“Afghanistan needs to find a good alternative to Pakistan as a trade partner. Therefore, Central Asian countries will be the best alternative for Afghanistan, considering its geographic and economic ties with South Asian countries”, says expert Mohammad Nasir Nasrat (Afghanistan) in an interview to CABAR.asia analytical platform.
Mohammad Nasir Nasrat is a lecturer at the department of banking and finance, faculty of economics, Kandahar University, Kandahar Afghanistan. He is also having the responsibility of deputy dean of the economics faculty and the head of the Quality Assurance and Quality Enhancement (QA&QE) committee at the economics faculty of Kandahar University. His academic rank is ‘Teaching Assistant’ and since 2014 he has been working at Kandahar University. He has got his bachelor’s degree in Management and Business Administration from the Economics Faculty of Kandahar University. Then, he has got a scholarship for the master’s studies from the OSCE Academy in Bishkek in 2017. He graduated from the Economic Governance and Development program in 2018.
How can you characterize the economic situation in Afghanistan after the change of power? What are Afghanistan’s important economic partners?
As you know the change of power in Afghanistan happened in a very short time and it was unexpected for the Afghan people. Most of the districts collapsed during a month and very key provinces collapsed during two weeks. Now, the power is with Taliban (terrorist movement banned in Central Asia. – Ed.) and they have control over almost all provinces (excepted Panjshir province) and they are controlling all border with neighboring countries.
But, unfortunately, the Taliban do not have any economic policy as of now. Because everything happened suddenly and they came to power. As it is clear, Afghanistan is an importer country in its international trade, it means that around 90% of our trade include import from neighboring countries and other parts of the world. So, after the coming of the Taliban into power, the prices of many goods dramatically increased. For example, the price of one liter of petrol jumped up from 50 Afn to 69 Afn in the previous month. The predatory prices are not the only problem. Low employment rate, the outflow of the capital from the country, brain drain or flight of human resources, and meanwhile the budget deficit of the government are the biggest problems for the new government. Therefore, I think the Taliban have to consider the current economic situation in Afghanistan and make an appropriate plan to solve them out. In my opinion, a big part of their economic and trade strategies should be the important trade partner of Afghanistan.
As I mentioned before, the economy of Afghanistan mostly depends on its trade partners, especially when we are talking about the export and import which in turn has a close relationship with prices of goods in domestic markets of Afghanistan. In the last two decades, Afghanistan was expanded its trade to most parts of the world including Pakistan, India, China, Turkey, Iran, Kazakhstan, Uzbekistan, Japan, Turkmenistan, Malaysia, Russia, and etc.
What is known about the shadow economy in Afghanistan? What are its indicators? What are the main economic problems the new government will face in the country?
Underground or shadow economy is a big concern in Afghanistan. That is why despite having many sources of revenue the governments in Afghanistan are always faced with budget deficits and a lack of financial resources. The shadow economy was a very serious problem for the previous government too, especially, in recent years they did not have proper control of borders. But, I do not think that it would be a big concern for the Taliban. Because they usually use harsh and abuse military power to solve the problems. So, in a short time, it may decrease the size of the shadow economy in Afghanistan. But, of course, it is not a scientific solution, hence, there have to be economic policies to solve the problem of the underground economy. In addition, the main indicators of the shadow economy should be demonstrated and solutions have to be provided.
The new government will be faced with dozens of problems; I will note here the significant problems that the new government has to pay attention to:
- Hunger and poverty;
- reconstruction, particularly in those sectors or parts that have been destroyed by the Taliban themselves or during the war, such as the main roads and bridges, government buildings, and etc.;
- widespread corruption;
- low employment rate;
- outflow of the capital from the country;
- brain drain or flight of human resources, and consequently lack of professionals;
- budget deficit and lack of financial resources for supporting the public budget;
- lack of FDI (Foreign Direct Investment).
What economic ties do the Central Asian countries have with Afghanistan? Who is Afghanistan’s main economic partner from Central Asia?
Afghanistan has a border with three central Asian countries, namely, Turkmenistan, Uzbekistan, and Tajikistan, but our economic relationship is not only limited to these central Asian countries. Afghanistan also has an economic connection with Kazakhstan and Kyrgyzstan. Considering the trade statistic, Turkmenistan, Uzbekistan, and Kazakhstan are among the 10 important trade partners of Afghanistan. Also, Afghanistan is the most important importer of hydroelectricity/ energy from Tajikistan, and in addition the CASA-1000 is another big project which is currently under the construction. By implementation of this project, Afghanistan and Pakistan will import the surplus hydroelectricity of Kyrgyzstan and Tajikistan into their countries. Besides these, Afghanistan needs to find a good alternative to Pakistan as a trade partner. Because we always have problems at the border with Pakistan. Pakistan always closes its border and uses it as a political tool to force the Afghan government. Therefore, I believe that Central Asian countries will be the best alternative for Afghanistan. At the same time, the economic connection of Afghanistan is also can be beneficial for South Asian countries. As we know geographically Afghanistan is located between South Asia and Central Asia. So, Afghanistan can play an essential economic role for both South and Central Asian countries.
