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Reconnected

Challenges and Opportunities in the Context of ’s Belt and Road Initiative

Annie Cowan

The first Central Asia cargo train departs from Nantong, east China’s Jiangsu Province for Afghanistan’s , marking the start of freight train service between China and Afghanistan. After approximatly one year of operation, the service was discontinued due to trade obstacles” eastwest.ngo | t: @EWInstitute | f: EastWestInstitute Afghanistan Reconnected: Challenges and Opportunities in the Context of China’s Belt and Road Initiative

The government of Afghanistan, as indicated by President Ghani, holds both infrastructure and investment as key points in its development agenda. China’s Belt and Road Initiative (BRI) presents an ideal opportunity for the government of Afghanistan to realize its historic potential in cooperation with China and other countries in the region.

Executive Summary China-Afghan cooperation under the Academy of International Trade and auspices of China’s BRI represents Economic Cooperation (CAITEC). The government of Afghanistan, as a welcome and potentially-lucrative Following this and substantial indicated by President Ghani, holds opportunity for both parties. subsequent consultation with experts, both infrastructure and investment as However, geographic and physical businessmen and policymakers key points in its development agenda. connectivity alone cannot ensure from Afghanistan, its neighboring China’s Belt and Road Initiative (BRI) the success of proposed projects. countries, the EU, and the U.S., the presents an ideal opportunity for the Both countries must take into EastWest Institute has assembled government of Afghanistan to realize account the region’s political climate an overview of the challenges and its historic potential in cooperation to address deficiencies in soft and opportunities facing Afghanistan, with China and other countries in the hard infrastructure, as well as focus China and the wider region as they region. Repeated state-level visits, on enriching Afghanistan’s human pursue China’s BRI for a cooperative, summits, and agreements between capital to ensure the development of mutually-beneficial way forward. Afghan and Chinese representatives, a regional transportation hub in the These conclusions are accompanied including between Presidents Ashraf heart of Asia. by a series of recommendations Ghani and Xi Jinping throughout 2017 pertaining to the implementation of were an important indication of the Upon the conclusion of its five- BRI and other initiatives as well as to intention to work together towards year “Afghanistan Reconnected the adoption of a coherent regional this vital goal, yet practical realization Process,” the EastWest Institute economic vision in the face of political, of this partnership may be a complex held an international symposium in security and development challenges. task, as persistent security, political Beijing, China in cooperation with and logistical challenges must be the National Institute of Strategic faced to ensure the full incorporation Communication at Peking University of Afghanistan into BRI. (NISC), the Centre for China and Globalization (CCG) and the Chinese

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A family travel down the , one of the two main routes from to in .

Introduction from China, , the Middle East, and Central and . At the heart of China’s Belt and Road Historically, says H.E. Janan Mosazai, Initiative (BRI) is the concept that Ambassador of Afghanistan to China, greater connectivity leads to greater “Afghanistan connected markets growth. Inaugurated in 2014, BRI is and facilitated peaceful interaction China’s 900 billion USD campaign to across ethnic, regional, linguistic, and physically and economically link itself other lines.” Today, BRI presents an to diverse markets such as Central At the heart of opportunity for China and the region Asia, Southwest Asia, Europe and the China’s Belt and to help restore Afghanistan’s potential Middle East through maritime and to serve as the “beating heart of Asia” terrestrial transport corridors. It is, in Road Initiative (BRI) by fostering connectivity, security, essence, a resurrection of the old Silk is the concept that stability, and growth through an increase of foreign investment and a Road trade routes that once served greater connectivity as the heart of the greater Eurasian renewal of opportunity for the people economy. leads to greater and economy of Afghanistan. growth. Nowhere was more central to the Afghanistan wisely aims to seize than the area that is now on the momentum provided by Afghanistan. Serving as a crossroads BRI and the development taking and vital marketplace, Afghanistan place around it to assume a in the ancient past represented a renewed position as a regional flourishing confluence of diverse hub of commerce and exchange. cultures, religions and economic Geographically, the country is ideally- opportunities for traders and travelers positioned to do this. Still, numerous

