Pakistan settles old trade dispute with Russia, paving way for an $8 billion investment
The previous PML-N government first made an effort to sign this deal with Russia, and the current PTI led the government to decide to execute it.
An agreement has been reached between Pakistan and Russia to sign a deal, that will settle a 39-year old exporters’ claims case that has been on hold since the collapse of the Soviet Union, which paved the way for an $8 billion investment by Russia in Pakistan.
The Pakistani government has sent its ambassador to Russia for signing the deal.
Under the agreement, the Pakistani government will have to return $93.5 million to Russia in the span of 90 days after signing and clear the pending claims of exporters to the tune of $23.8 million, which is all according to the settlement reached between the two countries on 6th October 2016 and 27th December 2017.
The previous PML-N government first made an effort to sign this deal with Russia, and the current PTI-led government to decide to execute it.
It has been conveyed by Moscow to Islamabad that an investment of $8 billion will be made by them in the country’s energy sector and Pakistan Steel Mills. However, it cannot invest in countries with which it has disputes under Russian law.
With this deal, Russia will be given the liberty to invest in different sectors of Pakistan.
As per the commerce division, back in 1980, the then USSR and its companies purchased textiles and other materials from Pakistan’s companies.
For suave working of the barter trade, the former USSR opened two bank accounts in NBP (National Bank of Punjab). The funds were deposited by EAD (Economic Affairs Division) through the SBP (State Bank of Pakistan).
What is the background of the dispute?
When the Soviet Union fell apart, many exporters did not get their payment. Furthermore, Pakistani companies also made claims for the unshipped goods as they had paid the sea freight charges.
After a time, the dispute lengthened, some Pakistani companies got stay order from SHC (Sindh High Court), restraining NBP from transferring funds of the Russian banks, that have been in its accounts since 1996, which amounted to a total of $104.93 million.
Attempts to solve this dispute were made in the past but were unsuccessful. This inability to solve the disputes in time impacted the relationship between the two countries. An early settlement between the two will pave the path for enhanced bilateral political, diplomatic and economic relations.
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