The South Asia Channel

How To Jumpstart the Afghan Economy

To shore up its economy, Afghanistan and other South Asia countries need to stop playing power politics.

This photograph taken on December 2, 2015, shows a general view of the Salma hydroelectric dam in Chishti Sharif, in the eastern part of Herat Province. Construction work on water storage in Salma hydroelectric dam in western Herat will be completed in spring 2016, and the dam is set to provide 42 megawatts of power. AFP PHOTO / AREF KARIMI / AFP / Aref Karimi (Photo credit should read AREF KARIMI/AFP/Getty Images)

Partnership defines this fast-changing century. Since the end of the Cold War, the world has become increasingly interdependent, both in terms of security and economic development. That is why countries no longer speak with the kind of zero-sum undertones they used in the last decades of the Cold War, and in the early years of the post-Cold War. At least in rhetoric, “win-win partnership” has replaced the realpolitik jargon of the past century and increasingly guides states towards a new world order whereby every state should be afforded the opportunity to develop alongside the rest.

Afghanistan’s experience during and after the Cold War helps us see why forging results-oriented, cooperative partnerships among nations matters. The Cold War zero-sum power politics victimized Afghanistan, turning it into a proxy battlefield. At the end, the West and the former Soviet Union won and lost battles. But it was Afghanistan and its people that bore the brunt of their zero-sum games. They have yet to completely recover.

Even though Afghans expected to secure international partnership and cooperation to help stabilize and rebuild their post-war country — thereby ensuring global peace and prosperity — they were let down. The United States and its allies prematurely disengaged from Afghanistan in the early 1990s, following the withdrawal of Soviet forces from the country. But a decade later on Sept. 11, 2001, the United States paid a heavy price for its failure to partner with Afghanistan and assist with its post-Cold War stabilization and reconstruction.

Since 9/11, however, the international community has increasingly embraced partnerships, including the Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD), and the New Development Bank BRICS (NDB BRICS), of different natures and objectives. Common to all of them is the element of economic cooperation. South Asia is potentially one of the richest regions of the world, one with a common, ancient civilization that binds its diverse peoples together. It is also endowed with youthful populations, whose energy and genius should be harnessed to exploit the region’s vast natural resources for the sustainable industrialization and development of all South Asia’s still-underdeveloped and least-connected countries.

But the countries of South Asia have, unfortunately, failed to forge effective bilateral and multilateral partnerships to boost economic development. This is due to the misadventures of some states in South Asia whose actions reflect the behaviors and policies of a bygone era. Afghanistan is a major victim of this negative regional dynamic where “manufactured insecurity in the form of terrorism” continues to destabilize this otherwise peaceful country.

Even so, Afghans have made significant strides towards long-term stability thanks to international assistance, including that of India, over the past 14 years. As Afghans have secured their country and built their state institutions, they have pursued private sector-led economic growth, consistently inviting domestic and international investors to explore and invest in the Afghan “virgin markets.”

The Afghan ministry of foreign affairs, through its Delhi embassy, has pursued a robust economic diplomacy agenda. Afghan diplomats, including this author, have visited many Indian states, directly engaging with their business communities. They have discussed profitable investment opportunities in Afghanistan, including in sectors like mining, agriculture, energy, infrastructure, telecommunications, and others. The Salma Dam in Herat, being completed with India’s financial assistance, is just one example of the mutually beneficial relationship between the two countries. Additionally, Afghan diplomats have facilitated the signing of memorandums of understanding of economic partnership and cooperation with a number of local chambers of commerce, while arranging visits to Afghanistan for Indian investors, who have chosen to move in and reap profits.

Despite these efforts, however, South Asia remains trapped in paralyzing inter-state power politics. This negatively impacts the entire region, especially India and Pakistan. These two major states can change their “lose-lose” relationship by focusing on the many benefits of “win-win” economic cooperation, which underpin their bilateral relations with other states in the world. The participation of India and Pakistan in the Turkmenistan, Afghanistan, Pakistan, and India (TAPI) pipeline is an example of how the two countries can invest in and implement additional economic projects. Doing so would further enhance regional economic interdependence, encouraging the two states and others to spend their resources not on confrontation but “win-win” economic cooperation.

The strategic and cooperative partnership of China and India serves as an example of traditional adversaries managing their difference while finding opportunities for mutual economic advancement. This approach has so far paid off. In the coming years, they are expected to reach their targeted goal, despite short-term setbacks, of $100 billion in annual bilateral trade, with the trade deficit fast closing in favor of India.

As a land-locked country committed to the principles of peaceful coexistence in South Asia, Afghanistan stands ready to do its part to facilitate regional economic cooperation. In the Fifth Ministerial Conference of the Heart of Asia – Istanbul Process in Islamabad that took place from Dec. 8-10, 2015, Afghanistan renewed its calls on the rest of the region to invest in each others’ countries.

President Ashraf Ghani emphasized this during the last South Asian Association for Regional Cooperation (SAARC) Summit in Nepal, inviting the whole region to opt for cooperation over confrontation. The government and people of Afghanistan hope that 2016 will produce concrete steps, backed by firm political will, towards sustainable economic development for the whole region.


M. Ashraf Haidari is a Visiting Fellow at the Afghan Institute for Strategic Studies (AISS) in Kabul, Afghanistan. He is also the Director-General of Policy & Strategy of the Ministry of Foreign Affairs of Afghanistan, and formerly served as the country’s Deputy Chief of Mission to India. Prior to this, he was Afghanistan’s Deputy Assistant National Security Advisor, as well as Afghan Chargé d'Affaires to the United States. He tweets @MAshrafHaidari.

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