Pakistan and Iran: Neighbors Forever

                Majyd Aziz

(Former President Karachi Chamber of Commerce and Industry)

Presentation at the Panel Discussion on “Pakistan’s Relations with Regional Countries (Afghanistan, Iran, and CARs)” At National Institute of Management, Karachi, July 02-2012

Preamble:

PAKISTAN’S policymakers, economists, politicians, and even the business community, when talking or explaining the nation’s relations with other countries, especially China and Islamic countries, usually begin by highlighting the rich history of religious or strong friendly bilateral ties since the creation of Pakistan. With China, the relationship is deeper than the ocean and higher than the mountain. With Islamic countries, Pakistan shares a common religion and the relationship is fraternal and brotherly. This is the diplomatic way of saying that we pray together, we assist one another, we meet often, and so we must do a lot for each other.

PAKISTAN’S diplomatic speak is well taken and acknowledged but the litmus test is the status of trade and investment that counts in today’s global environment. The name of the game is money, translated into investment, imports and exports, trade incentives, trade and investment treatment, and cooperation through trading blocs or regional blocs. However, the economic side is not the only criteria in favorable bilateral relations. Being a neighbor, or adhering to the same religion, or being a member of the same bloc are also taken into consideration when defining the contours of a bilateral relationship. The political implications are paramount too, especially when there are issues that emerge either at a global level or those that are primarily two-sided controversial. More often than not, the political, security and diplomatic ramifications weigh heavily on the relationship and thus impact negatively by making trade and investment hostage to these factors.

PAKISTAN’S neighbors have all experienced, accepted, and are frequently evolving their bilateral relations with Pakistan. China, India, Iran, Afghanistan have in recent years, due to their own national interests, exigencies, or the changing world environment, are focusing their attention on Pakistan and, in the process, have gradually brought economic issues into the forefront. Although this revisit may not immediately bring about the transformation from a sensitive or aggressive posture to peace and economic prosperity for Pakistan, the projections and outlook point towards a positive development in Pakistan’s relations with neighbors.

Pakistan-Iran: The Trade Scenario:

PAKISTAN’S bilateral trade with Iran is, to say the least, dismal. The two nations, with a 900 km common border, with population of 190 and 75 million, with full membership in Economic Cooperation Organization, had a bilateral trade of only $ 357 million in 2011. Pakistan exports were $ 153 million while imports were $ 304 million. Of course, the informal or undocumented trade is flourishing despite avowed statements by officials of both countries to control smuggling. Trade through Dubai is also not taken into account in the official figures. Notwithstanding these, the fact remains that Iran’s total exports in 2011 were $ 102 billion and imports were $ 54 billion while Pakistan-Iran bilateral trade is less than 0.7%.

The depressing fact is that Pakistan’s exports to Iran in 2008 were $426 million, in 2009 were $252 million, and in 2010 were $ 182 million. On the other hand, Pakistan’s imports from Iran also witnessed a decline. In 2008, imports were $738 million, in 2009 were $956 million, and in 2010 imports fell further to $ 883 million. Within one year, there has been a deep dive by over $ 580 million.

It is a fact that over 80% of Iran’s exports are petroleum and petroleum products while fruits, nuts, and carpets make up most of the other exports. It is also a fact that Iran’s major oil customers are China, Japan, India, Turkey and Korea. Inspite of economic sanctions, Iran managed to increase exports by 21% in 2011 on a year-to-year basis, i.e., from $ 84 billion to $ 102 billion. Of course, Iran’s main exports are petroleum and petroleum products.

Pakistan’s major exports to Iran consist of cereals and make up nearly 50% of total exports. Meat, edible meat offal, edible fruit, nuts, citrus fruits, melons and mangoes have a share of 20% of total exports. Pakistan exports less than $ 2 million worth of textiles to her neighbor.