www.eastwest.ngo 3 domestic, bilateral and regional creates worries that tensions challenges—including instability between the neighbors will complicate and insecurity in Afghanistan, Afghanistan’s practical inclusion, insufficient transport and industrial with President Ghani in October 2017 infrastructure, prohibitive or expressing reluctance to link up with unwieldy regulations and policies, CPEC projects as long as Pakistan combative or exclusionary political prevents its access to .2 Stalled and trade dynamics, and a lack of and cancelled negotiations—as well existing/enforced transit and trade as the de facto discontinuation of the agreements—must be overcome now-expired Afghanistan-Pakistan before Afghanistan can fully capitalize Transit Trade Agreement (APTTA), on the rich opportunities emerging which was supposed to ensure Afghan as a result of BRI and other regional access to India—represent a significant initiatives. impediment to regional connectivity. Existing bilateral and regional trade Challenges and transit agreements need to be improved, implemented and adhered to in order to allow fair access to The cornerstone of BRI is, of course, By beginning infrastructure development to all markets for all parties, for the encourage connectivity. For Afghanistan, domestic collective good of the entire region. this is a much-needed focus. The infrastructure country has been embroiled in conflict The Crisis of Implementation: A lack after conflict since the late 1970s, development with of implementation and enforcement causing infrastructure that would a focus on projects of existing trade and transit otherwise have been maintained and close to the border agreements is endemic throughout developed over time to have at best the region and represents a serious deteriorated or, in a great many worst with Pakistan, lack of the “soft infrastructure” cases, been destroyed outright. Afghanistan could necessary to ensure the success more directly of physical projects. Despite the Possible Complications with CPEC: The plethora of Memorandums of development of the China-Pakistan benefit from Understanding and other agreements Economic Corridor (CPEC) presents CPEC and more signed between Afghanistan and its an opportunity for Afghanistan to easily access the neighbors, including China, these link up to and directly benefit from agreements are frequently left infrastructure projects linking Pakistan Chinese market. unimplemented or unachievable due with China. By beginning domestic to practical and political impediments. infrastructure development with a Momentum gained by the signing focus on projects close to the border of agreements and MoUs must be with Pakistan, Afghanistan could acted upon efficiently throughout more directly benefit from CPEC and the region, with agreements and more easily access the Chinese market. policies being implemented, In December 2017, Chinese Foreign standardized, evenly enforced, and Minister Wang Yi announced China updated or expanded as necessary. and Pakistan’s openness to discussing Afghanistan’s potential inclusion in The realization of expressed political the corridor.1 However, the troubled will and commitment is critical to relationship between Afghanistan and ensuring the efficient and smooth transit of goods across the region

1 Ministry of Foreign Affairs of the People’s Republic of China (26 2 TOLOnews (25 October December 2017). Wang Yi: To Discuss 2017). Ghani Refuses To Join CPEC Extending CPEC to Afghanistan in a While Access To India Is Blocked. Proper Manner. Available at http://www. Available at https://www.tolonews. fmprc.gov.cn/mfa_eng/zxxx_662805/ com/afghanistan/ghani-refuses-join- t1522540.shtml cpec-while-access-india-blocked

4 www.eastwest.ngo and access to diverse and lucrative for Afghanistan, it is heavily reliant on international markets. Pakistan as a corridor and gatekeeper for transit. Political and economic Pakistani reluctance to allow the transit difficulties between Pakistan and of goods over land between Afghanistan Afghanistan lead the latter to seek and India drives both countries to alternative routes to access foreign pursue alternative routes bypassing markets, forgoing geographically Pakistan, such as ’s India-backed expedient routes through Pakistan to port, which has recently develop new links through Iran and seen the sixth shipment of Indian Central Asia. To ensure the success to Afghanistan3, or the nascent of its own initiatives, China should Afghan-India Air Corridor Program, leverage its economic and political which has since June 2017 conveyed influence to facilitate a harmonious 1000 tons of and other goods regional trade environment, prone to spoilage from Kabul to New ensuring its own easy and reliable Delhi when delayed by impediments access to an Afghanistan with to land-based transit routes.4 A second normalized economic relations corridor between Kabul and Mumbai with Pakistan and preventing the was launched in December 2017.5 Existing bilateral bypassing of markets that are vital Political tensions continue to spill over to the impact and reach of its CPEC into punitive economic and trade and regional projects and the larger BRI. consequences, including Afghanistan’s trade and transit reciprocal decision to prevent the transit agreements need It can be hoped that the Chinese of Pakistani trucks through its territory administration of Pakistan’s Gwadar to Central Asia and other markets.6 It to be improved, port—a keystone of CPEC— could is in China’s considerable interest implemented, and potentially ease some of these to facilitate the smooth transit of adhered to in order bureaucratic and political hang-ups goods to and through Pakistan and that tend to impede economic traffic Afghanistan. Though BRI represents a to allow fair access between Pakistan and Afghanistan. renewal of opportunity for connectivity to all markets for Nevertheless, further work to all parties, for the separate political disputes from 3 Financial Tribune (24 February economic retributions, such as 2018). India’s 6th Wheat Consignment collective good of border closures and punitive visa Unloaded at Chabahar. Available at: the entire region. policies, must be continued and https://financialtribune.com/articles/ increased by both neighbors if an economy-domestic-economy/82371/ operable transit corridor is to be india-s-6th-wheat-consignment-unload- used as an incentive for investment ed-at-chabahar and economic engagement in 4 TOLOnews (9 February 2018). Afghanistan and the region. India A Better Market For Afghan : Officials. Available at https://www. tolonews.com/business/india-better- Competitive Perceptions: The market-afghan-fruit-officials development of other regional projects 5 Hindustan Times (27 Decem- alongside BRI, such as the Chabahar ber 2017). India, Afghanistan launch port, the Corridor, and the second air corridor linking Kabul and Five Nations Railway Corridor may Mumbai Available at: https://www. stand to eventually provide Afghanistan hindustantimes.com/world-news/ with other cheap and efficient road, india-afghanistan-launch-second-air- maritime and rail-based linkages to corridor-linking-kabul-and-mumbai/ the Indian, Central Asian, Russian, story-LF2ABpIZOomPf3VvzqxezN.html 6 TOLOnews (22 October 2017) Turkish and European markets which Ghani Bans Pakistani Trucks From (at this stage) formally involve neither Entering Afghanistan. Available at http://www.tolonews.com/business/ ghani-bans-pakistani-trucks-entering- afghanistan

