October 04, 2018
There is loud and frequent brouhaha on falling exports to Afghanistan with India and Iran poaching Pakistan’s share. The powers that be however appear to remain deaf to concerns though a lot of lip service is given to the problem.
The hubristic belief in Afghanistan’s dependence on Pakistan has some grounding in fact since Pakistan was the top exporting partner of Afghanistan in FY18, as per Central Statistics Organisation Afghanistan. While it is true that Pakistan’s exports to Afghanistan has declined over the years, part of the reason lies in the country’s total imports declining as well. Since FY13, Afghanistan’s total imports have decreased by 13 percent, falling from a 6-year high of $8.9 billion to $7.8 billion in FY18.
As a percentage of total imports of Afghanistan, Pakistan’s exports have remained constant at about 14 percent for the last four years. Given the operational difficulties of Chabahar and recent Iranian sanctions, increase in imports from India are not a near or medium term threat. Currently, Indian exports occupy a paltry 3 percent share of total Afghanistan’s imports.
In the broad picture, Pakistan’s economy and BoT has not suffered any major hits in recent years, as far as exports to Afghanistan are concerned. However, the true losers are those at the bottom of the food chain.
One such group are the small businessmen and transporters involved in hauling the cargo across the border. A paper by Bonn International Centre for Conversion published last year highlights that political and diplomatic tensions and frequent closure of borders has let to lengthy delay for exporting and transport companies. This has created an environment which allows nefarious activities to flourish and non-state armed groups (NSAG) to set up shop.
Legit businessmen and transporters have to circumvent these issues by paying NSAGs for protection for their convoys as well as gain custom exceptions. Large companies with wallets big enough adapt by keeping aside funds for bribes and hiring of locals that would help bypass the problems. Smaller players and informal transporters have to fend for themselves as there is no formal structure and poorly-implemented policies which gives rise to corruption. An insight provided by the paper is that corrupt practices by police and state offices are a greater hindrance than acts of violence.
The ad hoc nature of policies create a mass of difficulties for transporters. One such example is the curfew imposed in Torkham and Ladikotal that closed the Pakistan-Afghanistan highway in 2016. Hundreds of vehicles were stranded at different points, many of which were carrying perishable goods. Similarly, Torkham and Speen Boldak crossing were closed in 2017 with at least 1,200 trucks stuck at each side of the border. The border opened after about a month had passed. While terrorist attacks are often given as a reason for the closure, the ones most hit are the transporters and businesses involved with trade.
Simmering hostilities and ethnic divisions create another layer of problems. For example, some within the industry assert that it is safer to use Afghan drivers within Afghanistan, Pashtun drivers as far as Peshawar and mainly Punjabi drivers from Peshawar into Pakistan, increasing costs and time spent on the road.
The big picture of Pakistan Afghanistan is not as shabby as painted. The finer details of Pak-Afghan trade that involve numerous small players, whose grievances are reduced to unimportant columns buried in the middle pages of newspapers are the ones most affected.
This article was originally published on Business Recorder on October 03, 2018. Original link.
Disclaimer: Views expressed on this blog are not necessarily endorsed or supported by the Center for Research and Security Studies, Islamabad.
