Pakistan's Trade Partners: Soviet Union

Economic Review, May 1990 | Go to article overview
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Pakistan's Trade Partners: Soviet Union


Soviet Union and Pakistan are traditional business partners. With the establishment of diplomatic relations between our countries, in 1948, the trade relations also began to progress. The inter-governmental trade agreement signed in 1956, is an important event in the progress of Soviet-Pakistan trade and economic relations as well as an essential legal basis of these relations, with further development in barter due to annual bilateral protocols of mutual deliveries.

In the early 60's, the mutual trade and economic relations considerably advanced. The principal cause in this connection was the beginning of economic cooperation between our countries when, on March 4, 1961, the first agreement on cooperation in exploration of oil and gas was signed with a respective soft state credit terms and conditions. Consequently, in the mid-sixties, the trade and economic contacts became part and parcel of the Soviet-Pakistan inter-state relations; and it met the requirements of the basic necessities of Pakistan who, contrary to the opinion of the Western countries, gave first priority to important fields of fuel, heavy industry and infrastructure.

During next years, apart from the above mentioned two agreements, the Soviet Union and Pakistan signed further five agreements pertaining to the economic cooperation in oil and gas, ferrous metallurgy, power generation, broadcasting and fishery.

The economic cooperation with Pakistani private companies also progressed. Thus, by the early 70's Soviet organisations participated in design and construction of about 20 various projects in Pakistan.

It was considerably helped by the firm policy of Zulfiqar Ali Bhutto's government to industrialise the country, promote the state sector of economy, and loosen the unilateral attachment with the Western countries.

As a result of the Soviet Union's economic and technical aid, such projects were built in Pakistan as Karachi Steel Mills (annual production of steel - 1.1 million tons), along with a large training centre, Guddu Thermal Power Station (210 MW), 11 radio broadcasting stations of various power, a tractor assembly plant and electric meter assembly plant in Lahore and cotton-spinning mill in Hyderabad. The Soviet organizations carried out great volume of geological survey for oil and gas resulting in discovery of 3 oil and 5 gas fields. A large number of Pakistani specialists got vocational training in Training Centre of Pakistan Steel Mills on construction sites and in the Soviet Union.

Karachi Steel Mills that was completely built and commissioned in the beginning of 1985 and which is the basis of the country's industrial development bears specific importance. Karachi Steel Mills is successfully attaining its designing capacity, is working profitably; and having been meeting more than 50 per cent of the country's needs in rolled products, promoting the export of the products to other countries.

In accordance with the inter-governmental agreement of December 16, 1983, the organisation of the Sides started construction of the Thermal Power Station Multan-2 in Muzaffargarh (630 MW), which will become during coming years, like Pakistan Steel Mills, the biggest project of our cooperation.

Due to progress of our economic cooperation, the turnover of trade between our countries has considerably and dynamically increased; from $ 6.7 million in 1960, to $ 67.7 million in 1975, and about $ 200 million in 1989.

At the same time, it may also be pointed out that the growth rates (volume) of the bilateral trade were not in accordance with the large possibilities of both countries. Its main reason lies in those unfavourable political relations between Soviet Union and Pakistan which emerged during last ten years due specifically to so-called Afghan issue. At present, the Soviet Union shares only 2.4 per cent of Pakistan's exports and 0.6 per cent of its imports. However, a number of the commodities pertaining to the Soviet-Pak trade plays an important role in economy of Pakistan, and have an increasing demand in the Soviet Union.

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