence on the world’s oceans. The latter is of strategic importance to Russia’s response to the US policy of global dominance of the world’s oceans. Given this and the history of Russian presence in the Eastern Mediterranean, Russia modernised its fleet and established a permanent Mediterranean navy taskforce in 2013. The prototype for the Russian Navy’s permanent Mediterranean taskforce operating today is the former Soviet Navy’s 5th Mediterranean Squadron, which was disbanded on 31 December 1992. In the Cold War period the 5th Soviet Squadron was considered a rival to the US Navy’s 6th Fleet.
According to doctrinal documents, Moscow also saw NATO’s expansion closer to its borders as a threat. Within the framework of major external military risks, Russia’s Military Doctrine noted a “build-up of the power potential of the North Atlantic Treaty Organization (NATO) and vesting NATO with global functions carried out in violation of the rules of international law, bringing the military infrastructure of NATO member countries near the borders of the Russian Federation, including by further expansion of the alliance”. Nevertheless, within the context of its objectives of preventing and containing conflicts, in the same military doctrine Russia sees the necessity of “maintaining equal dialogue in European security with the European Union and NATO”, among other things.
For Russia, the actions of NATO’s main policy driver, the US, are perceived as a key threat. Washington not only pressures Moscow with its actions and anti-Russian rhetoric, but also seeks to undermine Russia’s relations with the Black Sea and Eastern Mediterranean states. Moreover, there has been a consistent US policy of supporting anti-Russian initiatives in the Eastern Mediterranean. These are expressed in the Eastern Mediterranean Security and Energy Partnership Act. The “Caesar Act”, which establishes tough sanctions against Syria, is also a matter of concern for Moscow. But, as further analysis shows, there is no support for these US policies from regional states. Most of them prefer to maintain stable ties with Moscow because of their national interests. For instance, with regard to the Caesar Act, many states do not support the sanctions imposed by the US. The problem is that those sanctions are secondary and prevent Middle Eastern and European states from engaging with Damascus. Some of these states, including such American partners as the UAE, have openly criticised US policy and would like to see Syria back in the region.
Several NATO member states evidently disagree with Washington’s assessment of Russia. This is confirmed by the position of one of NATO’s largest forces, Turkey. Turkey prefers to engage with Moscow both in the Black Sea region and in the Mediterranean. Despite different positions on many issues, Russia and Turkey have managed to find complex answers to difficult questions through hard work together. For instance, despite taking opposite sides in the Syrian conflict, Moscow and Ankara managed to create de-escalation zones and to set up, together with Iran, the Astana talks, which went on to become a major negotiating tool. In 2017, Russia and Turkey also signed a US$2.5 billion deal to supply the S-400 Triumph air defence system, in the national interests of Turkey. The US, however, is pursuing a campaign against Turkey and trying to make it give up the Russian air defence systems. The media have reported that, during the meeting between the United States Secretary of State Antony Blinken and Turkish Foreign Minister Mevlut Çavuşoğlu, Blinken “urged” Turkey not to retain the Russian S-400 air defence system, while his Turkish counterpart answered that it is a “done deal”. Even in the case of Libya, Turkey tried to engage with Moscow, and many observers began to say that Russia and Turkey were deciding the fate of states together. This was nevertheless not quite true. Moscow’s efforts at resolving the Syrian or other crises drew the attention of Western states (beginning with Russian activism in 2015). When Moscow sent its military contingent to Syria, the Russians wanted to work together with the US (Lavrov- Kerry format). Attempts to work with European powers also failed (Istanbul meeting of Russia, Germany, France and Turkey). Since then, Russia has been more active in working with regional powers, including the Gulf monarchies. Both Russian and European experts have nevertheless repeatedly discussed opportunities for interaction between Russia and Europe.
