Editor in Chief: Moh. Reza Huwaida Monday, July 8th, 2024

The Battle of Economic Dominance

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The Battle of Economic Dominance

Sound and growing economy serves the basis of sustainable and unwavering development of an every nation state. The dream to turn unbeatable is achieved by making heavy investments on education, infrastructure, governance, defense and law and order, which is sought via economic riches. Endurably, an unflinching diplomatic tie, at this very stage, plays pivotal role in turning this dream reality. It is judicious that states tied with the bonds of mutual interest, confidence and reliability only succeeds to linger in the lifelong relation.

The geopolitical location of Afghanistan is quite a lot promising, given it can bridge the world over with Central Asian; earthen resource rich countries and China; one of potentially growing economy of the world. Many countries therefore, exercise great deal of diplomacy to straighten their affairs or find out a better alternative to reap these resources and goods. India; another giant economy of Asia foresees way out to reach out to energy reserves of Central Asia, meeting its energy requirements and keeping pace with industrial developments.

Afghanistan enjoys comparatively good trade relation with neighboring Pakistan. Both the states share superb deal of transportation of goods from one to other country. In this perspective Pakistan and Afghanistan tied in Transit Trade Agreement (also known as APTTA), which is a bilateral trade agreement between the two neighbors has been renegotiated several times, with the most recent version signed on October 28, 2010. This treaty allows Afghanistan access to the dry port of Lahore, and also access to a land route to export goods to India. It does not allow India to use the land route to export goods to Afghanistan.  The bilateral trade between the two countries has increased from $830.2 million in 2006-07 to $2.5 billion in 2010-11 due to non commercial goods but then declined in the subsequent years. Bilaterally formal trade is increasing but informal trade is higher than formal trade. Pak-Afghan agrees to enhance bilateral trade to $ 5 billion by 2015.

With exception to goods’ trade Afghanistan can reap the fruit of service in different areas of human endeavors. Undoubtedly, Pakistan has earned a good reputation in the area of trade in services, in banking and insurance, telecommunications; IT enabled services, engineering consultancy, architecture and accountancy. Afghanistan would need expertise in these areas both for current operations and ‘on the job’ training of their own young professionals.

In the coming years, Afghanistan should negotiate free trade and bilateral investment agreements with Pakistan by ensuring duty free trade. In the medium term, the two countries should form a common customs union with the external tariffs at ports of entry and thereafter the goods can move freely between the two countries.

The same principle applies to rest of countries in the neighborhood of Afghanistan. India, China and central Asian countries are equally important from economic point of view. Afghanistan and central Asian countries render to be a feasibly sound market for Indian goods that strives hard to seek entry in these markets via land routes through Pakistan. Nonetheless, the battered political relation Pakistan undergoes with India has equally undermined this relationship.

Both Pakistan and India accuses each other of insecurity in the two states. This allegation and counter allegation inflicted worst impact on Afghanistan trade relation with two states. It has therefore to exercise balanced diplomacy with two disgruntled, one friend and other ally. In order to placate Pakistan growing concern about Afghanistan greater inclination towards India, earlier President Ghani suspended a request by the Afghan government to purchase heavy arms from India, of which Pakistan has long been wary. Moreover, he has also offered Pakistani investors generous access to Afghanistan, including free industrial zones. In November, the Afghan and Pakistani governments agreed to a detailed list of proposals to promote trade, including the opening of 15 new crossing points along their shared border, even though Afghanistan has long disputed its legitimacy

Undoubtedly, the irresolute relationship between Pakistan and India battered the transition of goods from Afghanistan to India and from India back to Afghanistan. At present, Pakistan allows Afghan trucks carrying goods meant for India only up to its last checkpoint at Wagah and not to the Indian checkpoint at Attari which is just less than a kilometer away. Kabul insists that APTTA should allow Afghan trucks to carry Afghan products to the huge markets of India and China as well as the rest of the world through the seaports and land routes of Pakistan. Afghanistan asserts the Transit Trade Agreement should be extended and it should display resilience letting India join the Afghanistan Pakistan Transit Trade Agreement (APTTA) to promote trade in the region. This assertion was witnessed, during president’s former visit to India where he underlined Afghan-India trade ties, immensely important.

It’s feared the Af-Pak trade and political ties tarnishes in the days to come, in the wake of consistent denial of access to Afghan and Central Asian markets through Pakistan, India will go with Chahbahar port of Iran. This proposition took prior space in former Modhi and Ghani talks. India already has waged to invest a handsome sum of $200 million for developing Iran's Chabahar port. The opening of the port to Afghan commerce is expected to improve direct trade between Afghanistan and India as well as open up new revenue streams associated with the flow of Indian goods through Afghanistan into Central Asia and back into India. This development might render unconvincing for Pakistan, hence eroding in one way or other the Af-Pak trade agreement and other ties.

Based on an agreement signed between Iran and India, in addition to New Delhi's investment in developing modern trade and commerce infrastructure at Chabahar port, a new shipping route will be established for trade between India and Afghanistan. This development doesn’t conform neither with Pakistan’s interest nor China’s who have ventured to functionalize Gawadar port at the earliest to reap out the fruits of entire developments in economic hub of Asia.

In the accounts of all developments, Afghanistan still secure central role, given the road to giant central Asian countries go through the land of opportunity, the Afghanistan. Pakistan, India and Afghanistan have to normalize its entire affairs and seek for economic superiority via free market and free and duty free trade policies turning Asia economic giant. In this pursuit they have to ensure security and better ties by doing away with terrorism, extremism and militancy.

Asmatyari is permanent writer of Daily outlook Afghanistan. He can be reached at asmatyari@gmail.com

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