Breaking ground The mountains of Bamiyan province, site of an iron-ore mine to be built by an Indian consortium
Trucker Saleem Khan likes to think of himself as a modern version of the camel drivers who once traversed the central Asian plateau in trade caravans destined for the suqs of Arabia, the bazaars of China and the markets of India. For more than a millennium, Khan's Afghanistan was the linchpin of the Silk Road, a trading giant and a cultural crucible that cast its influence as far as Greece and Japan. Trade could make Afghanistan rise again, says Khan, thumping the bejeweled bumper of his modern beast of burden, a Mercedes flatbed loaded with cedar logs from the forests of Uzbekistan. "I could go all the way to India with this or to China if I didn't have to worry about borders, customs and bribes," he says. That day may not be far away, if the latest solution for all that ails the region ever materializes.
Khan is not the only one to see Afghanistan's future in its trading past. The U.S. has embraced a new vision for the country that places it at the center of a rejuvenated network of commerce, communications and energy transmission, a "land bridge" connecting the Middle East and central Asia to the insatiable markets of China, India and Southeast Asia. "Let's set our sights on a new Silk Road," U.S. Secretary of State Hillary Clinton said last fall as she laid out the new strategy. "An Afghanistan firmly embedded in the economic life of a thriving south and central Asia would be better able to attract new sources of foreign investment, connect to markets abroad and provide people with credible alternatives to insurgency." The wish list includes tens of billions of dollars in trade and energy deals between former neighborhood friends and foes. The goal: to transform this war-wracked beggar of a nation — for the past decade, Afghanistan has sucked in an estimated $286 billion of nonmilitary aid — into a country that can stand on its own when foreign forces depart in 2014. On the new Silk Road, rail depots will replace Afghanistan's ancient caravansaries, its camel tracks taken over by pylons and pipelines. And Khan will be able to drive all the way to India with his truckload of central Asian goods.
Whether or not that vision becomes reality depends largely on the cooperation of central Asia's perpetually squabbling authoritarian governments, peace between rivals Pakistan and India and the end to a corrosive insurgency that has stunted Afghan development. The U.S. will also have to shelve reservations about the blossoming Afghanistan-Iran relationship in the name of regional stability. So far, the U.S. has been leaning on other Afghan trading partners while sidestepping Iran. "It's a difficult proposal to say we want Afghanistan to develop in a way that ignores one of its key neighbors," says Andrew Neff, senior analyst at IHS Energy Group.
In many ways, Afghanistan's future echoes its past. For much of the past two centuries, its strategic location has been the cause of its undoing. In the 1800s it was a battleground between imperial Russia and Britain. The 1980s ushered in a proxy war between the U.S. and the Soviet Union. Now Iran, Pakistan, India, China and Russia have a stake, and few of them see any advantage to continued U.S. meddling. If Afghanistan is to successfully exploit its strategic advantages — resources and location — it will need to navigate long-standing regional tensions while reassuring nervous neighbors about their security. "We want to shift this definition of Afghanistan as a source of terror to one where it is the main catalyst for regional cooperation," says Afghan Foreign Ministry spokesman Janan Mosazai.
Boosting the country's economic prospects should help regional stability. Countries with tightly knit trade relations are less likely to go to war, a boon in a region where India and Pakistan have nuclear weapons and Iran is well on its way. If Afghanistan becomes a transit point for the energy pipelines that funnel central Asian gas and electricity to power-starved India and Pakistan, they will be less likely to use its territory for proxy wars.
Goodbye Aid, Hello Trade
When U.S. and NATO forces depart, the war economy and the aid program — which play a big part in Afghanistan's robust 8% growth rate — will go with them. Roughly half Afghanistan's $30 billion in GDP last year came from international aid. If those aid expenditures drop precipitously by 2014 as expected, the government will have to make up for a shortfall of several billion dollars just to cover the cost of its security forces and maintain existing infrastructure. Its vast untapped natural resources — an estimated $1 trillion to $3 trillion in gold, copper, iron, gas, oil and rare earths — are the surest bet to fill the gap quickly, according to U.S. and World Bank assessments.
Both China and India have bid big for mining rights in deals that could pad government coffers with $1 billion to $3.5 billion a year once the mines ramp up, which could take years. Then those resources will need to get to market. And that is where the old Silk Road meets the new. In February the Uzbekistan government, with $165 million in funding from the Asian Development Bank, completed the first tranche of a 75-km-long cross-border railroad — Afghanistan's first — to the provincial capital of Mazar-i-Sharif. For the moment, that line ends at Naibabad, where Khan has just loaded his truck with cedar logs destined for construction sites in the capital. Eventually the Uzbek line will connect with a Chinese-built segment near Aynak, as promised in the winning bid for excavation rights. And in this way, in patchwork segments, the vision of a new Silk Road will come to life.
That is, if disgruntled neighbors agree to make nice, allowing trade and energy to flow from central Asia to India. India and Pakistan, which have gone to war three times in the past 64 years, have a near trade embargo. So while India has the rights to mine Afghan iron, there is no economical way to get it across Pakistan to India's hungry steel mills. "If you can unlock the India-Pakistan transit trade route, that then opens up tremendous possibilities for Indian companies to get more involved in central Asia and vice versa. Not only would they benefit, but Pakistan itself would benefit," says Robert Blake, U.S. Assistant Secretary of State for South and Central Asian Affairs.