Liberalization of Border Regime Leads to Fragile Economic Boom at the Afghan-Uzbek Border

HAIRATAN, AFGHANISTAN / TERMEZ, UZBEKISTAN

Since years, the Afghan government tries to push the narrative that Afghanistan can become a «roundabout» for trade between South and Central Asia. However, the grand economic projects to connect various regional countries through Afghanistan that are touted by the Afghan government then usually stall without any notion of whether and when they will be completed. In contrast, the situation at the Afghan-Uzbek border in Hairatan / Termez shows that sometimes small steps, such as a simple liberalization of a border regime, can have a more significant impact than monumental plans. The Swiss Institute for Global Affairs (SIGA) took a look at the economic boom in Hairatan and Termez from which both countries profit, but also highlights how continuing insecurity in Afghanistan might threaten it all.

Although Afghanistan’s trade relations remain dominated by the large trade volumes with Pakistan, Iran, India, and China, the iron truss bridge spanning over the slow flowing water of the border river Amu Darya between Hairatan in Afghanistan and Termez in Uzbekistan is an important bottleneck for travelers and traders in and out of Afghanistan — even more so since a few years.

«When I started working at the port in Hairatan seven years ago, on average only 20 to 30 people crossed the border per day and trade was also limited», an officer of the Afghan border police recalled in a conversation with SIGA in April 2021. «Now, we are up to around 400 people on average per day.» Firuz Sadri, the director of the oil and gas department of the Chamber of Commerce of Balkh, the northern Afghan province where Hairatan lies, confirmed this. «Overall, trade at the Hairatan/Termez border crossing — the largest exports are fruits and vegetables and the largest imports fuel, gas, and flour — has increased about 70% when compared to three years ago. This has been the first and biggest boost in years, especially after international aid, and with it trade had decreased since 2014», he added. 2014 was the year in which the United States of America announced the end of their combat mission in Afghanistan, which meant a much lighter footprint of U.S. and allied military forces. This also had a significant impact on the Afghan economy.

«Most of the people crossing the border back and forth are Afghans», the border officer further explained. This was confirmed by several people in Termez, amongst others by Abror Qurbonmurodov, a local journalist in Termez who specified that «Afghans who come to Termez are investors, tourists, or students». Aziz Ahmad Amini, a young Afghan hailing from Jowzjan, a northern Afghan province next to Balkh, is one of these students. «When the Afghan-Uzbek University was opened in Termez in 2017, I was the first student to enroll and we were only a few. Now, the latest class counts around 200 people», he explained the increase in Afghan students in Termez.

That said, the most visible Afghans in Termez are arguably the owners of comparatively posh restaurants, namely the Diplomat, Dubai, and Best. «The Diplomat opened about six months ago and business has been good so far», Faiyaz, a young man from the Afghan capital Kabul and a co-owner of the Diplomat, told SIGA in his restaurant in Termez. Afterwards, he gave a short tour of the main dining room with opulent white chairs, the seating area in the garden in the back, and the disco in the basement. «Around 80% of our customers are Uzbeks and 20% are Afghans», he explained, referring to other Afghans who moved to Termez or the many more who just visit. 

Asked about the reasons for this boom, everyone talking to SIGA in Termez and Hairatan concurred that the liberalization of the Uzbek visa-regime was the main cause. «Some years ago, it was extremely difficult [for Afghans] to get an Uzbek visa, even if one was ready to pay 600-700 U.S.$. Nowadays, one can easily apply for a visa at a tourist agency and obtain it within a week. The invitation letter only costs 10 U.S.$ and the visa itself 50 U.S.$», Harun Siom, an Afghan from Balkh who frequently visits Uzbekistan for leisure and business, told SIGA on the streets of Termez. Sadri from the Chamber of Commerce of Balkh agreed: «Before, only a small circle of longstanding businessmen with special connections could get visas. Now, every merchant can easily get a one-year visa. The only thing one needs is a trading license from the provincial government of Balkh and then one can apply for an Uzbek visa.»