www.eastwest.ngo 5 Afghan military personal unload packages during the handover ceremony as China delivers first shipment of military aid to Afghanistan, at Kabul military airport.

Pakistan, BRI or CPEC-linked projects.7 Though at the surface, the near- at present due largely to bureaucratic These corridors should be perceived simultaneous developments of and political blockages, will likely always as potential complements rather than the India-supported Chabahar and flow in substantial volume through alternatives to BRI. Chinese access China-backed Gwadar ports seem neighboring Pakistan in the absence of to these routes could be beneficial, to be in direct political and economic punitive economic policies. and could be facilitated by steady competition, the two can in fact be access to Afghanistan through regular, used to complement one another for Logistical impediments: However, standardized and uninterrupted flow the betterment of trade throughout Afghan trade need not flow exclusively of goods and transit through Pakistan. the entire region. For instance, Gwadar through Pakistan. Just as Gwadar China should encourage countries can benefit Chabahar by handling offers China increased access to new in the region to adopt the view spillover cargo, while both cargo and markets, so too can its neighboring that infrastructure and transit passenger services between the . The potential benefits projects—including Iran’s Chabahar two ports could enhance economic of direct connection between CPEC and Pakistan’s Gwadar ports—can interaction between Iran and Pakistan projects and Chabahar could create be used in a complementary, rather (and by extension China), in addition opportunity and incentive for China and than competitive or exclusionary to benefitting travelers (such as other partners to invest in infrastructure fashion. A common regional strategy religious pilgrims) by precluding the and development in Afghanistan. In fact, for affordable, convenient linkage necessity of travelling by road through in March 2018 Iranian Foreign Minister to diverse markets—coupled insecure Balochistan. Pakistan’s fears Javad Zarif indicated a willingness with regional and bilateral transit of losing Afghan and other business to explore Chinese and Pakistani policies and agreements conducive specifically to the Chabahar port are involvement in Chabahar and the to functional, unimpeded trade— thus largely unfounded; Chabahar port potential of using Gwadar and Chabahar stands to benefit all parties. should be viewed as a facilitator for in a complementary manner.8 Currently, additional opportunity rather than goods imported through Chabahar as a competitor to Gwadar. Pakistan’s 7 TOLOnews (15 November 8 Financial Tribune (14 March proximity, existing trade ties, and ability 2017). Five Nations To Sign Lapis 2018). Pakistan Invited to Join Cha- Lazuli Corridor Agreement. Available at to facilitate trade ties to other markets— bahar Project. Available at https:// http://www.tolonews.com/business/ particularly as CPEC projects continue financialtribune.com/articles/economy- five-nations-sign-lapis-lazuli-corridor- to develop—ensures that trade from domestic-economy/83569/pakistan- agreement Afghanistan, though suffering greatly invited-to-join-chabahar-project

