Russia has extended an offer to export select food items to Bangladesh under the government-to-government (G2G) terms at highly competitive prices, according to a senior commerce ministry official.
Along with the geopolitical and bilateral issues, this proposal will be a focal point of discussion during the visit of Russian Foreign Minister Sergey Lavrov beginning tomorrow.
The offer becomes especially significant as Russia recently withdrew from the Black Sea grain deal, which expired on 17 July. Bangladesh used to import wheat, sunflower oil, and fertiliser from both Russia and Ukraine. But the ongoing war between the two countries has almost halted these imports.
The proposal was formally conveyed in a letter from the Russian state-owned JSC FEC Prodintorg to Bangladesh's commerce ministry. Russia's expression of interest in enhancing collaboration with Bangladesh is emphasised, particularly in the supply of various food products, including yellow peas, chickpeas, red lentils, green lentils, sunflower oil, and more, under G2G terms.
"We would like to take the opportunity to supply these food commodity items at the most competitive and comprehensive price," reads the letter.
It is expected that military cooperation will also be discussed during Sergey Lavrov's visit.
The foreign minister of Russia, a close ally of Bangladesh since its Liberation War in 1971, will arrive in Dhaka on 7 September after attending the 18th East Asia Summit in Jakarta.
Lavrov will hold a meeting with Bangladesh's Foreign Minister AK Abdul Momen on his arrival and call on Prime Minister Sheikh Hasina the next day before leaving for the G20 conference in New Delhi.
On 26 August, the Russian embassy in Dhaka sent a note verbale to inform the commerce ministry about Lavrov's visit.
The general director of the Russian state-owned joint stock company Foreign Economic Corporation "Prodintorg" has proposed the export of the food items. It is a subsidiary company under the Ministry of Agriculture of Russia.
Earlier, in a letter to Senior Commerce Secretary Tapan Kanti Ghosh, the Russian company wrote that since 2013, they have been exporting chemical fertilisers and food grains to Bangladesh on a G2G basis. The company has exported over 1.3 lakh tonnes of potash fertiliser and over 1.5 lakh tonnes of wheat to Bangladesh.
Officials at the commerce ministry have stated that the state-run Trading Corporation of Bangladesh (TCB) is providing subsidised food items, including lentils, to one crore impoverished individuals in the country.
As a result, the TCB has had to import lentils. Additionally, there is a demand for sunflower oil in Bangladesh. If these products are available at competitive prices, they can be imported from Russia, they added.
Former foreign secretary Touhid Hossain told The Business Standard, "We can source the products we import from the international market from Russia if there's an opportunity to do so at a lower price."
But the payment system due to the US SWIFT ban on Russia needs to be discussed, he added.
The retired diplomat stated that this high-level visit from Russia, the first of its kind since Bangladesh's independence, holds both political significance and potential for enhancing commercial relations. However, the ultimate impact of the visit will depend on the outcome of the discussions.
Since the Ukraine-Russia war, Moscow has sent multiple letters seeking Bangladesh's support in various international organisations, including the United Nations and the World Trade Organization, according to officials.
Russia had never spoken about the internal politics in Bangladesh, but it has changed its position over the past year. Calling the role of US and European politicians seeking free, fair, and peaceful elections in Bangladesh "neo-colonialism", the Russian foreign ministry said such a move was a "shameless interference" in the internal affairs of a sovereign state.
At the foreign ministers' meeting, discussions are expected to revolve around strengthening Dhaka-Moscow relations, cooperation in the energy sector, defence collaboration, and enhancing trade relations in the context of the Rooppur nuclear power plant.
Apart from this, about 20 agreements and memoranda of understanding that await signing between the two countries may also be discussed, said commerce ministry officials.
The proposed MoUs include defence, extradition of prisoners, and peaceful use of space, they added.
Early last year, Bangladesh expressed interest in forging a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU), an economic union led by Russia, encompassing Belarus, Kazakhstan, Armenia, and Kyrgyzstan. The aim was to tap into the export potential across various sectors.
These five Eastern European nations engage in annual bilateral trade with Bangladesh valued at over $1.5 billion, a figure that could see substantial growth with the establishment of an FTA, as suggested by officials in the commerce ministry.
In May 2019, Bangladesh and the Eurasian Economic Union formalised their collaboration by signing a memorandum of cooperation in Moscow. Subsequently, a working group was established to bolster trade and economic ties across 19 different sectors.
It's important to note that Bangladesh does not currently benefit from duty-free access to Eurasian markets, which hold immense potential for its export products. For instance, Bangladesh's exports of readymade garments, totalling $426 million in FY2022-23, experienced a decline of nearly 30% compared to the previous year. Exporters believe that Russia alone could represent a $1 billion export market for Bangladesh if not for ongoing conflicts.
In a report submitted to the commerce ministry on March 14, 2022, the Bangladesh embassy in Moscow recommended that the government explore the possibility of exporting medicines and potatoes to Russia in exchange for importing essential foodstuffs such as wheat, fertilisers, and edible oil. This could be facilitated through government-to-government barter arrangements or currency swaps, thereby bypassing the need to rely on Russia's participation in SWIFT, the international payment system.