Pakistani businesses are keenly watching the initiation of a process that can prove to be the first step in a long journey towards a lasting peace in Afghanistan. An improved security situation will certainly yield gains for all neighbours.

Tense bilateral ties and the erosion of the export market in the neighbouring country signal a compromised position with scant scope for Pakistan to take part in the rebuilding of Afghanistan.

The Taliban and the United States signed a truce in Doha last week. If complemented by an intra-Afghanistan dialogue culminating in a sustainable strategy to break the violent cycle, it will alter the dynamics of the whole region. Slowly but surely it will help mend the fractured process of natural development there and its integration in the regional and global economy.

Developed nations that wish to see Afghanistan make progress are expected to extend generous support for its economic development — the most dependable guarantee for keeping the country from slipping back into chaos and violence. Its rebuilding, therefore, is expected to gather pace soon alongside internal arrangements to achieve a modicum of stability.

“It’s a pity that a country that shared the cost — economic, social, political and human — of war more than others commands such little influence in Afghanistan in the reconstruction phase. Does it not expose the bankruptcy of Pakistan’s exercises in economic diplomacy?” asked a leading Peshawar-based businessman who was bitter over losing the Afghan market to India, Iran and China.

Peace in Afghanistan can be a trigger for development and trade in the region

“Until 2010, from plastic mats to edibles, iron and steel, Pakistan accounted for over 90 per cent of Afghan imports. Now we hold hardly one-third of the market. Except in Jalalabad, Pakistanis and their products are detested with passion across Afghanistan. In a recent visit, it was depressing to see the wide circulation of brand India in Kabul,” he added.

The total volume of trade with Afghanistan has dwindled over the past 10 years. According to data forwarded by the Trade Development Authority of Pakistan (TDAP) on Dawn’s request, the trade volume inched up from $1.4 billion in 2009 to $1.8bn in 2019. However, its share in total trade dipped two percentage points from 7.8pc to 5.7pc over the same period.

The government, however, claims to be hopeful and expects peace dividends in Afghanistan.

Comments by Abdul Razak Dawood, who serves as the prime minister’s adviser on trade and industry, were not straightforward. He blamed it all on the war.

“We have never been able to formalise a relationship because of war. Now is the time to formalise the relationship with Afghanistan,” he stated in response to Dawn’s query.

The adviser was probably referring to the opportunity cost of security spending. “If Afghanistan develops, it’s in our interest, too. It’s in our interest that Afghanistan has sustainable peace and development, so we have peace on our Western border,” he added.

As proof of his desire to enhance and formalise bilateral ties, he wrote: “I would like to go to Kabul and start the negotiations of the next round of the Afghan Transit Trade.”

The business community, however, lamented the loss of trust between the two nations — a prerequisite for better access for the private sector to capitalise on economic breaks in a partner nation. They attributed the persistent fall in trade with Afghanistan to flawed government policies. They saw a compromised role of Pakistani businesses in the rebuilding of the war-ravaged country if the government failed to heed the private sector’s advice.

Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) President Zubair Motiwala was too critical of the government. “We imposed prohibitive duties on miniscule Afghan imports. They retaliated by slapping 200pc duties, almost shutting us out of their market. Can someone explain the wisdom of this move that hurt Pakistan more than it helped?” he asked.

He also mentioned a tough visa regime for Afghan traders and a gradual withdrawal of Pakistani banks from Afghanistan. “The vacuum left by us has quickly been filled by our competitors,” he added, adding that the government excels only in making committees.

PAJCCI Vice President Khalid Shahzad expressed frustration at what he considered a reckless treatment of business issues by the government. “I have serious business interests in Afghanistan and my ties extend beyond trade. Despite long personal and family relationships, being a Pakistani has become so much of an issue that after my last visit to Kabul a few months back, I have decided never to visit that city again. Hostilities have become intolerable. I intend to limit my business trips to Jalalabad for now. This is so unfortunate, especially because of timing,” he commented. The attempt to reach out to PAJCCI Secretary Naqibullah, an Afghan businessman based in Kabul, did not succeed.

“The government needs to regain the confidence of the Afghan government by showing respect instead of trying to dictate them. Pakistan shares historic ties and 2,430 kilometres of border with Afghanistan. We need to learn to live and grow with them. It should sink in officialdom that our fortunes are tied with our immediate neighbours,” he added.

At an official meeting, Mian Muhammad Mansha of the Nishat Group reportedly termed the prospects of peace in Afghanistan encouraging as it would improve security and advance cross-border trade with Central Asia. “This also bodes well for the business community as it holds the promise of economic development and prosperity,” he commented.

Afghanistan may be poor, sparsely populated, ethnically diverse and socially backward, but the country is naturally rich and geographically important. If turbulent Afghanistan proved to be a drag, peaceful Afghanistan can be a trigger for development and trade in the region.

No one expects the transition to be quick or easy. However, mega regional projects like Turkmenistan, Afghanistan Pakistan and India (TAPI) gas pipeline and CASA-1000 electricity trade deal, which were held hostage by instability for long, can actually have a future.

Published in Dawn, The Business and Finance Weekly, March 2nd, 2020