6 www.eastwest.ngo reach Afghanistan via road as railway than a year after its inauguration.10 connections are not yet developed. To The project, though well-intentioned maximize and incentivize Chabahar’s and heralded with excitement by use by diverse markets including both sides, was ultimately rendered China, further railway connections ineffective due to unaddressed regional between Iran and its neighbors—in “soft infrastructure” deficiencies. particular Afghanistan—will be In December 2017, talks were held necessary. Railway connectivity both between President Ghani and President within Afghanistan and to neighboring Mirzizoyev of , during which countries is crucial to the economic plans were announced to extend the development of Afghanistan and the existing railway connection between the region as a whole. India’s commitment The construction two countries further within Afghanistan to help build a railway connection in of further railway and ultimately to Iran, and agreements Iran between Chabahar and were signed addressing bilateral represents a good start; however, connections and trade and transit issues regarding there remains only one realized rail sufficient supporting roads and railways in particular.11 The link between Afghanistan and Iran, infrastructure implementation of this new project and the Afghan portion of which is under these agreements will stand to benefit construction and projected for between both countries individually as well as completion in Spring 2018. Afghanistan and Iran, greater Central Asia, and China, its neighbors in the and should be prioritized in the coming A railway connection from Afghanistan months of 2018. The construction to China—called the Sino-Afghan region to China of further railway connections and Special Railway Transportation—was should be a priority, sufficient supporting infrastructure launched in September 2016 with rail and must include between Afghanistan and its linkage of Afghanistan’s Hairatan to neighbors in the region through Uzbekistan and thus via enforced transit to China should continue to to China.9 Unfortunately, the project, agreements with all be a priority, and must include which was established with hopes of countries along the implemented and enforced transit providing a steady connection through agreements with all countries along which China could import Afghan routes to ensure the the routes to ensure the smooth , was stalled by lack of a transit smooth passage of passage of goods. agreement between Afghanistan and goods. Uzbekistan, meaning that though Security Chinese goods could and did arrive in Afghanistan, Afghan goods could not Perhaps the most prominent— transit through to China and thus trains certainly the most publicized— returned to China empty-handed. Due barrier to Afghanistan’s economic to the lack of a transit agreement, as development is its insecure well as insufficient infrastructure and environment, the result of 40 years loading capabilities on-site in Hairatan, of prolonged conflict. Inability the use of the nascent rail connection to Afghanistan was suspended by the 10 TOLOnews (11 September Chinese side in summer 2017, less 2017) Railway Route From China Grinds To A Halt. Available at http://www. tolonews.com/business/railway-route- china-grinds-halt 11 Office of the President, Islamic (5 December 9 Bloomberg News (11 Septem- 2017). Joint Statement By the Presi- ber 2016) China Lays New Brick in Silk dent of the Republic of Uzbekistan His Road With First Afghan Rail Freight. Excellency Shavkat Mirziyoyev and the Available at https://www.bloomberg. President of the Islamic Republic of com/news/articles/2016-09-11/china- Afghanistan His Excellency Mohammad lays-new-brick-in-silk-road-with-first- . Available at https://presi- afghan-rail-freight dent.gov.af/en/News/056666

