Afghanistan and Central Asia Collaborate to Boost Regional Trade

James Durso

James D. Durso is the Managing Director of Corsair LLC, a supply chain consultancy. In 2013 to2015, he was the Chief Executive Officer of AKM…

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• Afghanistan and Uzbekistan strengthen trade ties with new agreements, including the Termez International Trade Center and the UAP Railway Project.
• Trade between Afghanistan and its neighbors, including Uzbekistan, Turkmenistan, and Kazakhstan, is growing rapidly, with projects like the TAPI Gas Pipeline and Trans-Afghan Corridor.

• Potential challenges include regional instability, U.S. sanctions, and internal Afghan political tensions, which may hinder progress on these trade initiatives.

Now that the U.S.-led punitive expedition to Afghanistan has ended, regional trade patterns are returning to normal, as in pre-Soviet Union normal, enhanced by China’s Belt and Road Initiative and local efforts, like the Uzbekistan-Pakistan-Afghanistan (UAP) Railway Project.

In August, the government of Uzbekistan announced the opening of the Termez International Trade Center, in the border town of Termez, the location of the Friendship Bridge that connects Termez with the Afghan dry port of Hairatan.

As the center has a regional role the governments of Azerbaijan, Kyrgyzstan and Kazakhstan were represented at the opening that was presided over by the Uzbek prime minister, Abdulla Aripov, and the acting prime minister of Afghanistan, Abdul Ghani Baradar, latterly seen negotiating the Doha Accord with the U.S.

 Underscoring Uzbekistan’s interest in firming relations with Afghanistan, Prime Minister Aripov visited the Afghan capital of Kabul two weeks before the Termez opening. That visit resulted in 35 investment and trade agreements worth $2.5 billion, with a goal of increasing bilateral trade to $3 billion. Simultaneously, Kabul hosted a trilateral meeting of  the economy ministers of Afghanistan, Uzbekistan and Azerbaijan on ways to enhance regional trade ties.

At the opening, Prime Minister Aripov declared that Afghanistan holds a significant place in Uzbekistan’s foreign policy. He reported that Uzbekistan will facilitate the export of Afghan fresh fruits to Central Asia; has sent technical specialists to extend the railway network from Hairatan to Herat in Northwest Afghanistan, a center for trade with Iran; and will work with Afghanistan to construct retaining walls along the banks of the Amu Dayra river, a matter of acute concern as the Taliban’s Qosh Tepa irrigation canal will divert up to fifteen percent of the river’s water away from water-stressed Uzbekistan and Turkmenistan.

Regional trade is climbing.

In January 2024, the Afghan Industry and Trade Ministry reported trade between Afghanistan and Uzbekistan in 2023 increased six-fold from 2022, hitting $266 million. The Islamic Emirate imported goods and services (electricity, flour, beans, chemical fertilizers, oil and natural gas) worth $239 million, and exported $27 million of goods (dried fruit, fruit juice, apricots, sesame, carpets.)

Trade between Afghanistan and Turkmenistan reached $481 million in 2023 with Turkmenistan supplying mostly electricity, oil and natural gas ($477 million), while Afghanistan mostly exported marble, dried fruits, potatoes and non-alcoholic beverages ($4 million).

Afghan and Turkmen companies recently inked ten contracts and two memoranda of understanding on the supply of construction materials, including iron bars, paint, marble and food materials, and the Turkmen delegation declared they hope to buy hundreds of tons of construction materials in Afghanistan every year, which may allay Afghan concerns about the lopsided trade balance.

Trade between Afghanistan and Turkmenistan is facilitated by the two official ports: the Aqina Dry Port, on the rail line connecting Turkmenistan’s capital, Ashgabat, with Mazar-e-Sharif, and Torghundi Port, starting point of the Lapis Lazuli trade route, which will connect to the Middle Corridor (the Trans-Caspian International Transport Route) and thence to Europe.

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The Turkmenistan–Afghanistan–Pakistan–India (TAPI) Gas Pipeline may finally get underway as officials announced that “practical work” will soon start. The implementation of TAPI is of particular interest to Ashgabat as it will help diversify its heavy reliance on gas exports to China.

In 2022, total trade between Kazakhstan and Afghanistan was $987.4 million, double the 2021 level. As expected, most of that is exports from Kazakhstan, largely, natural gas, flour, and wheat. (Afghanistan is the biggest consumer of Kazakh wheat.)

In August 2023, the countries agreed to increase trade and investment and Afghanistan’s Vice Director for Economic Cooperation at the Ministry of Foreign Affairs, Shafiullah Azam, reported, “We currently have trade turnover of $1 billion with Kazakhstan. We hope to bring the trade up to $3 billion.” Azam said Kabul hopes to cooperate with Astana in the energy sector, a smart move as Afghanistan imports a lot of electricity, natural gas, and oil from Central Asia.

Kazakhstan has an interest in diversifying its trade routes to reduce reliance on its traditional routes through Russia and possible American sanctions and will welcome a second Southern route to the markets of Asia. (The first route is by the Iran-hosted leg of the International North–South Transport Corridor.)   

So, in August, Pakistan and Kazakhstan announced the launch of the Trans-Afghan Multimodal Transport Corridor. The corridor’s route runs from northeastern Kazakhstan via Uzbekistan, Afghanistan, and Pakistan, then by sea to Jebel Ali port in the United Arab Emirates, and shipments should be delivered in in is 20-25 days. 

In May, the Taliban announced a logistics and energy trading hub at Herat in the country’s northwest to facilitate oil sales from Russia to South Asia. The project will be in cooperation with Kazakhstan and Turkmenistan, which highlights the republics’ approach to Kabul as “neighbors forever:” Kazakhstan removed the Taliban from its terrorist list in December 2023, and Uzbekistan never declared the Taliban an extremist group and in 2018 publicly encouraged the Taliban to start negotiations with the Islamic  Republic. Turkmenistan was mum on the topic of the Taliban in line with its policy of permanent neutrality.

The expression, “Don’t count your chickens…” could have been coined about Afghanistan, so what are potential obstacles to the republics’ plans?

• Continuing U.S. and European sanctions for offenses such as the new laws restricting women, and the growing presence of Al Qaeda, according to the National Resistance Front of Afghanistan.
• Dysfunctional Afghan government due to disagreements between the seat of government in Kabul and le pouvoir in Kandahar, the Taliban heartland.
• Kabul refusal to segregate its trade relationship with Tashkent from its demand that Uzbekistan return the aircraft abandoned in Termez by fleeing Afghan forces.
• Pakistan’s ongoing instability due to the economic crisis (inflation, falling currency value, and low foreign reserves), political polarization and protests, extremism and intolerance, and chronic underdevelopment and social turmoil.
• An attack on Iran by the U.S. or Israel if they fear the Islamic Republic has developed nuclear weapons.

By James Durso

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