EDITORIAL: Pakistan’s economic partnership with Afghanistan during the 20 years of US military engagement was fraught with difficulties and the Afghan Transit Trade Agreement, critical for a landlocked country, was in recent years simply extended every six months pending the Afghan government approval of our draft. The major stumbling block was the insistence of Karzai and later Ghani administrations to not only allow Afghan goods to reach India through Wagah border (which was acceptable to Pakistan) but also allow Indian goods to reach Afghanistan through Pakistan territory (which understandably was not acceptable). This position during the past 20 years was, amongst other factors, prompted by India giving Afghan goods duty-free entry as well as spending around 3 billion dollars in building infrastructure in Afghanistan - roads, dams, schools, power lines, clinics and a new parliament building which was inaugurated by Narendra Modi in 2015 - as well as training officers, giving scholarships to Afghan students. These investments no doubt account for India opening backdoor channels to Taliban and the Taliban announcement early this month that they want good diplomatic relations with India with one Taliban source stating that they would want the Indian projects to continue. However, the outcome remains uncertain at this stage.
The Afghan border authorities, including customs officials, during the past 20 years refused to allow passage of trucks to or from Pakistan without payment of a bribe (between 10,000 to 50,000 Afghanis based on the nature of the cargo). However, after the Taliban takeover of the border posts this illegal payment is no longer being charged which explains why only 475 trucks carrying goods to and from Afghanistan crossed the border on 15 August while two days later 1125 trucks crossed the border with around 234 containers (transit and exports) cleared at Torkham customs on 19 August. It is important to note that bulk of these supplies were paid for by the NATO countries through grant assistance to first the Karzai and then the Ghani administrations and hence any expectation that total trade with Afghanistan would be facilitated due to the Taliban takeover must be tempered with the evolving ground realities. However, one would hope that the Pakistan government engages in getting safe passage of our trucks through Afghanistan to Central Asian Republics as the potential for increasing our exports as well as contracting beneficial energy contracts with these countries is significant.
The US treasury has also formally announced that it would freeze the Afghan dollar reserves, estimated at 9.4 billion dollars by the International Monetary Fund, followed by the announcement by the Fund on 18 August that the Taliban-controlled Afghanistan would not be able to access funding, including a pledged imminent disbursement of nearly half a billion dollars. In other words, dollars would be in short supply, and without assistance from other countries with China emerging as a distinct possibility, Afghanistan’s capacity to import from Pakistan would be compromised. There is of course the fear that the dollar shortage may be met from poppy crop. It is also important to note that the Taliban, according to some reports, have directed the proscribed Tehreek-e-Taliban Pakistan (TTP) to engage with Pakistan to resolve all issues with the objective of not allowing Afghan territory to be used as a launch pad for attacks in Pakistan. One would hope that this directive is followed in letter and spirit because the recent attacks on Pakistan territory (notably Dasu and Lahore) were sourced to the TTP. Unless the security situation is normalized in Pakistan the objective of economic growth may be compromised.
While it is early days yet one would hope that not only the Afghan Taliban but also Pakistani authorities move forward based on experience of the past as well as the evolving situation today.
Copyright Business Recorder, 2021
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