By Dr Hussain Yasa
Abstract
The APTTA renewal between Pakistan and Afghanistan has always increased concern in the light of developing political scenario. This article evaluates the forthcoming challenges and hurdles during the renewal process of the Afghanistan-Pakistan Transit Trade Agreement (APTTA).The agreement expires on February 11, 2021. The article evaluates the two major hurdles
- First, the technical and procedural problems, like cessation of informal trade, effective usage of Information Technology (tracking devices of goods, vehicular tracking systems etc.), banking guarantees, and special bonded carrier licenses for transit trucks, container security deposits, and all other logistics and customs procedures, better working relationship and communication between the relevant authorities.
- Political and security concerns of both parties, particularly Pakistan. The first set of problems seems to be negotiated smoothly but the second problem might be a real bone of contention. It is the inclusion of India into this agreement or at least the provision of Indian access to Afghanistan via Wagah Border. On this issue, both Afghanistan and Pakistan stand on opposite sides.
Introduction
In spite of sharing the longest border, having much in common in religion, culture and language on both sides of the border, naturally locked in interdependency in the various key areas like economy and security, both Pakistan and Afghanistan could never acquire a smooth level of relationship.
The root causes of this discontent in the mutual relations between both neighbours have varying perceptions in their geo-political realm, sometimes difficult to sum it up in a small article. But the fact cannot be denied that both countries geographically locked in to each as neighbours will keep affecting a degree of consensus, though at times an uneasy one, in terms of security policy and economic cooperation between both the states. Notwithstanding the fact that both governments could not maintain a desirable level of relations, still millions of legal and illegal refugees prefer Pakistan as their second home and tens of thousands of Afghan children are being educated there. In addition to that thousands more are busy in licit and illicit businesses in Pakistan.
No doubt that Pakistan and Afghanistan have their own unique geopolitical and geo-economic strategic importance, it would be improper for both countries to undermine the other. Pakistan is a junction of South Asia, West Asia and Central Asia with ample of coastline along the Arabian Sea which is of high importance and enables it to be an important hub for the transit trade to Afghanistan, china and the CARs. On the other hand, Afghanistan, though a landlocked country, has been known as a cultural crossroads of the Indian, Persian and Chinese civilisations, it has significant geostrategic and geopolitical importance by connecting East and West Asia or the Middle East to Central Asia, not to mention that it is the home of approx. over one trillion US dollars’ worth of untapped precious mineral deposits.
If Pakistan has one of the largest armies of the world and it is the only Islamic nuclear power state, the dilemma occurs when lasting peace in Afghanistan is only possible with mutual security consensus between both the states but for Pakistan not compromising on its own geopolitical concerns in the changing security, political and geo-economic dynamics of the region, the vicious cycle of instability seems to remain unresolved. As for Afghanistan, being the heart of Asia, as the poet of the East Allama Muhammad Iqbal acknowledged it; its destabilisation bears direct consequences on the region. In other words Afghanistan’s instability factor alone would be enough to seek its nuisance among the regional players at least, if it could not do much to prove itself otherwise, particularly, when Afghanistan lacks the capacity to contain trans-border spillover of its internal security problems.
Both countries can play important role in the stability of South and Central Asia. Being a landlocked country, Afghanistan has been dependent on its neighbours for transit trade and the provision of the basic necessities, from food items, petroleum products up to basic medicines. Amid the continuous civil war, it still exports fresh and dried fruits, carpets and other textile floor covering. Although. In spite of the huge investment in blood and money by the international community over the last two decades, Afghanistan still faces a huge trade imbalance. According to the available data from WTO, the trade deficit of Afghanistan in 2018 was US$ 6.4 billion with US$ 1.2 billion imports and the exports were only US$ 485 million which is -32.72% of the GDP. In 2019, the situation improved a little bit and this deficit decreased to -30.11% of the GDP[i].
Pakistan, Iran, China and India are the main trading partners of Afghanistan. Till 2013 Trade between Pakistan and Afghanistan was at its peak by US$ 2.1 Billion but after that, the graph shows a decline in the mutual trade between the two countries[ii]. At the moment, Pakistan is the top export partner of Afghanistan with US$ 379million (43%) and India with US$ 359 million (41%) stays at number two but as far as imports are concerned Iran and China overtook Pakistan with US$ 1.26 billion and US$ 1.17 billion respectively. Pakistan stands third as the importing partner of Afghanistan by US$ 1.09 billion. Afghanistan’s import from India is US$ 359.47 million[iii].
