Islamabad squeezes Kabul, but will it work?

In a recent and upsetting series of events, tensions soared high between Kabul and Islamabad as cross-border airstrikes took place last month. Pakistan claims to have targeted hideouts of the commanders of Tehreek-e-Taliban Pakistan (TTP) ‘due to terrorist activities sponsored and conducted from across the border.’ The Taliban in Afghanistan also claim to have launched retaliatory airstrikes as the group maintains that Islamabad’s ‘reckless actions’ killed innocent Afghan citizens. Prior to the escalation, Pakistan expelled hundreds of thousands of Afghan refugees that left relations bitter. It isn’t only immoral, but departs from the concept of ‘brotherhood’ and shared trust between the states that share a border, an ethnic population, a culture and a religion.

Owing to the ongoing rift, trade between both states has been impacted significantly. The Afghanistan-Pakistan transit trade agreement (APTTA) facilitates trade between the two states through various corridors. The Pakistani market accounts for 50 percent of Afghan exports and the land route through Pakistan is used to export to India. For Pakistan, developing trade links with Afghanistan holds significant importance in the regional context. Feasibly, given the close geographical proximity, both states should have reached their full potential, but security concerns and militancy does not stop at shaping geo-strategic political ambitions but also severely hinders the financial prospects that are vital to regional stability. 

One may argue that Afghan Taliban have long been labelled as the protégé of Pakistani state and that the return of the group may inevitably restore the ‘brotherly’ bond between the neighbors. None is ready for war, but there are doubts on both sides.

Pakistan’s economy is bad and Afghanistan’s is worse. Both states need to tap in on the full potential of bilateral trade that both desperately need.

- Naila Mahsud

Frustrated with Islamabad’s stringent trade barriers and anticipating its mood, Kabul recently turned to Iran for the prospective use of Chabahar port with an investment of $35 million. For the Taliban, the use of an alternate route to Pakistan may decrease pressure from an overly involved neighbor. But Kabul should not get misplaced expectations too soon. Chabahar port is neither cost effective for a cash-strapped Afghanistan, nor a full-fledged alternative to Port Bin Qasim, Gwadar and Karachi in Pakistan.

This must not give Pakistan false confidence or a sense of leverage because Afghanistan remains the shortest and most accessible trade route between Pakistan and the Central Asian Republics (CARs). The economies of Afghanistan and four CARs combined are 60 percent larger than that of Pakistan. Pakistan’s proximity to Afghanistan gives Pakistan the added benefit of lower transport costs over most countries when viewed as a potential export destination. More importantly, having access to the surplus energy in the CARs is an attractive option for the energy starved Pakistan.

Recently, Pakistan’s Defense Minister Khawaja Asif stated that Pakistan does not want armed conflict with Kabul but warned Kabul that Islamabad could block the corridor for its trade in India if it failed to curb anti-Pakistan militants. Ishaq Dar, Pakistan’s Foreign Minister said that Pakistan is seriously considering trade with India after observing the sentiments of the business community in Pakistan. Delhi is likely to issue the same warnings to Islamabad that Islamabad did to Kabul: Stop terrorism or there will be no trade. Except, trade between India and Pakistan is non-existent especially after August 2019.

Diverting trade options could work for Pakistan only if the security concerns were not grave enough with its eastern neighbor. Pakistan, however, also maintains that the onus of normalizing talks lies with India and it would only be possible if it undid the unilateral steps it took in Kashmir. With its expansionist design in place, Delhi has no plans to undo what it has done and the possibility of bilateral trade remains bleak.

Islamabad needs to understand that a key trade partner could look somewhere else for business. Though Afghanistan’s investment in Chabahar is not effective enough currently, if the Taliban continue to pour in cash to look for alternatives, a longer-term loss for Pakistan is inevitable. As for Afghanistan, more focus needs to be directed at cost-effective, easier routes especially at a time when more than half of its population is starving. Economic integration through trade has become more important than ever. Pakistan’s economy is bad and Afghanistan’s is worse. Both states need to tap in on the full potential of bilateral trade that both desperately need.

- Naila Mahsud is a Pakistani political and International relations researcher, with a focus on regional politics and security issues. Twitter: @MahsudNaila