www.eastwest.ngo 7 to guarantee the security of in the country. In March 2018, types of projects in the Afghan infrastructure and lack of consistent, the Afghan Ministry of Interior market, mitigating some negative secure access to contested areas deployed significant security forces perceptions. The governments of severely inhibits investment to protect the construction site for China, Afghanistan, and Pakistan opportunities and the viability of the -Afghanistan- should work together to explore connectivity projects, leading to fears Pakistan-India (TAPI) Pipeline, a opportunities to create free trade that many regional corridors may project slated to generate substantial zones and “safe zones” for foreign seek to bypass Afghanistan entirely. economic returns in the form of and regional business, such as in the China has indicated that this is not transit duties and job creation for border area between Afghanistan’s its intention, recognizing that the Afghanistan.13 To expand this to the Badakshan, China’s Xinjiang, and route through Afghanistan, at the formal designation and training Pakistan’s Khyber Pakhtunkhwa center of the region, represents of a division of Afghan special provinces. Return on investment the most geographically-expedient forces, similar to Pakistan’s SSD, for those investors and foreign means of reaching the European specifically to protect foreign businesses willing to operate in these market and thus seeks to integrate investments and regional projects areas could be substantial, and could it into BRI. The government of in Afghanistan could help to serve as an example to encourage China has indicated a commitment draw new investments as well as future ventures. to pursuing and facilitating a securing existing ones, facilitating peace process in Afghanistan, economic development as part of a Regional Counterterrorism Strategies: understanding that economic long-term stabilization strategy. As Up to 20 violent non-state actors— development and investment in China seeks to further its military including the , al Qaeda, the human capital can facilitate security and security ties with Afghanistan Haqqani Network, Islamic State, the and stabilization. Its strategy in alongside its economic ones, it Islamic Movement of Uzbekistan, and Afghanistan is two-pronged, however, could consider the training and others— are operating in Afghanistan, as it has in recent years begun to support of such a division as a many of them from surrounding focus on leveraging its role politically potential area of cooperation states in the region and using the as a mediator, in particular with that would be to its direct benefit country as an incubator for violent regards to its relationship with economically. acts abroad. Regional and state actors Pakistan. must accept that any violent non- Safe Zones and Free Trade state actor in Afghanistan- regardless Securing Investment in an Insecure Zones: In light of the current of a particular group’s pledged or de Environment: China’s active environment—in which foreign facto allegiance represents a threat involvement in Pakistan—a country investors are discouraged by an to all. States in the region must be that also suffers from areas of inability to guarantee both the wary of supporting or tolerating instability—demonstrates that physical and economic safety of specific groups as a counter to fears cooperation and development in their investments— it is all the of other extremist groups or as a insecure environments is possible more necessary for Afghanistan means of pursuing their own interests, when political will is sufficient. to attract and reassure potential and recognize that the lawlessness Pakistan has prioritized the security partners and investors where created by the prolonged Taliban of CPEC projects and Chinese possible. While an inability to insurgency is precisely the factor workers, establishing a Special designate the entire country as a that creates the conditions that allow Security Division (SSD) in January “safe zone” for investment does other groups to gain footholds and 2017 specifically for the protection place limitations on its potential operate in the country. The idea that of CPEC projects.12 The SSD aims for growth, the designation of “good terrorists” exist as a counter to deploy approximately 15,000 certain areas—such as Mazar-i- to “bad” ones prolongs the internal specially-trained personnel, including Sharif—as official industrial parks strife in Afghanistan and threatens 1,000 retired army officers, to protect could draw cross-border trade and the security and economic outlook China’s substantial investments demonstrate the viability of certain of the entire region in both the short- and long-term. Non-regional states 12 The Express Tribune (22 Janu- 13 TOLOnews (14 March 2018). interested in brokering or facilitating ary 2017). Special Security Division Thousands Of Security Forces Deployed peace efforts—such as the United established to secure CPEC. Avail- To Ensure TAPI Safety. Available at States, , and China—must able at https://tribune.com.pk/sto- https://www.tolonews.com/business/ acknowledge the actual dynamics ry/1303428/special-security-division- thousands-security-forces-deployed- within the region and use their established-secure-cpec ensure-tapi-safety

8 www.eastwest.ngo political and economic influence Opportunities to discourage the manifestation of this strategy in their regional allies. Despite the challenges the two Countries in the region—with the countries must overcome in support of stakeholders such as order to achieve efficient bilateral China—must develop and act on a connectivity, much can be said for cohesive, unified counterterrorism China’s investment and interest in strategy and acknowledge that an Afghanistan, which stands to be insecure Afghanistan threatens leveraged into a relationship that the viability and geographic enriches both countries substantially. expediency of regional transport Afghanistan is a wealthy country in corridors and large-scale regional terms of natural resources, most projects. of which have not yet been tapped. Chinese interest in accessing Domestic Counterterrorism and extracting these resources is Strategies: Illegal mining operations well-documented; with sufficient in Afghanistan must be curtailed infrastructure development, and brought under government normalized and standardized trade control. Reports indicate that relations with transit countries, and groups like the Taliban are profiting The government a mutually-beneficial investment from the of illegally- of Afghanistan strategy, Chinese attention to extracted Afghan , precious Afghanistan could lead to new stones, , minerals, and other should deregulate momentum and valuable new resources, with lapis lazuli mines in and streamline cooperation with significant potentially incentives for both sides. out of government control entirely.14 procurement and These operations enable terrorist approval processes Education and Human Capital: groups and insurgents to generate to encourage One facet of the Chinese strategy steady revenue and perpetuate the investment in regarding Afghanistan features security crisis throughout the country. a view of human capital and The recent U.S. military strategy sectors like mining education as its own particular to curtail the revenue of insurgent as well as the type of infrastructure, one that can groups by targeting opium local construction be developed alongside physical production facilities should also projects in order to strengthen focus on reducing illegal extraction of roads and people-to-people connectivity and smuggling operations of raw infrastructure, while between the two economies and materials. Afghan security strategy still combatting increase Afghanistan’s ability to should prioritize this as well, and take advantage of the opportunities with the support of international corruption. provided by BRI projects. The partners increase surveillance and Chinese commitment to foster targeted operations against illegal the growth of human capital extraction sites. in Afghanistan in the form of scholarships, educational exchange programs and capacity-building, and professional training programs demonstrates an investment in the future of the country that extends 14 TOLOnews (16 March 2018). beyond China’s own immediate Smuggler Says Bada- economic benefit. It is an investment khshan Mines Out Of Govt Control. in a future trading partner and a Available at https://www.tolonews. vote for a thriving, interactive, self- com/index.php/afghanistan/ sustaining and stable market down gemstone%C2%A0smuggler-says- the line: a long-term, multifaceted badakhshan-mines-out-%C2%A0govt- strategy that is a diversion from control