The top state hierarchies of both the countries routinely come up with grandiose statements urging an increase in bilateral trade. However, the main focus of talks between the two nations revolves around the energy sector while emphasis is seldom given to other sectors that could enhance bilateral trade. The United Nations trade embargo on Iran has further put pressure on Pakistan to conduct a more meaningful trade relationship with Iran.

The Positive Results:

Pakistan is facing a severe energy crisis. Loadshedding has played havoc with the lives of the citizens and massive riots against loadshedding have become a daily feature. In some cities and towns, power is off for most of the day. Trade and industry is suffering this menace too. All government efforts to ensure regular supply of power have come to naught. At the same time, the circular debt scenario has further exacerbated the crisis. Moreover, Pakistan is running out of natural gas. The impact on industries, especially in Punjab, has been atrocious. Last year, industries were without gas for about 180 days. The ensuing result has been reflected in the decline in textile exports as compared to last year. The crisis has been further aggravated by the unbridled issuance of licenses for CNG stations and the lack of discipline in this sector. Officially, these stations consume nearly 9% of the total gas supply while it is alleged that about 3% further supply is made to unscrupulous station owners through an undocumented process by corrupt officials in SNGPL and SSGC. Whatever may be the case, the indiscriminate utilization of natural gas through CNG stations also reflects the distorted priorities of the policymakers in government.

Thus, the news about the agreement to build the Iran-Pakistan Gas Pipeline was widely acclaimed. The project would supply 750 mcft daily through its 1700 km length. It is estimated that atleast 4000 mw of electricity could be generated through the use of Iranian gas. Iran has nearly completed the 900 km pipeline upto the border while Pakistan, as always, is still trying to find someone to lay the pipeline. The estimated cost of the project on the Pakistani side is estimated at $1.2 billion. It is possible that a Chinese company may commence work on the pipeline unless external pressures put a damper on the project. The venture is a tall order but a doable alternate source of supply of gas. The dice is, however, loaded against Pakistan, primarily the United Nations trade embargo as well as the strong opposition from Washington. Inspite of the signing of the TAPI agreement that would be another alternate source of gas supply and inspite of covert disapproval even from Saudi Arabia, various daring statements emanating out of Islamabad reflect the government’s determination to go ahead with the project. It is to be seen how much support Pakistan receives from China in this project. Notwithstanding the Tehran offer to finance upto $500 million of the construction of the pipeline in Pakistan, the threat of economic sanctions looms heavily over the project.

Pakistan has inked an agreement with Iran for importing 1000 mw electricity at 10 cents per unit. This project would be commissioned in about four years. Iran is willing to export more than 5000 mw to Pakistan and has indicated that a new power plant can be set up exclusively for Pakistan. Iran is also willing to provide financing with $800 to $900 million for constructing the infrastructure.

The solution for the perennial energy shortages, although should be addressed internally, the fact of the matter is that Pakistan’s policymakers have let things go out of hand. Construction of dams has been sacrificed due to political or provincial constraints. Hard-nosed efforts have never been made in renewable alternate energy. Corruption, theft, obsolence, and mismanagement in utilities-providers are endemic. Thus, the thinking is to rely on external sources of supply to maintain the nation’s economic progress. With this in view, the offer of supplies of gas and power by Iran seems a realistic alternative.

The Roadblocks:

The United States and Israel have launched a campaign to deter Iran from going nuclear while Iran is determined to achieve nuclear technology capability. United Nations has placed a trade embargo asking members not to deal with Iran. Pakistan is between the devil and the deep blue sea in trying to strike a balance between observance of the global decision and in maintaining relations with the Western neighbor. On the one hand, Pakistan is strongly committed to fulfilling its obligations regarding the Iran Pakistan Gas Pipeline and the expected supply of electricity, while on the other hand, there have been restrictions imposed by State Bank of Pakistan. Although the UN sanctions do not apply to foodstuffs, cereal, and packaging material for packing of food, the Pakistani banks are not prepared to issue e-forms or open Letter of Credit for deals made with Iran. The SBP has decreed cessation of trade with Iran also. Thus, there is a need to utilize alternate banking channels to circumvent the SBP directives. One deterrent is that there are no branches of banks in respective countries. This has led to a reliance on informal channels, such as transit trade through Dubai, resulting in adding cost to the consignments.

