China, Pakistan in rush to exploit weakening Afghan economy

Kabul : China and Pakistan are in rush to exploit the Afghan economy as both have announced certain luring benefits for Afghanistan, which will largely benefit the former and latter in near future, a media report said on Thursday.

War-torn Afghanistan is going through immense financial difficulties. And the new rulers are not experienced to confront the intricate economic issues that the impoverished country is facing.

The former chief of Afghanistan’s central bank had also fled the country leaving the financial decision in disarray. However, recently the Taliban had appointed a new chief.

Most of the Afghan officials who are dealing with financial issues now have dual citizenship and have ample reasons to be wary of incurring the wrath of the new authorities that could extend to their families, news website InsideOver reported on Thursday.

Any initiative, even by way of floating ideas or discussion, without action, can be risky. This opens the prospects of Pakistani officials, like the military that had helped the Taliban achieve victory last month, may get drafted to run, or guide, the running of the Afghan economy, at least for some time, according to InsideOver.

In an attempt to take advantage of the situation, Islamabad and Beijing have already chalked out plans. The initial step was taken by Islamabad as recently, it announced to trade with Afghanistan in Pakistani rupee.

Finance Minister Shaukat Tarin cited as the reason the dollars crunch in Kabul. He also offered to help the Taliban to fill the technical positions left vacant due to the recent evacuations.

The communist regime also started luring the Taliban. Recently, China — the country known to lend money easily — has committed USD 31 million to get the Afghan economy moving. In return, the Taliban have also shown interest in tie-up with China’s BRI.

When other countries are deciding whether they should recognise the Taliban’s interim government, Beijing and Islamabad have begun to act on financial issues related to Afghanistan.

However, in all these developments, China seems to be a larger beneficiary as the Pakistani economy and currency are already dependent on China. And since 2018, Islamabad largely started trading with Beijing in Chinese currency Yuan, making much of the Sino-Pak trade Yuan-based, raising the prospects of three-way dovetailing of the economies, IndsideOver said.

In this, being the strongest currency the Chinese Yuan will be benefitted in large while it will allow a measure of advantage to the other two.

Pakistan seems to be benefitted, acting as the middleman and cornering resources by way of transit and facilitation charges. But, currently, the Pakistani economy is in perpetual crisis and runs a huge deficit in terms of debt servicing, among other indicators.

On Wednesday, the Pakistani rupee hit an all-time low of Rs 169.94 against the US dollar in the inter-bank market.

According to InsideOver, Afghanistan ranks as one of the most at-risk, fragile economies in the world despite receiving western aid for two decades. The World Bank had said that in Afghanistan, poverty is endemic, as is underdevelopment. It also added that nearly 90 per cent of Afghanistan’s population lived on less than USD 2 a day and Kabul, which received USD 4.2 billion in aid in 2019 will receive probably none this year.

Beijing and Islamabad are monitoring the developments in Afghanistan closely.