Unlikely to end its dog-in-the-manger policy towards India, Pakistan is nevertheless being advised to cooperate to forge trading routes to the benefit for all in the region.
A Pakistani analyst based in Washington has counseled the Pakistan Government to allow transit of Indian goods to Afghanistan if Islamabad wishes to avoid its own isolation and play a significant role in the region.
Facilitating India-Afghan trade would also benefit Pakistan to get the maximum out of the China-Pakistan Economic Corridor (CPEC). Indeed, Indo-Afghan trade’s success is a key to the success of the CPEC.
Ending the current “myopic” approach to Delhi-Kabul trade is essential if Pakistan wants to reach Central Asia via CPEC since that route must pass through Afghanistan, says Uzair M. Younus, a South Asia analyst at Albright Stonebridge Group in Washington D.C.
Significantly, his counsel appears in the Dawn newspaper of Karachi with the hope that it would put some sense into the way Islamabad looks at the trade in the region.
However, some readers have reacted unfavourably citing “national security” considerations that the Pakistani military establishment has drilled into the public mind.
Politics should not obstruct regional trade, Younus has argued, on a line that not just India, but others in the region, including China and Iran, have pursued.
Younus has sought to disabuse the mind of fellow-Pakistanis that China would favour its “all weather” friend over others in the region at the cost of trade and regional cooperation that China wants for the US 50 billion Belt and Road Initiative (BRI) that it is promoting.
He has criticized the fact that while Pakistan allows Afghanistan land access to India for its exports, it does not allow Indian goods to make their way to Afghanistan via the same route — Indian exports to Afghanistan must be routed via Pakistan’s seaports.
The outcome of this short-sighted policy is debilitating regional trade. The curbs on Afghanistan’s imports from India mean that trucks crossing Wagah with Afghan exports to India must return empty, thereby increasing transportation costs for the country’s exporters. Secondly, the restrictions make it more expensive for Afghanistan to purchase Indian goods.
As a result, he points out that “these limitations bolster anti-Pakistan sentiment in Afghanistan.”
Last month, the Afghan government banned Pakistani trucks from entering Afghanistan, after claiming that Pakistan had stopped allowing Afghan trucks from crossing the Durand Line.
Younus cites data made public by Kabul that clearly indicate that Afghanistan’s exports to India have increased by 227pc, from $70 million in 2011 to $230m in 2016. However, its imports from India in this same period have grown by only 47pc, from $103m in 2011 to $152m in 2016.
During the same period Afghanistan’s exports to Pakistan increased by 57pc, from $180m in 2011 to $283m in 2016, while imports from Pakistan have increased by 37pc, from $877m in 2011 to $1.2 billion in 2016.
South Asian region, he points out, is home to almost a quarter of the world’s population and has been one of the fastest-growing regions on earth. “A young, enterprising population living here is eager to find its place in the world and could deliver a historic demographic dividend. Yet for all its potential, South Asia continues to be one of the least integrated places.”
Inter-regional trade, according to the World Bank, accounts for barely five per cent of South Asia’s total trade. Compare this to Asean, where inter-regional trade accounts for over a quarter of total trade.
“This isn’t surprising: South Asia is plagued by geopolitical tensions and a history of distrust and disputes, particularly between India and Pakistan that stymie any progress towards greater economic integration,” says Younus.
“The myopia of this region’s policymakers is showcased in the impasse between Afghanistan and Pakistan on providing the former greater access to the Indian market through a land route. This policy has skewed Afghanistan’s trade ties with India and has become a major sticking point of late.”
To circumvent these barriers, India and Afghanistan have launched an air corridor and was followed by the first shipment of Indian wheat to Afghanistan via the strategic Chabahar Port in Iran.
Younus points out: “These alternative routes will increasingly play a major role in bolstering Afghanistan-Iran-India trade ties, while isolating Pakistan from lucrative trade networks. It is worth mentioning that Iranian exports to Afghanistan have increased by 118pc, going from $581m to $1.3bn in 2016.”
He warns that “by not giving India access to the land route via Wagah, Pakistan also risks its plans to use CPEC as a gateway to Central Asia. That route must go through Afghanistan. President Ashraf Ghani recently said his country won’t be a part of CPEC unless it is given access to India via a land crossing.
“Unless a deal is reached, the billions of dollars of transit fees, essential for meeting CPEC repayment obligations (by Pakistan), will be at risk.”
He has dwelt on the ongoing debate in Pakistan on the Chinese built Gwadar versus Chabahar in Iran, located just 100 km away, which India is building in collaboration with Iran.
“While elites in Pakistan view Chabahar as a competitor to Gwadar, the Chinese are less keen to view this as a zero-sum game. In fact, Chinese officials are on the record as saying that they see Iran as a key plank in the One Belt, One Road (Obor) initiative.
“With Pakistani policymakers unable to generate sufficient momentum to meet Kabul’s demands on the land route, one can expect the Chinese to hedge their bets, especially if billions of dollars of goods begin to go through Chabahar and into Afghanistan and Central Asia,” Younus says.
He ridicules Pakistani official argument that China is an all-weather friend and would not undercut Pakistan, that Chabahar is India’s pet project and that India has been vehemently opposing Obor.
“While that may be true, it would be prudent to look at the fact that China is India’s largest trading partner, with annual bilateral trade amounting to more than $70bn.
Although this summer, Chinese forces came face to face in Doklam in stand-off with India-Bhutan, trade continued to grow at the height of the crisis. Further, India is a founding member of the Asian Infrastructure Investment Bank.
He explained that China’s goal is to foster greater regional trade and cooperation by developing essential infrastructure that facilitates this trade. India is one of the largest economies in the region and the Chinese recognise that it has a role to play in promoting greater regional trade.
These trade routes can run through Pakistan, allowing it to earn revenue through the transit trade, or through alternative routes via Iran. To become a conduit for goods flowing to Central Asia, Islamabad must provide full access to India’s markets via a land route.