The New Horizon

A new world explored with a rational view

Afpak and India – The new Transit Trade Treaty

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Last week when news came about Pakistan signing transit trade treaty with Afghanistan and it will eventually enable India to send its cargo through Pakistan, I was not surprised. The Pakistan transit was a matter of time and it had to happen. It’s good that at least the negotiations have started. Hopefully, the conclusion will also be good for all of us.

Historically, the trade between India and Afghanistan used to be through Khyber pass. The equation changed after India was partitioned in 1947. After that, the route was solely used by Afghanistan-Pakistan and not for Indian trade. While Pakistan said Kashmir is the reason for the denial, Indians never felt that interested in Afghanistan since their friend USSR was already there, bordering Afghanistan.

After the fall of USSR, Afghanistan went under the Taliban and India lost that advantage. Among all mistakes the Taliban regime did – a couple needs mention. They sheltered Osama bin Laden who was instrumental in 9/11 attack – we all know that. The second was the on the same date but 3 years earlier. On the September 11th, 1998, Taliban captured Mazar-i-Sharif and killed all Iranian diplomats (from Iranian Press) along with thousands of Shia Hazaras.

That brought India and Iran close for evicting Taliban and the master-plan to bypass Pakistan in India-Afghanistan trade was drawn. The UN approved attack on Afghanistan was when it started to fulfill. India-Iran jointly built a port named Chahbahar near Pakistan’s port of Gawdar. This port connects to Zaranj in Iran-Afghanistan border. It solved part 1 of the problem but the part 2 remained. There were no Highway to connect Zaranj with nearest Afghanistan city of Kandahar. Indians included that in their mission in their 1.1 billion dollar aid to Afghanistan. The construction ended and the highway was handed over to Afghanistan in January, 2009. (See image – thanks to Stratfor)

India-Iran-Afghanistan transit trade route

India-Iran-Afghanistan transit trade route

For long, US-supported Government in Afghanistan wanted to import goods from India through Pakistan. Their reasoning was simple – they didn’t want to rely on Pakistan as the sole supplier of their country. Pakistan allowed Afghanistan to use their trucks up to India-Pakistan border but did not allow them to load back to Kabul. Pakistan used to charge exorbitant fees for Afghan goods in the port of Karachi. Things changed suddenly. To be competitive, Pakistan had to reduce their customs duties in Karachi port. A lot of Afghans still see the Iranian port to be the only other option than their traditional Pakistan route to sea.

Now Pakistan had only a single option on transit – to allow India a direct transit to Afghanistan. They don’t gain by preventing it since the alternative is available. The Government took the logical step, they started negotiations. Pakistan can also gain out of negotiations, since they’ll also get access to Central Asia through Afghanistan. The latter denies Pakistan such access since the agreement is reciprocal.

India-Pakistan-Afghanista Transit Trade route (Also the Links with Central Asia)

India-Pakistan-Afghanista Transit Trade route (Also the Links with Central Asia)

I read the Pakistani newspaper the Daily Times and they put it in details.

“The memorandum signed in Washington is in fact a realization that Pakistan’s importance as a transit country for Afghanistan’s trade is virtually at an end. Giving India the right to use Pakistan’s territory for its goods going to Afghanistan will effectively undermine the importance of the alternative Chabahar route. But Pakistan will have to address the issue of trade routes in general under SAARC — the organisation has prepared an elaborate road networks project joining all the member states — and dwell a little more on the dictum that trade effectively destroys all conflict and replaces it with shared economic prosperity.”

They also seem to summerize the whole incident with a nice little sentence –

“If you don’t exploit your geopolitical importance by allowing trade routes, new trade routes tend to by-pass you.”

The above sentence is true for all major geo-political regions. The next could be India-Bangladesh transit issue – that also could be resolved by creating alternatives.


Written by Diganta

May 10, 2009 at 12:22 am

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