Accessibility links

Washington Brokers Major Afghan-Pakistani Trade Breakthrough, Boosts Aid To Civilians


Afghan Trade Minister Anwar Ul Haq Ahadi (left) shakes hands with Pakistani Trade Minister Makdoom Amin Fahim as U.S. Secretary of State Hillary Clinton and Pakistani Prime Minister Syed Yousaf Raza Gillani look on in Islamabad on July 18.

Afghan Trade Minister Anwar Ul Haq Ahadi (left) shakes hands with Pakistani Trade Minister Makdoom Amin Fahim as U.S. Secretary of State Hillary Clinton and Pakistani Prime Minister Syed Yousaf Raza Gillani look on in Islamabad on July 18.

Following years of negotiations, Pakistan and Afghanistan signed a landmark deal in Islamabad on July 18 that could provide a major boost to regional trade while building much-needed trust in a historically rocky relationship.

The agreement, witnessed by visiting U.S. Secretary of State Hillary Clinton, will open an eastbound route for Afghan exports to reach India by way of Pakistan. Islamabad, meanwhile, gains access to Central Asian markets via Afghanistan to the west.

The bilateral deal, however, falls short of allowing Indian goods to be sent overland to Afghanistan via Pakistan. That prospect had been suggested but met with opposition among Pakistanis who feared that a flood of cheap Indian goods would harm them economically.

Once the political leaders of Afghanistan and Pakistan grant their formal approval of the bilateral deal, the agreement should replace an outdated trade agreement worked out in the 1960s. The new deal is expected to provide a major boost to the nearly $2 billion annual trade between the two counties, much of which goes unrecorded, by facilitating transport and investment and reducing bureaucratic procedures.

"Bringing Islamabad and Kabul together has been a goal of this administration from the beginning," Richard Holbrooke, the U.S. special envoy for Afghanistan and Pakistan, said after the signing ceremony. "This is a vivid demonstration of the two countries coming closer together."

Freer Trade

The agreement has been hailed as a huge step for Washington's efforts to stabilize the region, with the thinking being that greater cooperation between Pakistan and Afghanistan will undermine extremists in both countries.

Speaking to RFE/RL Radio Mashaal, former Pakistani Finance Minister Sartaj Aziz said that the new trade agreement has the potential to boost both the Pakistani and Afghan economies by giving them greater access to new markets.

The two countries, Aziz said, are still negotiating the details of a comprehensive bilateral trade agreement to determine the types and volume of goods it will cover. Under the old agreement, Islamabad blocked the import of certain consumer goods to Afghanistan via its ports, claiming such items were smuggled back into Pakistan, leading to the loss of hundreds of millions of dollars in customs revenue.

"We still don't have a comprehensive trade agreement. This is just a partial agreement allowing Afghan exports to India," Aziz said. "They have formed a joint working group to discuss what items will be allowed under the Afghan transit. Some of these items are brought back to Pakistan. It damages us and we call it smuggling."

But the mood is Kabul is more optimistic. Afghan President Hamid Karzai's administration hopes that that the agreement is a step closer to its dream of transforming their country into a "land bridge" in the heart of Asia. "[President] Karzai congratulated people of both countries on the signing of the agreement and called it a major step for the regional trade and for the path of its development," a statement from his office said on July 18.

Turning toward improving bilateral relations between U.S. and Pakistan, Clinton on July 19 announced $500 million in new civilian-aid projects for Pakistan. Washington hopes the move can help convince skeptical Pakistanis that Washington's interest in their country extends beyond fighting Islamic extremists.

Engaged With Islamabad

The projects are part of the multiyear $7.5 million aid effort for Pakistan and will focus on health care and the building of new hydroelectric dams to ease the ongoing crippling energy crisis in the country of 165 million people. U.S. legislators approved the aid package last year.

Clinton also concluded the second round of the U.S.-Pakistan "Strategic Dialogue" with Pakistani officials. These comprehensive bilateral negotiations began in March this year and cover a broad spectrum of strategic, military, and development cooperation. These talks also aim at minimizing mistrust between the two sides.

Speaking to journalists in Islamabad before the start of the latest negotiations, Clinton said that Washington was looking to deepen its engagement with Islamabad.

"We know that there is a perception held by too many Pakistanis that America's commitment to them begins and ends with security. But in fact, our partnership with Pakistan goes far beyond security. It is economic, political, educational, cultural, historical, and rooted in family ties," Clinton said. "That this misperception has persisted for so long tells us that we have not done a good enough job of connecting our partnership with concrete improvements in the lives of Pakistanis, and with this dialogue, we are working very hard to change this perception."

The trade agreement and civilian aid to Pakistan is expected to contribute to the success of a major international conference in Kabul on July 20. Major international leaders -- including the secretary-general of the United Nations and foreign ministers of 40 countries -- are expected to participate in the Kabul event.

The conference is expected to showcase Afghanistan's resolve to take responsibility for its future, while Secretary Clinton is expected to underscore Washington's renewed commitment to helping Kabul stand on its own two feet.

compiled from agency reports
XS
SM
MD
LG