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Acquiring ‘economic depth’

June 17, 2012

WITH the withdrawal of Nato troops from Afghanistan in sight, there is a growing recognition among scholars and businessmen that Islamabad and Kabul need to evolve a new strategy to bring the two war-ravaged neighbours closer to each other, using trade as an engine of change, stability and economic progress.

Over time, the ground realities have changed and the two states are no longer in a position to remain a theater of insurgency and war. The mindset focused on ‘strategic (security) depth’ needs to change. It is time for acquiring ‘economic depth’. And going by the encouraging trends over the past four years, there is great scope for bilateral as well as transit trade between the two neighbours. The transit trade agreement of 2010 has enabled Afghanistan to send its goods to India while containing a provision to facilitate Pakistan’s exports to Central Asian Republics.

These views were aired by scholars, writers, intellectuals, businessmen, journalists and academia from all over the country gathered at a conference on May 16-17 organised by the Department of Political Science, University of Peshawar to discuss ‘Pakistan-Afghan Transit Trade: Dynamics, Challenges and Prospects’ .

Bilateral trade between Pakistan and Afghanistan has surged from $850 million some four years ago to $2.5 billion in fiscal year 2010-11 and the joint Economic Commission of the two neighbours has set a target of $5 billion for 2015. However , smuggling is a major impediment in legal trade.

The participants spoke on a wide range of issues including Pak-Afghan Transit Trade Agreement 1965 and 2010, historic trade route and landlocked status of Afghanistan apart from dwelling on historical and political issues and perspectives.

The Afghan government can exploit three alternative routes to facilitate its foreign trade. However, Pakistan is the major transit route into and out of Afghanistan as the routes through Torkham and Chamman are shorter and less costly. However, the major impediment to using these trade routes is the security dilemma And Pakistan’s rail system is in terrible shape due to lack of investment and modernisation.

Another overland route to Afghanistan is Northern Distribution Network, passing through Russia, Caucuses, Kazakhstan, Uzbekistan and Tajikistan. The most important country in this network is Russia. The Afghan-Russian relations are at the lowest ebb for last three decades. In addition, this route is expensive. It currently costs an additional $38 million per month for the Nato supplies for Aghanistan.

The third trade route for Afghanistan passes through Iran. The Iranian port of Chabahar is about 1700 kilometers away from the major Western Afghan city of Herat. It is not known how the current US-Iran tensions would impact the traffic of goods through Iranian port.

In addition, three major conclusions could be drawn from the conference. First, peace is a prerequisite for boosting regional trade, and without a peaceful Afghanistan it might be difficult to improve Pakistan-Afghan transit trade and engage India and CARs.

Afghanistan has remained in turmoil since 1979 and there is not much hope that the continued Afghan war would come to an end in near future. The decision to withdraw US-led 130,000 Nato troops from Afghanistan is ‘rreversible’ and it may be followed by another civil war in Afghanistan.

Third, the real test of Afghanistan and Pakistan would be after the withdrawal of Nato forces. Afghan economy is in a transition stage and nearly 60 per cent of its $ 17 billion budget 2010-11 is spent on security forces. The recent Chicago summit made no solid pledge to provide $ 4.1 billion annually to Afghan forces needed for a decade after the Nato withdrawal. Indeed, there is a dire need to strike a peace formula acceptable to all Afghan warring factions.