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Home Opinion & Editorial Opinion

Afghan situation and Pakistan’s economy

Dr. Muhammad Shahbaz by Dr. Muhammad Shahbaz
September 19, 2021

Pakistan’s stability has been gravely undermined by the twin blowback from Afghanistan: first the Russian occupation which bequeathed a witches brew of militancy, weapons and drug proliferation and 3 million Afghan refugees; second the unintended consequences of 2001 US intervention which pushed the conflict into Pakistan and further fuelled the forces of militancy.

The conflicts in Afghanistan and Pakistan are interlinked, but they are also distinct. They are linked by the bonds of Pashtun ethnicity; a broadly shared ideology; common links to Al-Qaeda; two way cross border movement and some mutual support.

Afghanistan and Pakistan have a long history of tense relations defined by five recurring drivers: sovereignty concerns, security interests, geopolitical dynamics, cross-border ties, and connectivity and trade. Together, these dynamics will shape future prospects for stability in Afghanistan and the broader region.

There have been improvements in the overall security situation in Pakistan in the recent months as a result of concerted actions by the Government of Pakistan. However, peace and stability in Afghanistan and the region are vital for the complete revival of Pakistan’s economy and to keep stability in the system. Under such circumstances, a positive relationship with Pakistan could go a long way in fostering stability and development.

The opposite is a much likelier outcome, however, given the deeply held grievances on both sides compounded by the ongoing conflict. Afghanistan and Pakistan stand the best chance of building on their cross-border ties for the benefit of regional stability and the well-being of their citizens.

The situation in Afghanistan adversely impacted Pakistan’s economy by several ways, such as the overall growth rate in all major sectors of the economy reduced because there is no trade to central Asia countries due to worsening the situation in Afghanistan. Pakistan continues to pay a heavy price both in economic and security terms in Afghan war.

Pakistani economy have been affected a lot while in security terms Pakistan faced a lot of deaths, injuries and other causalities. Along with this, both men and material, have been diverted to address the emerging security challenges for the last several years. This situation disrupted Pakistan’s normal economic and trading activities which not only resulted in higher costs of business but also created disruptions in the production cycles.

As a result, Pakistani products have gradually lost their market share to their competitors. Consequently, economic growth could not picked up as planned. Investment outflow and negative trends of outsourcing of capital in Pakistan has further added to the woes of dwindling performance of the export-oriented industry.

The security situation will be the key determinant of future flow of the investment. Currently, after Taliban take over Pakistan will face a lot of challenges which include, a further influx of militants and Al-Qaeda fighters into Pakistan from Afghanistan. It would produce a spike in violent reprisals on “mainland” Pakistan.

It could lead to the influx of more Afghan refugees, with further destabilizing effects in the Khyber Pakhtunkhwa and Baluchistan. While the positive affect of Afghanistan current situation on Pakistan will be i.e. High-level officials should engage directly to maintain relations. The shared language and culture of Pashtuns on both sides of the Durand Line presents an opportunity for trust-building.

Talks can succeed only if participants foster an environment of open dialogue and establish in advance a mechanism to resolve disagreements. Focus on bilateral topics such as e the shared impacts of climate change; the narcotics trade; and the status, potential regularization, and prospective return of Afghan refugees in Pakistan.

Explore border management options i.e. conventional wisdom holds that the Durand Line is a third rail in Afghanistan-Pakistan relations that, if raised, will shut down dialogue. Regularize military-to-military engagement by creating an environment of trust which enhances trade, investment, people to people exchanges, military and security exercises and recognition of Taliban military victory.

Afghanistan is like a land bridge for Pakistan to the Central Asian Countries, therefore Pakistan attaches importance to Afghanistan in order to gain access to natural resources of the Central Asian Countries. Pakistan also provides a viable route to Afghanistan for trade with other countries of the world.

Relations between Pakistan and Afghanistan have historically been tense. Cross-border infiltration, refugees, drug trafficking, militant groups, and disputes over counterterrorism policy and dialogue with terrorist networks have contributed to an entrenched trust deficit and have eroded relations.

These issues have impacts beyond the security sector, complicating efforts to build stronger trade and economic ties. Despite tensions, Pakistan is today Afghanistan’s largest trading partner, and Afghanistan is Pakistan’s second-largest trading partner. Peaceful economic cooperation between Afghanistan and Pakistan and improved trade and transit facilities would help connect South Asia with Central Asia.

Exported economic growth would be expected to increase domestic employment in both countries and provide foreign exchange to import commodities manufactured more cheaply somewhere else. Afghan officials see India and Pakistan as the two primary markets for Afghanistan but face obstacles in realizing this goal. The governments of Pakistan and Afghanistan need to make further arrangements for mutually beneficial trade relations.

The Afghan economy is predominantly agricultural, even though only 12% of its land area is arable and farmers have cultivated much less than that in recent years. Agricultural production is constrained by an almost total dependence on erratic winter snows and spring rains for water; irrigation systems are primitive.

Some existing irrigation networks and other agricultural facilities were destroyed in military conflict Afghanistan’s agricultural sector has deteriorated during more than two decades of conflict, and made a large portion of the country’s population reliant on international food aid. By comparison, Pakistan and Iran have introduced some agricultural reforms in recent years, seeking to raise productivity and bolster their agricultural sectors’ contribution to their national economies.

Agriculture (excluding opium poppy) in Afghanistan accounts for about one-quarter of national GDP and is the second largest sector after services. More than 80 percent of the population and nearly 90 percent of the poor live in rural areas, and agriculture plays an important role in their livelihoods. About half of all households derive at least part of their income from agriculture, which employs about 40 percent of national workforce.

Agriculture and minerals are the two sectors with the greatest potential to drive economic growth in the foreseeable future, and to generate the foreign exchange and government revenue needed to help offset projected reductions in foreign aid. But of the two, agriculture offers significantly greater potential for creating jobs.

It also has prospects for raising labor productivity, benefiting women and other disadvantaged groups (the poor, landless, and nomads), and reducing poverty and food insecurity in rural areas. Pakistan plays a great role in this regard, Pakistan need to invest in agricultural sector and mineral industry by opening new industries in Afghanistan.

About for three decades Pakistan and Afghanistan have very tensed situations. Now by the Taliban take over Pakistan must have good relations with the current Taliban government. The Taliban own real estate in Pakistan and receive large donations from private individuals in the country.

Pakistan will benefit from Taliban showing its sensitivity to the Durand Line, Pakistan has spent millions of dollars over the past few years to reinforce and demarcate the border. To complicate matters further, the Taliban maintain close ties with the Tehrik-e-Taliban (TTP), sometimes referred to as Pakistani Taliban.

The TTP comprises small Pashtun militant groups that are sympathetic to Taliban, operate along the Afghanistan-Pakistan border, and vow to war with Pakistan until it secures an independent Pashtunistan. The TTP is responsible for the deaths of many thousands of Pakistani civilians. Strong and peaceful relationship with Taliban government benefited Pakistan as a peaceful and prosperous Pakistan and Afghanistan.

 

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