Afghanistan is a landlocked country, which is mostly using its neighbor’s (more than 80% transit through Pakistan) transit routes to import from and export to the rest of the world. Not in line with its commitment to the UN Convention on Law of Sea, which makes special provisions for granting landlocked countries access to international seas, Pakistan has violated the Afghanistan Pakistan Transit and Trade Agreement (APTTA) more than 110 times in the last decade. Pakistan has always used its transit routes as a tool to achieve its goals in Afghanistan. Afghan businessmen have sustained a lot of losses, because of the sudden increases in tariffs, transit fees, and demurrage. Sometimes, Afghan trucks are stopped for several days in Pakistan which resulted in rotten agriculture products. Chabahar is a better alternative for Afghanistan to connect to the open sea and get rid of all the pressure Pakistan has been putting for a long time. Chabahar is Iran’s only oceanic port, but the Islamic Republic only recently began to bring it to its full potential. The port has particular promise as a means of access to the Indian Ocean for landlocked Afghanistan. Iran and India are the two nations financing this large-scale project.
The Chabahar port and corresponding Chabahar city are in Sistan-Baluchistan, a province that spans both Iran and Afghanistan. The two countries seek to complete a multimodal system that will more efficiently connect Kabul to the port and in turn reduce reliance on Pakistan. This will significantly boost trade capacity because, as it stands, Pakistan does not allow India overland transit access, a major obstacle for critical trade between Afghanistan and India.
While India and Iran are signatories to the Chabahar Port development project, a second agreement on connectivity was also signed by India, Iran, and Afghanistan. This pact allows Afghanistan to use the Port to ship its goods to markets like India, thereby reducing its dependence on Pakistan and its Karachi port.
Importance of connecting Central Asia with South Asia
Now that economies are emerging and growing rapidly in the region it is vital to explore new markets and connect them via the shortest, most effective, and most secure routes. South Asia with a 1.7 billion population is a well-established potential market for commodities and products produced in many regional countries. Besides, India’s rapid growth has attracted the attention of energy-rich Central Asian Republics (CARs), who wants to find a market for their commodities. Furthermore, Central Asia is a potential market for goods produced in South Asia; for example, pharmaceuticals are Pakistan’s top-performing exports to CARs with a 42.5 % share of total exports to CARs. India also exports pharmaceuticals to CARs but its share in total exports to CARs is only 25.5 % of its total exports to CARs CARs and South Asia see each other as potential markets for their abundant energy resources and other products respectively. This means connecting South and Central Asia is vital for the development of this region. Karachi-Torkham-Aqina is not the only route that can connect South Asia with Central Asia, which could increase transit revenue of both Pakistan and Afghanistan and highly increase the geo-economic and geo-strategic importance of the countries meanwhile, the Wagah-Peshawar-Torkham route, which roughly extends up to 800 km, is probably the shortest possible route between India and Afghanistan, which would greatly reduce the logistics cost of shipping goods from India to Afghanistan and beyond. Unfortunately, none of these routes is currently used to connect India to CARs because Pakistan is rightfully concerned about losing its share in the Afghan and Central Asian Markets.
By creating the Gawadar seaport, not only Pakistan wants to be the only supplier of goods to Central Asia but also be the sole beneficiary of connecting Central Asia and South Asia. Therefore, highly increasing the Geo-economic significance of Pakistan and undermining that of Afghanistan. Because this port surpasses Afghanistan and connects Pakistan with Central Asia through Iran. Under the current circumstances, any products other than Indian origin will be traveling from Gawadar to Iran and then Central Asia, consequently giving Pakistan the opportunity to conquer the markets on their own, challenging the market share of India. As a result, the cheapest and most efficient route of Waga-Peshawer-Torkham-Aqina will not be used to connect the two markets.
Afghanistan cannot be forced to rely on its capricious relationship with Pakistan in order to secure resources. Pakistan’s alleged support for the Taliban renders it a disagreeable ally for Kabul, and Pakistan-India tensions stand in the way of Afghanistan increasing its trade with India, the regional economic powerhouse and reliable ally. Prior to outright barring Indian access to overland trade routes, Pakistan imposed regulations in the hopes of encouraging Afghanistan to prioritize Pakistani imports and limit Kabul’s cooperation with New Delhi. At its peak between 2014 and 2015, Afghanistan’s trade with Pakistan was $2.7 billion, but excessive documentation requirements at Pakistani ports as well as unpredictable closings at the Chaman and Torkham border crossings led the Afghan government to reassess its options. Ultimately, the series of stringent regulations backfired and trade with Pakistan fell to $500 million in 2018 as Afghanistan shifted trade to Iranian ports at both Bandar Abbas and Chabahar, where 80 percent of Afghanistan’s cargo traffic now lies.