A recent casualty of the trade embargo has been the mango export to Iran. Pakistan generally exported more than 30,000 tonnes of mangoes worth over $10 million and now this market has been lost. At the same time, Kinnow exports that were in excess of 60,000 tonnes per year have dwindled to less than 6,000 tonnes. Rice exports have been impacted negatively too. Pakistan used to export upto $230 million worth of rice to Iran but in the current year the rice exports have been less than $75 million. Due to the banking restrictions, smuggling, and under-invoicing, official exports have considerably reduced and now rice is mostly sent via Dubai. Recently, an agreement was signed under which Pakistan plans to export one million tons of wheat and 0.2 million tons of rice to Iran in lieu of oil and other goods under barter trade arrangements. However, the plan has not yet been finalized.

The Future:

Pakistan and Iran have to sincerely look towards the future. Iran, while facing sanctions, has to rely on neighbors to maintain economic sanity. Pakistan offers the ideal set up for Iranians in many aspects. Iran’s foreign exchange reserves are estimated to be in excess of $100 billion and inspite of the economic embargo, Iran has been able to export oil to China, India, Japan, Korea and Turkey. It is proposed that Pakistan and Iran should rely on payment of goods in each other’s currency as India is doing with Iran for oil.

Iran can participate in setting up an Iran-specific Special Economic Zone in Pakistan that would primarily cater to the Iranian market. Rice and fruit processing plants can be easily set up in the SEZ. Iran, taking advantage of border with Balochistan, is rightly placed to invest in mineral exploration as well as oil exploration. This would provide an edge as well as protect Iranian interests in the region. Iran can also focus on Barite mining that is essential for drilling oil.

It is time Iran revisited her trade policy with Pakistan. It is to Iran’s advantage that preferential treatment be given to Pakistanis products and services. Apart from rice, wheat, fruits, etc, Iran can procure textiles, leather, and other commodities from Pakistan. Moreover, Iran can invest in agriculture and livestock that would cater to the Iranian consumers’ needs.

Pakistan is facing a severe financial crisis. The foreign exchange reserves are gradually depleting. SBP Governor Yasin Anwar, in an interview with Wall Street Journal, warned that the foreign exchange reserves are under pressure. Moreover, due to the economic downturn, the Treasury would not be able to meet the targeted revenue. Pakistan is still waiting for reimbursement of the Coalition Support Fund. Etisalat is still not coughing up the $800 million that is due for PTCL. Even IMF has closed its portals for the Pakistani Finance Minister. China recently has parked a substantial amount of resources to boost up the Forex reserves. Iran can also be approached to support the eastern neighbor with financial resources to strengthen Pakistan’s monetary position in the short term.

Role of Business Community:

The onus lies on the business community of both Iran and Pakistan to initiate a Track II approach to bring change in the trade and investment environment. Pakistani and Iranian businessmen are also vigorously trying to persuade respective governments to make the Joint Ministerial Commission pro-active by holding frequent consultative meetings. The Pakistan Iran Joint Business Council, a business initiative, is at present dormant due to Iranian lack of interest.

There has been lot of talk about single country exhibitions in each other’s territory. Progress was made to hold one exhibition in Iran. The Pakistani side desired it to be held in Mashad while the Iranians were keen on Zahidan. The decision is awaited. There is also discussion about setting up a Business Forum of shipping companies of both countries.

Pakistani exporters have also lobbied to reduce the import duties on textiles. So far, there is no headway in this matter. Since there are no bank branches, this is also affecting smooth official trade as well as channelizing trade in an official mode.