In Libya, the Russian approach assumed a rather tactical nature with various players. It was therefore not a problem for Russia to engage with Turkey when it needed to, or to support the Berlin process and the position of individual EU states on Libya. It is worth noting that “Russia certainly has the ability to influence the unfolding events in Libya, having diplomatic weight and even a military presence in the Eastern Mediterranean, as well as working and special relations with many regional sponsors of the Libyan conflict. Nevertheless, Moscow has already shown that in such matters it prefers to rely on regional players with real influence on the situation in crisis zones (as was demonstrated in the framework of the Astana format on the Syrian issue)”.
Of course, Turkish actions in the Eastern Mediterranean have been a source of considerable wariness. Though these were initially explained by Turkey’s having been sidelined by regional states in various issues, Turkey decided to escalate its rhetoric. In December 2019, Turkish President Tayyip Erdoğan received the head of Libya’s GNA, Fayez al-Sarraj, in Istanbul and signed a Turkish-Libyan agreement on military cooperation and a memorandum of understanding on the demarcation of maritime zones between the two countries. This did not please Turkey’s Mediterranean neighbours. Nevertheless, this escalation also suggested that at some point the Turks would have to de-escalate and seek compromises, which is what eventually happened.
What Room for Dialogue in the Eastern Mediterranean?
Changing regional dynamics in the Eastern Mediterranean have revealed the need to reshape the policies of regional and global powers. The normalisation of relations between Israel and several Arab states, most notably the UAE and Bahrain in 2021, could not fail to have an impact on the situation in the Eastern Mediterranean. The re-establishment of ties between the UAE, Saudi Arabia and Egypt on the one hand, and Qatar on the other also opened new opportunities for strengthening ties. These developments ran in parallel with Turkey’s attempts to break out of the isolation it had fallen into in the Eastern Mediterranean. Rumours of rapprochement between Ankara and Cairo—the region’s two most populous countries—were particularly prominent in February and March 2021, though more likely to come from the Turkish side. On May 5-6, the Turkish Deputy Foreign Minister Sedat Onal visited Cairo following consultations by the two states’ special services. Despite the fact that even a meeting of the Egyptian and Turkish foreign ministers is expected, progress in Egyptian-Turkish relations takes more time than one could expect. It is obvious that it is not easy for the parties to reach agreements on regional issues. The start of dialogue between Turkey and Greece is also worth noting. After rounds of serious escalation, the sides are taking their first steps towards compromise. Russia monitors these developments and supports de-escalation in the area while also maintaining relations with Turkey, Egypt and Greece. With reference to the latter, as Russian Prime Minister Mikhail Mishustin noted during his visit to Athens, on 24–25 March, to attend the celebrations marking the 200th anniversary of the Greek Revolution “The Russian-Greek relationship is based on special historical, cultural and spiritual closeness”. If we take Russia’s attitude to the Eastern Mediterranean in general, there is also a sense of the need to support interfaith dialogue between Christian (Orthodox, especially important to Moscow), Muslim, and other communities. As for Egypt, it is worth noting that Russia maintains high contacts at the military-political level and conducts joint naval exercises (the last of which took place in the Black Sea).
Both the US and the EU have agreed to work “hand-in-hand” on stabilisation in the Eastern Mediterranean. But how inclusive would this be on their part? The Americans are known for their policies of “isolationism” or “exceptionalism” when they do not like something. Europe, for its part, has shown that EU capitals can assume different positions on crises. When one of the European powers intervenes more actively, it does not always lead to a more effective outcome (as with France in Lebanon). At a joint meeting, European diplomacy chief Josep Borrell and Antony Blinken also declared that “… they are ready to engage with Russia on issues of common interest …”. It remains to be hoped that the Eastern Mediterranean will become an area for discussion rather than confrontation between the US, the EU and Russia. In the meantime, in March 2021, during a visit to China, Russian Minister of Foreign Affairs Sergey Lavrov said: “If and when the Europeans deem fit to eliminate these anomalies in contacts with their largest neighbour, of course we shall be ready to build up relations based on equality and balanced interests. In the meantime, there are no changes on the Western front, while in the East, in my opinion, we have a very intensive agenda, which is becoming more diverse every year”. In 2021, Russia’s aim is to “keep its finger on the pulse”. This is due to the complex logic of transforming tactical alliances in the Middle East. With many changes in regional dynamics, regional and global powers should not go out of their way to ignore each other’s interests. Doing so could lead to an escalation or to the activation of the proxy powers that all of the external and regional players possess.