www.eastwest.ngo 9 previous “plug-and-play” solutions Construction and Use of Local to combat stagnation in Afghanistan. Infrastructure: In Afghanistan, China has demonstrated its keen domestic infrastructure such as willingness to invest in Afghan roads (including a direct link to educational capacity with a number Pakistan’s China-administered of projects, including the construction ) must continue to be of substantial facilities at Kabul enhanced to fully take advantage University.15 Further investment in of regional transport initiatives like Afghanistan’s people—such as a BRI and connect rural Afghanistan focus on developing medical and with avenues to export agricultural educational infrastructure in rural and other goods abroad. Further areas—can drive Afghanistan’s Business visa exploration of air corridors—such as human development in such a way policies between the recent link to India—can enhance as to contribute to an eventual this capability and bypass areas of viable trading economy. In terms of Afghanistan and blockage or security risk. However, facilitating education, a special focus China must be the development of air corridors will should also be paid to building and made significantly hinge on sufficient supply of cargo supporting technical vocational planes as well as access to secure schools to cultivate local talent in less prohibitive airfields and the training of local talent the form of personnel essential to in order to to man them. In the short term, the infrastructure development, such as creation of pilot programs using airfield operators, dam operators and encourage existing airfields as secure hubs for construction experts. business and regional or international companies to cultural exchange. transport Afghan agricultural goods Increased People-to-People or extractive products could illustrate Connectivity: With China’s investment If these policies Afghanistan’s potential to investors in human capital will come increased were to become and the international community, and human and cultural exchange. As sufficiently relaxed incentivize further development and contact increases, encouraged by investment in this area. China’s initiatives like scholarships, enough to allow ease of access must be facilitated to for a passenger Enabling Access to Resources and ensure maximum impact of Chinese volume that Refining Procurement Procedures: investment. Business visa policies An unwieldly procurement process between Afghanistan and China would ensure the presently hinders both domestic must be made significantly less profitability of such infrastructure development and prohibitive in order to encourage a connection, the foreign investment in Afghanistan. business and cultural exchange. China demonstrates a keen interest If these policies were to become establishment of in investing in mining operations sufficiently relaxed enough to allow for direct commercial in Afghanistan. However, lack of a passenger volume that would ensure air connections domestic infrastructure and access the profitability of such a connection, to potential sites, corruption and the establishment of direct between Kabul bureaucratic obstacles in Afghanistan commercial air connections between and Beijing could present issues that often discourage Kabul and Beijing could then be then be viable. foreign investors. Approval of viable. The creation of these direct extraction processes can be difficult flights would substantially enhance the to secure— the present approving ease of doing business between the two body, the National Procurement countries and the economic appeal of Authority (NPA), was set up to both markets to one another. centralize procurement processes across the government, but in some 15 XinhuaNet (10 October 2017). cases may lack the expertise to Construction of two China-aided build- effectively and efficiently approve ings start in Kabul University. Avail- projects in certain sectors. Additional able at http://news.xinhuanet.com/ approvals required for the extraction english/2017-10/10/c_136670303.htm