Pakistani Chambers and Associations should also extensively lobby with United Nations to exempt Pakistan from conditionalities of the trade embargo and treat Pakistan as a nation that needs Iranian gas and electricity. Pakistani businessmen should also lobby through Economic Cooperation Organization (ECO) as well as Organization of Islamic Countries (OIC) so that mutually beneficial regional cooperation is ensured.

There is an imperative need to increase the number of trade delegations since direct contacts can create new business opportunities and also enhance the bilateral trade figures. Although trade delegations routinely visit each other’s country and there is plenty of interaction at various forums, the trade and investment figures are negating all such initiatives. It is also essential that undocumented trade be discouraged and opposed. This must be the priority of FPCCI in motivating businessmen who trade with Iran. Moreover, it is also important that financing of the gas pipeline is envisaged through private sector participation and involvement.

Conclusion:

Pakistan and Iran have to be economically and politically bonded since both desire more regional trade and investment, especially under the banner of ECO of which both are leading members. Pakistan should also endeavor to commence work on the Iran Pakistan Gas Pipeline on a fast track basis. In future, a direct oil pipeline should also be planned so that Pakistan is assured of its petroleum needs. Pakistan and Iran have no choice but to be neighbors in the real sense.

Pakistan and Afghanistan: Neighbors in War and Peace

Majyd Aziz

(Former President Karachi Chamber of Commerce and Industry)

Presentation at the Panel Discussion on “Pakistan’s Relations with Regional Countries (Afghanistan, Iran, and CARs)” At National Institute of Management, Karachi, July 02-2012

Preamble:

PAKISTAN and Afghanistan are two neighbors that have a lot in common. Although a 2600 km border separates the two nations, they have common cultural values, traditions, religion, and even civilization. Notwithstanding a blow hot, blow cold bilateral relationship, the mutual ties have a distinct flavor blossoming with history, language and ethnicity.

PAKISTAN, inspite of its own economic difficulties, provided shelter to millions of Afghans and the Pakistani people welcomed them with warm hearts into their towns and villages.

Islamabad opened up its Treasury to the tune of over $400 million per year to sustain, feed, and maintain the refugees who migrated from their ancestral homes. Pakistan allowed them to work, to conduct business, and to study enabling them to contribute to their welfare through hard work and business acumen. Many prosperous Afghan businessmen of today belong to the families of the refugees, a fact accepted by most of the Afghanis.

PAKISTAN has witnessed and also felt the tremors of the turmoil that Afghanistan is facing for more than three decades and even though there are indications from Washington that over 130,000 NATO troops would withdraw in 2013, the prognosis for peace is bleak. The withdrawal of foreign troops may provide impetus to the Taliban to fight for supremacy and that may ignite the fires of civil war enveloping Pakistan again in its flames.

PAKISTAN also facilitates the landlocked neighbor through the Afghanistan Pakistan Transit Trade Agreement. Two landmark agreements, signed in 1965 and 2010, enabled both countries to channelize trade in a systematic mode and thus ensuring uninterrupted transit of goods even when political manifestations or national security dynamics overwhelmed the bilateral relations. Afghanistan has access to three overland routes to facilitate foreign trade, through Pakistan, Iran and Central Asian Republics, but the economics work out favorably through the Pakistani route. Right now, the United Nations trade embargo on Iran precludes using the Chabahar Port in Iran which is 1700 km from Herat. The Northern route is expensive as NATO/ISAF forces have experienced after the suspension of the Ground Lines of Communication (GLOC) by Pakistan. The US Secretary of Defense recently disclosed that it is costing the coalition forces over $100 million per month due to this decision.

The Trade Scenario:

The extent of trade between Pakistan and Afghanistan largely depends on the nature of diplomatic or militaristic situation at a given time. Over the past decades, official trade was not much in value as Pakistani goods did not have a large market in Afghanistan while Iranian goods were more available and were more in demand. However momentum picked up from the year 2000 and bilateral trade went up from $170 million in 2000-01 to $2,860 million in 2011 with Pakistan exporting $2,660 million and importing $200 million.

