Umme Laila
This insight advocates prioritising trade to enhance security and foster economic prosperity as a way forward for Pakistan-Afghanistan relations. Prioritising trade to improve security focuses on tackling the core causes of instability, such as terrorism, economic hardships, and lack of opportunities. Trade can create employment opportunities, steady economic growth, and alleviate poverty, addressing the root causes of insecurity.
Security, a shared challenge for Pakistan and Afghanistan, requires a comprehensive solution. Trade, as a potential tool, can pave the way for security. This strategy aligns with the belief that economic growth and cooperation can catalyse long-term stability, bolstering Afghanistan's resilience and security. Afghanistan's security and stability would gradually extend to the region, fostering peace and stability.
The limitations of the 'security for trade' approach have become increasingly evident over time. Despite substantial investments in security initiatives, Afghanistan continues to grapple with persistent violence, insurgency, and socio-economic challenges. In contrast, the 'trade for security' approach prioritises trade and economic development as central pillars of stability and recognises the interdependence of economic prosperity and security. This approach does not diminish the importance of security issues but reframes them as challenges to overcome. It aligns with Pakistan’s National Security Policy 2022-26, which underscores the role of geoeconomics in the country’s national policy.
Notwithstanding the benefits of trade for security approach and the potential of transnational trade and connectivity, the relationship between the two neighbouring countries, Pakistan and Afghanistan, has been marred by numerous challenges stemming from a complex interplay of historical, cultural, and political factors.
Terrorism is the major hurdle in Pakistan-Afghanistan relations. Terrorist attacks have surged in Pakistan since the Taliban came into power. These attacks rose to 28% in 2022 and 79% in 2023. Most of the attacks were conducted by TTP, whose most of leaders are based in Afghanistan. According to the UN Security Council report, the TTP benefited more than any foreign group in Afghanistan from the Taliban takeover. The surge in terrorist activities in 2023 led to a significant number of casualties of security personnel in Pakistan, making it a record eight-year high. Pakistan has also expressed serious concerns about the safe havens and liberty of action for TTP in Afghanistan. In the given situation, Pakistan has no other option but to manage its borders strictly for security.
In these circumstances, the expulsion of Afghan refugees also posed a serious challenge to Pakistan and Afghanistan's bilateral ties. Pakistan has hosted millions of Afghan refugees for several decades because of the instability in Afghanistan. The current state of peace in Afghanistan warrants a fair and equitable approach towards the repatriation of Afghan refugees to their homeland. Pakistan is still hosting around 2.7 million Afghans. Pakistan's security concerns are the main reason behind the expulsion of illegal immigrants.
These discountenances between the two neighbours would be sorted out effectively by employing trade as an instrument. Pakistan is among Afghanistan's top trading partners. Afghanistan’s exports to Pakistan in 2022 were about US$ 957.99 Million, making 57.6% of total exports. Pakistan’s share in imports was 13.1%, making it Afghanistan's third largest import partner after Iran and UAE in 2022. Both countries had almost bilateral trade of US$ 2 Billion despite the United States of America (US) sanctions and other regional issues. Illegal trade or smuggling is another reason behind the low volume of legal trade between the two countries.
Another challenge in establishing economic ties with Kabul is the absence of a banking system. Afghan companies have established representative offices in countries such as Dubai or Istanbul, which implies that imports into Afghanistan are facilitated through these countries. The issue related to the banking system can be resolved by introducing a barter system and the use of local currencies.
Afghanistan's transit trade with Pakistan is mandatory under the General Agreement on Tariffs and Trade (GATT 1947) and United Nations (UN) laws.
Pakistan signed the TIR (Transports Internationaux and Routiers) treaty in 2015 and made it operational in 2018, potentially enhancing bilateral transit trade. The TIR treaty simplifies cross-border product trade by streamlining administrative and customs processes. By implementing the TIR agreement, Pakistan and Afghanistan may accelerate and streamline their transit trade procedures, saving border crossing waits and expenses. This can enhance efficiency and dependability in trade operations, ultimately creating a more conducive environment for bilateral transit trade.
Afghanistan's war-torn economy requires a viable transition from an import-substitute to an export-oriented economy for sustained economic growth.
Rather than being part of great power competition, Pakistan and other regional countries have the potential to develop their alternate paradigm for regional trade and connectivity. Afghanistan's economic development relies heavily on trade with neighbouring countries, including Pakistan, China, Russia, Central Asian Republics (CARs), and Iran, with critical projects like CASA-1000 (Central Asia-South Asia), the Uzbekistan railway, and the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline project. In this context, the Economic Cooperation Organization's (ECO) support for Afghanistan transit trade and infrastructure investments can boost regional connectivity, growth, and stability, fostering cooperation among its members like Pakistan, Afghanistan, CARs, Turkey, and Iran.
This ‘trade for security approach’ can help to deal with the misperceptions that Afghans have about Pakistan. Considering the current economic issues of Afghanistan, such as high poverty rates, food insecurity, and dependency on foreign aid, Pakistan has the potential to participate in economic cooperation through bilateral trade and transit trade.
The views expressed in this Insight are of the author(s) alone and do not necessarily reflect the policy of NDU.