By Dr. Sayed Yahya Akhlaqi 

There are more than two hundred nations whose flags fly outsides the UN headquarters. Every nation aspires to become a developed country but the reality is that there are only a few dozen nations that are either developed or on the high growth trajectory to join this league of developed nations.

Afghanistan was on the way to becoming a developed nation during the early 60s, but lost its way. Today, the National Unity Government of Afghanistan is trying to take pathway to Development. While we are moving forward with the Afghanistan China Economic Cooperation and most specifically joining the One Belt One Road (OBOR) or the Belt and Road Initiative (BRI), the world is going through changes of mega proportions. To borrow a term from biology, the world today is in a state of “punctuated equilibrium ‘where old models break and new models emerge. The 19th century is known in history as the century of the United Kingdom-the sun never set on the British Empire. The 20th century is known as the American century, when the USA emerged as the dominant superpower after the Second World War. Now, experts around the world are arguing that the 21st century belongs to Asia, whose share in global GDP will rise from USD 17 trillion-what it was in 2010-to more than USD 174trillion by 2050.

Asia will command a 52 percent share of the global economy, and region its ancient role as the leader of the world’s economy: a position it occupied as 300 years ago. There is indeed a major shift taking place in the world order, and Asia is quickly becoming the center of the world economy and of global power. Within Asia, Afghanistan is situated at the heart of three engines of growth: South Asia, Central Asia, and China. Afghanistan has the unique advantage to serve as a bridge that links these three engines of growth into one large market of 3 billion people. The possibility of achieving this reality-which is increasing day by day-is what makes this region very, very special.

While these changes are taking place, we see that many geopolitical and geoeconomic tectonic plates are shifting. And when tectonic plates move, they cause reverberations and jolts. The results of these disruptions-these reverberations and jolts-are visible all over the world: they require leadership from Asian countries, which must shoulder great responsibilities and make good use of wisdom, cooperation and shared understanding to promote stability, peace and prosperity in this continent, and also around the world by way is setting an example.

For China, Afghanistan presents strategic value due to its geographic location at the crossroads of South Asia and Central Asia. In addition, its vast mineral resources are untapped and present a valuable economic opportunity. According to United States Geological Survey, identified deposits are conservatively valued at $1 trillion. However, Afghanistan’s notorious security and corruption challenges have in the past deterred many investment opportunities. At the core of any potential investment will be the stabilization of Afghanistan’s security situation, an effort that will require great cooperation. For instance, in 2008 China had signed a 30-year agreement with the Afghanistan government to access Mes Aynak, the world’s second largest untapped copper deposit. The deal, which was worth over $3 billion, was viewed with great interest until it stalled due to security concerns and attacks by the Taliban.

China has played a central role in supporting peace talks between Afghanistan and the Taliban by encouraging the latter to join the peace negotiations. Ensuring security in Afghanistan not only contributes to stability in the country, but it also allows China to be at ease regarding instability from Afghanistan impacting security and stability in its western region, specifically Xinjiang. That said, China has only made minimal contributions to directly support the security effort in Afghanistan, 3 largely deferring to the United States and NATO. Since 2014, however, China has increased its security cooperation, providing military aid for counterterrorism efforts. Perhaps a greater effort to combat militancy in Afghanistan will open the doors for Chinese investments and access to the country’s untapped resources.

1. Energy

The Belt and Road Initiative is predicted to bring industrialization and investment to Afghanistan. This country needs reliable and cost-efficient source of power. The country has potential in hydro-electric power, which requires the construction of dams and related facilities. This is an area where China can provide financial and technical expertise under investment projects. This is because China has good engineering and technical expertise and has successfully completed many infrastructure projects. Mining is another attractive sector for investment. Chinese companies have ventured as far as Africa to mine for minerals and energy.

In Afghanistan, we have Gas Reserves in Sheberghan-North of Afghanistan, and also Copper Mine in Logar province. This is at the doorstep of China, which means that shipping will be faster and less costly. Mining is a capital intensive and high technology business, and I believe Chinese companies are well suited for this purpose.