The trade figures do not reflect the actual volume of trade taking place between the two nations. There is rampant smuggling, there is the concentrated undocumented trade, and there is the perennial misuse of the APTTA. Although a lot of items from Pakistan make their way into the Afghan market, the main emphasis is on mineral fuel, oil, cement, rice, cereals, and vegetables. From Afghanistan, the imports are mostly iron and steel, minerals, and cotton.

The heavy rush of cargo trucks moving containers under APTTA or for NATO/ISAF plus the official exports has enabled massive undocumented trade to take place. Although GLOC is suspended since November 2011 after the Salala incident, the movement of cargo under the other two sectors continues and thrives. The official exports of cement are around $225 million but these figures do not reflect the actual value and tonnage of cement being imported into Afghanistan. It is estimated that cement of the value in excess of $100 million is transported across the border by the truckers who have direct access to distributors or retailers of cement. In this manner, the official channels are circumvented and the Afghan importers are able to obtain cement cheaper.

The porous borders and the contrivance of Customs authorities and law-enforcing agencies have also facilitated the unscrupulous traders to indulge in the smuggling of livestock, wheat, and other commodities. This has affected the availability and prices of these items in Pakistan. The official imports from Afghanistan also do not indicate the actual value of coal, chrome ore, iron ore, and other such minerals. In Pakistan, the demand for Afghan coal is increasing on a daily basis since industries in Punjab are facing shortage of gas. At the same time, chrome ore and iron ore, to name a few, compete with the mining output of these minerals in Pakistan and thus Pakistani exporters are able to enhance their share in the global minerals market. Afghanistan has more than 10% share in the chrome ore exported from Pakistan whereas share of Balochistan and KPK are 55% and 35%.

The signing of APTTA in 2010 and the decision to allow Afghan goods for India through land route, without any financial security, has bolstered more Pak-Afghan trade. The reconstruction and rehabilitation of Afghanistan inspite of being in a war zone has also increased the demand for Pakistani goods and commodities. Pakistan has also provided a credit limit of $100 million that needs to be enhanced in the future. Both countries have also agreed to reduce the amount of bank guarantee as it will facilitate smaller importers and exporters from Afghanistan. At the same time, Pakistan’s exports to Central Asian Republics through land route in Afghanistan will also be exempted from any financial security or guarantee. The Pakistani Customs authorities have lately been vigilant in controlling the movement of containers destined for Afghanistan with the result that some of the illegal trade has been diverted to official channels thus increasing revenue for the government and also impacting positively on the sales of domestic producers. The government has also agreed to encourage the use of Pakistan Railways for transportation of goods destined for Afghanistan. In this connection, efforts are underway to provide more engines and wagons for this sector.

The Roadblocks:

Pakistan and Afghanistan have managed to survive the violence, hostility, and terrorism that has led to the Global War on Terror, with Pakistan being the frontline state in this war. The presence of 130,000 NATO troops led by the United States in Afghanistan, the drone attacks, the shoot-out in Abbottabad, the escalation of militancy on Pakistan’s side of the Durand Line, the Salala incident, the hawkish statements oozing out of Pentagon and Foggy Bottom, the belligerent environment at Capitol Hill, the non-reimbursement of the Coalition Support Fund, the vocal accusations, blames and bashing of Pakistan’s premier intelligence organization, the loss of 36,000 civilians and 4,000 Army personnel, the financial drain of over $70 billion fighting the war, and the oft-repeated mantra of Do More have disastrously affected Pakistan’s economic, diplomatic, and social sectors.