From “ATTA” to “APTTA”
The first transit trade agreement between Pakistan and Afghanistan signed on March 02, 1965. Although, it was a bilateral treaty but officially it was called “Afghanistan Transit Trade Agreement” and according to that treaty Pakistan was not given the access to the then USSR while Afghanistan had the access to the ports of Pakistan, mainly the Karachi seaport which is the shortest and most cost-effective route to access the regional and the world market. In that agreement Afghanistan was not given the facility to access India by land route. For Pakistan the agreement was not balanced because it was not given reciprocal access to then USSR and after its collapse in the 90s, to the Central Asian Republics (CARs).
In the post-Taliban Afghanistan ATTA was replaced by the “Afghanistan Pakistan Transit Trade Agreement” which was signed by the commerce minister of both countries on October 28, 2010 in Kabul. This time the agreement was much more comprehensive with 58 articles and two annexes specifying exit-entry routes and four protocols with all the relevant technical and legal details.
By this agreement, Pakistan was given access to the CARs from three main points and Afghanistan was allowed access to Pakistan’s seaports as well as to the Wagah Border for its exports to India but does not allow Indian Exports to Afghanistan through Wagah Land Border.
The international community and the United Nations welcomed and appreciated the agreement and called it a positive step toward the promotion of mutual trade and relations.
In addition to the traditional Red-tapism and the corruption in border and customs authorities, there were always two problems which were raised time and again by both sides.
Pakistan was always concerned about the illegal and informal trade which costs Pakistan a huge sum of money annually as well as it had a bad impact on the Pakistani domestic industry and trade. It has been really a big challenge for Pakistan to control its more 2600 km porous border to control these illicit trade activities.
The second issue was Afghanistan’s persistent demand that India should be given access for its exports to Afghanistan through Pakistani land routes. Pakistan has never responded positively to this Afghan demand due to the legal aspects of the agreement as well as the security concerns.
Informal Trade
According to the United Nations Office on Drugs and Crime (UNODC), Pakistan is uniquely challenged by the nexus between crime and the illegal economy due to its geographic location. The country’s relations with its neighbours, particularly Afghanistan, are complicated by cross-border criminality, which in turn creates a thriving regional illegal economy orchestrated by complex informal and formal organised criminal networks of supplier rings, wholesalers, financiers, protectors and patrons. The situation within the region has implications for the broader global community as the risks created by illegal and criminal economic activities spread and multiply far beyond. For example, illegal drug trafficking risks human health globally; illegal trade that funds insurgencies poses not just local and regional security challenges but also to more distant locations. The report also says that Afghanistan’s illicit trade is still the major source of income. While the illegal economy raises the cost for conducting legal economic activities, it also weakens states, threatens development opportunities, undermines the rule of law, and keeps countries trapped in a cycle of poverty and instability[iv].
A research paper by the Pakistan Strategy Support Program (PSSP) writes the details that how the goods destined for Afghanistan under the APTTA, upon arrival at the Karachi port, pay no duties, after which they are loaded onto trucks which transit Pakistani territory to reach Afghanistan via Chaman or Torkham (border crossing points). After arrival in Afghanistan the merchandise is smuggled back to Pakistan[v].
According to CIDOB, the informal (non-opium) trade including smuggling (electronics, car parts, semi-precious stones, carpet, livestock, and foodstuffs). Informal trade reportedly accounts annually for US$ 1.5 billion, with smuggling accounting for US$1 billion. The same report mentions that “Lack of justice and rule of law, of which informal economies are a part, are a greater threat to Afghanistan than insurgency”[vi].
Abdul Razak Dawood, the adviser to the Pakistani Prime Minister on Commerce and Investment depicts more serious situation. As said by him, the volume of informal trade between the countries was UD$ 2 billion in 2019[vii].
