Experts, Official Discuss Future of Economic Ties With Afghanistan

EghtesadOnline: The Taliban’s takeover in Afghanistan has got many companies and businesspeople in Iran worried as to the future of commerce between the two neighboring countries.

News ID: ۷۸۶۸۷۵

24 August 2021

Experts on Afghan issues and officials from the Iranian private sector urge merchants and businesses to wait out this period of instability before taking any measures.

Hossein Salimi, the head of Iran-Afghanistan Chamber of Commerce, says whether Iran’s annual exports worth around $2.4 billion can continue will depend on future events, transformations and power shifts in the neighboring country.

“No matter what group takes over, Afghanistan will still need foodstuff, construction materials and home appliances. Other than the border checkpoints with Iran, the country does not have any significant, properly structured borders with its neighbors through which the Afghan population’s demands could be met. Therefore, Iran will remain its main gateway for the country to import its required commodities,” he was quoted as saying by the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.

The official said that many questions remain to be answered, such as, are the Taliban going to seize total power? Will Iran-Afghanistan’s political and diplomatic relations remain intact? And how will regulations change?

Salami said these are questions for which we do not have answers yet, and therefore have to wait until the dust dies down.

Iran’s exports to Afghanistan stood at 1.8 million tons worth $728 million in the first four months of the current fiscal year (March 21-July 22), registering a 15% decline in terms of weight and a 2% growth in terms of value compared with the corresponding period of last year, according to Rouhollah Latifi, spokesperson of the Islamic Republic of Iran Customs Administration.

Iron and steel rods, agricultural products and foodstuff are among the main products exported from Iran to the neighboring country.

Need to Wait

Jamshid Nafar, the head of Iran Chamber of Commerce, Industries, Mines and Agriculture’s Non-Oil Exports Commission, said Iranian businesspeople and merchants who have property or money in Afghanistan need to wait until the political situation in that country settles down, before any decision can be made regarding commercial and financial affairs.

“More important things are right now going on in the war-stricken Afghanistan. At this point, supporting, solving the problems and providing the urgent needs of the people of Afghanistan have to be the main concern of not only Iran, but also other countries. No doubt, Iranian businesses working in the neighboring country will incur losses, some of them hefty ones too, and these enterprises must be supported by the government,” the official was quoted as saying by ILNA.

“Taliban’s policy for generating revenues is to cultivate opium poppies and sell narcotics to the world. This way, they will make a lot of money and, backed this source of income, estimates are that their imports will increase as well. But the important thing is to not look at the issue of Afghanistan from a trade and commercial point of view at present, but from a humanitarian perspective,” he added.

Nafar called on the international community to prove its sincerity and goodwill in the case of Afghanistan’s current crisis, otherwise the assumption that all of this is a scenario devised by world powers will seem a reasonable one, given how easily the Taliban took over.

Uncertain Fate of Investments

Vahid Zohouri, an expert on Afghanistan affairs, says with the Taliban ruling the roost, the future of international agreements made with this country is now unknown and unpredictable.

“International relations and agreements in different fields, commerce and economy in particular, over the past 20 years improved Afghanistan’s economic status. Yet, today, with foreign interference and Taliban’s takeover of the country, there is a high risk of Afghanistan’s economy falling apart. As we speak, traders and economic players in Afghanistan are denied access to their bank accounts and the fate of investments in that country is uncertain,” he said.

For instance, preliminary agreements were reached for Iran to invest a total of $5.3 billion in Afghanistan’s road and rail transportation infrastructure and housing projects prior to the Taliban takeover, according to an advisor to Iran’s roads minister.

“We are now negotiating project details and selecting the companies that will be undertaking these projects,” Hossein Mirshafi has also been quoted as saying by Mehr News Agency.

He added that Iran has officially announced its readiness to cover the $2.2 billion investments required for the construction and completion of the 656-kilometer-long Herat to Mazar-i-Sharif railroad.

“Negotiations are underway for Iran to invest at least $3.1 billion on road construction, road transportation infrastructure and technical and engineering services in Afghanistan,” he said.

Mirshafi noted that the draft of a memorandum of understanding has been prepared by the two sides for Iran to invest in its eastern neighbor’s housing sector by constructing 5,000 to 10,000 homes in the new cities of Afghanistan.

Once the agreement is finalized, these homes will be built in cooperation with Afghan companies using Iranian investments.

Zohouri says no matter what group or party takes over power in Afghanistan, this eastern neighbor will definitely need the support of Iran, adding that Iran-Afghanistan economic and commercial agreements will most probably remain in place.

“We are approaching the cold season and it is important to pave the way for commercial interactions that will meet the needs of Afghan citizens in these hard times. I believe that economic ties can be formed between Iran and Taliban to meet the demands of our neighboring population,” he concluded.