The event focused on the assessment and mapping of progress towards the goal of regional connectivity through the implementation of the trilateral agreement of Chabahar port.
Chabahar port from an idea to its inauguration in 2017 and complete operationalization has a long way ahead. The port has significant capacity for the diversification of trade routes and economic prosperity of the region. The potential it has and what it means for Afghanistan as a landlocked country has not attracted the due attention of stakeholders, policymakers, and researchers in Afghanistan. Tarzi Research Foundation (TRF), understanding the need for a platform to identify, define, and bring forward the challenges faced by this project, decided to facilitate a series of discussions among stakeholders. "Chabahar Economic Connectivity Forum" was the first discussion of this series on December 15, 2020, at Kabul Serena.
The event focused on the assessment and mapping of progress towards the goal of regional connectivity through the implementation of the trilateral agreement of Chabahar port. This event provided a platform for stakeholders to share experiences, concerns, and recommendations to contribute to the success of the Chabahar trilateral agreement and reach its full capacity. In its future sessions, the Forum will explore future possibilities, work on technical issues, and bring the obstacles into the limelight while sharing its recommendations with the government of Afghanistan, India, and Iran.
The event was attended by Diplomats, Senior Afghan Government officials, Donor Agencies, Researchers, Experts, Traders, and media correspondents. It had two-panel discussions under the titles of:
1. Progress, Issues, and Way forward
2. Trade and Investment opportunities at Chabahar
Inaugural session:
The session was inaugurated by a welcome note from Dr. Sibghatullah Ghaznawi, Director Tarzi Research Foundation. Followed by remarks of the Afghan Minister of Commerce and Industry H. E. Mr. Nisar Ahmed Ghoryani Ambassador of the Islamic Republic of Iran in Kabul H. E. Mr. Bahadur Aminyan and First Secretary of Embassy of the Republic of India in Kabul H. E. Mr. Bastian N. Chacko.
Minister Ghoryani highlighted Afghanistan's location at the crossroad of South and Central Asia and its capacity to become a corridor of regional connectivity. He emphasized the Chabahar port's importance to turn Afghanistan into an economic hub with brighter prospects for Afghanistan and the region.
In his remarks, Ambassador Aminyan said that Chabahar port has a capacity beyond the regional connectivity and economic development; it can connect South and Southeast Asian markets to the European markets. He said that Iran had invested in this port to make it safe and secure for investments. Mr. Ambassador stated that "we need stronger countries for a stronger region, and we need coordinated strategies towards transportation infrastructure; roads and railways lines to and from the port." The Iranian Ambassador invited Minister Ghoryani to visit Chabahar and see the facilities and have follow-up discussions with counterparts to fully operationalize the port for Afghanistan's imports and exports.
First Secretary of Indian Embassy in Kabul, Mr. Bastian N. Chacko, termed Chabahar as an Indian dream project and stated it has a special place in the hearts of Indians. He said that "India's government is committed to solving the issues towards this project to make it reach its true potential." Mr. Chacko shared the figures of 70,000 metric tons of wheat and 15,000 metric tons of life-saving drugs that were transported in a short time to Afghanistan through Chabahar port during the outbreak of the Covid-19 Pandemic.
First Panel Discussion; Progress, Issues, and Way forward:
Panelists emphasized that the way forward for the Chabahar port project must be seen in the context of what is important for the traders, i.e., lower cost, short distance, reliable infrastructure, and investment safety. Effects of the US economic sanctions on Iran were highlighted as the top issue that has kept back the Afghan traders and Indian investors in doing business in Chabahar. Lack of banking facilities is one example of the sanctions that have mainly affected the Afghan traders. The infrastructure investment is done on the Iranian side, including the railway line to Zahedan is adequate for the current need of Afghan transit trade. There is a need for Afghanistan's government to expedite infrastructure development to link the Zahedan track with the Meelak border area. Additionally, it is needed that the circular road is improved inside Afghanistan, and the circular railway track is built to expand the transit trade opportunities for the traders of the central Asian republics and those of Pakistan.
Representatives of the banking sector expressed concerns regarding the US sanctions and their implications on the business community and the transfer of funds. The ambiguity of sanctions regarding the transaction with Iranian banks in Chabahar and opportunities for the Afghan banks was also mentioned as an important issue requiring further discussion both in the region and with the US's treasury department. Moreover, the panelists emphasized using lessons learned from the successful shipment of 15,000 MT of medicine and 70,000 MT of wheat through Chabahar port during the Covid pandemic from India to Afghanistan.