But bad news for the smugglers and the people engaged in illegal trade across the Pak-Afghan border, Inter Services Public Relations, or ISPR (The media wing of the Pakistan Army) said that the barrier has already been installed along “about 83 percent” of the western Pakistani frontier. Additionally, hundreds of new outposts and forts have been built under the roughly $500 million program. The project was started in 2017 to block militant infiltration, smuggling, and other illegal crossings on the Pakistan-Afghanistan border. Under the military-led border management project, Islamabad has also upgraded several formal crossings with Afghanistan to further facilitate bilateral and transit trade activities[viii].
In spite of the serious blames that Pakistan is not doing more against the infiltration of terrorists across the border, the Afghan government didn’t welcome this Pakistani measure and called this fencing illegal. Kabul still unilaterally claims that a huge area inside Pakistan belongs to Afghanistan and presently occupied by Pakistan.
The Afghan Ministry of Borders and Tribal Affairs, in its official website doesn’t recognise the borders between Afghanistan as legal and calls it “Malicious Durand Line”[ix]. Another dilemma overshadowing Pak-Afghan Relations in all areas of mutual cooperation.
APTTA and India
In fact, after the partition of British India into two states of India and Pakistan in 1947, Afghanistan never had good relations with Pakistan. The ethnocentric approach of the consecutive Kabul governments toward the Durand line and territorial claim over a vast area in Pakistan has been the main obstacle in building a good working relationship between Kabul and Islamabad. With the utopian vision of a greater Pashtunistan or Afghanistan, India was a better ally to rely on. India also did not mind it to be accommodated in Afghanistan, in the immediate neighbourhood of its hostile neighbour Pakistan. But for Pakistan, the Indian presence on both Eastern and Western borders have always been a matter of concern.
In brief, this negative trend in low-level relations between the two neighbours dominates all areas from politics to economy.
For India, there are only two roads leading to Afghanistan and onward to the reasonably sized CARs market and access to their natural resources. The distance between Wagah (Indian Border) to Torkham is only 588.4 km and from there to capital Kabul is only 228.4 km. It means the total distance from the nearest Indian border to Kabul is 816.8 km. Considering the unfriendly relations with Pakistan, in particular, the long-lasting issue of Kashmir, it is almost impossible for India to access this route to Afghanistan without the solution of the key issues with Pakistan.
The other issue which is seriously disturbing India is the expanding project of “The One Belt One Road Initiative” led by China and its Southern extension, the CPEC (China-Pakistan Economic Corridor). The CPEC is not only an important part of the Chinese-led global economic project but also a game-changer in the region which enables China to access and dominate the maritime politics of the Indian Ocean. The total distance via land route between Gwadar, the main hub of the CPEC to the “Khunjarab”, the Chinese border is only 2757 km.
If India would search for another alternative route to reach Afghanistan and ultimately to CARs, it has only one option, that is Iran. The Iranian port of “Chabahar” is said to be the potential competitor of Gwadar and no doubt that it is also an important port strategically.
To bypass Pakistan, years before the APTTA is signed, India has started a key highway project of Zaranj-Dilaram Highway (Route 606). This 215km long highway connects Iran to the Kabul-Herat highway, the only and the key route of Afghanistan, connecting Herat to Kabul and onward to northern Afghanistan. This ambitious project was started in 2005 and completed in 2009. The highway is constructed by the Building and Road Organization of India (BRO) and it cost US$ 125 million.
On January 22, 2009, Hamid Karzai, the former Afghan President and Pranab Mukherji, who was serving as the Indian FM at that time, participated in the inauguration ceremony of route 606. Both leaders, in their speeches talked about the benefits of the project and its probable impact on the regional integration but some parts of both speeches were said to be provocative. Mukherji said, “The completion of the road reflects the determination of both India and Afghanistan that nothing can prevent or hinder collaboration between the two countries” and Karzai was two steps ahead, he said, “the completion of the project, which opens a shorter alternative route connecting Kabul to Iran, is a message to those who want to stop cooperation between India and Afghanistan. “Our cooperation will not stop[x].”
On May 23, 2016, India, Iran, and Afghanistan signed a trilateral transit trade deal in Tehran. This transit trade pact was inked in the presence of Narendra Modi, Hassan Rohani, and Ashraf Ghani, all three heads of states.
