Afghanistan’s Trade Transformation: Transit with Pakistan Plummets as Iranian Ports Rise

New analyses indicate that transit trade between Kabul and Islamabad has experienced an unprecedented decline of ninety-three percent since 2021. This systemic shift has resulted in Afghanistan becoming increasingly dependent on Iranian ports for half of its imports, leading to a surge in transit costs.

Severe Decline in Transit Trade

Recent investigations into cross-border trade data reveal that transit exchanges between Afghanistan and Pakistan have faced a dramatic and unparalleled downturn since the political upheavals of 2021. The financial value of this trade has plummeted by approximately ninety-three percent. According to reputable regional media, including Dawn News, the volume of containers transiting through Pakistan has significantly decreased, with the total value of this trade dropping from five billion dollars in earlier years to a mere three hundred sixty-seven million dollars in the last financial year.

While the closure of border crossings by Pakistani security forces late last year has exacerbated this downward trend, economic analysts argue that the core of the issue lies within the overarching strategy of the interim government in Kabul. From early in their rule, Kabul authorities adopted a strategy aimed at reducing absolute reliance on Pakistani ports, shifting their focus towards developing alternative routes through Iran and strengthening economic ties with Central Asian countries. Additionally, reports indicate that UAE blocks transit routes for Afghan traders, further complicating the situation.

Iran’s Unprecedented Economic Influence in Afghanistan

In light of the significant drop in trade along the Durand Line, the World Bank’s economic monitoring report confirms that Afghanistan’s trade system is increasingly reliant on Iran’s highways and transit ports. Official statistics show that imports in the country have risen by fifteen percent to over thirteen billion dollars, with Iran supplying more than thirty-one percent of Afghanistan’s essential goods, becoming its largest source.

Overall, the direct borders and transit routes with Iran currently account for nearly half of the logistical burdens in the Afghan market. Meanwhile, the status of exports and reverse transit, which previously provided favorable opportunities for selling domestic products, particularly to India, has been severely damaged. Financial assessments indicate that the value of this commercial layer has dropped from hundreds of millions of dollars to a minimal amount in the current financial year, posing a heavy blow to local merchants. Reports on the overall economic landscape reveal that the World Bank report highlights the dire economic conditions as well.

Heavy Consequences of Shifting Transit Routes on Livelihoods and Inflation

World Bank experts warn that while moving away from Pakistani ports has significantly weakened Islamabad’s political pressures on Kabul, it has also inflicted numerous deficiencies and ancillary costs on the fragile economy. The greater distances, increased logistical and transport costs of alternative routes, have led to reduced export opportunities in agricultural products and coal while driving up the cost of essential goods in domestic markets.

Ultimately, this significant shift in the regional trade geography has left adverse impacts on the lives of the vulnerable segments of society. With exorbitant transportation costs passed on to end consumers, inflationary pressures have intensified in various cities. Additionally, the prevailing stagnation at the eastern and southern borders threatens the livelihoods of thousands of truck drivers, offloading workers, customs brokers, and border area activists on both sides of the border with the looming threats of unemployment and absolute poverty. Meanwhile, Middle Eastern conflicts continue to add to the pressures faced by the Afghan economy.