10 www.eastwest.ngo of , which is considered a Addressing Trade Imbalances and Fraidoun Haji Bari strategic resource, also impede Creating a Viable Afghan Brand: If checks a carpet at Xinjiang International efficient approval processes in the domestic infrastructure is enhanced Grand Bazaar in Urumqi, mining industry. In addition, unwieldy to allow linkage to regional corridors capital of northwest and lengthy procurement procedures like BRI, the resulting increased China’s Xinjiang Uygur Autonomous Region. impede the local construction of transport connectivity with foreign Fraidoun of Afghanistan domestic infrastructure such as markets will allow Afghanistan to has run carpet business roads necessary to access sites and diversify its exports and reduce trade in China for some 11 years by buying transport extracted materials. The imbalances with its neighbors and goods from his Afghan Ghani administration’s continued international markets. A substantially hometown and selling appointment of anti-corruption increased ability to export directly to them in Xinjiang. ministers and progress made foreign markets will also enhance the by the NPA may have had the ability of Afghanistan to control its effect of lessening the need for own brand and image, allowing it to overzealous or unwieldy regulation benefit fully from its own products.If in certain ministries.16 Refining and transport corridors are developed, streamlining procurement and and regulations and trade transit approval processes to reflect, agreements put in place and where possible, the progress made enforced, Afghan agricultural against corruption would assist in products can be exported directly necessary domestic development to markets such as China and as well as facilitate and encourage clearly branded as Afghan, investment in sectors like mining. enhancing the country’s image and marketability while creating direct economic benefits for Afghan farmers and businessmen. Steps toward this strategy are already being taken, with 16 (31 October 2017). a team assigned by President Ghani Afghanistan’s Public Procurement to identify new markets for Afghan Racks Up Victories Against Corruption. Available at http://www.worldbank.org/ en/news/feature/2017/10/31/national- procurement-authority-racks-up-victo- ries-against-corruption

www.eastwest.ngo 11 pine nuts,17 which have historically development. Chinese expertise and been exported to Pakistan, which demonstrated willingness in this then exports them to China and other field should be viewed as a strong markets under Pakistani branding.18 potential asset for Afghanistan Further opportunities to promote and drawn upon to facilitate the uniquely-Afghan goods abroad development of green energy could be identified and explored by projects. engaging the extensive worldwide network of Opportunities for Digital Connectivity: businesspeople. This could allow Currently, 23 of Afghanistan’s 34 the country to take full advantage China’s interest provinces have access to fiber optic of increased connectivity, changing in Afghanistan’s networks, with plans underway to perceptions by building a brand that broaden connectivity and enhance draws attention to quality or unique digital connectivity infrastructure including the Afghan products and creates a demand is well-placed. Fiber Optic Ring. To that end, the for Afghan goods in diverse and Further government of Afghanistan has widespread markets. adopted an open access policy for prioritization data, with the aim to encourage Encouragement of Green of public and private sector investment in fiber Development and Green Energy: private-sector optic and broadband infrastructure Advocates of BRI emphasize the and connect rural areas more sustainability of the initiative and the investment in feasibly.19 This represents an focus on limiting its environmental the development opportunity for China to contribute impact. A less-developed state like and expansion to the development of infrastructure Afghanistan, lacking in existing that will benefit its long-term “Digital infrastructure, has an opportunity to of Afghanistan’s Silk Road” initiative. Afghanistan progress in this area by encouraging fiber optic and China’s April 2017 agreement to healthy, sustainable and affordable infrastructure explore linkage of the two countries’ development projects over traditional fiber-optic networks through the environmentally-negative ones. will facilitate Wakhan Corridor could improve Afghanistan has the potential to Afghanistan’s Afghan digital connectivity as well generate approximately 230,000 long-term plan as generate substantial economic megawatts of and returns for Afghanistan.20 The 220,000 megawatts of . to serve as a proposed connection would serve Prioritizing the generation of major data transit as a conduit for Chinese data and clean and renewable energy such route, bringing enable Afghanistan to access internet as hydropower, solar power and services at a more affordable rate. wind energy could benefit both substantial Moreover, China also committed Afghanistan and its neighbors, many benefits to to facilitating the enhancement of of whom—including Pakistan—are internet users Afghanistan’s existing and developing energy-deficient, as well as fall fiber optic networks. This agreement in line with BRI’s focus on green domestically, has been followed by the signing of regionally, and 17 TOLOnews (27 November internationally. 19 Ministry of Communication 2017). Ghani Assigns Team To Find New and Information Technology, Islamic Markets For Afghan Pine Nuts. Avail- Republic of Afghanistan (28 Septem- able at http://www.tolonews.com/ ber 2017). The Open Access Policy to business/ghani-assigns-team-find-new- Fiber Optic Renews and Distribution of markets-afghan-pine-nuts license to the Private Sector were Ap- 18 Pahjwok Afghan News (30 proved. Available at http://mcit.gov.af/ December 2015) ‘Govt never tried to en/news/69987 find market for chilgoza pine’. Avail- 20 Regional Economic Coop- able at https://www.pajhwok.com/ eration Conference on Afghanistan en/2015/12/30/%E2%80%98govt- (RECCA) (26 April 2017). Afghanistan never-tried-find-market-chilgoza- and China Sign Fiber Optic Agreement. pine%E2%80%99 Available at http://recca.af/?p=2387

