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Trade with Afghanistan

  1. The new "Economic Road Map"
  2. Sea-food exports
  3. Trade with Afghanistan
  4. Financial defence of Pakistan

The ATT agreement is being renegotiated with the Afghan trade mission in Islamabad

From Shamim Ahmed Rizvi, Islamabad
Nov 29 - Dec 05, 1999

The UN imposed sanctions on Kabul will directly hit Pakistan's economy as it may lead to fresh influx of refugees and increase in the smuggling across the border causing loss of revenues to already weak revenue base of Pakistan. Within Afghanistan, the already hard pressed common man will be further burdened with economic miseries and left with no other occupation but the cultivation of poppy and drug manufacturing.

As an immediate consequence, during the very first week the sanctions, the Frontier province, adjoining Afghanistan, experienced acute shortage of wheat flour. Wheat/Atta rationing had to be imposed for a few days unless emergency supplies of 10,000 tonnes from Punjab start arriving in the Province. The only cause of this sudden shortage of the wheat flour was the large scale purchases by the smugglers maphia from the local markets for onward transportation to Afghanistan where the price of flour is Rs. 17 to 18 per Kg as against Rs. 8 to 9 in Pakistan including N.W.F.P. This applies to other consumer items as well.

Reacting quickly, the Iranian government formally reopened Afghanistan Border with Iran at Doghuran— Islamqala for trade purposes after remaining closed for more than one year. The timely division intended to kill many birds with one stone. Firstly it will curb smuggling on Afghanistan-Iran border and through opening of formal trade channel Iran and its trading community will also benefit. Second reason for this decision is that Iran might be afraid that if there was shortage of food in Afghanistan there will be more Afghan refugees in Iran. Most important consideration behind this decision is Iran's desire to mend its relations with Talibans and end the bitterness and tension between the countries. Iran has been highly successful in their objective is proved by loud and over-wherlming welcome of Iranian gesture of goodwill at this critical moment" by general public and Taliban leadership. Sunday, November 21 when this decision was announced by Iran, it also rained heavily in Afghanistan after a long dry spell brightening the hope of a bumber poppy crop and the Afghans really celebrated the day saying that "Allah has showered His blessings on us when the US and its allies had decided to punish us through economic sanctions.

The United Nations have slapped trade and financial sanctions on Afghanistan on November, 15, 1999 following its refusal to hand over Osama bin Laden to the United States. Ignoring last-minute Pleas by the ruling Taliban for a temporary postponement of the imposition of sanctions, the United Nations went ahead and slapped punitive measures on Afghanistan, demanding the arrest and handing over of Osama bin Laden. The Security Council did not formally meet to consider the request of the Taliban and the sanctions went into effect at the stroke of midnight.

Under the terms of the world body, all overseas assets of the Taliban would be frozen and a blanket ban imposed on flights owned, operated or leased by the Ariana Afghan Airlines landing or taking off. Humanitarian assistance and flights for the pilgrimage to Makkah would be exempted.

The UN sanctions on Afghanistan, are limited but crippling. The only Afghan airlines, Ariana, will be unable to do business anywhere in the world. The country's assets abroad have also been frozen as the one-month deadline given in the UN Security Council resolution of October 15 lapsed without the Taliban turning in Osama bin Laden. Though backed by the world community, such sanctions have no way of distinguishing those whose actions warrant retribution of some kind, from targeting the people who may already be the worst sufferers of poor governance. Iraq is a recent outstanding example. An indefinite embargo on Ariana airlines, for instance, will hurt the ordinary Afghans—especially those working in the Gulf and elsewhere — more than either the ruling and resourceful Taliban or other war-hardened militias. Then the rationale of sanctions, so publicly US-instigated, narrows down to one person who is yet to be found quilty of the crimes he is accused of. Aid and relief programmes for Afghanistan, already a contentious issue on grounds of human rights and the Taliban's uniquely orthodox laws, will also suffer as mistrust between Afghans and western agencies deepens.

As in any other issue involving Afghanistan, Pakistan will increasingly be the sharp focus of world attention in the post sanctions period. Over the past month the new administration has tightened border surveillance, primarily to check wheat-flour smuggling. But the religo-cultural proximity across the Durand Line underwritten by historical trade links and reinforced during the Afghan war of the 1980s, makes it almost impossible to fully plug our northwestern borders, especially now when our landlocked neighbour has become even more dependent on the facilities available in Pakistan.

As a consequence of sanctions, the poppy cultivation would increase in Afghanistan so would the production of the opium. This would have a serious fallout on Pakistan and neighbouring countries especially Iran, which is a key transit route for drug trafficking from Afghanistan and Pakistan to Europe and oil-rich Gulf Arab states. Evidently, this would affect the Gulf region in which there is a thriving banking community.

Pakistan is suffering heavy losses of revenues because of massive smuggling of all types of goods under the cover of Afghanistan Transit Trade (ATT). The large scale smuggling of foreign goods worth billions of rupees into Pakistan has continued unabated down the years, causing incalculable loss to the national exchequer and leaving disastrous effect on overall national economy. Most of the smuggling is being done through Pak-Afghan border, the FATA areas dominated by influential Maliks and the vastly stretched porous mountainous routes. The foreign goods thus smuggled, apart from being sold in sprawling markets in the Tribal Areas find their way to what have come to be known as Bara Markets which have mushroomed in almost all big cities in the country.

In its proposals, sent to the federal government the Chamber of Commerce and Industry, Karachi, is reported to have laid specific stress on the need of eliminating the menace of widespread smuggling. Evidently, the cause of concern for country's premier trade chamber is the massive inflow of a widening range of consumer goods from the world over and to the increasing detriment of the domestic industry.

The ATT is being renegotiated and an Afghan trade mission is in Islamabad these days. The Pakistan must ensure that all those items which are not used by Afghan people these days like Air Conditioners, Refrigerators, Deep Freezer, Colour TVs, and other modern electronics goods, perfumes cosmetics. Fine clothing should not be allowed to be imported under ATT, because these items never cross the border and are sold in Pakistan. The poor people of Afghanistan do not need luxury goods. What they need is wheat, rice, Dals and Ghee. Only imports of such items should be allowed under ATT. We can thus help our Afghan brothers without causing losses to public exchequer and crippling our domestic industry.