Afghans and Uzbeks alike also stated unisono that the new Uzbek President Shavkat Miromonovich Mirziyoyev is to credit for the opening of the visa-regime. Mirziyoyev took over the reins in Uzbekistan after the death of Uzbekistan’s long time president Islam Karimov in late 2016. After he was elected as president of Uzbekistan, Mirziyoyev began to significantly change Uzbekistan’s foreign policy that, back then, was still characterised by its Soviet legacy. Abdusamat Khaydarov, a retired Uzbek diplomat with extensive experience in Afghanistan, described this change as follows: «in Uzbekistan’s foreign policy and, in particular in its Afghan vector, the values of cooperation have been given priority over issues of distancing and isolation.» In this context, Khaydarov highlighted that in December 2017, on the occasion of the first visit of an Afghan President to Uzbekistan in 16 years, Uzbekistan and Afghanistan concluded 20 bilateral agreements in various sectors, including economy, transport, security, health, and education. This also comprised an agreement to open an Afghan consulate in Termez and the intention to increase the trade volume between the two countries from around 600 million U.S.$ in 2016 to 1.5 billion U.S.$ (see Abdusamat Khaydarov’s article «Uzbek Perspective on Afghanistan»).

The boosting of trade and investments also includes direct Uzbek incentives to Afghan investors. «In 2018, I participated in a meeting between Uzbek officials and Afghan businessmen in which the Uzbek government offered Afghan investors the free provision of land in Termez, if Afghans would develop the plots», Faiyaz told SIGA in Termez. «Me and my partners took this opportunity and built the Diplomat restaurant.» This programme is still in place to date, as Haji Mohammad Yassin Akbari, the Director of the Chamber for Industry and Mines for Balkh province and a member of the Afghan-Uzbek Committee for the Development of Trade and Industry in Balkh and Surkhondaryo, the Uzbek province in which Termez lies, confirmed. «As of early May 2021, over 300 Afghan investors have made use of the offered free land in Termez», he elaborated.

Moreover, Uzbekistan also invests more directly in trade facilities at the Termez/Hairatan border. «The project to construct a joint bazaar in a spot about 500 meters from the border bridge on the Uzbek side is underway and set to be completed by May 2022», Akbari stated, «and it is all financed by the Uzbek government.» According to Akbari, the joint bazaar is set to have 1,700 shops, some hotels, restaurants, and a clinic. Once completed, merchants can rent the shops and Afghan merchants and customers alike will be allowed to visit the joint bazaar for a duration of 15 days without a visa; for areas beyond the bazaar, a visa will still be necessary. How large the Uzbek government’s investment in this joint bazaar is could, despite efforts, not be clarified, but it is apparently a multi-million U.S.$ project.

Due to all this, the regions on both sides of the truss bridge between Termez and Hairatan, known as the Afghan-Uzbek Friendship bridge, have experienced a boom. People to whom SIGA talked to on both sides of the border described it as a win-win situation. Afghans regularly highlighted the easy access to a foreign market, universities, and to travel somewhere for leisure, while Uzbeks noted the many Afghan investments in Termez.

There have been almost no negative comments. Asked whether the influx of Afghans into Termez would not have caused any problems various Uzbeks negated this. Some people in Termez, such as the journalist Qurbonmurodov and a taxi driver named Bakhtyar, stated that this would be due to the fact that the Afghans who manage to obtain visas have money, while poor Afghans or refugees are not able to make their way to Termez. Afghans frequenting the border barely had anything to complain about. Uzbek border guards would regularly employ extra scrutiny when searching them and their luggage at the border, as Uzbeks would still be mostly wary of Afghans about whom they usually only heard bad things; however, the Afghans SIGA talked to all qualified that this is rather a minor nuisance. The only clearly negative comment that was made to SIGA came from a blind old men who lived in Hairatan since around 50 years. «The main problem here in Hairatan is that only outsiders profit from the trade. The merchants here are all from elsewhere [in Afghanistan], while people from Hairatan can’t find work», he claimed. To what extent the latter is accurate could not be determined. 