Russia has yet to find its place in Eastern Mediterranean affairs, though joining the subregion’s energy projects can be seen as a reasonable route towards Russian engagement. Given Russia’s experience, and that energy can provide a basis for building a more stable Eastern Mediterranean, Moscow should be perceived as a constructive partner in this process. Several regional powers are interested in the stability of the subregion, but so are global powers, like Russia and the US (though with different visions). Cooperation is the key to establishing a stable region. Russia’s bilateral relations with Eastern Mediterranean countries were clearly quite successful by the start of the new decade. COVID-19 provided a further catalyst for regional dynamics. Russia became increasingly pragmatic and domestic policy issues took precedence over foreign policy issues by 2020 (and even more so during the pandemic). This can be seen clearly from Russia’s policy in the Levant: the intensification of 2015–2017 was superseded by greater moderation in 2018–2020. The treaties signed with the Syrian government consolidated Russia’s position and presence in the Eastern Mediterranean. Understanding its limitations, however, Russia did not expand its presence in Syria or increase its influence in other parts of the region. Instead, Moscow opted for a more balanced policy of maintaining neutral-positive non-aligned relations. This approach implies political risks, but it is the most correct in terms of the flexibility of Russian policy in the face of increasing pressures, a competitive environment and the next round of regional transformations. At the same time, the resilience of Russian policy promotes inclusiveness, the establishment of a balance of interests between global and regional powers, and the need to stabilise the region.
From our partner RIAC
Energy transition is a global challenge that needs an urgent global response
COP26 showed that green energy is not yet appealing enough for the world to reach a consensus on coal phase-out. The priority now should be creating affordable and viable alternatives
Many were hoping that COP26 would be the moment the world agreed to phase out coal. Instead, we received a much-needed reality check when the pledge to “phase out” coal was weakened to “phase down”.
This change was reportedly pushed by India and China whose economies are still largely reliant on coal. The decision proved that the world is not yet ready to live without the most polluting fossil fuels.
This is an enormous problem. Coal is the planet’s largest source of carbon dioxide emissions, but also a major source of energy, producing over one-third of global electricity generation. Furthermore, global coal-fired electricity generation could reach an all-time high in 2022, according to the International Energy Agency (IEA).
Given the continued demand for coal, especially in the emerging markets, we need to accelerate the use of alternative energy sources, but also ensure their equal distribution around the world.
There are a number of steps policymakers and business leaders are taking to tackle this challenge, but all of them need to be accelerated if we are to incentivise as rapid shift away from coal as the world needs.
The first action to be stepped up is public and private investment in renewable energy. This investment can help on three fronts: improve efficiency and increase output of existing technologies, and help develop new technologies. For green alternatives to coal to become more economically viable, especially, for poorer countries, we need more supply and lower costs.
There are some reasons to be hopeful. During COP26 more than 450 firms representing a ground-breaking $130 trillion of assets pledged investment to meet the goals set out in the Paris climate agreement.
The benefits of existing investment are also becoming clearer. Global hydrogen initiatives, for example, are accelerating rapidly, and if investment is kept up, the Hydrogen Council expects it to become a competitive low-carbon solution in long haul trucking, shipping, and steel production.
However, the challenge remains enormous. The IEA warned in October 2021 that investment in renewable energy needs to triple by the end of this decade to effectively combat climate change. Momentum must be kept up.
This is especially important for countries like India where coal is arguably the main driver for the country’s economic growth and supports “as many as 10-15 million people … through ancillary employment and social programs near the mines”, according to Brookings Institute.