In the same visit, Indian PM announced that India would invest US$500 million to develop the strategically important Chabahar port, close to Iran’s border with Pakistan, he said that the port would open a transit route to Afghanistan and Central Asia for Indian goods and products, avoiding the land route through Pakistan. The Iranian business daily, Ta’adol, also welcomed the deal. It said that India wants to challenge China’s power in central and South Asia through Chabahar port. Noting that China is trying to control the pulse of regional trade by making extensive investments in the Pakistani port of Gwadar, India is now positioned against its strong competitor by investing in the port. The newspapers reminded its readers of ‘setbacks’ that Iran has faced due to India, “We should raise our complaints… and ask them [India] to be more honest in their trade with Iran, and to fulfill their obligations more seriously,” Another Iranian daily E’temad added that Mr. Modi’s visit and the signing of agreements on joint projects, energy and connectivity will ring danger bells in Islamabad, China, and Riyadh[xi].
Indian newspapers called the deal a milestone and a strategic defeat of Pakistan as well as the potential to provide an Indian strategic counter to Pakistan’s Gwadar port being developed by China right next door to Chabahar.
The Iranian daily’s concerns came true when the U.S. President Donald Trump overturned the Joint Comprehensive Plan of Action (JCPOA) and imposed rigorous sanctions on Iran in 2018. India could not continue with Iran, the way Iran counted on it.
Iranian Foreign minister, Zawad Zarif conveyed to his Indian Counterpart that Iran had expected the Modi government to be ‘more resilient’ in the face of Washington’s bullying at a time when equally Modi government was dragging its feet on the Chabahar port project, which has far-reaching implications for regional connectivity, stability, and security. In fact, Zarif reflected the deep misgivings at the highest level of Iranian leadership that India’s capacity or political will to pursue independent foreign policies are increasingly in doubt[xii].
On the other hand, a partnership with the US to restrain China was also attractive for India. The table moved further around after the two-day visit of Saudi Crown Prince, Mohammad bin Salman (MBS) in India on February 29, 2019. The visit was followed by a UD$ 100 billion Saudi investment in Indian in the areas of energy, refining, petrochemicals, infrastructure, agriculture, minerals, and mining[xiii].
This strategic shift in both Indian and Saudi foreign policy were received with great concerns in all three relevant countries, Pakistan, Iran, and China.
As a logical percussion in August 2020, a piece of breaking news about the Chino-Iran mega-deal of US$ 400 billion through a strategic partnership, over the next 25 years rattled not only the Indian policymakers but also the western countries. Now, Iran did not need any more Indian investment in Chabahar port, the crucial railway line from Chabahar to Zahedan that ultimately connects the Iranian port to Zaranj nor the Iranian were eager for Indian money to explore the Farnaz B gas field. India started feeling to be footed out of the deal and the ambitious approach to access Afghanistan and the CARs. India wooed Iran to keep China away from Chabahar. Although Iran had a very diplomatic and soft response to India but a former Iranian diplomat, who served in India, said New Delhi’s “growing ties” with the US and Israel under the Narendra Modi government have “not gone down well with Tehran.[xiv]” But it seems to be too late.
Another angle
Now, how the APPTA could be an important factor for both countries to preserve their geopolitical/economic importance and guarantee the prosperity of the people in both countries. Although, Pakistan continued to disallow the transit of Indian exports to Afghanistan via its land routes due to multidimensional political, security, legal and technical problems. But it allows exports of fresh fruits, vegetables, and herbs from Afghanistan to India through the Wagah land border. It means Afghanistan does not have any problem with its exports from Pakistan. Over and above to India and the rest of the world, Pakistan itself has been the favorite destiny of Afghanistan’s fresh fruits and vegetables minimal spoilage and without losing its natural taste and freshness. Fresh fruits and vegetables comprise a big percentage of the total Afghan export.
According to the paper AFGHANISTAN NATIONAL EXPORT STRATEGY 2018-2022, FRESH FRUITS AND VEGETABLES SECTOR published Afghan Ministry of Industry and Commerce, over 90% of Afghan fresh fruits and vegetables are consumed in Pakistan, US$ 71.5 million and it is predicted an increase of 45% in coming years.[xv] Moreover, there is a high demand for Afghan coal in Pakistan. Only one company ‘Fauji Cement Company ltd.’ requires up to 324,000 metric tons of Afghan coal per annum.[xvi]
Now, let us explore two more important issues related to APTTA.
