Putin Woos Pakistan as Cold War Friend while India Buys U.S. Arms

   (Bloomberg) --- Russian President Vladimir Putin is seeking to build military ties with Pakistan as India buys more weapons from the U.S., changing an approach toward the nuclear-powered neighbors that has endured since the Cold War.

   Sergei Shoigu, making the first visit by a Russian defense minister to Pakistan since the Soviet Union's collapse, last week signed a "milestone" military cooperation agreement. The world community "wants to do business with Pakistan now," Shoigu said, according to a Pakistan government statement.

   The move comes as Putin seeks to expand relations with Asia in the face of growing isolation from the U.S. and its allies over his support for separatist rebels in Ukraine. The U.S. overtook Russia as India's biggest weapons supplier in recent years, prompting leaders in Moscow to reassess their strategy toward South Asia.

   "We're seeing a new Russia," C. Uday Bhaskar, director of the Delhi-based Society for Policy Studies. "With India now widening its search for defense supplies to the U.S. and Israel, Russia too wants to expand the market for its equipment. Both Russia and India are reviewing their policies."

   Putin plans to visit India next month to meet with Modi as Russia seeks to counter sanctions from the U.S. and others. Russia this month announced plans to build a second gas pipeline to China, an ally of Pakistan, in a move that would cement Putin's policy of tilting energy exports toward Asia.

Ruble Tumbles

   "China and Russia are also allying themselves, so it's also one factor why Russia is looking toward Pakistan more cooperatively," retired Lieutenant General Talat Masood, a former chairman of Pakistan Ordnance Factories, said by phone from Islamabad. "It's important to be an ally of an ally."

   Russia's gross domestic product will contract by 1.7 percent next year after stalling in 2014, with inflation rising to 8.4 percent from 7.6 percent, IHS Inc. forecasts. The ruble has fallen about 28 percent against the U.S. dollar this year, the worst performance among 24 emerging market currencies tracked by Bloomberg.

   Russia and the Soviet Union have been India's biggest weapons suppliers, accounting for about 70 percent of its arms imports since 1950, according to data compiled by the Stockholm International Peace Research Institute. Pakistan, by contrast, has received only 2 percent of its weapons from Russia and the Soviet Union in that time, with the majority provided by the U.S. and China, the data show.

‘Critical Juncture'

   Russia and Pakistan plan to increase port calls of warships, cooperate in fighting terrorism and help stabilize Afghanistan, Russian state news service Tass reported. Shoigu also met Pakistani Prime Minister Nawaz Sharif, who said steps were needed to boost the $542 million of bilateral trade between the two nations, according to the state-run Pakistan Broadcasting Corp.

   "Shoigu's visit has come at a very critical juncture when U.S.-led NATO forces are drawing down from Afghanistan by the end of 2014," Pakistan's government said in a statement. "Apart from promoting bilateral defense relations, the visit will enable both countries to join hands in bringing peace and stability in the region."

   It's important for countries to balance ties between India and Pakistan, which have fought three wars since they were split after British rule ended in 1947. U.S. President Barack Obama called Pakistani leader Sharif last week, shortly after accepting an invitation from Modi to attend India's Republic Day parade on Jan. 26.

U.S. Weapons

   The U.S. surpassed Russia as India's top supplier of defense equipment in the three years to March, according to figures submitted to parliament in August. They were followed by France and Israel.

   Prime Minister Narendra Modi is seeking to modernize India's armed forces and shift toward more domestic production to reduce reliance on imports.

   Two days ago, India approved a 158 billion-rupee ($2.5 billion) purchase of artillery, the first acquisition of large-caliber guns since the 1980s. If a foreign manufacturer wins the tender, the first 100 pieces will be imported and the remaining 714 will be made in India through technology transfer.

   Alexander Kadakin, Russia's ambassador in New Delhi, told the Press Trust of India last month that "there is zero technology coming from the U.S. to India," whereas Russia is building a nuclear power plant and fighter jets with India.

   He has also questioned India's fairness in awarding defense contracts, telling the Hindustan Times last year "we know what gimmicks are used to manipulate deals." He said that Russia has always stood by India and losing its position as the country's top weapons supplier "causes damage to our reputation."

Kadakin earlier this year dismissed concerns that Russia was changing its policy toward India in discussing the sale of Mi-35 defense helicopters to Pakistan. "Nothing will be done that will be detrimental to the deep relationship with India," Press Trust of India quoted Kadakin as saying.