The new hard reality in Afghanistan, with the country back under Taliban rule after 20 years, will prompt neighbouring nations including Turkmenistan, Uzbekistan, Tajikistan and Iran to rapidly reassess the prospects of investment projects that essentially depend on Kabul’s support and cooperation.
There are relatively few such projects but some of those that do exist are quite sizeable and strategic. Below, bne IntelliNews takes a look at some of the investments concerned and at whether or not they are likely to survive under the Taliban regime, a regime that, sometimes described as the world’s biggest drug cartel, won’t be in too much of a hurry to diversify away from Afghanistan’s heroin economy.
In February, a Taliban delegation paid a surprise visit to Turkmenistan to restate support for the planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline.
Suhail Shaheen, a member of the Taliban’s Qatar-based negotiation team, told reporters in Ashgabat that his movement was offering “full support for the implementation and security of TAPI and other developmental projects in our country.”
“We are trying to contribute to prosperity of our people and development of our country by providing protection to all projects,” Shaheen added.
The fortunes of Turkmenistan’s battered economy almost entirely hinge on gas sales to China. The other customer, Russia, buys just small amounts. Thus, TAPI is a crucial element of the Turkmens’ search for badly needed additional revenues. The Taliban have also made encouraging noises as regards proposed Turkmenistan-Afghanistan-Pakistan (TAP) high-voltage power transmission lines and railways that would run from Turkmenistan to Afghanistan.
Nevertheless, given the huge risk factor caused by investors’ lack of trust in a fundamentalist group like the Taliban (whose financial fortunes are built on producing opium and heroin), running a regime that has essentially emerged out of a military coup, Turkmenistan will have its work cut out securing the financing for TAPI, TAP and other Afghanistan-dependent projects.
Portents of this difficulty were seen in June when Pakistan started intimating that it would be unwilling to agree on a pricing mechanism for TAPI gas until the project was complete. The News, an English-language Pakistani newspaper, cited Tabish Gauhar, a special advisor to the prime minister, as saying that Islamabad would not commit to paying for gas until it had crossed safely through Afghanistan.
“In case of a halt of gas supply to Pakistan in the wake of any subversive activity in Afghanistan, Pakistan will never take the risk at any cost,” Gauhar was quoted as having said.
Uzbek President Shavkat Mirziyoyev is the point man for those ambitious to see the landlocked economies of Central Asia properly linked in trade and investment to those of South Asia, such as Pakistan and India. Of course, without stability in and cooperation from Afghanistan, the idea will remain a pipe dream.
But Mirziyoyev is nothing if not persistent and in mid-July, addressing the international conference “Central and South Asia: Regional connectivity. Challenges and opportunities”, which took place in the Uzbek capital Tashkent, he expressed the hope that a united Central Asia and South Asia, together with the whole Eurasian continent, could become a stable, economically developed and prosperous space.
Mirziyoyev talked of a vision in which a Termez-Mazar i Sharif-Kabul-Peshawar railway, running from Uzbekistan to Pakistan via Afghanistan, would become a key element of the architecture of interconnectedness between Central and South Asia. Uzbekistan is also ambitious to develop routes through Afghanistan that would give it access to the oceanic ports of Gwadar in Pakistan and Chabahar in Iran (see below) for export-import purposes (a related cargo truck pilot run took place in June), but, even before the fall of Kabul, the Uzbek leadership was on record as acknowledging the ascendancy of the Taliban and appeared prepared to envision a power-sharing arrangement in Afghanistan that would include the group prominently. That much emerged from an interview granted last month by Uzbek Foreign Minister Abdulaziz Komilov to US journalist Dennis Wholey.
“We must know about Afghanistan that there is no … military solution,” Komilov said in the English-language interview. “We think that this problem must be solved on the base of mutual compromise between the existing government and the military opposition, the Taliban and others.”
After the conference that Mirziyoyev addressed, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan, together with the US, which make up the C5+1 countries, adopted a joint statement.
It read: “The C5+1 countries affirm their commitment to enhancing engagement through this regional diplomatic platform and seeking opportunities to strengthen connectivity between the Central and South Asian regions via trade, transport, and energy links. The C5+1 recognizes that increased connectivity supports its shared goal of a prosperous and secure Central Asia. Visionary ideas for Central Asia’s economic growth and closer ties to the economies of South Asia also reinforce the C5+1’s commitment to strengthening the region’s security and stability, including through Afghan peace negotiations”.
Tajikistan and Kyrgyzstan
In June, Kyrgyzstan announced that the electricity transmission project CASA-1000 that it is developing with Tajikistan to send power to Afghanistan and Pakistan had been temporarily suspended because of coronacrisis impacts. The investment had anyway been moving along at a crawl so it’s not as if the pre-suspension schedule for project completion by 2023 had been entirely believable, but once ready to move forward the investment will need to seek security guarantees from the Taliban the way that Turkmenistan will have to with TAPI (see above).
In March, reports said Tajikistan was aiming to supply 1,300 MW to Pakistan via Afghanistan under CASA-1000 project. Under the original terms, Tajikistan and Kyrgyzstan were meant to jointly supply 1,300 MW to Pakistan. Tajikistan has also said it is planning to export 75bn kWh of electricity via CASA-1000 over 15 years after the project completion.
In March, Afghanistan-based Tolo News reported officials as saying only 30% of the CASA-1000 construction on the Afghan section of the power transmission project was complete, a progress level that was not in line with an optimistic pledge to complete the Afghan section within this year.
Once Donald Trump got cracking with his campaign to strangle Iran’s economy, it became rare to find any big Iranian investment projects not struggling against US sanctions, but one project that has enjoyed a sanctions-free emergence is the development of Iran’s only oceanic port, Chabahar on the Sea of Oman.
The Chabahar project, being jointly delivered by Iran and India, was seen as so important to Afghanistan’s economic prospects that US officials decided to leave it alone. Its Pakistani rival, Gwadar port on the Arabian Sea, a short distance from Chabahar, is being jointly developed by Islamabad and China.
The objective with Chabahar is to give India an export gateway for Afghanistan and Central Asia and the Central Asian ‘Stans’ an export hub for sending shipments globally. Of course, if the Taliban regime doesn’t play ball then at least the Central Asian parts of those objectives may hit a brick wall.
The Taliban and Shi’ite Iran have long been enemies but if some mutual accommodation can be found other projects to check for progress are the first rail link between Afghanistan and Iran—the Khaf-Herat railway, which when built could also facilitate Turkey-Afghanistan trade via Iranian rail access—and wind farm projects on the Iranian-Afghan border. Analysts say that with 30,000 MWe potential of wind power capacity, the Iran-Afghanistan border area is one of the world’s most windy regions.