Why Pakistan's border closure is squeezing Afghanistan's economy

After the collapse of Istanbul dialogue and two terror attacks on its soil originating from Afghanistan, Pakistan’s any likely decision to simultaneously exercise the options of blocking across the border human and trade movement and flexing security muscles can compound Kabul’s woes and build internal pressure on the regime to normalise ties.

According to trade statistics, Afghanistan exports to Pakistan were equal to 45 percent of its total exports in 2024, making Islamabad the single largest trading partner. Kabul’s heavy dependence on Islamabad and given its landlocked country status, the western neighbour has limited alternatives to suddenly find a sustainable market for nearly half of its exports.

From its southeastern, south and eastern sides, Afghanistan uses three border crossing points to sell its goods to Pakistan. These are near to its farm produce and make Pakistan an economically viable option to sell fresh fruits, vegetables and dry fruits.

According to Pakistan Customs, Kabul exported Rs170 billion worth of goods to Pakistan through these border crossings in the fiscal year 2024-25. Over 70 percent of the goods were sent via the Torkham border, followed by one-fifth from Ghulam Khan and the rest through Kharlachi point.

After the closure of the borders due to unrest and grave security situation, farmers in Afghanistan are in pain because of huge financial losses. Afghanistan’s perishable exports like fresh fruits, vegetables, and dry fruits are dependent on short-distance, low-cost transport to Pakistani markets. Diversion through other countries makes such exports less competitive due to longer transit and higher risks of perishable goods being rotten. There is also a lack of cold storage facilities to transport perishable goods to long-distance sea ports.

Realising the situation and to avoid losses, Afghan exporters are still making desperate attempts to reach Pakistani markets through alternate routes. Pakistan Customs on November 8th blocked the import of Afghan-origin goods via Iran by misusing the Early Harvest Programme. The attempt was made to use the Taftan post from the Iran side.

The Pakistan Customs did not permit the entry of the consignment into Pakistan on the grounds that the early harvest programme was aimed at providing mutual benefits to the farmers of both the countries on a bilateral and reciprocal basis. However, no trade was taking place between Pakistan and Afghanistan as the borders remained closed.

The Customs also denied the entry of Afghan-origin goods on the grounds that there was a potential risk of misuse of the early harvest facility, as similar consignments can be imported from Iran under the guise of Afghan origin, given that both countries produce comparable fresh fruits such as grapes and apples, which are also covered under the Early Harvest Programme.

If Pakistan does not open its borders and also restrict Afghan citizens’ movement, the interim government may not have many options in the short term. The alternative routes through Iran are Chabahar port and Hairatan–Termez, Torghundi–Serhetabat in Central Asia.

These corridors face high transportation costs, weak infrastructure, and complicated regional politics. Thus, despite tensions, Pakistan would remain the most viable and cost-effective trade corridor for Afghanistan in the foreseeable future.

The Afghan interim government this week expressed the desire to opt for alternate trade routes but it may not be able to provide those opportunities to its exporters in the short-to-medium term.

The Iranian routes are longer and more expensive, resulting in higher transportation and fuel costs compared to the Pakistani corridors. Kandahar and Helmand regions are about 150–300 kilometre from Pakistan’s Chaman–Spin Boldak borders but 1,200–1,300 kilometer to Iran’s Zaranj or Delaram borders.

Likewise, Balkh and Baghlan are roughly 500–700 kilometer from Pakistan’s Torkham-Jalalabad borders and 900–1,000 kilometer from Iran’s Islam Qala.

Alternate routes would substantially increase transport charges, ranging from 30 – 50 percent. Where Afghan farmers are facing problems, Pakistani transporters were also having less earning opportunities due to closure of the borders.

The growing number of Afghanistan-bound cargo stuck up in Pakistan despite the closure of international borders after skirmishes highlight the landlocked Kabul’s dependence on Pakistan amid its desire to look for alternate routes.

According to Pakistan Customs, Afghanistan-bound over 5,500 containers have been stuck either on roads or at Karachi port. About 4,650 containers were stuck at the sea and land ports after the Pakistan Customs stopped their processing due to closure of international borders.

Pakistan has not suspended the Afghanistan Transit Trade Agreement but it was not processing the goods clearance due to closure of borders to avoid congestion at Chaman and Torkham borders. There were 729 containers stuck up at Chaman border and another 142 at Torkham border.

Pakistan made many positive gestures on the fronts of trade, humanitarian assistance, educational and medical visa facilitation, and efforts at international forums to encourage the international community to engage with the Taliban regime in the interest of regional peace and stability, and for the socio-economic development of Afghanistan and its people.

But the response from the Taliban regime has only been hollow promises and inaction and the excuse that it cannot take action against the terror outfit. If the situation does not improve, Pakistan could also think about other economically punitive measures, including demanding bank guarantees against transit cargo.

Pakistan has suffered immense military and civilian casualties, exercised maximum restraint and did not retaliate, according to Pakistan’s Ministry of Foreign Affairs.

However, now the indicators are that the maximum restraint may not be an option any more.

Pakistan’s Foreign Office said that the Taliban regime was constantly trying to misrepresent the issue of Pakistani terrorists hiding in Afghanistan as a humanitarian issue. In the aftermath of Pakistan’s Operation Zarb-e-Azb in 2015, terrorists belonging to the so-called TTP/FaK fled to Afghanistan.

The recent terror attacks at Judicial Complex, Islamabad, which killed over 12 innocent civilians, and an attack on a Cadet College in Khyber Pakhtunkhwa could prove the last straw in the camel’s back.

According to the Pakistani authorities Sajid ullah alias Shina, who was the handler of the suicide bomber, confessed that TTP commander Saeed ur‑Rahman, alias Dadullah, a resident of Charmang, Bajaur who is currently living in Afghanistan and serving as the TTP’s intelligence chief for Bajaur’s Nawagai, contacted him via the Telegram app and instructed him to carry out a suicide attack in Islamabad in order to inflict maximum damage on law‑enforcement agencies.

Dadullah sent Sajid ullah (Shina) the pictures of the suicide bomber, Usman, alias Qari, so that he could receive him in Pakistan. The suicide bomber, Usman (Qari), belonged to the Shinwari tribe and was a resident of Achin, Nangarhar, Afghanistan.

The traces of attack on Cadet College are also found in Afghanistan by the security agencies.

Pakistan’s former ambassador to Kabul, Mansoor Ahmad Khan, argued in Express News show, The Review, the government can use the three options of restricting movement of people, trade and using security means to put pressure on the regime to take action against the terrorist outfit. But he emphasised upon the need of trying to reopen the dialogue with Afghanistan.