In fact, India and Iran had agreed to build the Port of Chabahar in 2003, but the venture did not take off due to western sanctions on Iran. The sudden new development may have been propelled by the $46 billion Pakistan-China Energy and Infrastructure Agreements. India wants access to the landlocked countries of the region, including Afghanistan and Central Asia, bypassing Pakistan. The route will cut New Delhi’s transport costs and freight time to Central Asia by about a third.
Iran has also proposed a preferential trade agreement with India during a recent visit of New Delhi’s Commerce Secretary to Tehran.
Prime Minister Nawaz Sharif’s recent tour of Turkmenistan and Kyrgyzstan shows Islamabad has geared up for the race. The main focus of his Ashgabat visit seemed to be the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, spreading over 1,680km and worth up to $10 billion. As per the Trend News Agency of Turkmenistan, Ashgabat believes the laying of the pipeline may start before the end of this year. Turkmen President Gurbanguly Berdimuhamedov called Pakistan a strategic partner vital for energy transit from Turkmenistan to world markets. He said the ports of Turkmenbashi and Gwadar would shape international trade corridors. Prime Minister Sharif said the Turkmenistan-Afghanistan-Tajikistan and Kazakhstan-Turkmenistan-Iran railway projects initiated by Ashgabat would also help trade with Pakistan, which has no direct transport link to Turkmenistan.
Political and diplomatic maneuverings may be the decisive factor
In Kyrgyzstan, the Pakistani prime minister said he wanted to see an increase in bilateral trade. “Pakistan, having huge human resources, access to the open sea and the unique experience of combating international terrorism and religious radicalism, is a significant partner for Kyrgyzstan,” his counterpart Temir Sariev said.
Will that be more than what Narendra Modi might offer in July, when he becomes the first Indian prime minister since Jawaharlal Nehru in 1955 to visit the region? Suhasini Haidar writes in The Hindu that the visit will have a three-fold focus: energy, exports, and as a counterpoint to China’s inroads in the region. Modi’s visit will come after Chinese President Xi Jinping’s 2013 visit to all five “Stans” when he announced billions of dollars in loans to the countries to build energy and transport infrastructure, as well as a year after Russia and China announced a $400 billion gas pipeline that would cover all the central Asian countries in between.
New Delhi has been trying to woo Kabul with a number of initiatives, including a Strategic Partnership Agreement in 2011, assistance worth $2 billion by 2014, and the Zaranj-Delaram highway built in 2009 that will connect to the Chabahar Port via Milak. Iran is already upgrading the Chabahar-Milak road with financial help from India. The highway and its distribution networks in Afghanistan will open up the Afghan and Central Asian markets for Indian exports and vice versa.
Meanwhile, in a meeting between Commerce Minister Khurram Dastgir Khan and Afghan President Ashraf Ghani, Islamabad has offered to “allow a system-based partial shipment of Afghan transit goods instead of manual processing, reduce the Afghan transit cargo’s scanning to 20 percent from 100 percent, allowing Afghan trucks to carry goods up to Wagah and on their way back carry Pakistani exports to Afghanistan, and clearance of almost 90 percent of Afghan cargo on the first day, with 80 percent cleared without scanning.” Pakistan has said it is also making an efforts to carry 400 containers of Afghan cargo to Torkham and Chaman border points by railway by July 1.
In return, Islamabad has asked for the “removal of financial guarantees on Pakistani goods charged at the rate of 110 percent of customs duty, and a tonnage fee of $100 per 25 tonnes while in transit to Central Asia”. It has also asked for the removal of a ban on the transit of liquefied petroleum gas via Afghanistan to Pakistan.
Unlike India, Pakistan is also a partner country of Central Asia Regional Economic Cooperation (CAREC) since 2010. According to the CAREC website, since 2010, $414 million have been invested to facilitate transport and trade infrastructure in Pakistan. Moreover, Pakistan, Afghanistan, he Kyrgyz Republic and Tajikistan are beneficiaries of the ongoing Central Asia-South Asia Electricity Transmission and Trade Project. The $1.17 billion venture will allow a trade of 1,300 megawatts of energy between the four countries.
According to Ministry of Commerce data, Pakistan’s overall exports to Central Asian Countries in 2010-11 and 2011-12 were almost the same – approximately $10.5 million. Exports to Kazakhstan, Turkmenistan and Uzbekistan showed a negative growth of -50.56%, -64.82% and -13.62% respectively, while exports to Kyrgyzstan and Tajikistan showed a positive growth of 19.37% in case of former and a whopping 162.96% in case of the latter.
“India’s ‘lack of a direct overland access to the region’ due to Pakistan’s reluctance in allowing its goods to pass through its territory has inhibited India’s rising trade interests in the Central Asian region and consequently, trade with them has only risen slowly from $115 million in 1996 to $738 million in 2012,” according to the Indian Development Cooperation Research (IDCR). Indian private investment in central Asia stood at $29 million in 2013.
Although, geographical proximity and relatively better relations with central Asian republics may be a plus point for Pakistan, political and diplomatic maneuverings in the region may also be a decisive factor.