Afghanistan has already undertaken the building of several roads to improve connectivity. The 125 km Khaf-Herat rail road is one of them, while the North Rail Way project is another. These roads will enable Afghan businesspeople and investors to access the enormous consumer markets in Central Asia, thereby increasing Afghanistan’s exports and reducing the costs of imports.

2. Market Access

Second, by becoming a part BRI, Afghanistan will have the opportunity to stabilize its economy by enhancing its trade opportunities. In 2015, over 70 percent of Afghanistan’s total exports were to Pakistan and India alone, according to data from the UN Comtrade database. The main export goods were carpets, rugs, dried fruit, and medicinal plants, and not the copper, iron ore, and other valuable resources Afghanistan is known to possess in abundance. Accessing the wider BRI network 4 will thus provide two opportunities: first, access to markets in China, Central Asia, and parts of Europe that Afghanistan doesn’t currently trade extensively with and second, the chance to diversify Afghan trade products by exporting copper, iron, and other resources to countries on the BRI.

It is noteworthy to point out that railways play an important part in BRI. Afghanistan does not have an integrated and connected railways system. Nonetheless, there are railways operation at Termez and Serkhed Abad, at the border with Uzbekistan and Turkmenistan respectively. Integrating into BRI can allow Afghanistan to further export non-perishables such as carpets and dried fruits to further markets which are presently inaccessible due to long distance and high cost of transport. Currently, China can send manufactured goods from Chongqing to Duisburg (Germany) in 14 days using high speed container trains. In September 2016, there were also $4 million worth of Chinese merchandise sent from Yiwu (China) to Mazar-e- Sharif in Afghanistan, where the journey took 15 days and crossed Kazakhstan and Uzbekistan. If a quadrilateral transit trade agreement can be negotiated between the four countries, this will greatly benefit Afghanistan and provides a cost-effective way to send Afghanistan goods in the return journey to China! This is indeed possible because Afghanistan does export marbles and previous stones to Yiwu via the sea rote now, which is complicated and long (takes two months!).

In relations to Kazakhstan, the Islamic Republic of Afghanistan is working towards two trilateral transit trade agreements. They are Afghanistan-UzbekistanKazakhstan and Afghanistan-Turkmenistan-Kazakhstan.

3. Higher Value Production and Export

Afghanistan has abundant high-quality raw materials, be it agricultural products, minerals or stones. However, the lack of capital, technology and management expertise restricts higher value migration to produce and export higher value products. For instance, the world-famous grapes of Afghanistan can be further converted into juice. By solving the problem of energy and market access described above, the country can also benefit by tapping into the BRI and export higher valueadded items. A common misconception is that China is the world factory and does 5 not need to import anything besides raw materials. This is not true. Once, there was a wine exhibition in China, and Georgian producers were able to successfully airshipped 300,000 bottles to Chinese consumers. The growing affluence of Chinese consumers giving rise to a middle-class size larger than the entire U.S. population means they will have higher disposable income and more sophisticated taste. Food safety remains a perennial problem in China, so they will respond well to food produced in a natural and organic manner. Afghanistan can work hard to attract established foreign producers to setup factories and distribution channels aligned with the BRI to sell higher value-added products. For instance, high grade marbles are mined in Herat but send in semi-processed form to Italy for further processing. If Afghanistan can sort, grade, cut and finish the stones into tiles and slabs instead of a semi-processed block, then the country can capture a higher value-add in the global value chain. Another example is the production of food and beverage with Halal certification, and market it to consumers in the Middle East, South Asia and the western region of China where Muslim population reside.

In conclusion, this paper outlines the importance of BRI to Afghanistan and describes how the country can capture this unique opportunity. Of course, just like any major achievement, there are many ‘ifs’. It is time for the country to work hard, and for the world to recognize that Afghanistan offers a special potential for global trade and investment.

Dr. Sayed Yahya Akhlaqi (Afghan national) is ECO Deputy Secretary General (since July 2019) in charge of Trade and Investment (T&I) Directorate and Agriculture and Industry Directorate.

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The article does not reflect the official opinion of the AISS