The suspension of GLOC has seriously provoked Washington and it is to the credit of Pakistani government that it has been able to withstand international pressure for the last eight months. The hardliners in Pakistan have vowed to block any efforts by the government to open GLOC and this is manifested in the inability of the coalition government to succumb to the demands to allow containers destined for NATO/ISAF forces to cross the border. The impasse has to be broken soon, and it mainly depends on how the United States drafts the wording of apology to the people of Pakistan for the Salala massacre. The NATO Summit in Chicago in May where President Asif Ali Zardari was a list minute invitee and where there was optimism that finally Pakistan would reopen the GLOC did not get the response sought from Pakistan. Even the Chicago Summit Declaration on Afghanistan does not mention any reference to Pakistan. President Obama too conveniently forgot to thank Pakistan for help in getting supplies into Pakistan. Although the NATO Secretary General categorically acknowledged that the problems in Afghanistan cannot be solved without a positive engagement of Pakistan, only time would tell whether the Chicago Summit was in the larger national interest of Pakistan.

The situation in the region is further compounded by the USA-Iranian imbroglio. The United Nations embargo has further complicated matters for Afghanistan. The Afghan traders as well as NATO forces were keen to utilize Iran’s Chabahar port for shipments and trade. The Chabahar port has been financed by Indian government to maintain Iranian and Indian influence in Afghanistan after US forces leave Afghanistan in 2014. The second purpose, of course, is to counter the expected influence of the Gwadar port. Inspite of the embargo, the United States has granted waivers to seven countries for procuring oil from Iran. US Secretary of State, Hillary Clinton, in a statement on June 11, stated, “Today I have made the determination that seven economies—India, Malaysia, Republic of Korea, South Africa, Sri Lanka, Turkey and Taiwan--have all significantly reduced their volume of crude oil purchases from Iran. They join the 11 countries for which I made this determination in March. As a result, I will report to the Congress that sanctions will not apply to their financial institutions for a potentially renewable period of 180 days.” Ironically, Afghanistan has been excluded from this waiver. The other eleven countries are Japan and ten EU countries. Although China has not received the waiver, Beijing has tacitly ignored the economic sanctions and continues to receive Iranian oil, albeit clandestinely. The waiver is also a dangerous signal for Pakistan. This recent Washington action could dampen the hopes of Islamabad that the Iran Pakistan Gas Pipeline would be a reality soon. Moreover, the prolonged suspension of GLOC has intensified concerns that Pakistan could be slapped with economic sanctions that would be disastrous and catastrophic.

A thorny issue that has muddied the waters is the Indian influence, politically, culturally, economically, and financially, over Afghanistan. The financing and construction of the Chabahar Port and the highway from the Port to Jalalabad in Afghanistan are alarming issues. The other sore point is the number of Indian “Consulates” in Afghanistan. Officially, there are 14 “Consulates” in Afghanistan and there are intelligence reports that these are primarily used for non-consular affairs which are a source of consternation for Pakistan, especially in the domain of national security. The acceptance by Pakistan to allow land route for Afghan goods to India through Wagah is another case of Indian influence, although it was the United States that prodded Islamabad to grant this facility.

The official Afghan-India bilateral trade figures of less than $200 million do not reflect the true scope of trade activities between both the countries. In October 2011, India and Afghanistan signed the Strategic Partnership Agreement that has three significant provisions. First point is the training, mentoring, and even assisting in the equipping of the Afghan National Security Forces both in India as well as in Afghanistan. Second point is providing economic aid and assistance to the tune of an additional $500 million on top of the $1 billion India has already spent since 2002. India and Afghanistan will cooperate in the development of mining and energy production. Kabul has awarded India mining rights for the country’s biggest iron deposits. Afghanistan expects $15 billion in foreign investment over 30 years in mining and energy with over $10 billion from India. An Indian investment consortium is negotiating the building of Afghanistan’s first steel mill costing $ 8 billion plus a power plant and facilities for ore extraction and processing. Third point is to establish a strategic dialogue to provide a framework for cooperation in the area of national security. This seems to be primarily Pakistan-specific.

