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India Issue Holds Up Trade Between Pakistan, Afghanistan

An overview of a transit depot where trucks bound for Afghanistan are loaded in Peshawar, Pakistan on September 15.
An overview of a transit depot where trucks bound for Afghanistan are loaded in Peshawar, Pakistan on September 15.

A series of trade agreements slated to boost commerce between Afghanistan and Pakistan more than threefold has been shelved amid worsening relations and economic ties between the two neighboring countries.

Despite Afghan President Ashraf Ghani's overtures toward Pakistan since assuming office last year -- which have included proposals on trade and intelligence-sharing -- officials say that any progress between Pakistan and Afghanistan has given way to an atmosphere of rivalry and suspicion.

The purpose of such cooperation, Ghani has maintained, was to address as part of a broader rapprochement the growing threat and everyday violence by the Islamist militant movement active in both countries. The Taliban, in particular, has claimed thousands of lives in its many violent campaigns and has stalled aid and development in areas that need it most.

Officials say the stalled trade deals -- which included reducing tariffs and granting preferential trade status to each other -- would have boosted Afghan-Pakistani trade by as much as $4 billion over the next two years.

"There has been no progress or further meetings for months since those agreements were signed," said Afghan Commerce Ministry spokesman Musafer Qoqandi.

The biggest issue turned out to be Pakistan's reluctance to allow trade from India -- its longtime rival -- to cross its territory in order to reach Afghanistan.

Since the issue came to light in April, neither side has made an attempt to find a solution, and a series of recent Taliban attacks in Afghanistan has put further pressure on the already-fraught political tensions.

After violent Taliban attacks in the capital Kabul, some Afghans have pointed a finger at Pakistan for providing support to the insurgents. Pakistan denies such allegations.

Deteriorating relations raise questions of how the two countries can curb the spate of violent militant attacks despite the lack of agreement on trade issues.

"If Pakistan and Afghanistan aren't able to agree on relatively simple trade initiatives that benefit both countries, how can they be expected to make progress in security cooperation?" asked Vaqar Ahmed, deputy executive director at Islamabad's Sustainable Development Policy Institute (SDPI).

Pakistan and Afghanistan have traded blame over who is responsible for the stalemate. Pakistan maintains that Afghanistan has been unwilling to negotiate new terms of the trade agreement or facilitate lower transit trade tax, while Afghanistan has awaited promised streamlining of regulations regarding Afghan cargo, rail trade, and customs.

Most of these steps have been implemented, said Dastgir Khan, Pakistan's commerce minister. However, the process has stalled in recent months, according to officials, due largely in part to Pakistan's powerful military having the final say in bilateral ties.

"(The Pakistani commerce ministry's) hands are too tied," said an Islamabad-based consultant who has worked closely with the ministry. "(They) need to take clearance on each and every petty issue on Pak-Afghan trade."

Reporting by Asad Hashim for Reuters