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Tuesday, January 31, 2023

Pakistan and Tajikistan Recent Trade Relations

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Introduction

After the disintegration of the USSR, Central Asian states gained enormous prominence in Pakistan’s foreign policy. The nearest Central Asian state to Pakistan is the Republic of Tajikistan. It is at a distance of only 14km separated by the Wakhan corridor. This narrow territory acts as a linkage between Pakistan and central Asian states. Pakistan has established relations with Tajikistan since its independence on September 1991, after the disintegration of the USSR. It is also the first country to recognize Tajikistan. 

Importance of Central Asian States

Central Asian states are rich in oil and energy resources. Pakistan offers the possible straight route for trade & commerce corridor for Tajikistan and other Central Asian countries. This can produce a tremendous amount of revenues through this trade transit. Tajikistan also looks forward to accessing the world through Gwadar port of Pakistan. Tajikistan is the third major producer of hydroelectricity in the world. Pakistan has ample opportunities to cooperate with it in the energy sector.

Last year Tajik President Emomali Rahmon signed a defense agreement with Islamabad on a two-day visit to Pakistan. According to the agreement, Pakistan would provide domestically manufactured arms to Dushanbe. This will increase Pakistan’s influence in Central Asia and improve its strategic cooperation. Tajikistan, a remittance-dependent economy lacks adequate funds. It will be interesting to see how Dushanbe pays for the arms purchase from Pakistan.

Pakistan and Tajikistan Import Export

According to statistics, Pakistan’s export with Tajikistan in 2021 was $2.48 Million, which increased to $3.313 million this year. Though this trade is far below its true potential, Pakistan has an estimated export potential of $85 million with Tajikistan. Another deal of $373 million with Uzbekistan. Tajikistan is also an importer of Textiles, Sets, clothing, etc. Therefore, Pakistan offers vast scope for textiles to Tajikistan as in 2020 net export of textiles was $ 12 million.

In trade with Central Asian countries, Pakistani exporters have faced numerous difficulties. These included currency exchange, banking concerns, language barriers, and documentation issues. Afghanistan’s instability and security were hindering trade with Central Asian nations. More trade bargains by Pakistan with Tajikistan and Afghanistan would benefit in opening new export markets. Maximizing its trade with Tajikistan and Uzbekistan will help Pakistan strengthen ties with Central Asia.

CASA 1000 Project

CASA (Central Asia South Asia power project) is an important initiative that binds Pakistan and Tajikistan, one of the direct linkages between South Asia and Central Asia. CASA-1000 is an innovative energy export agreement between Tajikistan, Kyrgyzstan, Afghanistan, and Pakistan (two Central Asian and two South Asian countries). The main aim is to sell the surplus energy available in Kazakhstan and Tajikistan to Pakistan and Afghanistan to manage their growing electricity demand. The CASA-1000 project will allow Tajikistan to enhance its hydropower generation and support a Pakistan government strategy.

Tajikistan ranks eighth in the world for hydropower potential, and over 90 percent of the country’s electricity needs are met with hydropower generation. But during warm summer, it often has an excess supply, which cannot be utilized locally. Supporting the growing economy, Pakistan, on the other hand, has an increasing electricity demand.

This transmission infrastructure will benefit Pakistan by creating an economic and political bond between the neighboring countries. Pakistan has public policy agenda that focuses on energy. Pakistan needs to solve the power crisis to alleviate poverty and economic development. PM Shebaz Sharif has assured President Tajik Emomali Rehman of Pakistan of the timely completion of the CASA-1000 power project, as Tajikistan has enormous hydropower potential and the cheapest electricity in the world. In this way, Tajikistan may prove crucial in reducing the electricity shortage in Pakistan. 

Recent Developments

At the 6th CICA summit in Kazakhstan, Prime Minister Shehbaz Sharif meeting with President Emomali Rehman, where both emphasized the significance of promoting connectivity in the region. They restated Pakistan’s readiness to provide access to Tajikistan to Gwadar and Karachi ports. PM Sharif briefed the Tajik President on the work being carried out by his government in the aftermath of the catastrophic floods in the country. In the light of recent floods, President Emomali Rahmon assured of Tajikistan’s continued support in this regard. He mentioned the dispatch of an additional convoy of trucks carrying essential flood relief items.

On the sidelines of the SCO Summit last month in Uzbekistan’s city of Samarkand, the prime minister met with the Tajik President. He expressed satisfaction with the progressively increasing bilateral engagement in varied areas. Both leaders also agreed to work together to strengthen peace, stability, and security in the region. They also acknowledge reinforcing their engagement to foster greater economic cooperation, particularly in trade, energy, and connectivity.

Conclusion

Pakistan and Tajikistan have extensive opportunities for cooperation in the areas of oil, energy sector, agriculture, defense, industry, tourism, and economy. These will strengthen the historical, commercial, and bilateral ties between nations. Pakistan’s geostrategic location has enormous importance for central Asian states, especially Tajikistan. For trade enhancement and economic cooperation, Tajikistan’s access to Gwadar will benefit both the regions as it is a gateway for Central Asian Republics to Europe, Africa, and the Middle Eastern States.

Although in the past, both countries have faced challenges in trade. There was no direct air route, language barrier issues, and instability in Afghanistan. The development of ongoing projects is expected to pave the way for enhancing both countries’ geopolitical and economic positions. Improving regional economic integration by increasing energy trade among Central Asian countries and bordering states can benefit the region.

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