Focus on cross border trade and smuggling

His shop brimming over with western-made telephones, fax machines and an assortment of used Japanese computers, Abdul Ghafur, could not be prouder. Situated in the small border market of Wesh near the Pakistani border crossing point of Chaman, but just inside Afghanistan - a country with hardly any functional communications network - the shop's location is unusual, but business could hardly be better. The ethnic Pashtun businessman told IRIN that he earned between US $250 and $500 a month and - apart from a few dollars a month for rent - paid no taxes. Like other shopkeepers and traders in the market, his home was a few kilometres away inside Pakistan. "There is no other work to do, and my shop gives me enough money to look after my family," he said. Abdul Ghafur and his two younger brothers also operate another shop to take care of another 20 family members, but they are hardly alone. Thousands of people are involved in smuggling goods between the two countries, ranging from simple couriers, actually carrying the goods on their back, to shopkeepers, petty traders, and business tycoons. They constitute a complex smuggling mafia with offices all around the globe - all dependent on what has fast become a lucrative industry in its own right. Their markets located in tribal areas across the border in both countries, their merchandise ranges from the latest Japanese electronic equipment to timber harvested in the vanishing forests of northeastern Afghanistan. But the "trade" also exacts its toll. The Pakistani government says it costs millions of dollars in lost revenues every year. With efforts under way to rebuild Afghanistan, revenue generation and the establishment of an effective taxpaying culture are all-important economic questions affecting the future of both countries. However, experts warn that any efforts to curb the annual multi-billion-dollar trade will have grave humanitarian consequences for the region on both sides of border - including unemployment for tens of thousands of people. The phenomenon is a result of over two decades of war in Afghanistan. Although trade links in the region are centuries old, the influx of money earned from narcotics and the weapons trade has given a tremendous boost to the informal or illegal trade between the two countries. Indeed, experts believe that one of the main factors motivating the rise of the Taliban was the smuggling mafia which used Afghanistan's crumbling road networks for trade around the region. Under a five-decade-old trade agreement between the two countries, a large quantity of goods is transited to landlocked Afghanistan every day utilising southern Pakistani ports like Karachi. However, goods imported under this agreement often end up in Pakistani smuggler markets, mostly located close to the border with Afghanistan. Besides Wesh market in the desolate desert between Chaman and Spin Boldak in Afghanistan, huge smuggling markets exist on the fringes of Peshawar, the capital of Pakistan's North West Frontier Province (NWFP), and throughout the tribal towns spread along the country's western border with Afghanistan. Syed Zaheer Ali, the secretary of the chamber of commerce and industry in the southwestern Pakistani province of Baluchistan, told IRIN that high tariffs levied in Pakistan were the element which rendered smuggling so lucrative. "A green signal on free trade with Afghanistan is needed," he said, adding that the forthcoming global trade regulations negotiated by the World Trade Organisation would change the scenario. "A new policy must focus on easy market access in both countries," he explained. He maintained that the Afghan refugees in Pakistan would return and reintegrate into Afghan society if they could find employment, something which could only be generated by increasing trade and other economic activity between the two countries. Indeed, in the absence of industry, agriculture or other earning opportunities, smuggling is a major source of income for people living on both sides of the border. Explaining the background of the problem, Baluchistan's trade minister, Sardar Muhammad Ali Jogezai, told IRIN that smuggling was even prevalent in developed countries, such as America along its border with Mexico. "The problem is exacerbated by the lack of a taxpaying culture in the area," he noted. Asked whether Islamabad had taken up the issue with the new Afghan interim authority, he cautioned that it was far too early to engage them on such issues. "Things have changed tremendously after 11 September, but I hope we will finally resolve this issue," he explained. During a recent visit, Afghanistan's finance minister agreed with his Pakistani counterpart to resume air links between the two countries, and the two sides are also working to establish a joint commission to boost economic ties. Jamaluddin Khan, a Peshawar-based independent economist who has conducted extensive research on the subject, told IRIN that smuggling was a form of corruption creating bad publicity for Pakistan and the region at large. "On the positive side, the cross-border trade or smuggling brings much-needed foreign currency into the country." Moreover, the hard currency earned through the drug trade and other illegal business floated smuggler markets in the region, he said. Khan's research, conducted from 1998 to 2000, revealed that the trade was worth up to $2.5 billion every year. Although both Iran and Pakistan were used as routes for trading with Afghanistan, only Pakistan faced the fallout of the trade, because most of the items routed through its territory are sold to consumers without paying the government any taxes, he said. "The trade accounts for up to 40 percent of income generation in Pakistan's North West Frontier Province and tribal areas," he maintained. "There is no concrete evidence for Baluchistan, but the ratio is even higher there," he added. As a solution, Khan proposed that alterative employment opportunities and wealth generation sources should be created in those areas to maintain social stability. "An abrupt end of this trade through arbitrary means will create chaos in the region," he warned. Indeed, many regional experts have been advocating a regional context for Afghanistan's reconstruction. They believe that without developing fringe border regions such as those in the NWFP and Baluchistan in Pakistan, as well as Sistan-Baluchestan Province in southeastern Iran and the Ferghana valley in Central Asia, the reconstruction of the war-ravaged country could not be sustained.