Written By: Zarrar Khuhro

“The supreme art of war is to subdue the enemy without fighting.” – Sun Tzu.

 

In May last year, India, Iran and Afghanistan signed a deal to develop the Iranian port of Chabahar and also to develop a trade and transit corridor through Afghanistan that could, when fully operational, halve the time and cost of trading with Europe. Concerns were raised in Pakistan that this was an attempt to reduce the potential importance of Gwadar, and also provide a way for India to bypass Pakistan when it comes to direct trade with Afghanistan. However, these concerns were countered with skepticism as to how quickly the Chabahar project could get off the ground and whether this circuitous route could ever practically replace the more direct Pak-Afghan trade route.

 

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In the meantime, Pak-Afghan relations and trade ties continued to deteriorate, as attacks from terrorists based in Afghanistan began to escalate, leading to Pakistani authorities sealing Pak-Afghan border crossings as a punitive measure. While possibly effective in the short-term, this was at best an ad hoc decision which caused losses to traders and businessmen not only in Afghanistan but also in Pakistan, and gave Kabul an additional impetus to favour the Chabahar route and project.


A ray of hope came when COAS General Qamar Javed Bajwa visited Afghanistan this year and held fairly cordial meetings with President Ashraf Ghani. It was one of the all-too-frequent ice-breaking meetings between Pakistani and Afghan officials, but as per routine it didn’t take long before yet another freeze came.


Soon after, Kabul once more conveyed to Pakistan that it wanted to delay the meeting of the Afghanistan-Pakistan Transit Trade Coordination body, which was already overdue to meet and which had on its agenda the resolution of long-standing issues bedeviling Pak-Afghan trade. The reason given this time was that the Afghanistan wanted India to have a place on the table before proceeding with the meeting. This condition was dismissed by Pakistan which argued that there was no need to include a third party in what was essentially a bilateral forum, and the meeting was delayed once more.


Then came the follow-up: On October 23rd, 2017, Ashraf Ghani issued a decree banning Pakistani trucks from entering Afghanistan via the Torkham and Spin Boldak crossings. Henceforth, Pakistani trucks would only be allowed up to the border crossings, at which point the trucks will have to off-load their goods and transfer them to Afghan trucks.


"The Afghanistan and Pakistan Trade Agreement (APTA) has expired. Before this Pakistan did not allow Afghan trucks to enter its territory. So we [will] do the same, and after this Pakistani trucks will be unloaded at borders and Afghan trucks will carry the goods to Hairatan and Shir Khan ports," Afghan Transport Ministry Spokesman Hekmatullah Qawanch said.


The immediate effect of this was that Pakistani truckers would face losses, as the work they previously performed would now be taken up by Afghan truckers which would undoubtedly benefit the Afghan economy, but work to the detriment of long-term Pak-Afghan relations and trade.


For those who were wondering why such extreme steps were being taken by Kabul, the answer came on November 11 this year, when the first shipment of Indian wheat reached the Afghan province of Nimroz, via the Iranian port of Chabahar. The jubilation was expected: Senior Afghan officials and the Indian ambassador to Kabul, Manpreet Vohra, attended a ceremony to inaugurate the new trade route – which according to them will help Afghanistan overcome its dependence on other trade routes, including Pakistan.


“With the opening of Chabahar Port, Afghanistan will no longer be dependent on Karachi Port,” Nimroz governor Mohammad Samiullah said.

 

This new route Chabahar-Zaranj, isn’t operating in isolation: In June this year a plane loaded in Kabul with 60 tons of medicinal plants landed in New Delhi, raising hopes of giving a major boost to commerce between landlocked Afghanistan and India. This was followed by a subsidized shipment of wheat flour from India to Afghanistan. The subsidy is in place in order to defray the costs of the air freight and make the product competitive in the Afghan market with the goal of edging out Pakistani exports of flour.

Manpreet Vohra was even more jubilant as he tweeted: "1st India wheat shipment via #Chabahar welcomed into Zaranj #Afghanistan with traditional song, dance and joy! Proud moment!!"


Vohra said that pictures of Prime Minister Narendra Modi, Afghan President Ashraf Ghani and Iranian President Hassan Rouhani decorated Zaranj as the shipment arrived.


This new route Chabahar-Zaranj, isn’t operating in isolation: In June this year a plane loaded in Kabul with 60 tons of medicinal plants landed in New Delhi, raising hopes of giving a major boost to commerce between landlocked Afghanistan and India. This was followed by a subsidized shipment of wheat flour from India to Afghanistan. The subsidy is in place in order to defray the costs of the air freight and make the product competitive in the Afghan market with the goal of edging out Pakistani exports of flour. Zubair Motiwala, chairman of the Pak-Afghan Joint Chamber of Commerce and Industry adds: “Iran is charging very minimal rates for port usage. Afghanistan is importing from the world through Iran. Afghanistan's imports have increased but Pakistan's exports to Afghanistan have decreased. And that share by and large has been taken by India through Iran.”


