Stifles Frontier's economy


Sep 06 - 12, 2004




















Smuggling across international borders has always been a living phenomenon and never it could be stopped entirely at countries boundaries. However, a few, if any, international borders may have experienced such a colossal level of smuggling for which the Pak-Afghan border has been quite infamous. This illegal trade has played havoc with the economy of Pakistan in general and the NWFP in particular. But the most despicable aspect of the phenomenon is that there has been no viable mechanism to check the menace.

The Pak-Afghan Joint Ministerial Commission on the eve of former prime minister Jamali's last visit to Afghanistan had agreed to enhance the volume of trade between the two countries to one billion US dollars. Keeping in view the big volume of invisible trade across the porous border of the two countries the target is not unachievable provided Pakistan girds up loin of its custom and trade apparatus. As Pakistan has more vigorous industrial structure vis-a-vis.

However, before proceeding on any such target the foremost obstacle which has to be removed is to stop the smuggling of various goods worth billions of dollars into Pakistan from Afghanistan, exported to the latter through the transit corridor provided by Pakistan. The mechanism of Afghan Transit Trade (ATT) has been greatly abused by mischievous elements especially smugglers to feather their nests by inflicting irreparable loss on national economy and in particular stifling the economy of NWFP and the FATA. The smuggling of large number of items into Frontier from Afghanistan imported for the latter through Pakistan serving as a transit land has scuttled real industrial development in NWFP and also greatly affecting its corporate structure.

The already weak industries in NWFP could not compete with the cheap smuggled foreign goods that awash the markets in NWFP and the adjoining tribal areas as consumer psychology and choice in Pakistan, as everyone knows, Pakistanis always in favour of foreign-made items. This is one of the main reasons that most of the manufacturing sector of the province is sick. According to Sarhad Development Authority figures there are a total of 2086 industrial units in the province. But most of these units are closed.

The point to ponder is that how to make quarantine efforts to stop the entry of smuggled goods from Afghanistan especially when even the one method to check the menace by outlawing the items from the ATT agreement list has now almost been ditched. Of late, Pakistan has removed seven items from the list of banned items while promising to eliminate the negative list having left with only 15 items in the matter of months.

Presence of such a huge volume of smuggled items inside Pakistan, even in the settled areas, suggests that the country's customs apparatus has downrightly failed to prevent the illegal trade. Smuggling by land routes is not possible without the custom staff and para-military personnel who are posted on these routes being in collusion with the smugglers. A year back while talking to this writer ex-governor NWFP and Balochistan Mian Gul Aurangzeb told that once he transferred a deputy commissioner of Chaman on complaints of corruption but then he was requested by a high official of a very sensitive national institution to restore him (transferred official) but when he told him about his misdeeds he still was adamant.

Although technically illegal but thousands of inhabitants of NWFP and FATA are directly involved in the illegal trade. Moreover, re-entry of transit trade goods also supports other sectors like transporters, truckers, workshop owners, and real estate businesses in NWFP. Therefore, the best strategy to scotch the illegal trade is to relocate and reemploy this huge workforce productively in other sectors, which unfortunately are not there in the NWFP or FATA. So the panacea is local industry. This may not only provide alternative job opportunities to those engaged in smuggling but would also discourage illegal trade as local inhabitants own stakes would be involved and they have a sense of ownership.



The environment for industrialization is quite conducive especially in the tribal belt because due to small landholdings extensive farming cannot be practiced while there are huge untapped mineral resources exist in the areas that may augment the process of industrialization. Moreover, as reconstruction is going on in Afghanistan and it is hoped it would go on at least for the next one decade there would be monumental demand for both the consumer and capital items. The industry of former could be established within no time and it could pay off huge dividends having a great locational advantage of the FATA due to which transportation would be very easy. With local residents having expertise in transportation that may galvanize the whole local economy.

Moreover, majority of the tribal area is dependent on transit trade with Afghanistan. Businessmen all over the country usually call these traders as 'smugglers' and due to this labeling these people are grouped together with drug smugglers. This is a very unfair stereotype against all the tribesmen. The worst crime that these traders commit is that they avoid custom tax and other forms of taxation on their products. This should not be considered an unusual crime as avoiding taxes is a common practice in Pakistan and is practiced much more in the southern province.

The Bara market traders have amassed significant wealth and it is very important to involve this group in the industrialization of FATA. In general, long-term investment in industries by these groups is very limited. A major factor for this is the lack of infrastructure in tribal areas and the other factor is the lack of professionally qualified people. Tribal investors also consider the political and social environment of the settled areas unsafe for long-term investments. Due to which a significant number of big businessmen from tribal areas have shifted their bank accounts to the Middle East. Although there are no exact estimation of the wealth of this group it will be safe to say that tribal investors.

The turning down by Pakistan of Kabul's request to allow Indian goods to go through Wagha into Afghanistan last August during Joint Commission meeting is a very good step and is in line with the country's interest.

The idea of common custom union that was floated by Pakistan would also not be an antidote to the smuggling menace. Under such an arrangement either Pakistan can collect custom duty on Afghan government's behalf or it can have its own staff collect the duty at the port of entry of transit trade goods. It was suggested that all those items which have been identified as being least required in Afghan markets and are smuggled into Pakistan will carry the same rate of duty.

Though the government has decided to open a third trading gateway at Ghulam Khan, about 15 km (10 miles) north of Miranshah, headquarters of the North Waziristan tribal agency but without having export surpluses produced in the same agency of the surrounding tribal or settled areas only industries of Punjab would take advantage of the gateway because at the moment only products worth millions of dollars from industries down country are being transported to Afghanistan while the North Western Pakistan has no share in the export to Afghanistan while the fall out of the smuggling from the neighbouring country has been severe on it. So if industries in NWFP and the FATA are established and allowed to grow firms would specialize in products which have a great demand in Afghanistan. Another important aspect of illegal trade between Pakistan and Afghanistan is that many fundamentalists due to their wealth and experience in trade between the two countries control a significant portion of the trade. For Pakistani fundamentalists the 'strategic depth' of Afghanistan is not relevant in military terms any more. But Pakistani fundamentalist elements that control the illegal trade with. To counter this threat several steps needs to be taken. First the de-Talibanization of Pakistani economy needs to be done and this is perhaps is very much in line with the scheme of President Pervez Musharraf. This will require a commitment by the Pakistani government to stop the exploitation of religion for resource accumulation. It will also require commitment from Western governments and aid agencies to help government of Pakistan in providing business and employment opportunities to its people especially in the backward areas of NWFP, FATA and Balouchistan.

The Frontier on one hand has no share in exports to Afghanistan while on the other many commodities including staple items are smuggled from it to the latter creating great hardships for consumers due to shortages of the same. For instance, wheat that is supplied to NWFP according to a quota by Punjab while the latter has also clamped ban on inter-provincial movement of the staple item but a big quantity of it is smuggled to Afghanistan that has time and again created severe flour shortages in the Frontier. Whereas, wail and woes of the local consumers due to ever-rising prices of poultry and livestock in NWFP have turned into a cacophony. For this situation apart from smugglers local and tribal authorities are fully responsible who have turned their ears deaf to the illegal supply to Afghanistan. Pakistan government must act in earnest to curb the menace of cross border illegal trade between Pakistan and Afghanistan as it is a sine qua non for the alleviation of the woes of people in the NWFP and the Frontier the region that can be described as the cornerstone of Pakistan's strategic and economic interests.