Political instability and security concerns have hampered Afghanistan’s capacity to serve as a vital transit center for trade and energy, yet there are opportunities to leverage its position to strengthen economic relations between Pakistan and Central Asian states for enhanced regional collaboration and sustained investment.
Afghanistan has historically served as a crucial link in the ancient Silk Road, facilitating trade between the East and the West. Today, Afghanistan’s geography positions it as a gateway for the resource-rich Central Asian republics to access global markets through Pakistan’s warm water ports of Karachi and Gawadar, on the Arabian Sea. The Central Asia Regional Economic Cooperation (CAREC) program, established in 2001 to enhance regional integration, has identified Afghanistan as a pivotal player in this process. Specifically, CAREC corridors such as Corridor 5 and Corridor 6 are designed to improve trade routes through Afghanistan, potentially boosting economic ties between Central Asia and Pakistan.
However, significant challenges stand in the way of realizing Afghanistan’s potential. The infrastructure for the CASA-1000, TUTAP, and TAPI projects under CAREC has largely been completed on the Central Asian side, but construction within Afghanistan has faced significant delays due to the withdrawal of international donors. This stalling affects the progress of these initiatives: the CASA-1000 aims to transport electricity from Central Asia to South Asia, the TUTAP project focuses on improving Afghanistan’s infrastructure to facilitate electricity delivery from Central Asia to Afghanistan and Pakistan, and the TAPI pipeline is designed to transport natural gas from Turkmenistan to Afghanistan, Pakistan, and India.[1]
Domestic challenges within Afghanistan are significantly impeding efforts to establish reliable regional connectivity. Since NATO’s withdrawal in 2022, the country has faced ongoing insurgent attacks, political instability, and regional rivalries. The Taliban controls large parts of the nation, while terrorist outfits like the Islamic State of Khorasan Province (ISKP), Tehrik-e-Taliban Pakistan (TTP), and Al Qaeda continue to expand their operations. This has led to international reluctance to recognize their government. Economic sanctions have caused financial isolation, limiting their ability to fund infrastructure projects. Additionally, climate-induced energy disruptions, outdated infrastructure, rising domestic demand, and seasonal water and power fluctuations are disrupting trade routes, leading to frequent border closures and increased cross-border transaction costs. Despite these hurdles, the opportunities for enhanced regional connectivity, transport and energy networks through Afghanistan are also significant, as it is enabling Afghanistan to boost regional trade, attract private sector investment, and secure reliable power through electricity imports. By integrating economically with its CAREC neighbors, Afghanistan can better harness the value of its natural resources, enhance human capacity, create jobs, and fund essential services.[1] Although Afghanistan’s isolation from the global financial system has hampered its economic prospects, there is a growing recognition among regional actors to invest in Afghanistan for economic growth. China’s Belt and Road Initiative (BRI), which intersects with CAREC projects is a major example.
Pakistan, in particular, stands to gain significantly from improved connectivity with Central Asia through Afghanistan. With its deep-water ports in Gwadar and Karachi, Pakistan could serve as a gateway for Central Asian exports to the global market. Developing transnational railways, highways, and energy pipelines through Afghanistan could reduce transportation costs and time, boosting trade volumes and economic integration across the region.
To fully tap into Afghanistan’s potential as a regional connectivity hub, Pakistan and Central Asian countries should take a strategic approach that addresses immediate challenges while also looking ahead. This is necessary because an unstable Afghanistan directly affects the implementation of the CAREC project spanning Pakistan and Central Asia. The following recommendations outline key steps:
Infrastructure: Prioritize the completion of major infrastructure projects such as CASA-1000, TUTAP, and TAPI within Afghanistan. To bridge the funding gaps, public-private partnerships supported by multilateral institutions like the Asian Development Bank are essential.
Regional security cooperation: Enhance regional collaboration on intelligence-sharing to improve security and protect trade routes.
Economic diversification: Encourage investment in diverse sectors like agriculture, mining, and technology to build a resilient Afghan economy.
Diplomatic engagement: Engage diplomatically with the Taliban government by focusing on economic and connectivity issues separately from political concerns.
Addressing climate resilience: Lastly, cooperation on climate resilience and resource management is vital to managing seasonal disruptions and ensuring a steady flow of resources.
By implementing these measures, Afghanistan can strengthen its role as a transit hub and contribute to greater economic and political cooperation across Central and South Asia through CAREC, benefiting the entire region. While the program holds the potential to reduce Afghanistan’s reliance on foreign aid and address issues like poverty, instability, and weak governance, its success depends on overcoming significant challenges and achieving sustained commitment from all stakeholders.
[1] Saleem, A. H. (n.d.). Central and South Asian Energy Projects: Prospects and Challenges for Pakistan. https://issi.org.pk/wp-content/uploads/2018/10/4-SS_Ali_Haider_Saleem_No-3_2018.pdf
[2] Central Asia Regional Economic Cooperation (CAREC) Program. (n.d.). Afghanistan. CAREC. https://www.carecprogram.org/?page_id=3
