Overcoming sanctions, developing bilateral relations

Iran-Afghanistan economic diplomacy

By Ashkan Pirzadeh

Strategic affairs expert

The Islamic Republic of Iran and Afghanistan are two neighboring countries with a long history and numerous religious, economic, and cultural commonalities. Given the unique geopolitical and economic positions of both nations, the advancement of economic relations and developmental diplomacy could play a crucial role in improving their economic and social conditions.

As a landlocked nation, Afghanistan requires reliable and permanent routes to access international waters. Thus, economic and trade cooperation with neighboring countries holds strategic importance for it. The cultural and linguistic affinities have kept Iran at the heart of Afghanistan’s attention. Simultaneously, Iran’s geographical advantages, particularly its access to open waters, can serve as a commercial gateway for Afghanistan, significantly contributing to meeting its essential goods needs.

Opportunities, challenges ahead
The development of economic relations between Iran and Afghanistan presents unique challenges and opportunities. Among the challenges, the economic sanctions imposed by the West on both countries have targeted their growth, creating restrictions on trade interactions. To overcome these obstacles, a serious willpower from both nations and the formulation of practical strategies to counteract and offset these sanctions is essential.
Moreover, insecurity and political instability in Afghanistan significantly impact economic relations, hindering investments and severely affecting cooperation with other nations. Infrastructure issues in transportation and communications further complicate development in Afghanistan. Tehran’s recent efforts to connect its railway to Afghanistan and establish roads in the country are seen as steps to tackle these challenges.
Despite these hurdles, there are exceptional opportunities for enhancing economic ties between the two countries, which outweigh the challenges. For instance, Iran’s strategic position enables it to supply Afghanistan with necessary goods, potentially positioning it as a key player in the latter’s economic growth. Afghanistan’s access to international waters through the Chabahar Port presents a remarkable opportunity for Kabul to procure goods from the global market. Moreover, as one of the world’s largest holders of oil and gas, Iran can make significant contributions to Afghanistan’s industrial growth and energy needs through fuel and petrochemical exports.
Furthermore, the establishment of joint companies and investments in sectors such as industry, agriculture, infrastructure, and energy will foster economic interdependence, creating jobs and increasing GDP in both nations, thereby complicating matters for any potential sanctions imposed on them. Given Iran’s foreign policy aims to support stability and development in Afghanistan, another outstanding opportunity lies in scientific and technological collaborations. These partnerships, covering a broad range of topics, will significantly enhance the economic and cultural relations between the two countries, with Iran consistently being a favored destination for young Afghan students pursuing higher education. Such academic and cultural exchanges further tighten the bonds between the two nations.

Breaking through sanctions, strengthening foundations
To seriously address Western sanctions and foster economic relations, infrastructure development is vital. Joint efforts in enhancing transportation and communication infrastructure will improve Afghanistan’s economic and trade status, while Iranian engineering expertise can fulfill Afghanistan’s needs without reliance on the West. This could involve the development of railways, roads, and communication systems.
In the current critical period, Afghanistan’s rulers need to consider regional interests, particularly those of their neighbors. History has shown that the policies of extraterritorial actors in Afghanistan have led to instability and unrest, ultimately resulting in conflict and hindering the country’s progress. Countries with high political risk struggle to attract foreign investment, making their paths to economic development challenging.
Focusing on economic diplomacy can play a significant role in improving the economic situation and effectively countering the sanctions faced by both Iran and Afghanistan. By identifying the existing opportunities and challenges in their economic relations, the groundwork for paving the way for Afghanistan’s development through the Islamic Republic of Iran is increasingly being laid. As a regional power with substantial energy reserves and advanced scientific knowledge in engineering and modern sciences, Iran is a crucial neighbor for Afghanistan. Notably, Iran’s policies towards Afghanistan consistently aim to secure the interests of the Afghan people, showing a genuine intent to support developments in the country.
It is also vital for Afghan leaders to understand their neighbors’ interests. For example, the issue of Iran’s water rights from the Helmand River, a contentious topic in bilateral relations, can be addressed within this framework. Increased trade and commercial cooperation, joint investments, and scientific and technological collaborations can serve as incentives for Afghanistan’s development, requiring proper interactions and a realistic understanding of existing realities by Afghanistan’s leaders.