Institute for War and Peace Reporting | Giving Voice, Driving Change

Afghans Divided on Regional Integration

Membership of a South Asian economic grouping may not be all it is cracked up to be.
By Sayed Yaqub Ibrahimi
Officials in Afghanistan say accession to a major regional economic grouping should help the domestic economy grow and will open up trade with the country’s southern neighbours. Critics of the move dispute this, saying the domestic economy will reap few benefits from closer integration with neighbours who are themselves poor and argumentative.



Afghanistan was accepted as a member of the South Asian Association for Regional Cooperation, SAARC, last month, joining India, Pakistan, Sri Lanka, Bangladesh, Bhutan, Nepal and the Maldives.



Both culturally and economically, Afghanistan lies at the crossroads between Iran and the Middle East to the west, former Soviet Central Asia to the north, and the Indian subcontinent to the south, and offers a convenient land trade route between these regions. Afghanistan itself has much to gain from closer economic ties with the Indian subcontinent, despite its fraught relationship with its immediate neighbour Pakistan.



"By joining the SAARC, we will strengthen our political relationships over time, and gain other advantages," Sultan Ahmad Bahin, spokesman for the Afghan foreign ministry affairs, told IWPR.



"South Asian countries, particularly Bangladesh and India, need our raw materials, and now we will be able to sell them to these countries more easily. For their part, the South Asian countries want to get their products to Central Asian markets, and Afghanistan is the cheapest route. We will also earn substantial revenues from freight transit fees.”



India and Pakistan feature high on the list of destinations for Afghan exports, which include dried fruit and nuts, wool and animal skins, cotton, precious stones and carpets.



Ainuddin Alawi, a merchant in northern Afghanistan who imports foodstuffs from Pakistan, explained that at present, complex custom arrangements are a major obstacle to trade.



In addition, Afghanistan is heavily dependent on Pakistani goodwill for the free flow of goods – and that is not always forthcoming given the difficult diplomatic relationship between the two countries. Kabul has repeatedly accused Islamabad of not doing enough to reduce the Taleban’s capacity to launch raids over the border into Afghanistan. The Pakistani authorities have argued that the insurgency is ultimately an Afghan problem.



"Our goods sit and go to waste in the Pakistan’s free ports. We have a lot of problems. When Pakistan so wishes, it holds up our goods at the port of Karachi port, sometimes for months on end. And we suffer considerable losses because when they do allow our goods out of their ports, they are spoiled,” said Alawi.



"Once I was importing soft drinks, and my containers were delayed in Karachi for two months. So when they allowed them to be shipped, they were completely unsaleable and I was [nearly] bankrupted."



Bahin insists that SAARC membership will resolve most of these problems. "We’ll be able to take advantages of custom privileges, which means non-stop transit, and this will help our traders a lot,” he said. “In addition, our traders will be able to invest in other member states easily, just as those from other countries will be able to invest in Afghanistan."



Nazir Ahmad Shahidi, the deputy economy minister, argues that Afghanistan will benefit from being able to import technology and know-how at the relatively cheap prices.



"South Asian countries have both cheap technology and inexpensive human resources, so we can use them to develop our economic infrastructure,” he said. "An expert from India currently costs a tenth of the rates charged by a European one.”



He explained his vision of how SAARC membership would pay for itself, saying, "We will earn money from transit fees and we will use it to buy in experts and technology from [other] member countries, and in that way increase our manufacturing capacity and eradicate poverty.”



Ramazan Bashardost, a former planning minister who is now a member of parliament and an outspoken critic of the government, is less enthusiastic about SAARC membership, saying any economic advantages are likely to be obstructed not only by tensions between Kabul and Islamabad, but also by the animosity between Pakistan and India.



"There is a deep sense of dislike rather than rapprochement between some of the member countries, for example between India and Pakistan and between Afghanistan and Pakistan," he said. "Political rivalries between the member countries will prevent Afghanistan from developing as it should.”



Given the historical interest that both Delhi and Islamabad have had in gaining the advantage over each other by engaging with or intervening in Afghan politics, Bashardost warns that even within SAARC, “Afghanistan may become a plaything in their hands".



Bahin argues that the SAARC framework at least imposes fair rules for all its members, and suggests that a revival of economic and trade ties will ultimately serve to defuse more aggressive forms of regional competition.



"Right now there are plenty of problems with transporting goods from Afghanistan to India via Pakistan, but at least when we are bound by a treaty, Pakistan will have to respect the regulations set out in the charter….We will not lose out; this is a step forward," he said.



"Another point is that the expansion of economic relationships between the various countries will have a direct effect on security and political problems. All of SAARC’s members believe that when economic ties are strengthened, military and political rivalries will be supplanted by free enterprise."



Bashardost and other critics also make the point that the Afghan economy is at such a low point that it is in no condition to take part in a competitive regional market.



"Afghanistan would need to have high levels of production in order to be an active member of SAARC, but right now we have nothing to offer [other] markets, and we will merely see [other] SAARC members growing while Afghanistan remains only a destination for their exports. All the money that Afghanistan earns [in transit fees] will disappear on purchases of goods from SAARC states."



Bashardost concluded that joining SAARC was a wasted effort. “Afghan leaders… have miscalculated, and took Afghanistan into SAARC without looking at the current domestic economic situation," he said.



Nabi Assir, an economic analyst in northern Afghanistan, agrees that a country like Afghanistan will not benefit. "The nature of this incongruous group of countries suggests that a new and especially poor member is not going to reap any benefit - these countries are themselves broke, and will grasp at any way of improving their own economies," he said.



Assir also disputed the notion that there is a direct correlation between security and international trade. Quoting figures cited by President Hamed Karzai, he said, “Pakistani exports to Afghanistan in 2002 were worth 50 million [US] dollars. In 2005, even though the security situation was much worse than in 2002, Pakistani exports increased to 1.2 billion dollars.”



Shahidi, however, insists that integration is the only way forward, saying, "We should have done this 20 years ago. Now that there’s an opportunity to do it, why should we miss out? The principal reason for our lack of economic success is that our participation in regional trade has been so minimal."



Alawi, the Afghan trader, is pleased that his country has joined SAARC.



He said, "I don’t know much about these sorts of associations, but one thing I do know is that with the exception of Afghans, traders [in these countries] are not facing difficulties - maybe because they are [SAARC] members.”



Sayed Yaqub Ibrahimi is an IWPR staff reporter in Mazar-e-Sharif.