Daily Times

The Russia-Ukraine conflict jolted the world, in the aftermath of the events economies around the globe are now facing the real impact of Putin’s Demilitarization. For Pakistan, it is not only felt through the sharply rising fuel prices and an aggressively climbing inflation but also as increased political pressure from global powers.

The isolation of the world’s 11th-largest economy, on the other hand, has immediate global consequences, including rising inflation, stagnant growth, and financial system upheaval. The Russia-Ukraine unfortunate turn of events has unfolded a grand saga of political loyalties and hidden economic benefits. As India’s stance confused its quad partners, China maintained its silence, the US and the NATO allies continue with the sanctions – the global economic landscape is forever changed.

Europe is a significant destination for Russia’s energy exports, accounting for approximately 49 per cent of its crude oil and condensates and 74 per cent of its natural gas. Europe is, in a nutshell, Russia’s main energy buyer. The bulk of crude oil exported from Russia went to the Netherlands, Germany, and Poland, whereas the majority of natural gas exported from Russia went to Germany, Turkey, Italy, and France. Yes, Europe is extremely reliant on Russia for energy, and decreasing that reliance will not be easy. As a result, the first and foremost economic impact is felt by European countries.

As the global geopolitical economic influence evolves due to shifting dynamics between China and the United States, as well as the tensions in the Middle East, enterprises and investors have persevered in the face of hardship and maintained corporate dreams. However, the commodity shock of not only the energy products but of key industrial metals such as nickel, aluminium, and palladium as well as wheat and potash will have a greater long-term effect as they begin to unravel.

Many of Asia’s important actors are now on the verge of being lured into an expensive and deadly arms race.

My major concern here is if Russia concedes, which, at this point, seems like a major likelihood, it will reinforce the American influence and unilateralism not only on Russia but also on its allies. Under which, Pakistan may be in hot waters. As witnessed in the FATF’s decision to keep Pakistan on the grey list and our reliance on the IMF program, we may be once again forced to rethink our alliances and priorities. What remains to be seen is how will it pay for India’s selective and calculated neutrality? With the US hinting at “regional and global consequences,” the message could not have been any clearer.

Economic penalties levied against Russia may also jeopardise other projects being considered between Russia and Pakistan as part of the “Cooperation Roadmap 2021-26.” This will have an effect on the supply and maintenance of transport aircraft and helicopters, the renovation and repair of Pakistan’s railways, the development of industrial facilities, including upgrades, in the metallurgy, chemical, and pharmaceutical industries, and power engineering. It will also have a detrimental effect on Pakistan’s army’s tank modernisation programamme and the Pakistan Air Force’s IL-78 aircraft overhaul. The USD 2.5 billion Pakistan stream gas pipeline project may potentially be delayed.

For its part, experts believe that by remaining neutral and finalising long-term agreements in LNG, LPG, and crude oil at competitive prices to meet its energy needs, Islamabad will have an opportunity to strengthen bilateral ties with Moscow while also enhancing its bilateral ties with the United States. However, Pakistani leadership will be walking a thin line in maintaining a balance between Russia and the US.

Another emerging aspect of the Russia-Ukraine conflict is that it may trigger a Nuclear Arms Race in the Asian region. According to a December report by the US Department of Defense, China aims to treble its nuclear arsenal by 2027 and collect 1,000 warheads by 2030.

China will undoubtedly strengthen these efforts in the aftermath of the Ukraine war. It undoubtedly possesses the resources necessary for a significant armaments build-up. And, with Putin issuing nuclear threats and Taiwan tensions escalating, the strategic imperative is stronger than ever.

However, China’s nuclear program will continue. Also, many of Asia’s important actors are now on the verge of being lured into an expensive and deadly arms race that will erode the region’s security. India, China’s regional opponent, will attempt to increase its nuclear arsenal, prompting Pakistan, India’s nuclear-armed adversary, to do the same. The economic impact of which may be too much for Pakistan’s fragile economy.

Russia, economic gurus believe, is doomed, and the default is viewed as a matter of when not if. The all-too-obvious expectation is that sanctions would wreak such economic havoc on Russia that they will almost certainly spark an internal uprising or coup, which will then pave the way for a long-awaited regime change.

With a bleak future predicted for Russia, the political and economic experts in Pakistan must brace themselves for an economic impact unseen and not experienced in the country’s history before.

The writer is the Foreign Secretary-General for BRI College, China. He tweets @DrHasnain_javed.