Russia-Afghanistan trade deal

According to the media, the Taliban interim government has signed a provisional deal with Russia to supply gasoline, diesel, gas, and wheat to Afghanistan. The acting Afghan Minister for Commerce and Industry told the media that the Afghan commerce ministry was working to diversify its trading partners and that Russia had offered the Taliban administration a discount on average global commodity prices. According to the details, Russia would supply around one million tonnes of gasoline, one million tonnes of diesel, 500,000 tonnes of liquefied petroleum gas (LPG), and two million tonnes of wheat annually. As said, the agreement would run for an unspecified trial period, after which both sides were expected to sign a long-term deal if both nations were comfortable with the arrangement. Although Afghan authorities did not comment regarding price, however, payment would be made in Russian rubble with a special discount to global markets on exports to Afghanistan.

The Taliban and Russia have political relations because Moscow had initiated a dialogue process between the Taliban and the former Ashraf Ghani regime along with regional stakeholders in the past. After the fall of Kabul, although Moscow did not formally recognize the Taliban interim government so far, the Russian Embassy in Kabul is still functioning and both governments have working relations. After Russia kicked off its special operation against Ukraine, Moscow offered a massive discount to its energy customers and several nations including Inda, Bangladesh, South Korea, and other countries benefited from this incentive. According to reports, a team of Aghan technical experts spent weeks in negotiations with Russian authorities while Afghan Commerce Minister visited Russian Capital last month to sign the decree for bilateral trade between the two nations.

Historically, this was the first major international economic deal after purchasing Iranian oil, that was struck by the Taliban government since they returned to power more than a year ago, which will presumably help to ease Taliban isolation in the global community along with providing relief in the ongoing economic and energy crises in the country. The Taliban government was facing serious problems in acquiring food grains and other commodities from abroad due to western sanctions against the Taliban government and the Afghan banking system. The interim Afghan government is battling the serious effects of the non-functioning of its banking system which not only creates hurdles in foreign trade but also is unable to process foreign remittances sent by the Afghan expatriates to their families living in the country.

Previously, landlocked Afghanistan had been importing essential goods from neighboring Iran, Uzbekistan, and Turkmenistan in the past, however an energy deficient and cashless Afghanistan perceived it comparatively better to buy cheaper energy products and wheat from Moscow in the long term. But, the country might have to pay the additional costs or face security issues in the transportation of these commodities through sea routes via Pakistan and rail or road through CARs states and the insurgency-hit western region of Afghanistan. Currently, the interim Afghan government is facing multiple issues ranging from the revival of the economy, nation building, political stability, and good governance as well as the consolidation of military and civilian institutions to provide dignified and prosperous life to the people of Afghanistan. Although the sitting Taliban government could not deliver during the past year, what would be the Taliban’s strategy to move through these snags in the future?