Relations between Pakistan and Afghanistan have hit historic lows in recent months after dozens of people were killed in deadly cross-border clashes.
Since then important trade routes like Torkham and Chaman have been closed. This has disrupted trade, increased prices and deepened rifts.
The closure of Pakistan’s border with Afghanistan has also led to a significant change in regional trade patterns, with India emerging as the primary beneficiary.
Pakistan-Afghanistan border crisis has reshaped regional trade
Due to the conflict between Pakistan and Afghanistan, trade between the two neighbors has almost halved.
Bilateral commerce is set to increase by 25% in fiscal year 2024-25, reaching nearly $2 billion (€1.88 billion), according to multiple media reports in both countries.
But border closures and military tensions have caused that to drop to about $1 billion, Khan Jan Alokoze, board member of Afghanistan’s Chamber of Commerce, told Amu TV. According to the World Trade Organization (WTO), this is an extremely impressive loss for a country whose exports were worth $992 million and whose imports totaled $5.76 billion in 2022.
Afghanistan is leaning towards India
With this vital commercial relationship severely disrupted, Afghanistan – which has been largely shunned by the international community since the Taliban returned to power – is actively looking for alternative trade routes.
New Delhi is moving towards establishing itself as the solution.
Afghan Commerce Minister Nooruddin Azizi recently traveled to New Delhi to talk about expanded economic ties, including increased cargo flights to Kabul from Indian cities such as Delhi, Amritsar and Mumbai. Both sides also appointed trade attachés in their respective embassies to oversee and facilitate bilateral commerce.
The discussions focused on tariff cuts, tax exemptions and a bilateral trade target of $1 billion, indicating Afghanistan’s intention to fundamentally restructure its commercial ties away from Pakistani ports and border crossings.
Chabahar, the strategic gateway to India
Central to India’s approach is the Chabahar port in Iran, which gives landlocked Afghanistan access to international waters without crossing Pakistani territory.
India is investing heavily in the port, which serves as a vital sea route that bypasses Pakistan, facilitating essential imports to Afghanistan.
Since relations between Pakistan and Afghanistan have soured, Afghan traders have begun using the port to import food, commodities, construction materials and consumer goods that previously came through Pakistan.
“While the blockade continues, India should prioritize upgrading the Chabahar port, including container handling, storage and internal connectivity covering the Chabahar-Zahedan rail, dry port and faster customs clearance,” former Pakistani ambassador Ajay Bisaria told DW.
The recent US sanctions waiver granted in October for operations at Chabahar – which India is developing and expanding – removes a major hurdle that had previously limited the port’s commercial viability.
Bisaria said, “India should also take advantage of the US clearance waiver on Chabahar to provide speed and reliability advantage to counter Pakistan’s cheaper routes. India’s proactive measures of subsidies, digital clearance, logistics integration can ensure competitiveness even when the blockade is lifted.”
Former Ambassador to Afghanistan Gautam Mukhopadhyay also said that the current Afghanistan-Pakistan blockade, no matter how severe, provides a strategic opportunity for India.
“If alternative routes through Chabahar port can be normalized and made commercially viable, they could establish a permanent bypass to Pakistan’s unpredictable transit policies,” Mukhopadhyay told DW.
He emphasized that the conflict between Islamabad and Kabul “has created a window for India to consolidate its position as the primary trade gateway to Afghanistan.”
But Mukhopadhyay said that “success depends on whether the Chabahar option can prove credible and profitable enough to overcome the inherent logic of the traditional land border.”
Challenges and uncertainty
However, Afghanistan expert Shanthi Marriott D’Souza points out that Chabahar needs significant logistics and equipment upgrades, including cranes and storage facilities, to handle the expected $2 billion-plus Afghan trade bypass.
“Nevertheless, the most important need is to activate the rail link, especially on the Chabahar-Zahedan route. Unfortunately, a number of challenges could hinder this progress, the most significant of which are US sanctions on Iran,” D’Souza, president of the Mantraya Institute for Strategic Studies think tank, told DW.
“Given the uncertainty over the duration of the trade blockade, addressing these logistical and systemic issues is likely to be difficult in the short to medium term,” he said.
Having already formalized and strengthened trade ties, D’Souza said India must now secure its long-term influence by building its trade ties with Afghanistan in a way that promotes Afghan self-reliance.
“India enjoys goodwill among the Afghan people, and its existing cordial relations with the Taliban can facilitate this process, making it more resilient to future changes in Pakistan-Afghanistan relations,” he said.
practical commitment
Although New Delhi does not formally recognize the Taliban regime, the two sides have deepened bilateral engagement in recent months, driven by both opportunity and necessity, especially against the backdrop of deteriorating India-Pakistan relations.
D’Souza believes that if Pakistan lifts its current effective blockade and extends its olive branch to Kabul, Indian trade routes to Afghanistan will face increased competition.
“However, given past examples of Pakistan using border closures as a strategic weapon to extract concessions from the Taliban, Afghanistan would be inclined to make a strategic shift toward a more credible and diverse option,” he said.
For that to happen, India, Iran and Afghanistan will have to find a way to mitigate the impact of Western sanctions on Tehran, which the United Nations reimposed in September. Meanwhile, the US has imposed sanctions on Iran for most of its history since 1979.
“Success on the sanctions front will make these alternative routes a more permanent and credible option rather than just a temporary solution,” D’Souza said.
However, TCA Raghavan, former Indian High Commissioner to Pakistan, expresses caution about India’s prospects with Chabahar.
He warned not to mistake temporary disruption for permanent structural change.
“We should be cautious in assuming that the Pakistan-Afghanistan trade disruption automatically creates opportunities for us to export to Afghanistan through Iran,” Raghavan told DW.
“There are serious infrastructure constraints as well as issues like US sanctions, all of which have severely impacted Indian exports to Iran in the last decade. This will also apply to exports to Afghanistan,” he said.
“I don’t think the current impasse will continue for years. But at the same time, I don’t think we’ll see a rapid improvement in a few days or weeks,” he said.
Edited by: Carl Sexton