A tightrope of caution and hope

Published August 23, 2021
This file photo shows a general view of the border post in Torkham, Pakistan. — Reuters/File
This file photo shows a general view of the border post in Torkham, Pakistan. — Reuters/File

Pakistan hopes to capitalise on the fall of Ashraf Ghani-led hostile regime by increasing the scale and depth of economic engagement with Afghanistan at a time when the economy desperately needs a push for growth.

As Taliban leaders scramble for legitimacy in the wake of the bloodless takeover on August 15, businesses in Pakistan wish for lasting peace in the neighbouring country. The community expects to be part of the reconstruction process in a war-ravaged country, realises the trade ambitions of the landlocked Central Asian Republics (CARs) using the Afghan corridor, and rake in dividends as Kabul unlocks its mineral wealth probably with Chinese help.

Traders, truckers and freight forwarders as well as some politicians appear to be optimistic to the point of being delusional. Big business houses, however, dread the resurgence of religious militancy in Pakistan inspired by the recent happenings.

“How could anyone discount this risk? The memory of the Army Public School massacre and numerous terrorist attacks has not faded. The projected gains in trade would pale against the heavy cost one has to face in putting up with the militant obscurantist elements in Pakistan. If the security perception worsens, people with assets, with options will wrap up and leave. The already low investment rate will drop further in such a case,” said a CEO who was too scared to own his views.

“The situation is still volatile. It is too early to project the future, but Pakistan stands to gain the most from peace and lose the most if Taliban fail to strike a deal swiftly for an inclusive dispensation acceptable to the world,” said a retired army officer who has a keen eye on Afghan affairs, and is currently associated with a China-Pakistan Economic Corridor project.

Traders, truckers and freight forwarders and some politicians appear to be delusionally optimistic whereas big business houses dread the resurgence of religious militancy

“If the chaos in Afghanistan persists, the danger of civil war looms large. The spillover would destabilise Pakistan which is still recovering from the fallout of previous wars there.”

He was not convinced that the Taliban have transformed, have discarded their decadent mindset and are ready to embrace an accommodative stance for nation-building. “It is great that the Taliban humbled the mighty military alliance of the West, but establishing a stable government is a different ball game. Sustaining victory in a divided society dependent on aid is a huge challenge. Over the next few weeks, the situation will be clearer in Afghanistan, but we must keep reminding ourselves that it can turn either way.”

Razzak Dawood, the special assistant to the prime minister on commerce, was a little anxious over the fresh challenges to economic diplomacy. The US exit and Taliban victory in Afghanistan have upset the power balance in the region. “We negotiated long and hard for a favourable Afghan Transit Trade Agreement (ATTA). Both sides hammered the differences and hoped to close the new deal before December 2021 (the month of ATTA expiry). Now we will need to start all over again when the dust settles there.

“I am hopeful of closer economic ties with Afghanistan in the period ahead. After two days of disruption, cross-border commercial operations have resumed. I am told that traffic is, in fact, moving at a faster pace than before,” he concluded as he repeated the party line.

Talking about the key points that he intends to take up with his Afghan counterpart if and when they meet, he mentioned trucking policy, ATTA and the preferential trade agreement (PTA).

Some business leaders based in Peshawar and Quetta, better aware of the complexities of the Afghan situation, advised caution though they confirmed that reports of border trade are encouraging.

“Under the Ashraf Ghani regime, duties were harsher on Pakistan. We had to pay 15 per cent of the value of the container when rates for all other countries hovered around 8pc. We had to pay an additional 5-10pc at check-posts manned by the Taliban. High duties rendered the export of several Pakistani items unviable. The Taliban reduced the rate of ‘mehsole’ (duties) for Pakistan as soon as they assumed power. They fixed a 7pc universal rate,” Adnan Jalil told Dawn over telephone from Peshawar.

Majyd Aziz, a business leader from Karachi, dismissed the doubts regarding Afghanistan. He advised the government and the businesses to prepare for good times ahead, ignoring baseless propaganda against the developments next door. He considered the official figures of bilateral trade with Afghanistan misleading.

“The surge in informal trade with Kabul more than compensate for the dip in the formal trade. Pakistan has a natural advantage in Afghanistan, but it needs to suppress the temptation to go solo and direct its efforts to partner with others in the region for optimal outcomes.”

Daru Khan and Ghazanfar Bilour, former presidents of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), believed that Pak-Afghan trade could multiply manifold if the irritants were removed and the traders were facilitated. “The logistic facilities, including sufficient weighing bridges and swift custom clearance, can shorten the travelling time, reduce the wastages, and increase overall trade to the benefit of the countries and their peoples,” stressed Daru Khan.

The leaders of the 326-member Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) could not be reached for their input on the matter. The chamber has 183 Afghan and 123 Pakistani business entities in its fold.

An analyst was worried as he saw no point in getting too excited when the bigger regional powers are involved. “Pakistan is not holding the cards. Sharing the language and the culture is fine, but neither do we have the resources (financial and technical) nor the diplomatic skills or the credibility to be of much help to Afghanistan at this juncture.

“As for Afghanistan, its economy shrunk 1.9pc in 2020. The country has the second-lowest per capita income in the region. Things are in flux and there is every chance for the situation to deteriorate further as the aid flow might get disrupted. After all, 80pc of Afghanistan’s budget is financed by aid. It would serve us better if we lie low and do our homework to deal with all possible scenarios in Afghanistan.”

Published in Dawn, The Business and Finance Weekly, August 23rd, 2021

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