Earlier this month, the US State Department announced that Afghanistan’s imports of oil from Iran, the Iranian port of Chabahar, and a railway line linking it to Afghanistan would all be exempt from the Iran Freedom and Counter-Proliferation Act of 2012.
The Trump administration has rationalized these moves as support for Afghanistan’s fledgling economy (which has grown at a rate of around 2 percent over the past five years), diversifying the landlocked country’s linkages with foreign trade markets—most notably, India, which will operate two terminals in Chabahar.
The danger, however, is that by exempting Chabahar from sanctions as it seeks an exit from the region, Washington will hasten Tehran’s dominance over Afghanistan and, more broadly, establish Iran as the locus of regional connectivity.
Saudi Arabia and the United Arab Emirates appear to be aware of the strategic implications of the new lines of connectivity being drawn in Central and South Asia, and they are helping provide regional states with alternatives to Iranian fuel.
Saudi Arabia is financing part of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. The UAE’s Mubadala Oil signed an agreement on hydrocarbon exploration earlier this year with Turkmengas.
Saudi Aramco is also expected to sign a memorandum of understanding with Pakistan State Oil to develop an oil refineryin Gwadar, home to a Chinese-operated port just fifty miles or so from Iran’s Chabahar port. And it is also likely to bid on oil and gas exploration blocks in Pakistan.
It is, however, key that Abu Dhabi and Riyadh develop a comprehensive strategy for supporting connectivity, peace, and regional stability, as they are inextricably linked. For example, the TAPI pipeline runs through the Taliban bastion of southern Afghanistan and depends on a political settlement to move forward.
The Trump Administration has wisely decided to fast-track diplomatic outreach to the Taliban. But Afghanistan is in the midst of an unwieldy transition as the Taliban continue to make territorial gains and another presidential election looms with serious concerns that they will be rigged.
Positions of Saudi Arabia and UAE as net food importers can translate into diplomatic benefits as they can showcase themselves as equal trade partnersArif Rafiq
Peace in Afghanistan
Abu Dhabi and Riyadh should actively seek a role in efforts to achieve peace in Afghanistan. They should consider creating a parallel trilateral dialogue with Islamabad and Kabul to complement and bolster initiatives by Washington, Moscow, and Beijing.
They should also include factions of the Jamiat-i Islami party, which has been historically close to Iran. To be clear, Abu Dhabi and Riyadh will not be able to completely displace Tehran’s influence in the region. Iran borders Afghanistan and its involvement in peace talks is essential for a regional solution to the war. But by investing in peace, Abu Dhabi and Riyadh will gain strategic equities that they can leverage in a post-conflict scenario.
When it comes to geo-economics, Saudi Arabia’s natural strength is energy. But, like the UAE has in the Horn of Africa, Saudi Arabia can and should pursue opportunities in the trade of other goods and the physical logistics networks used to transport them.
While the Gulf states cannot change geography, altering the flow of goods can dilute the value of Iran’s strategic location and mitigate the negative externalities of Washington’s Chabahar own-goal.
For example, in Afghanistan and Pakistan, Emirati and Saudi companies can invest in agricultural projects that leverage energy and water conservation technologies and pair them with cold storage logistics networks, helping these countries diversify their agricultural exports and enhancing Emirati and Saudi food security.
Robust export activity could ultimately lead to a trade corridor stretching from Central Asia through Pakistan’s Arabian Sea ports into Abu Dhabi, Dubai, and Saudi Arabia’s growing King Abdullah Port.
While Iran is now Afghanistan’s largest trade partner, it is a relationship of unequals. Iranian imports from Afghanistan are insignificant. The positions of the Saudi Arabia and UAE as net food importers can actually translate into diplomatic benefits as they can showcase itself as an equal trade partners.
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Beyond trade, Saudi Arabia and the UAE could consider new types of assistance that help a post-conflict Afghanistan integrate into the global economy. For example, they could fund all-girls schools in southern Afghanistan, a highly conservative region where girls are pulled out of school once they reach puberty. Supporting girls’ education abroad also reinforces the Saudi national narrative of reform.
The Trump administration’s Chabahar exemption deepens Kabul’s dependence on Tehran and bolsters Iran’s already promising prospects as the crossroads for regional trade.
Through the International North-South Trade Corridor, Iran links India with Russia and Europe, providing an alternative to the Suez Canal and overland Pakistan route. And through Beijing’s Belt and Road Initiative, northern Iran will offer China overland access to Europe.
But Saudi Arabia and the UAE can leverage their diplomatic and economic toolkits to open new doors of trade and ensure that the keys to the region are not handed to Iran.
Arif Rafiq (@arifcrafiq) is a non-resident fellow at the Middle East Institute in Washington, DC and president of Vizier Consulting, LLC, a political risk advisory company focused on the Middle East and South Asia.