Second Panel Discussion; Trade and Investment opportunities in Chabahar :
The panelists brought up the potential of Chabahar port as a hub of regional connectivity. They agreed that this port must become a multilateral cooperation model rather than a port of confrontation among the countries of the region. Proportionate development of the neighboring countries was mentioned as an important step towards utilizing the port's full potential and peaceful coexistence and elimination of the existing distrust.
There was an agreement on the significance of Chabahar port as an additional route for Afghan transit trade. Trilateral cooperation of India, Iran, and Afghanistan was termed vital for enabling Afghan traders to have access to more than one trading route to conduct cost-efficient and reliable trade with the outside world. Representatives of the trader community reiterated that the business community must not pay the regional political rivalries' price, and the governments must agree on immunities for trade in the region. This panel also discussed the importance of technologies and the development of systems to facilitate transit trade successfully.
Key Findings:
There was a consensus among the participants on the port's potential capacity and importance for regional economic connectivity and diversification of the region's trade routes. The port's complete operationalization under the current trilateral agreement between India, Iran, and Afghanistan is relatively more important for Afghanistan. Therefore, Afghanistan shall assume the leading role in taking advantage of the opportunity. The discussions highlighted three areas for further follow-up.
Point One:
Ambiguity of the Chabahar port exemption from the US sanction has affected the import and export for Afghanistan. The sanction and exemption system's complexity has made businessmen and investors reluctant to import or export their goods through Chabahar. Lack of clarity has two dimensions; first, lack of easily accessible formal channels for the businessmen to receive guidance and facilitation. Second, lack of outreach by the Afghan and Indian official to create clarity and new opportunities for traders who are conducting business through the Chabahar port.
Point Two:
The capacity and interest of the Afghan business community to understand and follow the procedure necessary for the smooth conduction of business was raised. This was also related to the business community's long history and familiarity with businesses through the existing alternative routes.
Point Three:
There is a lack of connecting infrastructure on the Afghan side that encourages Afghan importers and exporters to utilize the full capacity of the Chabahar port. According to the information provided in the Forum discussions, there has been substantial investment in the infrastructure on the Iranian side.
Way Forward:
Currently, a mechanism exists for the follow-up and implementation of a trilateral agreement between the governments of India, Iran, and Afghanistan for the operationalization of the Chabahar port. A legal framework is in place, and a coordination council and a follow-up committee are also established to follow-up on the progress of an action plan developed by the follow-up committee. The coordination council is at the deputy minister level, and the follow-up committee is at the director level; both have conducted one meeting so far. The existing follow-up mechanism is designed for the follow up of official business. TRF has planned to support the existing follow up mechanism by addressing the business community's capacity challenge and creating clarity on the exemption of the Chabahar from the US sanctions. Moreover, TRF will conduct qualitative studies.
Capacity of Business Community:
Afghan business community needs to be linked to resources that guides them and facilitates their business through Chabahar. Capacity building effort shall focus both on the capacity of importers and exporters. Important aspects of export are quality control, follow up of standard procedures (specifically for agricultural products), and a clear understanding of laws and regulations governing the port. TRF will plan to link the business community with the existing capacity in these areas in Iran and India.
Clarity of the US sanctions and Exemption of Afghan trade through Chabahar:
There is a need that the TRF facilitates further meetings between the responsible officials of Afghanistan and officials of the US treasury department to develop a facilitation package that includes banking, investment, and export facilitation for the Afghan business community through Chabahar. This effort will also have a communication with the governments of Afghanistan and India to develop plans for their diplomatic missions in Washington DC to negotiate further exempting facilities for the Afghan traders in Chabahar.
Next meeting of the Forum:
A follow-up conference of the Chabahar Connectivity Forum is proposed to take place in Chabahar. Relevant officials of the partner countries, Iran, India, and Afghanistan, will be invited to the conference. The second Forum will allow the business community and government officials from India and Afghanistan to see the progress on the ground and hear about the opportunities in the area of diplomacy. The government officials will also present their plans for connecting infrastructure inside Afghanistan to encourage the traders to utilize this route.