Editorial: Transit trade with Central Asia

[Wonder]

SNIP

Four states — Pakistan, Afghanistan, Turkmenistan and Tajikistan — belonging to the not-so-successful trading bloc called Economic Cooperation Organisation (ECO) have signed a new agreement at the UNDP headquarters at Manila for the creation of a north-south transit corridor. The occasion was the first ministerial conference on Transport and Trade in Central and South Asia. Pakistan’s finance minister, Mr Shaukat Aziz, together with the transport minister, Mr Ahmad Ali, signed a deal that would allow the three northern states to use Pakistan’s ports, including Gwadar, as a trade opening with the world. For further studies on the subject, the ministers also signed on the establishment of a Central and South Asia Trade and Transport Forum. If the plans move forward, Pakistan’s roads and ports will become a conduit for a growing volume of trade to and from Central Asia.

SNIP

Wisely, though, Pakistan has joined the other parties to include Iran in the envisaged trading bloc although Iran was not present at the conference as an observer. Islamabad is interested in benefiting from a transit Iranian pipeline supplying gas to an energy-starved India. This was a good move to allay Iranian concerns because Iran had been negotiating a separate trade route linking the northern Central Asian states with its ports on the Arabian Sea.

SNIP

A peep into the mind of Mr Shaukat Aziz would be interesting. Pakistan’s average tariff has decreased from 30 to 15 per cent and this will come down further in the years ahead, finally touching a single digit. That is when smuggling will stop, when its cost is equal to or greater than the rate of tariff. That is why Pakistan’s future is more securely imagined in terms of trade. As transit trade develops, regions hostile to it inside Pakistan and Afghanistan will become more interested in its economic benefits. Trust will also develop between Pakistan and India after the north-south route takes off and Iran is able to convince India that a pipeline through Pakistan is in its interest. As a state serving as a hub of regional or cross-regional trade through roads and pipelines, Pakistan will undergo a transformation that may not be as “fixed” as the imagination of its ideologues, but it will be a change for the better for its long-suffering population.

But if the present political paradigm is allowed to continue then Pakistan will have to contend with odds that it can never cope with. While India is already on the warpath, Iran will join up with India to deprive Pakistan of the economic advantages that it can fairly expect, being situated strategically. Central Asia will then find alternative trade routes, leaving Pakistan high and dry. In fact, the world will then by-pass Pakistan and its brand-new Gwadar port and begin linking up with the rich Caspian region through the Iranian facilities. And once nations get used to trade routes it is difficult to wean them from the habit.

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