Indian Ocean access stands to transform trade entirely for Afghanistan by cutting costs in an unprecedented way and allowing for efficient passage of critical resources. Iran and India’s construction of a multimodal system are in various stages of completion, but overall, the routes provide a 60 percent reduction in shipping costs and a 50 percent reduction of shipment time between India and Central Asia. Even without the completion of the highway and rail system between Chabahar and the Iran-Afghanistan border, India successfully shipped 110,000 tons of wheat and 2,000 tons of pulses to Afghanistan in 2018, as a part of its promise to deliver a total of 1.1 million tons of food supply on a grant basis. These shipments from India will maintain the supply of Afghanistan’s strategic grain reserves that provide resources for impoverished citizens and emergency resources in times of crisis. Trade from Chabahar to Afghanistan has thus far been mostly of non-sanctionable goods such as agricultural products and medicine. Afghan traders have responded with enthusiasm to Chabahar’s reliable trade and transit offerings. Traders are looking forward to a forthcoming shipping line that will fly Afghanistan’s flag and feel that the more cargo they can shift to Chabahar, the better. Iran and India aimed to give as lucrative a deal as possible to Afghan traders and initially provided a 30 percent discount in customs tariffs, 50 acres of land for Afghan investment, and free cooling storage facilities. In 2017, the offer was raised to an 80 percent discount in export tariffs. Already, Afghan traders make up 165 of the 500 companies registered with the Chabahar Free Zone authority. The Iranian government has ambitious goals for Chabahar, with an intended nominal capacity of 86 million tons by 2024, and Afghanistan intends to have a considerable stake in these operations.
India’s Perspective of Chabahar:
India is not only interested in the Central Asian markets but also has always been very keen to engage with Afghanistan economically and strategically, thus, it finds Chabahar port as an easier sea-land route to Kabul, Iran, and Central Asia. Chabahar acquired further importance when Pakistan refused to provide a land route for India via the Wagah border in Punjab. However, the initial route of Karachi-Torkham-Aqina is several hundred kilometers shorter, once invested in Chabahar, Iran can compensate for the length of this route by cutting transit fees and providing other incentives. That will lead to, Iran becoming the connecting bridge between Central Asia and South Asia, leaving out Afghanistan and Pakistan. India will not only have increased leverage in Afghanistan but will also establish its strategic presence in the region. In the long term, it will act as a hub for Indian trading operations to venture into oil and mineral-rich Central Asia.
Iran’s Perspective of Chabahar:
Iran located at the crossroads of three continents (Asia, Europe, and Africa) is one of the countries whose strategic location has brought it many transit opportunities. The strategic port of Chabahar, which is located in the south of Oman River, is the nearest and easiest route of connecting land-locked CARs to the open ocean. The development of Chabahar as a free trade zone is crucial to connecting the North of Iran with the south. Moreover, 2000 Km of sea border to international waters and a large number of neighbors 6 of which are landlocked including Afghanistan make it an ideal transit country. Chabahar being a free trade zone will be much desirable for all the six countries to invest in. Chabahar is one of the three seaports predicted by the United Nations, which will be used to connect the silk way corridor.
Currently, it is assumed that India will export its goods to Central Asia from Chabahar through Afghanistan, however, the existence of advanced railway systems, roads, and economic infrastructure in Iran gives it an advantage over Afghanistan in the region. Furthermore, Afghanistan has limited roads and railways which doesn’t make it ideal for transit, especially, given the weak security and economic infrastructure in Afghanistan, it is difficult to use its mountainous and troublesome routes. On the other hand, Chabahar-Ashgabat via Iran is shorter (1869 km) than, Chabahar-Herat-Ashgabat (more than 2500 km), making it efficient for transit. Thus, Iran will be, not in the so-far future, used to connect Central Asia with South Asia.
Chabahar-Central Asian Republics Vs Chabahar-Afghanistan-Central Asian Republics:
Considering the following comparison table, we can see that there are more benefits in using Iran as a transit country to access Central Asia than using Afghanistan. Yet, if Pakistan is willing to open Waga-Peshawer-Torkham, it will not only be, the shortest and most efficient transit route on land but, will also avail the Geo-economic importance of both Pakistan and Afghanistan.
|Chabahar – CARs||Chabahar – Afghanistan – CARs|
|Short Route 1869 km||longer Route 2500 km|
|Not Mountainous||Mountainous & Complicated|
|Railway available||Railway not constructed|
|Safe & Secure||Mostly not safe & secure|
|Economic Infrastructure available||Limited economic infrastructure|
|Free trade zone||No Free Trade zone developed so far|
|More developed route||Less developed route|
|Full law enforcement||Limited law enforcement|
AISSC’s Recommendations to the Afghan Government:
It will be in the interest of the whole region to open the Waga border for transit, Pakistan will gain more through tougher competition with India, Afghanistan and India will gain from increased trade turnover. Besides, both Pakistan and Afghanistan will remain strategically the best transit corridor for the region and can maintain a large amount of transit income this way.
- Afghanistan should continue to diversify its import routes and should abstain from depending on one country, keeping in mind the notorious behavior of Pakistan.
- Afghan policymakers should never stop trying to convince Pakistan for opening the Waga border. And should always, unless otherwise required, use the Waga border for their exports to India.
- The Afghan government should attract more funds to establish standard transit infrastructure in the country so that Afghanistan is a choice for Indian traders as a transit route.
- The Afghan government has to provide preferential treatment to all Indian transits in Afghanistan.
- Pakistani policymakers should reconsider their decisions in this regard and cooperate with Afghanistan and Iran for their own national interest.
Once Chabahar, Iran is used as a transit route to access CARs, it would be very hard to reroute the traders to any other route even if more efficient. Because then, Pakistan will not only be competing with Iran for transit routes but also with India for markets. In the long run, Iran would provide easier and better treatment and much better infrastructure that can convince traders to keep using Chabahar.
Written by Hon’ Executive Board Member of AISSC – Syed Shah Fahad Hussain
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