The Chabahar Port indeed bypasses Pakistan and if the other issues did not overshadow the Indo-Iranian relations, as it is discussed earlier, India may have an access to Afghanistan but the main destination of India is CARs and beyond that. Why India would use Afghanistan as a transit route while Iran has better infrastructure, better roads, railway lines, and better management bodies as well as there are no security threats, it operational in all seasons and the no hard terrain to cross. So, the importance of Afghanistan as a crossroad and a connecting hub will be badly effected which will have a long run affect. India will certainly use the International North–South Transport Corridor (INSTC). It is the ship, rail, and road route for moving freight between India, Russia, Iran, Europe, and Central Asia. The INSTC project was initiated by Russia, India and Iran in September 2000 in St. Petersburg. The trilateral agreement was signed on May 16, 2002, at least one-half decades earlier than the India-Iran-Afghanistan trade transit agreement.
Another agreement ‘The Quadrilateral Traffic in Transit Agreement (QTTA)’ was signed by Pakistan, China, Kyrgyzstan, and Kazakhstan on March 09, 1995, in Islamabad, 15 years earlier than the APTTA. Later on, in 2017 Tajikistan also wished to join this agreement while Kabul has reluctant to finalize a transit trade agreement with Islamabad. Tajikistan is poised to join a separate initiative that will connect Pakistan to Central Asia, bypassing Afghanistan entirely. The QTTA provides Pakistan an alternative gateway to Central Asia by completely circumnavigating Afghanistan. It would use the Karakoram Highway which connects Gilgit-Baltistan to China’s Xinjiang region, which links to Central Asia.[i] On May, 08 2020, the Uzbek Deputy Prime Minister, Sardor Umurzakov also submitted a formal request. The road will provide Uzbekistan an access to China and the Pakistani seaports.[ii] Now, this project is part of CPEC and is operational. This transit route is also bypassing Afghanistan. Although, the road passing from the tough mountainous areas and the traffic might face problems, it the same case with Kabul-Mazar-e Sharif highway when it passes through Salang Mountains and Tunnel.
Source- Ministry of Communication
Concluding Remarks
- All knows the undesirable fluctuating relationship between both neighbours but both has to overcome those problems as soon as possible; lest it will undermine all facet of relation from trade to peace and stability in Afghanistan and Pakistan.
- APTTA has more implications beyond mutual trade. If, Afghanistan cannot incorporate the region economically by this project; it should not lose Pakistan and CARs. If APTTA is not signed Afghanistan may lose its leverage as the crossroad of the region. The countries all around Afghanistan, which are much more stable economically and politically may find their way for mutual trade with or without Afghanistan. The two examples of INSTC and QTTA projects, respectively led by Russia and China are already discussed above.
- No doubt that India is an important country of the region but the persistent pressure of Kabul to include India in the APTTA does not seem to be materialising. Since the mutual relations between Pakistan and India has its own dynamics and history, until they do not resolve their problems of considering each other an existential threat, APTTA has to move forward with or without India. India cannot export to Afghanistan via Wagah and Pakistan land route but the government of Pakistan has given Afghanistan a special dispensation to export Afghan Goods to India.
- India has already found another trade route for its exports to Afghanistan and CARs., Afghanistan does not need to worry about that.
Although one can realize the immense pressure on president Ghani, Afghanistan really a hard land to rule with the history of four-decade war. At present, the issues of his lavish dining table with fourteen various types of meet and the deadlock in Doha Talks might be the matters of more importance but APTTA is also a matter that should be dealt on priority basis.
Dr. Hussain Yasa is the former Editor in Chief of the daily Outlook Afghanistan. At the moment he live in Germany in self-imposed exile. The views expressed by author are his own and DiploMag is not responsible for it.
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[1] The economic Times/ News (September 29, 2019), Our investment plans in India on track, Indian economy has strength to bounce back: Saudi Arabia.https://economictimes.indiatimes.com/news/economy/foreign-trade/saudi-arabia-to-invest-usd-100-billion-in-india/articleshow/71358978.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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[1] AFGHANISTAN NATIONAL EXPORT STRATEGY 2018-2022FRESH FRUITS AND VEGETABLES SECTOR
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[1] Fauji Cement Company ltd.http://fccl.com.pk/wp-content/uploads/2016/01/Afghan-Coal.pdf
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