12 www.eastwest.ngo Memorandums of Understanding transmissions and providing effectively worked around if foreign between Afghan and Chinese significant economic benefits for investments and integration into companies, Afghanistan and its neighbors as regional transport corridors are exploration of opportunities with digital connectivity is made more to contribute substantially to the Chinese companies like Huawei, efficient, reliable and affordable. country’s development, and if its and further plans to pursue linkage central location is to be leveraged to with Afghanistan and Central Asia. Conclusion benefit neighbors and international China’s interest in Afghanistan’s partners. digital connectivity is well-placed. In the face of numerous decades-long Further prioritization of public security and development challenges, Nevertheless, Chinese activity in and private-sector investment in Afghanistan’s current government is neighboring Pakistan illustrates that the development and expansion doing its utmost to lay out a detailed, cooperation and development in of Afghanistan’s fiber optic thorough road map for the country’s the face of challenges are possible infrastructure will facilitate future growth, holding infrastructure when underscored by political Afghanistan’s long-term plan to and investment as the fundamental willpower. China has communicated serve as a major data transit route, building blocks with which to its strong political will to work in bringing substantial benefits construct the country’s development and with Afghanistan, with Chinese to internet users domestically, agenda. Simultaneously, a revived and commitments to invest in the regionally and internationally. ambitious China seeks to resurrect country’s human capital and facilitate ancient land and maritime trade the development of infrastructure Afghanistan as a Hub for Data routes throughout Eurasia, potentially offering serious opportunities for Transmission: Afghanistan is placing Afghanistan and its neighbors Afghanistan’s long-term growth and presently connected to international at the center of a new international stabilization. Further opportunities fiber optic networks at six points trading network. Afghanistan’s are present in such areas as digital along its borders with five neighboring location at the heart of Asia and its connectivity and sustainable countries, including Pakistan (with current development goals present development projects, and in China’s which it has two connections), a strategic complementarity with potential to act as a mediator in Iran, , Turkmenistan and China, providing opportunities and tense regional political relationships. Uzbekistan. However, as a landlocked significant potential for deeper Both China and Afghanistan stand country, it has no direct access to cooperation within the framework of to benefit substantially from the undersea communication cables. China’s BRI. country’s integration into not only This renders the country (and its BRI, but other regional transport northern neighbors) subject to poor Yet the fanfare of the Chinese corridors, as do neighboring countries and unreliable quality of service in dream and Afghanistan’s potentially and diverse international markets, all terms of digital communications. instrumental role within it must take of which would profit from efficient, Afghanistan’s geographic location into account the many challenges affordable transit routes, enhanced places it in a position to be able to which stand to complicate the economic and digital connectivity, reduce data transit time between intended partnership. Tense relations and a stable, viable Afghan economy. India and Europe by as much as a and impediments to cooperation with These pervasive and overarching millisecond—a substantial decrease China’s foremost ally in South Asia, opportunities for long-term mutual that will drive faster economic and Pakistan, could undermine avenues benefit present a strong incentive information exchange with broad for potentially integrating Afghanistan for continued close Chinese-Afghan worldwide benefit. Its position into BRI via the expansion of CPEC cooperation going forward. If serious would also facilitate the connection projects. Additionally, a lack of a efforts are undertaken by the Afghan of Central Asian and South Asian cohesive regional development and Chinese governments to address fiber optic networks.Continued strategy, and the overabundance the significant, though largely development of and investment of unimplemented or unenforced surmountable, challenges facing in Afghan fiber optic networks regional and bilateral agreements the full incorporation of Afghanistan could efficiently connect other between Afghanistan and its into BRI, the resulting growth and landlocked countries such as neighbors, also presents a connectivity could contribute the Central Asian republics to practical problem to the planned substantially to positive economic, undersea cables via neighboring implementation of BRI in the region. political and social developments Pakistan or Iran, increasing Pervasive security challenges in in Afghanistan, the region and the speed of international data Afghanistan must be mitigated or worldwide.

www.eastwest.ngo 13 Afghanistan Reconnected: Challenges and Opportunities in the Context of China’s Belt and Road Initiative

EWI Policy Brief by Annie Cowan

With contributions from Muhammad Amin and Charles Elkins

Brussels, March 2018

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14 www.eastwest.ngo