Russia participation in BD economy to be increased

Rabiul Haque : Russia exported 2.7 lakh tonnes of wheat to Bangladesh in 2023 calendar year. At present, plans are being made to import more wheat from the country, Maritime Gateway said, quoting related sources. According to information published by various sources, Bangladesh is the third top export destination of Russian wheat among the countries outside the Eurasian Union (an alliance of former Soviet Union countries). Besides, Russian diplomats have claimed that the import of fertilizer from Bangladesh is also increasing.
Bangladesh tried to import crude oil from Russia. Although the country’s refineries do not have the capacity to refine Russian fuel oil, it cannot be imported directly. Russian observers claim that Bangladesh is now importing this oil by refining it from India or West Asia. Besides, the Russian company Gazprom has been involved in the exploration activities of the gas sector in the country for a long time.
The Russian-funded Ruppur nuclear power plant is nearing completion. If everything goes well, the power of the first unit of the power plant may be connected to the national grid this year. According to sources related to the project, about 85 percent of the power plant construction project has already been completed.
After the war with Ukraine, Russia was excluded from the international payment system SWIFT. The Western world imposed various economic restrictions on bilateral trade with the country.
Without an immediate solution to the payment problem, it becomes difficult for other countries to continue trading with Russia. In this situation, a solution comes from Moscow’s ally China. The Chinese payment system Cross Border Interbank Payment System (CIPS) became a major means of conducting trade with Russia.
The Chinese currency yuan was added to the Real Time Gross System or RTGS-based automated clearing of foreign exchange in the payment system in Bangladesh last month. Russian observers and Bangladeshi analysts believe that it has become easier for Bangladesh to join China’s cross-border interbank payment system. They are of the opinion that this has created an opportunity to increase Russia’s participation in the economy here.
In an expert opinion published by the New Delhi-based think tank ORF Foundation on February 23, Alexei Zakharov, a research fellow at the Institute of Oriental Studies of the Russian Academy of Sciences, wrote, “Without Beijing’s involvement, it would have been impossible to maintain Russia’s economic ties with South Asia.” A large part of Russia’s trade with countries in the region, be it agriculture or energy, is currently conducted through China’s CIPS system. Increasing the use of China’s financial infrastructure has now become the lifeline of Russian economic projects in the region. The Russian Embassy in Dhaka was contacted to find out about the matter, but it was not possible to get any immediate comment from them.
In recent times, Russia has become very interested in strengthening economic ties with Bangladesh. Alexander Mantitsky, the Russian ambassador assigned to Bangladesh, said in an event organized at the National Press Club on December 7, “Bangladesh is the second largest trading partner of Russia after India in South Asia. Even during the pandemic, it was not interrupted. In 2021, bilateral trade reached an all-time high of $2.97 billion. In 2022, Western countries imposed unilateral sanctions on Russia. Russia’s trade with foreign partners, including Bangladesh, has suffered due to disruptions in production and logistics chains. As a result, the volume of trade decreased by $64 billion. There are many reasons to expect it to return to 2021 levels this time. For example, Russia is increasing wheat and fertilizer exports to Bangladesh. Russian companies are now ready to export 10 lakh tonnes of food grains and 5 lakh tonnes of potassium chloride to Bangladesh every year on the basis of G2G.
Russia has long expressed interest in increasing its participation in the power and energy sector of Bangladesh. In May 2022, the country came up with a proposal to sell fuel oil. At that time Bangladesh Petroleum Corporation (BPC) was given the responsibility to work on the matter. Instructions are also given from the top level of the government to review its feasibility. In this context, the service brought samples of crude fuel oil from Russia and conducted experiments at Eastern Refinery Limited (ERL) in Bangladesh. But the technical committee of ERL mentioned in a report that it is not possible to refine Russian fuel oil in the refinery of Bangladesh. Later, the matter was reported to the Russian oil company Rosneft.
Russia is lending $1,138 million to Bangladesh for the Rooppur nuclear power plant construction project. Most of the work on the project has already been completed. Sources said that 85 percent of the project has been implemented so far.
Diplomats of the country claim that Russian investors are now becoming interested in importing clothes made from Bangladesh. At the event in December, the Russian ambassador said, ‘Many international brands have decided to leave Russia since 2022. In this situation, Russian business circles are now searching for new sources of supply, including Bangladesh. In this case, state and individual investment can reach several billion dollars.
Alexander Mantitsky also said, “Russian companies are ready to take joint projects with Bangladesh in various sectors including ICT, pharmaceuticals, space technology, geological survey, maritime, railway and air transport.”
In the context of Western restrictions on Russia, businessmen conducting trade with the countries of the former Soviet Union are talking about introducing an alternative system. Commonwealth of Independent States-Bangladesh Chamber of Commerce and Industry (CIS-BCCI) Honorary Advisor Mahbub Islam Runu told, “Bangladesh’s trade potential with former Soviet Union countries is huge. We have been trying to realize that possibility for a long time. The sanctions have had a severe negative impact on direct trade with Russia. In this context we want an alternative system. In this case, China or India can be any country partner. Recently in Moscow I also discussed with Chinese and Indian bank officials about creating trade opportunities with Russia by setting up branches in Bangladesh.
Bankers say, how much profit can be made by joining the Chinese payment system depends on how much opportunity Bangladesh can create to increase exports there. Former chairman of Association of Bankers Bangladesh (ABB) and MD of Mutual Trust Bank (MTB) Syed Mahbubur Rahman told, “Our business with Russia is still continuing. Our transaction is via Poland. Moreover, the BRICS alliance is now becoming quite strong. The alliance has come a long way in launching its own currency. On the other hand, oil-rich countries are also now agreeing on transactions in their own currencies. CIPS is gaining strength as an alternative to SWIFT. However, the extent to which Bangladesh can benefit from the inclusion of yuan in RTGS will depend on the volume of Bangladesh’s currency-dependent exports.