By Hamid Pakteen
As an impoverished and land-locked nation, Afghanistan has always grappled with economic difficulties which have only been exacerbated by its disadvantageous geographic location. Being land-locked and sharing a border with Pakistan, historically Afghanistan’s trade volumes have been dependent on Pakistan. However, in the recent past, Pakistan has clamped down dramatically on Afghanistan’s trade flows, particularly with India. Repeated border closures and regulatory hurdles have drastically curtailed the volume of this trade.
In placing such hurdles, Pakistan’s policy objectives are threefold; in the first place, to cause Afghan traders to opt for Pakistani exports, thereby boosting Pakistani producers; secondly to reinforce the political pressure which Pakistan exerts over Afghanistan; and lastly to restrict and diminish India’s role and presence in Afghanistan.
This policy has resulted in mutual harms. Trade volume between Afghanistan and Pakistan amounted to $2.7 billion per year, at its peak in 2014 and 2015. This figure has currently been reduced to below $500 million. Facing the unpredictability of Pakistani policy, Afghanistan has searched for alternative markets and alternative routes to keep its foreign trade alive.
In the incipient Chabahar Port, Afghanistan has finally found an avenue for hope. The Chabahar Port in Iran is well connected to Zabul province in Afghanistan, which is accessible via the Delaram-Zaranj route, allowing Afghanistan an alternative access point to the Arabian Sea and Persian Gulf, and freeing Afghans from dependence on unstable Pakistani routes. The operationalization of the Chabahar Port has already resulted in a reduction of logistical costs to Afghanistan, and this benefit will only grow over time as more development is undertaken.
Reliable access to the Indian Ocean has the potential to be transformational for Afghanistan resulting in unprecedented cost-reduction and efficiency. The Chabahar trade routes represent a 60% reduction in shipping costs and a 50% reduction of shipment time between India and Central Asia. A railway system between Chabahar and the Iran-Afghanistan border is under construction, but even before its completion, India had successfully shipped 110,000 tons of wheat and 2,000 tons of pulses to Afghanistan in 2018 (as part of a food-grant programme), thereby demonstrating the viability of the overland road route as well.
Presently some of Afghanistan’s more valuable products have high demand in the international markets, but Afghan traders have seen limited benefits accruing to them due to the transportation difficulties involved. Products like pistachios and pine-nuts are imported by other countries and sold at tidy mark ups. The Chabahar Port allows Afghan traders direct access to the end consumer with a concomitant increase in profitability.
Recognizing the potential trading opportunities as well as present difficulties faced by Afghanistan, the Iranian and Indian administrations have taken steps to ease Afghanistan’s transition to Chabahar as its primary trading outlet. At present, Afghan traders enjoy an 80% discount on export tariffs. In addition, Afghan firms have been offered 50 acres of land and free cooling storage facilities. Afghan companies currently make up 33% of the companies registered with the Chabahar Free Zone Authority. The Iranian government has also announced an intended nominal capacity of 86 million tonnes by 2024.
Naturally, these efforts are already bearing fruit. Recently, the Afghanistan Chamber of Commerce announced that in the last ten months, the country has exported agricultural products, carpets, silk and other items worth $136 million destined for Europe, America and various Arab countries. This is all trade that was simply impossible not very long ago and represents cause for optimism.
Much of the difficulty Afghanistan has faced has been caused by its unfortunate geographic location, with its trading opportunities being constrained by the policy whims of its capricious neighbour Pakistan. A new outlet in Chabahar, has now afforded Afghanistan a wealth of opportunities and access to a number of new markets and trading partners while also freeing its foreign policy from the oppressive constraints Pakistan was able to place upon it by virtue of controlling its trading routes. In short, the Chabahar Port has revitalized Afghanistan foreign trade, and in the coming years increased trade volumes and a variety of new opportunities are to be expected.
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