US-Afghanistan withdrawal: Can Pakistan survive without NATO money?

Published: November 25, 2013
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Numerous businesses have flourished in the Pakistan with the influx of NATO cargo, with transport and logistics firms being the biggest winners. Many would lose their jobs when the US leaves Afghanistan in 2014. PHOTO: AFP

With September 2014 fast approaching, all eyes are fixed on Afghanistan and the announced withdrawal of the United States-led coalition forces. Although the Afghan Loya Jirga has asked President Karazai to sign the peace deal with the US, a majority of the contingents are scheduled to leave by the end of 2014.

This mass military exodus from Afghanistan will shift the burden of security responsibility onto the Afghan army and police. It is hard to predict whether the Afghan forces will able to cope with the post-withdrawal security situation or not. Yet the withdrawal will surely have a negative economic impact – not only on Afghanistan, but also on Pakistan.

Irrespective of the security implications, the Pakistani economy would witness some contraction given that NATO cargo and supply is a major source of US currency.

Clearly, the impact would be greater in Afghanistan, yet considering the number of livelihoods dependent on the transit cargo and ISAF forces; Pakistan is already preparing to provide alternatives for those who will be out of work after 2014.

Imran Khan also led a massive gathering recently in the Khyber Pakhtunkhwa province, ordering his followers to block the Nato supply route. He has demanded a halt to the drone campaign in return for opening the supply line. Khan’s party also currently governs the fragile Pakhtunkhwa province. His critics are of the opinion that Khan is swaying the masses with emotions without realising the economic repercussions of blocking the Nato supply line.

The Nato cargo influx has created a transport sector boom over the past decade, with contractors and workforce earning three times what they used to make with commercial or national trade. Any halt or drastic decline in the Nato cargo would represent a major loss of revenue for Pakistan.

Numerous businesses have flourished in Pakistan with the influx of Nato cargo since 2001, with transport and logistics firms being the biggest winners. Although the accumulation of wealth and contracts has remained in relatively few hands, a large portion of the workforce from the underdeveloped FATA region gained from the overall movement. Khyber and Mohmand agencies (two Fata regions) were two of the main beneficiaries, as their drivers, helpers and security personnel were preferred because of their knowledge of the treacherous terrain.

The number of drivers involved with the trade goes in thousands. With Nato gone, these drivers will have difficulty finding alternative employment given the very limited opportunities in the tribal areas. In fact, one of the best paying options in these areas is working for banned militant groups. These groups are not only involved in violent attacks, but also provide security on informal trade routes for illegal cargo in return for money.

The amorphous, 2640 kilometer-long Pakistan-Afghanistan border is a hotbed of informal trade. Sources say that the amount of this informal trade could be over a billion dollars. If transit and commercial trade declines, transport outfits could be motivated to invest in informal trade, more commonly known as smuggling.

In addition to the Nato transit, bilateral/commercial trade between Afghanistan and Pakistan has surged in recent years. Afghanistan is now Pakistan’s third-largest trading partner, importing a number of important goods from Pakistan. The ranking could plummet in a volatile security situation post 2014, badly hurting Pakistan’s economy.

But even with a stable outlook, there are fears of foreign capital flight from Kabul that could weaken Afghanistan’s economy, reducing purchasing power, which in turn would affect imports from Pakistan. Afghanistan also hosts a large Pakistani workforce, especially in the non-profit and reconstruction sectors. A weaker Afghan economy may mean that these workers will have to return to Pakistan, where their prospects are decidedly uncertain.

Finally, security concerns may also force many Afghans to immigrate to neighbouring countries, especially Pakistan, adding further economic strain.

All this suggests that Afghanistan’s security and stability should be a top priority, particularly for Pakistan.

The Afghanistan security landscape is not only the concern of the US and its partners, but also of neighbouring countries such as Iran, India and, most importantly, Pakistan. These three neighbours need to realise that a stable Afghanistan is needed for regional prosperity.