The noteworthy remark made by Indian Prime Minister Manmohan Singh that “India will stand by the people of Afghanistan as they prepare to assume the responsibility for their governance and security after the withdrawal of international forces in 2014” also reveals the thinking in New Delhi that after the withdrawal of the Coalition force, it is imperative that India becomes the driving power in the region. One consolation for Pakistan is that the Afghanistan-China cooperation would provide tough competition to India in the area of economic influence. This, of course, does not bode well for Washington.

The APTTA is a volatile as well as a sensitive issue. Although the agreement is really Pakistan’s obligation as a neighbor and is in reality a credit to Pakistan, the unfortunate position is that this agreement has been blatantly misused, violated and corrupted. The agreement has always been detrimental to many of the industries in Pakistan and the main reason has been the blatant laxity demonstrated by those who are responsible for honest clearance and monitoring of the transit cargo. The 1965 APTTA had many loopholes and these became the base for dishonesty and deceit. The 2010 APTTA has endeavored to address most of the flaws in the previous agreement but Pakistani industrialists still view APTTA with suspicion and distrust.

APTTA is estimated to be the source of more than 70% of the smuggled goods that enter Pakistan. A conservative figure of total smuggling, without considering under-invoicing and mis-declaration, is in excess of $5 billion per annum. Tea is a case in point. Pakistanis drink over 230 million kg tea every year. The official tea imports are about 130 million kg while over 100 million kg is smuggled in from Afghanistan, and to some extent from Iran. It is a fact that Afghanis prefer green tea and genuine Afghani importers do import green tea for domestic consumption. The APTTA channel is conveniently used to import black tea that makes its way to Pakistan. In the month of May 2012, Pakistani ports received 28 consignments under APTTA from seven countries totaling 4921 metric tonnes. This included tea from India, China and Dubai too. This exhibits the quantity of tea imports purportedly for Afghanistan but in practice meant for the Pakistani consumer.

The misuse of APTTA results in revenue loss of around $3 billion annually in taxes, duties, and other levies. Pakistan’s road infrastructure is also greatly damaged due to overuse of trucks destined for Afghanistan. Moreover, APTTA is responsible for inculcating a massive corruption culture not only at the Customs stage but also in Pakistan Railways as well as at the border. The Afghan traders have also agitated strongly against a Pakistani decision taken in 1996 and 2000 to establish a negative list of items that would not be covered under APTTA.

The intensity of the misuse of APTTA can also be gauged from the fact that a large number of containers destined for Afghanistan go missing after clearance from the two ports of Karachi. So much so, even containers for NATO/ISAF lose their way and never cross the Durand Line. According to FBR official data, a total of 157,736 containers of United States destined for Afghanistan before the Salala incident of November 26, 2011 never reached there and disappeared inside Pakistan. Even Pakistan’s Customs does not have any record of 77,884 containers from the above missing figures. Pakistan’s Treasury lost over Rs 55 billion in revenue due to this chicanery.

It is also disheartening to note that inspite of the facilities provided by Pakistan, the Afghan authorities resort to Non Trade Barriers and discriminatory treatment of goods imported from Pakistan. Afghan Customs levy Rs 50,000 per container for imports from China and India but charge Rs 270,000 for each container imported from Pakistan. The discrimination is also prominent in exports of crockery items and motorcycles by Pakistan.

There is also this rule that only National Logistics Cell is authorized to transport transit goods by land route. Since NLC does not have a large number of vehicles, it sub contracts the transportation to private truck owners and charges a hefty frontloading percentage from the importers. Moreover, transit goods cannot be transported in open trailers due to the fear of pilferage and other reasons. Under APTTA this practice would be discontinued and the licensed and authorized private sector trucking companies will be allowed to undertake the transportation directly. Under NLC procedures, the transit cargo is first unloaded at the NLC warehouse at Amangarh in KPK and then sent across the border. Unfortunately, this storage area is incapable of providing ample space for unloading and storage resulting in long and time-consuming queues of the vehicles.