In general, Termez has apparently profited more from the boom than Hairatan. This is arguably most visible when comparing the small towns. Termez with its wide avenues, parks, and many new buildings is neat and orderly. And it is growing, as seen by numerous construction sites. In contrast, Hairatan leaves, despite some new high-rise buildings, the slightly run-down and dusty feeling of an outlying frontier trade post. That the current state of Termez can indeed be attributed to the boom in recent years was confirmed by a Westerner who had visited Termez in 2015 and said that, back then and in contrast to now, Termez was «dull and dysfunctional with a solid dose of communist grim.»

One reason for this difference is arguably the distinct outlook of the two towns. Despite being only separated by the border river, the future of Hairatan — which, contrary to other places in Afghanistan and despite the deteriorating security situation in Balkh, is not directly affected by fighting or insecurity — is inextricably linked to the fate of the ongoing war in Afghanistan. Scenarios reach from a continuation of current levels of violence, to a more intensified civil war, or a takeover of the ultra-conservative Islamist movement of the Taliban. In contrast, Termez is an oasis of peace that offers, despite or maybe because of the reforms of the Uzbek government, a sense of stability. «It is tranquil here and there is no war; that’s why many Afghans come here», Mustafa, a young Afghan who has been living in Termez since 10 years, summed it up to SIGA.

The insecurity on the Afghan side is also a factor that limits the feasibility to implement other, grander schemes, such as the projects for railways connecting Uzbekistan via Mazar-i Sharif, the capital of Balkh, to Herat in western Afghanistan and, in a separate line, via the Afghan capital Kabul to Peshawar, the center of Pakistan’s northwestern Khyber Pakhtunkhwa Province. Indeed, the situation in the northern Afghan provinces of Baghlan, Balkh, Jowzjan, Faryab, and Badghis, which the mentioned railways would have to cross, has deteriorated in the past few years. And this does not only pose potential, but very real risks, as was exemplified when employees of Sogdiana Trans, a subsidiary of Uzbekistan Railways, were attacked in Balkh province on 20th of August 2020. One Afghan Sogdiana Trans employee was killed and one Uzbek wounded in this incident.

Such concerns even weigh more, when one takes into account the fact that other grand infrastructure projects planned to cross Afghanistan got delayed for years, when the security situation was also a problem but much more permissible. One of numerous examples for the latter is CASA-1’000, the project for an electricity transmission line that is meant to connect Kyrgyzstan and Tajikistan through Afghanistan with Pakistan and would partly follow the same way as the projected Mazar-i Sharif-Peshawar railway. Since years in the making, CASA-1’000’s implementation got delayed again and again and it remains, to date, unfinished (see here and here).

Growing insecurity and the uncertainty about Afghanistan’s future might also endanger the recent small boom in Termez and Hairatan. While Akbari and a well-connected Afghan merchant, who requested anonymity, stated that single recent media reports about investors pulling out of Hairatan are inaccurate, the merchant said that he and his colleagues are worried. «One reason is the current insecurity in many places in Afghanistan; another one the seeming indifference with which the Afghan government treats the manifold problems of us merchants; and a final one the negative impact the full withdrawal of U.S. forces [announced to happen before the 11th of September 2021] will have on security and the economy», the merchant told SIGA. «Merchants have threatened to pull out their investments from Afghanistan if nothing changes; some have already done so and invest their money in the Central Asian Republics, Turkey, or Dubai.»

Taken all together, the above experiences show that in Afghanistan and the wider region, taking small easy steps like liberalizing border regimes are arguably a more realistic and effective approach to improve the economic situation than pursuing headline-grabbing grand infrastructure projects. However, the ongoing war and the growing uncertainty about Afghanistan’s future might even endanger the positive developments that such small steps achieved during the past years.

Franz J. Marty