While interference in Afghanistan’s fate would be unwise, a limited international security presence could be helpful in providing support for the nascent Afghan forces

Farooq Yousaf

Farooq Yousaf

The author is a PhD (Politics) Candidate currently pursuing his studies in Australia. He has previously completed his Masters in Public Policy and Conflict Studies from Germany. He also consults Islamabad-based Security think tank, Centre for Research and Security Studies, and occasionally writes for various news and media sources. He is specialising in Indigenous conflict resolution and counter insurgency. He tweets at @faruqyusaf (twitter.com/faruqyusaf?lang=en)

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • Shariq Najeeb

    According to the finance ministry of Pakistan, we spend 67.3 billion dollars on the war and we get 17 billion dollars in aid. Anybody who can do third grade math can tell you we spend 50 billion from our own pocket. Hence, NATO money isn’t doing us any good.Recommend

  • Anonymous

    Seems like you are stuck in third grade only then.
    A) We don’t spend 67.3 billion on war considering our military budget for the past 9 years total is 45 billion (please don’t expect me to believe we spent more in the war then our entire sizeable military budget for 9 years together!)
    B) Pakistan practically gets money to fight people that are killing Pakistanis only since Pakistan does not take action against afghans killing NATO soldiers (strategic assets)
    C) Apart from money NATO provides employment to thousands of Pakistanis and economic activity in transport sector which we badly need (what the author is saying too)
    D) This was just direct. Good relations work wonders for Pakistan. Heard of Pakistan getting GSP + Europe benefit for experts to EU? That’s for Pakistan being a partner for the international community.
    E) heard of F-16s and P3 Orion’s Pakistan got which are mostly used to keep up with the Indians were given under US foreign military sale financing so Pakistan didn’t pay quite the price of these planes still we get them.
    And this is just the tip of the ice. Hence NATO and NATO money does us a ton of good.Recommend

  • Singh

    Please can anyone describe $67.3 billion loss happen to Pakistan?
    Everybody give # but nobody give exact information where the loss happen.Recommend

  • SayWhaaa!!

    Nato cash will run out anyway next year, might as well use it against the US while we canRecommend

  • Sami Khan

    From where do you get the numbers 67.3 billion dollars (US dollars i assume)?Recommend

  • Stealth

    It’s not about blocking NATO supplies, it’s about stopping drones. This is just a mean to an end. It has more symbolic value aimed at western media as the lobbies and media plays an important part in any state policy shift in US. And yes with NATO stoppage(read drone stoppage) Pakistan will not only survive…it will thrive.Recommend

  • unbelievable

    The TTP doesn’t care about the Afghan war and when the American’s leave the level of violence in Pakistan is going to escalate not decrease. Recommend

  • smbfhs

    NATO Dollars were going to be gone tomorrow anyway. So now if IK is willing to take the blame for bad economy for HIS constituencies, good for him. But he should be ready for bringing up a substitute source of income. Not another show of valor and bravery. May be he should suggest we start trade with Russian Republics and Iran to use these truck drivers.Recommend

  • Vox Indie

    Unless Pak cuts down its def forces by at least a half , Pak and neighbours including Baloch can’t live in peace. You should ask US to support edu and development. Now war and misery is business for Pak.Recommend

  • justanotherpoint

    Unless Pak cuts down its def forces by at least a half , Pak and neighbours including Baloch can’t live in peace. You should ask US to support edu and development. Now war and misery is business for Pak.Recommend

  • centralparktarzan

    Wow…we have deep pockets…$50 Billion spent…why?
    couldn’t we say…sorry we don’t have the money… :)Recommend

  • fatima

    uh we get total reimbursement buddy. every single pennyRecommend

  • gp65

    You think NATO stoppage is synonymous with drone stoppage. Why then did drones not stop in the 8 months when the supply routes were in fact blocked by Pakistan?

    Secondly TTP has said clearly that it fights Pakistan not just because of Pakistan’s support to US but also because it has kufr ka nizaam. So what makes you think that stopping of drones would stop TTP?

    Thirdly Mulla Fazlullah the present leader of TTP is not an unknown and infamiliar person to Pakistan. Pakistan had signed Nizam-e-Adl with him in Feb 2009. Did that bring you peace? No. It brought you khooni chowk in Mingora. It was army fighting him that dislodged him. In any case he has made it very clear that he does not want to negotiate with Pakistan government.Recommend

  • Vikram

    Some one just made up that figure to demand more Zakat from USA and other donor countries. In the end it is US taxpayers that are being screwed. Some one in US needs to do serious investigation why trillions dollars were wasted in Pakistan/Afghanistan in the last decade.Recommend