This leads us to the second step which must be accelerated: support for developing countries to incentivise energy transition in a way which does not compromise their growth.
Again, there is activity on this front, but it is insufficient. Twelve years ago, richer countries pledged to channel US$100 billion a year to less wealthy nations by 2020, to help them adapt to climate change.
The Organization for Economic Cooperation and Development estimates that the financial assistance failed to reach $80 billion in 2019, and likely fell substantially short in 2020. Governments say they will reach the promised amount by 2023. If anything, they should aim to reach it sooner.
There are huge structural costs in adapting electricity grids to be powered at a large scale by renewable energy rather than fossil fuels. Businesses will also need to adapt and millions of employees across the world will need to be re-skilled. To incentivise making these difficult but necessary changes, developing countries should be provided with the financial support promised them over a decade ago.
The third step to be developed further is regulation. Only governments are in a position to pass legislation which encourages a faster energy transition. To take just one example, the European Commission’s Green Deal, proposes introduction of new CO2 emission performance standards for cars and vans, incentivising the electrification of vehicles.
This kind of simple, direct legislation can reduce consumption of fossil fuels and encourage industry to tackle climate change.
Widespread legislative change won’t be straightforward. Governments should closely involve industry in the consultative process to ensure changes drive innovation rather than add unnecessary bureaucracy, which has already delayed development of renewable assets in countries including Germany and Italy. Still, regardless of the challenges, stronger regulation will be key to turning corporate and sovereign pledges into concrete achievements.
COP26 showed that we are not ready as a globe to phase out coal. The priority for the global leaders must now be to do everything they can to drive the shift towards green energy and reach the global consensus needed to save our planet.
Pakistan–Russia Gas Stream: Opportunities and Risks of New Flagship Energy Project
Russia’s Yekaterinburg hosted the 7th meeting of the Russian-Pakistani Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation on November 24–26, 2021. Chaired by Omar Ayub Khan, Pakistan’s Minister for Economic Affairs, and Nikolai Shulginov, Russia’s Minister of Energy, the meeting was attended by around 70 policy makers, heads of key industrial companies and businessmen from both sides, marking a significant change in the bilateral relations between Moscow and Islamabad.
Three pillars of bilateral relations
Among the most important questions raised by the Commission were collaboration in trade, investment and the energy sector.
According to the Russian Federal Customs Service, the Russian-Pakistani trade turnover increased in 2020 by 45.8% compared to 2019, totaling 789.8 million U.S. dollars. Yet, there is still huge potential for increasing the trade volume for the two countries, including textiles and agricultural products of Pakistan and Russian products of machinery, technical expertise as well as transfer of knowledge and R&D.
Another prospective project discussed at the intergovernmental level is initiating a common trade corridor between Russia, the Central Asia and Pakistan. Based on the One-Belt-One-Road concept, launched by China, the Pakistan Road project is supposed to create a free flow of goods between Russia and Pakistan through building necessary economic and transport infrastructure, including railway construction and special customs conditions. During the Commission meeting, both countries expressed their intention to collaborate on renewal of the railway machines fleet and facilities in Pakistan, including supplies of mechanized track maintenance and renewal machines; supplies of 50 shunting (2400HP or less) and 100 mainline (over 3000HP) diesel locomotives; joint R&D of the technical and economic feasibility of locomotives production based in the Locomotive Factory Risalpur and other. The proposed contractors of the project might be the Russian Sinara Transport Machines, Uralvagonzavod JSC that stand ready to supply Pakistan Railway with freight wagons, locomotives and passenger coaches. In order to engage import and export activities between Russian and Pakistani businessmen, the Federation of Pakistan Chamber of Commerce signed a memorandum with Ural Chamber of Commerce and Industry, marking a new step in bilateral relations. Similar memorandums have already been signed with other Chambers of Commerce in Russian regions.