Pride Comes Before a Fall
For years, authorities in Pakistan have convinced themselves that Afghanistan has no real alternative to routing trade through Pakistan, and has responded to recent incursions of militants from Afghanistan by sealing the border crossings in what was meant to both boost security and as a punitive measure. The operating logic seems to be that while this will hurt Pakistan’s economy, it will hurt Afghanistan even more, thus theoretically providing an incentive to prevent such attacks. As a result of such measures and the

Our loss has been India and Iran’s gain: Indian officials estimate that the air corridor alone will boost annual trade between the two countries from $700 million to $1 billion in three years and give a lift to exports of Afghanistan's agricultural and carpet industries. Afghanistan’s increased reliance on Iranian flour has caused immense losses to the over 200 flour mills operating in Khyber Pakhtunkhwa which were previously the main suppliers, and some mills have reportedly even been forced to shut down as a result.
Afghanistan’s increased reliance on trade with and via Iran, Pak-Afghan trade over the years has dropped by approximately 40% from about $2.5 billion to an expected $1.5 billion this year. This also does not take into account the equivalent $2.5 billion of ‘informal’ cross-border trade, taking the real volume of Pak-Afghan trade to about $5 billion in the past. Note also that the trade balance here is about 80:20 in favour of Pakistan and you can see that the loss of revenue is immense, and profoundly worrying. This figure, though staggering, does not take into account losses from decreased trucking, transit fees and also the reduction in revenues from cargo handling and other revenue streams at Karachi port. There is a multiplier effect at play as well: the decrease in trade volume also affects the business of entire support industries, all the way down to the hotels that cater to truckers.

 


Our loss has been India and Iran’s gain: Indian officials estimate that the air corridor alone will boost annual trade between the two countries from $700 million to $1 billion in three years and give a lift to exports of Afghanistan's agricultural and carpet industries. Afghanistan’s increased reliance on Iranian flour has caused immense losses to the over 200 flour mills operating in Khyber Pakhtunkhwa which were previously the main suppliers, and some mills have reportedly even been forced to shut down as a result.


Canary in the Coal Mine
Again, none of this should come as a surprise. Zubair Motiwala, chairman of the Pak-Afghan Joint Chamber of Commerce and Industry has been sounding the alarm for years, but to no avail.


Earlier this year, he said: “The government must realize the value of trade with Afghanistan. Already half the wheat flour mills and related businesses have closed down in Peshawar while we take steps to increase the trade deficit rather than decrease it…, the government needs to understand that there is no difference between dollars coming in from the U.S., the EU or Afghanistan. This is our market that we are losing out on.”

 

All is not lost; Pakistan remains the easiest route for Afghan trade and there is room for cooperation with Iran on Chabahar. Furthermore, Pakistan has also joined the Lapis Lazuli corridor, which aims to foster transit and trade cooperation between Afghanistan, Turkmenistan, Azerbaijan, Georgia and Turkey by reducing barriers facing transit trade.

He lamented that frequent border crossings have played havoc with trade, and that the last two closures resulted in the rotting of hundreds of trucks worth of perishable goods being exported to Afghanistan.


Mr. Motiwala also expresses his frustration when it comes to dealing with the various branches of the Pakistani state. While acknowledging that Ghani is certainly under Indian influence, he also notes that Pakistani authorities do not seem to have a comprehensive plan to counter this economic warfare. Let us be clear that Pakistan’s security concerns are indeed paramount, but this does not mean that the economic loss we are suffering is inconsequential. Far from it. Earlier this year, COAS General Qamar Javed Bajwa addressed a seminar on the “Interplay of Economy and Security’ in which he said: "Our region in general and the immediate neighbourhood in particular has failed to take off due to peculiar security challenges. I sincerely believe that the region will sink or sail together – that is how it has played out across the world. I want to use this opportunity to earnestly convey to our neighbours to the East and to the West that our destinies are inextricably linked.”


Pakistan’s security concerns can be allayed by setting up a system of security checks at the border crossings and by increasing documentation requirements and so on, but we need to realise that our current actions and lack of planning are in fact benefitting our adverseries and causing losses that our economy can ill afford.


All is not lost; Pakistan remains the easiest route for Afghan trade and there is room for cooperation with Iran on Chabahar. Furthermore, Pakistan has also joined the Lapis Lazuli corridor, which aims to foster transit and trade cooperation between Afghanistan, Turkmenistan, Azerbaijan, Georgia and Turkey by reducing barriers facing transit trade. This corridor, taken in conjunction with CPEC and OBOR, has the potential to further integrate the region, and while it does prima facie offer competition to the Pakistan route, it is also an avenue for cooperation.


Unfortunately, it seems that while our opponents are playing chess, we are busy playing ludo. I’ll explain: in chess, one achieves victory by anticipating the opponents’ moves and planning for each possible contingency. Victory does not come from linear thinking but from a cool appraisal of the board and the myriad possibilities it encompasses. Ludo, on the other hand, depends largely on praying for a six on the die.


It is unfortunate that the state does not follow up effectively on high-profile visits and diplomatic outreach in a coordinated way.


Foreign tours by civil and military leaders are rarely followed by the tours of business and cultural leaders that are needed to actualize policy and cement gains. We work in isolation, and often at odds with no real understanding of the big picture, or that the challenges we faced cannot be dealt with in isolation by a single branch of the state, or indeed of civil society. As this piece began with a quote from Sun Tzu, let’s end it with another:


"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win."


It is up to us to choose which warrior we want to be… and time is not on our side.

 

The writer has worked extensively in Pakistan's print and electronic media and is currently hosting a talk show on a private TV Channel.

E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

 
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