Which countries have played the role of important investors in Afghanistan and what will happen after the US has frozen Afghan reserves? Besides the European Union has cut off development funding and government assistance to Afghanistan following the Taliban’s takeover.
Fortunately, there are many opportunities for investors to invest in any sector in Afghanistan, but, unfortunately, we should admit that today it is not a good place for investment. Besides others, lack of political stability, insecurity, lack of energy, administrative bureaucratic process, and corruption, are the most important problems against investors. After the US withdrawing from Afghanistan and frozen Afghan reserves, it became harder for Afghanistan than previous. Now, it depends on the type of government in Afghanistan that the Taliban will make it in the next few days. If they make a government that would be acceptable for both political parties in Afghanistan and other countries, then the situation can be changed and most of the problems can be solved. In this case, I believe that some of our neighboring countries including China will invest in Afghanistan; especially in the mining, energy, and construction sectors. But, I can’t see a strong chance there, because, still Taliban is in the black list and is known as a terrorist group.
Investment in the mining sector of Afghanistan has billions of dollars’ value. A good example is ‘Mes Aynak copper mine’ which a Chinese company will invest there. Its expected value is around US 3 billion. There are dozens of projects such as electricity generation from coal and construction projects that China is going to invest there. China is an important trade partner for Afghanistan: considering the volume of trade with China, it is in first and third position for import from China and export to China respectively. As it is mentioned, Afghanistan mostly imports goods from China, so, Afghanistan is a good market for Chinese products. In addition, China also wants to reach Iranian and some Central Asian markets through Afghanistan, which would be the cheapest way for them.
As the Taliban have recently taken power over all of the provinces in Afghanistan, and it happened in a very few days, therefore, it could be a point of inspiration for other conservatives and terrorist groups in Central Asia and China; such as, Uyghur fighters, and other groups that could destabilize Central Asia and China. Therefore, China wants to help the Taliban and will recognize their government to remove the threats. In last month, the China invited Taliban, and the ministry of foreign affairs of China declared that they had a constructive meeting about different issues. it can be a green light for the new government in Afghanistan.
In conclusion, I can say that after the withdrawal of American troops from Afghanistan, China is the only hope in the region for Afghanistan. China can help Afghanistan in many ways and at the same time, Afghanistan can be a very good place for Chinese investment.
The new authorities announced that one of the priority infrastructure projects will be the construction of TAPI. What predictions about infrastructure projects can you make?
We have to remember that Taliban had control of most of the rural territory and roads in Afghanistan. I can say that none of the projects, particularly in the last three years has been implemented without the permission and military support of the Taliban. I know that the government of President Ashraf Ghani was claiming that they had control over both urban and rural areas, but unfortunately, that was not true and they just lying to media and partner countries. This was the main reason they had lost control of 31 provinces in just two weeks, because, their control was just not cities no other areas. Anyway, by saying this I mean the Taliban are not against construction projects, but before they came to power, they always made money indirectly from the government or directly from the contractors in return for their support in the implementation of big construction projects, such as Kamal Khan Dam in Nimroz province and etc.
Nevertheless, now the Taliban are going to make their government, so I believe that they will completely support the projects such as TAPI. But, we have to remember that the TAPI is a project between Turkmenistan, Afghanistan, Pakistan, and India. At the same time, we know about the conflict between Pakistan and India. So, if the Taliban make a government that will be acceptable for Turkmenistan and India, then it will be possible to be implemented. Otherwise, one of the parties will not allow the project to be implemented. It means that the Taliban is already acceptable to Pakistan, so, implementation of the TAPI project now depends on Turkmenistan and India.
Will the Mazar-i-Sharif-Kabul-Peshawar railway project be built?
It is the same as the TAPI project. I do not see any political problem and issue, but once again it depends to the support of donors of the projects and economic views and policies of Taliban.
What changes in foreign policy can be predicted?
As the spokesman of Taliban, Mr. Zabihullah Mujahid said in his first press conference to media: ‘the Taliban has been changed than the previous time (1995 – 2000)’; he also mentioned that they have twenty years’ experience. It means that this time they have a new view of the governmental issues. Now, the Taliban realized that their government needs to be known by foreign countries including neighboring countries. Therefore, if this happened then of course their foreign policies will be changed. So, I think they will try to make an acceptable government for all, but the time will show their honesty and political cleverness. Overall, there is a big hope with Afghan people to see significant changes in the policies and views of the Taliban.