— Today, the ties between Russia and Pakistan are objectively strengthening in all areas including economic, political and military collaboration. But we, as businessmen, are primarily interested in the development of trade relations and new transit corridors for export-import activities. For example, the prospective pathways of the Pakistan-Central Asia-Russia trade and economic corridor project are now being actively discussed at the intergovernmental level, — said Mohsin Sheikh, Director of the Pakistan Russia Business Council of the Federation of Pakistan Chambers of Commerce and Industry. — For Islamabad, this issue is one of the most important. Based on a similar experience of trade with China, we see great prospects for this direction. That is why representatives of Pakistan’s government, customs officers, diplomats and businessmen gathered in Yekaterinburg today.
However, the flagship project of the new era of the Pakistan-Russia relations is likely to be the Pakistan Gas Stream. Previously known as the North-South Gas Pipeline, this mega-project (1,100 kilometers in length) is expected to cost up to USD 2,5 billion and is claimed to be highly beneficial for Pakistan. Being a net importer of energy, Pakistan will be able to develop and integrate new sources of natural gas and transport it to the densely populated industrialized north. At the same time, the project will enable Pakistan—whose main industries are still dependent on the coal consumption—to take a major step forward gradually replacing coal with relatively more ecologically sustainable natural gas. To enable this significant development in the Pakistan’s energy sector, Moscow and Islamabad have made preliminary agreements to carry on the research of Pakistan’s mineral resource sector including copper, gold, iron, lead and zinc ores of Baluchistan, Khyber Pukhtunkhwa and Punjab Provinces.
A lot opportunities but a lot more risks?
The Pakistan Stream Gas Pipe Project undoubtedly opens major investment opportunities for Pakistan. Among them are establishment of new refineries; the launch of virtual LNG pipelines; building of LNG onshore storages of LNG; investing in strategic oil and gas storages. Yet, it seems that Pakistan is likely to win more from the Project than Russia. And here’s why. The current version of the agreement signed by Moscow and Islamabad has been essentially reworked. According to it, Russia will likely to receive only 26 percent in the project stake instead of 85 percent as it was previously planned, while the Pakistani side will retain a controlling stake (74 percent) in the project.
Another stranding factor for Russia is although Moscow will be entitled to provide all the necessary facilities and equipment for the building of the pipeline, the entire construction process will be supervised by an independent Pakistani-based company, which will substantially boost Pakistan’s influence at each development. Finally, the vast bulk of the gas transported via the pipeline will likely come from Qatar, which will further strengthen Qatar’s role in the Pakistani energy sector.
Big strategy but safety first
The Pakistan Stream Gas Pipeline will surely become an important strategic tool for Russia to reactivate the South Asian vector of its foreign policy. Even though the project’s aim is not to gain a fast investment return and economic benefits, it follows significant strategic goals for both countries. As Russia-India political and economic relations are cooling down, Moscow is likely to boost ties with Pakistan, including cooperation in economy, military, safety and potentially nuclear energy, that was highlighted by Russian Foreign Minister Sergey Lavrov during visit to Islamabad earlier this year. Such an expansion of relations with Pakistan will allow Russia to gain a more solid foothold in the South Asian part of China’s BRI, thus opening up a range of new lucrative opportunities for Moscow.
Apart from its economic and political aspects, the Pakistan Stream Project also has clear geopolitical implications. It marks Russia’s growing influence in South Asia and points to some remarkable transformations that are currently taking place in this region. The ongoing geopolitical game within the India-Russia-Pakistan triangle is yet less favorable for New Delhi much because of the Pakistan Stream Project. Even though the project is not directly aimed to jeopardize the India’s role in the region, it is considered the first dangerous signal for New Delhi. For instance, the International “Extended troika” Conference on Afghanistan, which was held in Moscow last spring united representatives from the United States, Russia, China and Pakistan but left India aside (even though the latter has important strategic interests in Afghanistan).
