A Region of Opportunity: Connecting South and Central Asia
By: Nadia Mukhtar
Edited: Ayesha Burney
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1 At a Crossroads, Again
The US withdrawal from Afghanistan after twenty years opens new possibilities in a region with tremendous untapped potential for regional connectivity. The country has the potential to act as a land bridge connecting the four regions of Asia, i.e., north-south and east-west Asia, to the world. Afghanistan is a gateway to China and India in the east and Central Asia, the Middle East, and Europe in the west. But for all its geopolitical importance, it remains a land-locked, less developed country (LLDC) marred by four decades of violence and instability.
Almost half of the Afghan population lived below the national poverty line in 2020, but estimates for 2021 revealed that this number could be as high as 72 percent. The situation is dire: Afghanistan was already one of the poorest countries in the world, ranking 7th from the bottom with a real per capita GDP of USD 509 in 2020 (WDI, 2021). This meant that the average Afghan lived in conditions that were 17 times worse than the average of low-income countries. The shrinking economy, which has been on a downward trend since 2017, now faces several challenges: the repercussions of COVID-19, severe drought, capital flight, suspension of aid flows, freezing of half the central bank reserves, international sanctions, and a Taliban government that is struggling to rule the country. Estimates from the IMF, World Bank, UNDP, and ADB suggest that economic activity could contract by 20-30 percent in 2022, with nominal GDP falling from USD 20 billion in 2020 to USD 14-16 billion by 2022.
This paper explores the state of regional connectivity between Afghanistan and other countries in the region, particularly Pakistan and the Central Asian Republics. The main objective is to identify the scope of future connectivity in the region, which could create shared prosperity, enhance trade competitiveness, and, most importantly, offer insights on opportunities for people-to-people and business-to-business economic connectivity. The underlying structural and historical fault lines that make this region the least integrated into the world are also considered. The four decades of historical power play in Afghanistan, the rivalry between India and Pakistan, increasing regional engagement of the Central Asian Republics, and the containment strategies of the USA, China, and Russia will continue to shape the nature of future regional connectivity and stability. The international community requires explicit signaling that a commitment to supporting Afghanistan is not synonymous with a recognition of the Taliban. Peace in Afghanistan, “the heart of Asia,” will continue to determine the fate of existing and future regional connectivity.
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