Aug 13 - 19, 2007

Islamabad and Kabul recently signed a Memorandum of Understanding (MoU) for laying railway track between Chaman (Pakistan) and Spinbudlak (Afghanistan).

The project would take around one year to complete and around 10.5 km of track would be laid at a cost of Rs 700 million. Under the accord, Pakistan in the first phase would provide all required infrastructure to introduce railway system up to Spinbudlak in Afghanistan. In the second phase, the track would be extended up to Kandhar and there from up to Khushka through Heart.

Pakistan Railway would complete feasibility study for laying of track between Spinbudlak and Kandhar. It would be a pioneering rail project that would introduce railway system in Afghanistan for the first time. Afghanistan being a landlocked country is in dire need of having railway system in the country. Islamabad and Kabul had agreed to lay track between both the cities of Pakistan and Afghanistan last year. It would be beneficial for trade between the two countries. Afghanistan trade is limited to imports and exports from third countries via ports in Pakistan or Iran, as well as to a lesser degree via the Central Asian republics.

Geographically, Afghanistan forms a land bridge between South Asia and Central Asia and the opening of its borders and rebuilding efforts can provide new opportunities for the region. By virtue of its geo-strategic location, the landlocked Afghanistan can emerge as a trade hub connecting the Middle East, Central Asia and Europe.

Pakistan railway also plans to lay railway tracks to link Gwadar with Afghanistan and the track will further link central Asian republic and Europe. The planned railway line from Chaman (a boarder town in Balochistan) to Spinbudlak would facilitate trade with Afghanistan and through Afghanistan with the countries of Central Asia. Gwadar would provide landlocked Afghanistan and the Central Asian republics with access to the sea. Goods and oil and gas reserves from these countries could be shipped to global markets through Gwadar port.

There is almost no transit trade through Afghanistan. Being a landlocked country, Afghanistan desperately needs an export outlet. She is largely dependent on Pakistan for its trade. Under Karzai government, Afghan trade has taken new direction in recent years, as Afghan authorities have reached trade deals with Iran, India and the Central Asian states all of which grant major concessions to Afghan goods. The efforts have been made to reduce dependence on Pakistan.

Pakistan has been Afghanistan's principle trading partner and entry port for imports and exports. Pakistan has been providing trade facility to Afghanistan under the WTO charter that allows the landlocked country to use the port of the neighboring country. It was in 1965 that Pakistan signed Afghan Transit Trade agreement (ATT) with neighboring Afghanistan to facilitate Afghan foreign trade. Presently around 300 containers per month pass through the Karachi port for onward haulage to Afghanistan.

Pakistani province of Balochistan has 723 miles long borderline with Afghanistan in the northwest and 520 miles borderline with Iran in the west. A group of Afghan Transit Trade recently approached the Ministry of Ports and Shipping and the Gwadar Port Authority (GPA) showing keen interest in bringing their cargoes through the Gwadar port in Balochistan. If the ATT cargo shifts to Gwadar seaport, it will give a big boost to the new port because there are already road networks up to the Iranian border. Afghanistan actually wants to benefit from the proximity of distance of around 460km from Gwadar, which is the nearest port for greater trade facilities in Balochistan.

Balochistan's geo-strategic location makes it attractive for transit traffic to the landlocked Afghanistan and Central Asian Republics (CARs). The development of communication links, network of roads, railways and related activities, including trade transactions, goods transportation and storage facilities have been designed to develop closer trade and business links between Balochistan and Afghanistan and CARs. Gwadar is poised to emerge as a transit port with Afghanistan letting big ships off load or take on cargoes for and from other ports servicing nearby regions. The port complex will provide facilities of warehousing, trans-shipment, transit and coastal trade and the commercial and industrial openings for international export-import trade.

Gwadar port can make Pakistan a transit trade hub. It can best commercially serve land-locked Afghanistan and Central Asian states for its geographical position. Iranian seaport Bandar Abass, which is at a distance of 3800 km from the Uzbek capital, presently provides transit trade facilities to CARs. Gwadar is 2700 km away from Uzbekistan and Pakistani city of Peshawar is linked by 900 km land route to Termiz via Afghanistan. During a recent visit of Pakistani Prime Minister Shaukat Aziz to Uzbekistan, the two countries signed a memorandum of understanding (MoU) on bilateral trade envisaging the use of Afghan territory as the land route.

Islamabad has already prepared a Rs400 billion plan to rehabilitate the country's major road network by 2012 in order to develop communication linkages with Afghanistan, China and the CARs. The Asian Development Bank has agreed to fund a $455.7 million cross-border infrastructure development program aimed at creating a sub-regional corridor from Gwadar port to Afghanistan and Central Asia. Under the program, a 'trade facilitation and land border crossing authority' is being established to supervise significant land border crossings and facilitate freight and passenger cross-border and transit traffic.

Pakistan has also approved a Rs27.3 billion ADB-assisted sub-regional connectivity and trade facilitation program under the medium-term development framework (2005-10) to improve trade relations with Afghanistan, Iran and Central Asian states. The ADB has agreed to offer Rs1.8 billion for the project, which includes rehabilitation of key national highways that are part of the sub-regional corridor and cross-border infrastructure development.

A road from Gwadar to Saindak, running parallel to the Iran-Pakistan border will make it the shortest route to reach Central Asia from the warm waters of Arabian Sea. Another 515-km long highway connecting Gwadar via Panjgur, Kharan, Chaghi and Rabat up to Herat in eastern Afghanistan has also been planned that would link up Pakistan directly by road with CARs.

Pakistan has planned to spend Rs12 billion on road sector development, which would include the Gwadar-Karachi, Gwadar-Khuzdar-Quetta-Chaman, Gwadar-Khuzdar-Ratodero highways, opening route to Afghanistan and the CARs. The Asian Development Bank already earmarked $500 million for the construction of the ECO Highway linking Gwadar with Turkmenistan. Around $300 million will be spent in Balochistan and the remaining fund in Afghanistan and Turkmenistan. The Bank is also committed to provide support for carrying out the digital mapping of the road network linking Gwadar to Afghanistan and Central Asian States under its regional technical assistance package. The goods produced in Pakistan can be exported to CARs at much cheaper transportation rates.