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Joshua Hersh
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Afghanistan's Trade Deal With Iran Complicates U.S. Aims

Posted: 05/09/2012 5:28 pm

KABUL, Afghanistan -- Last Wednesday, government officials from two countries met here to finalize an international pact that would help define their relationship many years into the future.

But it wasn't the U.S.-Afghan strategic partnership agreement, which Afghanistan's President Hamid Karzai had signed in the early hours of the night with U.S. President Barack Obama, who had flown into the country on a surprise mission.

Instead, it was a simple but crucial trade deal with Iran, Afghanistan's immediate neighbor to the west.

That deal, which would secure Afghanistan's access to the new Iranian shipping port of Chabahar in the Indian Ocean, has been in the works for years.

Indian companies, which would be some of the main beneficiaries of the sea link to Central Asia and the mining sites of Afghanistan -- bypassing the politically and geographically more treacherous land route through Pakistan -- have poured millions of dollars into roads in both Iran and southern Afghanistan to access the port.

It's not the first time Iran has been linked to Afghanistan, nor is it even the first Iranian port employed for this purpose, but the new deal -- and its timing -- underscores a dilemma facing American officials who seek to economically isolate Iran on the one hand, while simultaneously stabilize and strengthen the Afghan economy on the other.

"The U.S. has the objective of preventing Iran from becoming a nuclear armed state, of imposing sanctions, of encouraging other countries, including Afghanistan and India, to curtail trade with them," said Alireza Nader, a senior Iran policy analyst at the RAND Corporation, a national security policy group. "But these countries have their own interests ... The reality is that Iran is not going to go anywhere, and no matter who rules Iran, it's going to be Afghanistan's more powerful neighbor."

Afghan officials, who were loath to extensively discuss the deal this week despite the fact that it was openly reported in Afghan and Iranian press, tended to describe it mainly as a deal for private enterprise.

"Chabahar is a new facility, and a new issue, and it will depend on the private sector to choose how they want to use it," said Wahidullah Ghazikhail, the spokesman for the Ministry of Commerce and Industry.

But they have not shied away from making clear just how crucial trade links with Iran are for Afghanistan's economic health.

In March, Afghan Minister of Commerce Anwar al Haq Ahady told reporters at a roundtable in Washington, D.C. that about 50 percent of Afghanistan's oil comes from Iran.

Afghan officials have told The Huffington Post that, overall, trade with Iran composed a little less than half of the entire Afghan economy, and that it is increasing.

"It's going to have a large part in the Afghan economy," one official said of Iranian bilateral trade.

These officials, and Afghan businessmen in the trading business, say that American diplomats have been pushing Afghanistan to reduce its trade and dependence on Iran for months now, but that without any alternative routes, this course was close to impossible.

"Afghanistan is bound on all sides without access to an ocean," Ghazikhail said. "We don't want to be dependent on just one port, or just one partner. We want both, for safety."

In recent months, Pakistani officials have held up large deliveries of supplies going in and out of Afghanistan, costing Afghan businesses millions of dollars in shipping delays and lost inventory.

"This is where the American issue comes in," said one Afghan businessman, who owns a major trade and logistics company and asked to remain anonymous in order to discuss politics. "If you don't want us to do business with Iran, then give us an alternative."

Despite their frequent protestations about violators of sanctions on Iran -- including strong words this week toward India, which still consumes large quantities of Iranian oil, from the visiting Secretary of State Hillary Clinton -- American officials in Kabul seem resigned to this reality, and to let deals like Chabahar pass unremarked.

"Pakistan and Iran are the two most commercially viable seaports available to land-locked Afghanistan," a U.S. official in Kabul told HuffPost. "Afghan traders consistently say they would prefer to use the Karachi ports as the most economical option," the official went on, but acknowledged that "long and unpredictable delays clearing goods" sometimes makes that a less viable option.

"The U.S. continues to support Afghan efforts to work with Pakistan to improve the implementation of the Afghan-Pakistan Transit Trade Agreement and to work with both countries to improve the flow of goods through Pakistan to Afghanistan," the official added.

Trading with Iran is not a panacea for Afghanistan. Iran and its agents have long been accused of playing a pernicious role in Afghanistan, even reportedly going so far as to violently resist efforts by the Afghan government to control or impose tariffs on the export of water into Iran.

The new trade deal also comes at a moment when, politically at least, relations between the two countries seem to be at a low point. On Monday, the Iranian ambassador to Afghanistan appeared before the Parliament here to urge members to reject the strategic pact with the U.S., a move that infuriated several lawmakers.

The political uproar worries some of the same Afghan businessman who hope to make money off deals between the two nations. "As good as the strategic partnership is for stability, there is also a concern that it could be bad for external relations, because it makes the neighbors unhappy," said the Afghan businessman who owns a logistics company.

Javed Noorani, a researcher with Integrity Watch Afghanistan, a watchdog group for the country's minerals and trading industries, said that the Chabahar port may well end up playing an essential role in another major part of the Afghan economy: the newly explored mining industry.

Having access to exporting lanes via Iran, Noorani said, "gives bargaining power" over the Pakistani ports of Karachi and Gwadar that will likely come in handy. "We'll just have to use that [power] smartly."

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