The APTTA 2010 envisages some laudable steps to regulate the trade under APTTA. The key steps to be taken include sealing of containerized cargo, tracking and checking of the containers thru biometric devises and satellite, scanning of containers, extensive monitoring by Customs authorities, forbidding partial shipments, and transporting only through Customs licensed bonded carriers. There is this hope that misuse would be minimized to a large extent and that reciprocity would be shown by the Afghan government in removing all discriminatory barriers and levies.

Role of Business Community:

Pakistani and Afghani business community must play a dominant role in furthering the bilateral relations between the two countries. Whether it is the issue of GWOT or GLOC or APTTA or even the sometimes tense relationship at the political level, the fact is that each and every issue impacts on businessmen and industrialists in both countries. There is a need to jointly form pressure groups to convey the apprehensions and concerns to the political leadership in Kabul and Islamabad.

One such initiative has been undertaken by businessmen from both the countries. On March 13, 2012, the Pakistan Afghanistan Joint Chamber of Commerce and Industry was established. PAJCCI is strongly supported by the Afghanistan Chambers of Commerce and Industries (ACCI) and three Chambers of Pakistan with the support of governments of the two countries in an attempt to boost trade, commerce and investment. The three Pakistani Chambers are Karachi Chamber of Commerce and Industry (KCCI), Khyber-Pakhtunkhwa Chamber of Commerce and Industry (KPCCI) and Chaman Chamber of Commerce and Industry (CCCI).

The obvious drawback in the setting up of PAJCCI has been the opposition of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) who deem the initiative should be under its umbrella and patronage instead of three Pakistani Chambers undertaking this venture. The Mardan Chamber of Commerce and Industry is agitating its exclusion and has formally appealed to FPCCI to take measures against the formation of PAJCCI. However, the Joint Chamber is within the ambit of APTTA and is being financed initially by the British High Commission through the Center for International Private Enterprise, an organization under US Chamber of Commerce.

A pragmatic step taken with the support of USAID has been the formation of the Talc Association with 250 members in Jalalabad. Over 200 truckloads of unprocessed talc are daily exported to Pakistan. In 2010, the annual quantity was 80,000 metric tonnes and it is estimated that the figure would cross 100,000 metric tonnes in 2013. There are more than 50 quarries in the area and the Association is also planning to attract other international markets too. This is one area where Pakistanis can invest in joint ventures and set up more processing plants in Pakistan.

It is also proposed that an Annual Joint Dialogue mechanism be developed with meetings alternating between the two countries. The format should be business-to-business and business-to-government so that everyone is on the same page. Moreover, there is a need to enhance trade and investment delegations and also to regularly organize single country exhibitions in major cities in both the countries.

Pakistani universities and institutes should have a business student exchange program under which the Afghani students are provided education in modern business methods and dynamics. PAJCCI can establish an endowment fund that could sponsor students desiring business degrees. Preston University has nearly 300 Afghani students pursuing BBA degrees at its various campuses. In the last three decades, more than 28,000 Afghans have graduated from Pakistani universities in various disciplines. 30 students have completed their Doctorate degree from Pakistani universities too.

Conclusion:

Pakistan and Afghanistan have to look towards the future. The two countries cannot isolate one another nor can they can remove themselves from the ground realities. Peace can only be ushered through mutual cooperation and trust. The antagonizing statements emanating out of the government corridors or from military barracks must be toned down considerably so that terrorism, extremism, suicide attacks, deaths, and losses are controlled. Both countries have to jointly work to achieve the objectives. Peace is possible and peace is imperative. The barricade is the lack of mutual trust and more reliance on external forces and ideas instead of each other. The business community can be the game changer in ensuring that the powers that be really smoke and relish the peace pipe. The countdown must begin, now.