With the recent withdrawal of the U.S. military forces from Afghanistan, Moscow has become literally the only warden of Central Asia’s security. As Russia is worried about the possibility of Islamist militants infiltrating the Central Asia, the main defensive buffer in the South for Moscow, the recent decision of Vladimir Putin to equip its military base in Tajikistan, which neighbors Afghanistan, seems to be just on time. Obviously, Islamabad that faces major risks amidst the Afghanistan crisis sees Moscow as a prospective strategic partner who will help Imran Khan strengthen the Pakistani efforts in fighting the terrorism threat.
From our partner RIAC
How wind power is transforming communities in Viet Nam
In two provinces of Viet Nam, a quiet transformation is taking place, driven by the power of renewable energy.
Thien Nghiep Commune, a few hundred kilometres from Ho Chi Min City, is a community of just over 6,000 people – where for years, people relied largely on farming, fishing and seasonal labour to make ends meet.
Now, thanks to a wind farm backed by the Seed Capital Assistance Facility (SCAF) – a multi-donor trust fund, led by the United Nations Environment Programme (UNEP) – people in the Thien Nghiep Commune are accessing new jobs, infrastructure and – soon – cheap, clean energy. The 40MW Dai Phong project, one of two wind farms run by SCAF partner company the Blue Circle, has brought new hope to the community.
For the 759 million people in the world who lack access to electricity, the introduction of clean energy solutions can bring improved healthcare, better education and affordable broadband, creating new jobs, livelihoods and sustainable economic value to reduce poverty.
“It’s not only about the technology and the big spinning wheel for me. It’s more about making investment decisions for the planet and at the same time not compromising on the necessity that we call electricity,” said Nguyen Thi Hoai Thuong, who works as a community liaison. “The interesting part is I work for the project, but I actually work for the community and with the community.”
While the wind farm is not yet online, a focus on local hiring and paying fair prices for land has already made a big difference to the community.
“I used the money from the land sale to the Dai Phong project to repair my house and invest in my cattle. Currently, my life is stable and I have not encountered any difficulties since selling the land,” said Ms. Le Thi Doan.
The energy sector accounts for approximately 75 per cent of total global greenhouse gas emissions (GHGs). UNEP research shows that these need to be reduced dramatically and eventually eliminated to meet the goals of the Paris Agreement.
Renewable energy, in all its forms, is one of humanity’s greatest assets in the fight to limit climate change. Capacity across the globe continues to grow every year, lowering both GHGs and air pollution, but the pace of action must accelerate to hold global temperature rise to 1.5 °C this century.
“To boost growth in renewables, however, companies need to access finance,” said Rakesh Shejwal, a Programme Management Officer at SCAF. “This is where SCAF comes in. SCAF works through private equity funds and development companies to mobilize early-stage investment low-carbon projects in developing countries.”
The 176 projects it seed financed have mobilized US $3.47 billion to build over one gigawatt of generation capacity, avoiding emissions of 4.68 million tons of carbon dioxide (CO2) equivalent each year.
But SCAF’s work isn’t just about cutting emissions. It is bringing huge benefits across the sustainable development agenda: increasing access to clean and reliable electricity and boosting communities across Asia and Africa. SCAF will be potentially creating 17,000 jobs.
This is evident in Ninh Thuan province, where the Blue Circle created both the first commercial wind power project and the first to be commissioned by a foreign private investor in Viet Nam.
Here, the Dam Nai wind farm has delivered fifteen 2.625 MW turbines, the largest in the country at the time. These will generate approximately 100 GWh per year. They will avoid over 68,000 tCO2e annually and create more than an estimated 302 temporary construction and 13 permanent operation and maintenance jobs for the local community.
Students from the local high school in Ninh Thuan Province were also given the opportunity to meet with engineers and technicians on the project, increasing their knowledge about how renewable energy works and opening up new career paths.
SCAF, through its partners, is supporting clean energy project development in the Southeast Asian region and African region. SCAF has more than a decade of experience in decarbonization and is currently poised to run till 2026.
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