Afghanistan’s New Trade Diversification Policy Presents Opportunities For Russia, India, & Iran

Apart from self-evident economic and humanitarian motives, they’re also incentivized to help Afghanistan with this amidst its tensions with Pakistan as an indirect response to Pakistan helping the US return to South-Central Asia.

Afghanistan’s Deputy Prime Minister for Economic Affairs announced that their country will diversify trade from Pakistan due to continued tensions. He added that Pakistan has a history of politicizing their trade, so it’s only natural to reduce dependence on it, and he also criticized the low-quality of medicine that’s been received from there. Importantly, the authorities will no longer cooperate with or listen to traders who still do business with Pakistan, which imbues a sense of urgency to this new trade policy.

It won’t be easy for Afghanistan to diversify from its trade dependence on Pakistan, which could also be restored in the (for now unlikely) scenario of them finally patching up their many problems, but Russia, India, and Iran – the three main states in the North-South Transport Corridor (NSTC) – can lend a helping hand. Russia was the first in the world to formally recognize the Taliban, India just reopened its embassy there, and Iran hosts the second-largest number of Afghan refugees, so they all have an interest in this.

This wouldn’t just be for economic and humanitarian reasons either, but in pursuit of undeclared strategic ones. Russia has an interest in replacing Pakistan’s exports to Afghanistan (perhaps via a barter system) as a means of diversifying its own trade, India wants to strengthen Afghanistan’s sovereignty to reduce the chance of it one day being subjugated to Pakistan, and Iran envisages a cross-Afghan corridor facilitating its trade with the Central Asian Republics and China. There’s a US dimension to all of this too.

None of them are comfortable with the role that Pakistan could play in returning US troops to Afghanistan’s Bagram Airbase, which would upset the military-strategic balance in the broader region. They’re also concerned by the Financial Times’ recent report that Pakistan offered the US a port and the Taliban once again accusing Pakistan of letting US drones operate in its airspace. Interestingly, the US just gave India a six-month Chabahar sanctions waiver, thus facilitating its trade with Afghanistan via Iran.

This was assessed here as an incentive for India to reach a trade deal with the US, without which the US’ secondary sanctions might cripple Indian-Afghan trade and therefore impede India’s earlier-mentioned goal of strengthening its partner’s sovereignty vis-à-vis Pakistan. In any case, the rapid US-Pakistani rapprochement is assisting America’s return to South-Central Asia, which Russia, India, and Iran oppose. This in turn incentivizes them to help Afghanistan as an indirect response to Pakistan helping the US.

Accordingly, they have a shared interest in assisting Afghanistan’s diversification of trade from Pakistan, which could include subsidizing exports and ramping up humanitarian aid. This might be undertaken bilaterally at first but could soon become trilateral in the sense of Russian-Indian coordination, perhaps agreed to during Putin’s upcoming summit with Modi, before including Iran to make it an official NSTC effort. They could then build upon this to expand their financial and security ties with Afghanistan.

Afghanistan’s latest policy therefore presents opportunities for all four of them if the political will exists. Pakistan wouldn’t be pleased, but it couldn’t credibly complain since Russia’s, India’s, and Iran’s potentially increased trade with Afghanistan and humanitarian aid to it would officially be apolitical. The longer that Afghan-Pakistani tensions persist, and provided that they don’t lead to a US-backed Pakistani invasion, the more sovereign Afghanistan will become as it diversifies from its dependence on Pakistan.