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Afghan market changes geo-economics status of the Middle East

Afghanistan.ru - 2.11.2010
Mohammad Daud

Afghan market changes geo-economics status of the Middle East

Mohammad Daud, the general director of “Kazindustria” Company.

Afghanistan is capable of changing the geo-economic status of the Central and South Asia because the Afghan resources are quite significant for resetting economies, infrastructure and energy supply in the region. Certainly, the stabilization of the political situation in the country will pave the way for using Afghan potential in full. However, the sprouts of future regional modernization are visible even today.

Food Market

Afghanistan is becoming an attractive regional food market for the former Soviet republics of the Central Asia, especially this concerns the supply of wheat, flour and oil to Afghanistan.

At present, over 30 million people live in Afghanistan and this is almost the overall population of Uzbekistan, Tajikistan and Turkmenistan taken together. In short, Afghanistan is becoming the leading food consumer in the region.

When taking into account the fact that the basic and traditional food of Afghan people is wheat flour flat cake, Afghanistan has every reason to become the main wheat market in the region compared to the Central Asian countries because Afghans eat flat cakes two-time more than others in the region.

Consequently, the wheat producers of Kazakhstan will have the brightest prospects for selling their products on the Afghan market. Flour from Kazakh wheat is regarded as the most suitable for making flat cakes in Afghanistan. In October, it’s no mere chance that the Afghan Agriculture Ministry urged the local traders to import wheat from Kazakhstan.

Moreover, According to Afghan Deputy Trade Minister, Gulyam Muhammad Elka, Kabul is worried that Kazakhstan may cut wheat export this year. In 2010, Afghanistan expects to harvest 4.5 million tons of wheat, but the demand in the country exceeds 5.2 million tons. This means that Afghanistan is ready to purchase at least 700 thousands of Kazakh wheat.   

Transport Map

As the political situation in Afghanistan improves the transport map of the region will change radically. This is first and foremost linked to the plans for the construction of railroads and highways linking the Middle East with South Asia.

A railroad, which will be built in the next few years to link China, Tajikistan, Afghanistan and Iran, will play a key role in transport projects. The construction of a railroad that links Hairaton of Uzbekistan and Mazar-e-Sharif of Afghanistan will be completed shortly by Uzbek workers. This will significantly unload terminal in Hairaton and increase cargo transit, and especially, the Uzbek cargo transport almost two-times.

Moreover, after the construction of the railroad between Kazakhstan and Turkmenistan, cargo can be transported to Afghanistan bypassing Uzbekistan, from western Kazakhstan through Turkmenistan to Afghanistan.

The transit potential of Afghanistan is quite significant, and it will be realized completely if the China-Tajikistan-Afghanistan-Iran railway project is implemented. In this case, Afghanistan will be a key element in the region’s transit map. The status of Afghanistan as the region’s leading transit country will assure it economic dividends and political preferences. Most likely, the implementation of the new railroad project will change the political card in the region.

Modernization in the Energy Area

The political stabilization of Afghanistan will change traditional energy infrastructure in the Central Asia and South Asia, especially the topography of energy resources transporting pipelines.

For one, Energy resources from Kazakhstan and Turkmenistan will be supplied to Pakistan through Afghanistan and from there to the Indian Ocean littorals.

In fact, the Afghan oil market remains one of the most attractive in the region since the country consumes over 3 million tons of diesel and petrol a year. This is a profitable market for suppliers in Kazakhstan and Turkmenistan.

There is a need to take into account several specific factors when analyzing the Afghan energy market.

1. There are very few electrified settlements in Afghanistan. Over 60 percent of the population lives outside the cities. Basically, diesel is used to heat houses in villages in the winter.

2. The deployment of a significant number of NATO forces in Afghanistan and the growing number of troops increase the demand for oil products.

3. The number of cars is growing fast as the living standard continues to improve.

4. The intensive public and private construction in Afghanistan also leads to a growth in fuel consumption, including oil products.

Russia Lags Behind

At present, many entrepreneurs in Kazakhstan, who are engaged in selling oil products and wheat and producing flour have shown keen interest in entering the Afghan market. Notably, Kazakh businessmen have already occupied a noticeable position on the Afghan market. Moreover, the prices of flour, wheat and oil products in Afghanistan depend directly on their volume of supplies.

The Kazakh businessmen, on their part, attach great importance to consolidate their hold on the Afghan market. This is confirmed by the opening of an office of the Commercial and Industrial Chamber of Kazakhstan in Kabul in May 2010.

Uzbekistan also shows a keen interest in the Afghan market. At present, it is the major supplier of electricity to Afghanistan. It is directly involved in the construction of the Hairaton-Mazar-e-Sharif railroad. Under an agreement with the Afghan authorities, Uzbek managers will control Afghanistan’s first railroad and train Afghan railway workers.
Uzbek businessmen who are engaged in trade with Afghanistan believe that this market is promising for them. Consequently, Uzbek presence on the Afghan market will be strengthened. Clearly, with the launch of new transit corridors in the region, Tashkent will find new opportunities in the economic area linked to providing cargo transport services.
Turkmenistan is also making serious attempts to strengthen its position on the Afghan market. Large consignments of oil products are sold in Afghanistan at a time when the suppliers of Turkmen patrol and diesel see the Afghan market as the most promising in the region. Turkmenistan also shows a keen interest in the project designed to construct the Akina (Turkmenistan) - Maiman (Afghanistan) railroad, which will undoubtedly increase the trade volume between the two countries.

Unfortunately, Russian entrepreneurs have failed to organize their sector on the Afghan market and have not shown their interest in forming it yet. Such indifference is quite strange from the standpoint of geopolitical and geo-economic thinking. In fact, Russian goods have been well known to Afghan consumers since Soviet times, and there is a high demand for them. 
     
Clearly, only the political will of the leaders of the Russian Federation can improve the situation, and most likely, it will display this shortly. On the contrary, Russia’s poor involvement in Afghanistan, especially in regional energy, transport and food projects will be critical for the country. This will be inevitably led to the weakening of Russia’s position in the entire region.

***

The formation of the Afghan national economy, improving living standards, social stability and Kabul’s economic ties with the countries in the region are the key conditions for political stability in Afghanistan and the Central Asia as a whole. Although a change in geo-economic and geo-political map of the region does not meet the interests of certain countries, the improvement of living standards of Afghan people and the people of the former Soviet republics in Central Asia is the most effective tool in the fight against terrorism and religious extremism.



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