Historically, the Pak-Afghan relations have often seen fluctuations, especially in the last three decades. During the Zia era, President Dauod and General Zia-ul-Haq reached a consensus to ‘freeze’ all the unresolved issues between the two countries, and start working for a prosperous beginning for the both brotherly states. However, unfortunately, their understanding had to be short-lived as the communist coup sabotaged it all.
The essentiality of the adjacent boundaries along with large ethnic groups on both sides of the border, and the common religious character require that the past rancour be put aside and the way for an association of mutual economic and strategic gains to address the growing challenges be surfaced. Pakistan can greatly take the advantage if it acts as a major player in the future rehabilitation and reconstruction efforts in Afghanistan. Pakistani machinery, workforce and expertise could play an important part in such efforts, and, in turn, its ports and transport sector could receive a major boost.
Apart from the concept of the ‘strategic depth’ â€” Afghanistan’s strategic location and its ability to destabilize the regional security and prosperity owing to its geographic significance of being the Gateway to Asia â€” Afghanistan is one of the most important countries in the region. All of its neighbours share a common interest in the emergence of a stable Afghanistan. However, these neighbours have variables, and in some cases quite contradicting interests regarding the nature of the Afghan state. However, the country is landlocked â€” having no sea and bounded on the north by Turkmenistan, Uzbekistan, and Tajikistan; on the east by China; on the south by Pakistan; and on the west by Iran. But the country, whose future is most intimately tied to that of Afghanistan, is Pakistan.
Afghanistan is very much important for Pakistan in terms of trade and other economic interactions. Pakistan can increasingly facilitate Afghan trade and get the opportunity of being a state that has maritime route towards the rest of the world. Such steps will further boost the economic development of both neighbouring countries. Recently, the Afghanistanâ€™s Foreign Minister also propped the Pakistan’s Minister for Finance for enhancing trade activities and a workout for a proper mechanism to enhance bilateral economic cooperation.
Pakistan has planned many projects to enhance its role in the social and economic development of Afghanistan. These projects include a 400-bed Jinnah Hospital in Kabul, a 200-bed hospital in Logar, a Kidney Hospital in Jalalabad, an Engineering University in Balkh along with Rehman Baba School, and accommodation for 2000 children, and the dual road of 75km length to increase the trade activities from Pakistan’s border directly to Jalalabad.
Recently, Pakistan increased the development fund for Afghanistan to $500 million to ensure the timely completion of development projects. Pakistan has also proposed inclusion of Tajikistan in the transit trade agreement with Afghanistan to convert it into a trilateral accord and extend the trade to the entire region. The transit trade means a trade by a citizen from a non-resident, followed by the sale of the goods to another non-resident without the goods entering the country. Therefore, transit trade is not included in the international trade statistics.
Pakistan and Afghanistan also have a Free Trade Agreement (FTA) with an understanding to follow common tariff policies, to facilitate the transit trade. The Afghanistan-Pakistan Transit Trade Agreement (APTTA) was established with a desire to strengthening the economic ties between the two countries. The Agreement promotes the intermodal freight transport and ensures the effective and efficient administration of the transit transport, avoiding the unnecessary delay in the movement of goods and commercial vehicles.
Pakistan also facilitates transit of Afghan goods to India. During the Taliban rule, the trade under transit facilities (ATT) was over Rs.100 billion and comprised items that were not in demand in Afghanistan and were actually meant for smuggling into Pakistan. The goods that get to Afghanistan are not subject to any tariff; therefore, they are smuggled back into Pakistan to bag the 25 to 35 percent differential on a tariff that Pakistan imposes on its imports. According to an estimate, Pakistan was losing over Rs.30 billion in revenues throughout the ATT. However, since 9/11, the scope of smuggling had actually reduced.
Smuggling is a curse for both countries as it significantly brings losses to their economies. There is a dire need to employ modern technological means to curb this menace. Moreover, realizing the setback, the Pak-Afghan Joint Chamber of Commerce emphasizes on the need of real-time initiatives like providing an online system. The proposed new system of WeBOC (Web Based One Customs) â€” a system of one window operation for all the Customs needs is a good step. Such steps will really boost the economic growth of the two countries.
The economic growth is benign for the governments as well as for the common people. The economic growth means an increase in real GDP that will automatically increase the value of national outputs. The benefits include higher incomes which will ultimately yield in shape of better services and better living standards. The economic growth will also bring the unemployment at the lowest level. The governments will generate higher tax revenues and there would be less need to spend money on benefits such as unemployment allowance. Therefore, there will be an automatic reduction in borrowing. Ultimately, the economic growth will encourage the foreign investors and create a virtuous cycle of actual development.