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EFSAS Commentary

Extension of China’s Belt and Road Initiative into Afghanistan is a risky venture, but it merits the close attention of the US


The Chinese Foreign Ministry had informed on 9 May that at a trilateral meeting held on the same day in Islamabad, the Foreign Ministers of China, Pakistan and Afghanistan had agreed to extend the China-Pakistan Economic Corridor (CPEC) into Afghanistan, and had reaffirmed their support for multilateral infrastructure projects already underway, including the Central Asia-South Asia (CASA) power project and the Trans-Afghan Railways. Later, Pakistan’s Foreign Ministry announced on 28 May that Beijing and Islamabad had concluded an agreement to extend the Belt and Road Initiative (BRI), of which the CPEC is the flagship project, into Afghanistan.

The plan to extend the CPEC into Afghanistan marks a significant development, one that could potentially draw in billions of dollars to fund infrastructure projects in the sanctions-hit country. However, the recent severely unpleasant experiences that the BRI has forced upon the people of Sri Lanka and Pakistan, and the by now widely recognized and accepted fact that Chinese investments are in essence instruments of exploitation, have raised the specter of a Taliban regime that is highly vulnerable and needy in the face of an international boycott falling prey to China’s manipulative designs. Also, Afghanistan is increasingly being seen through the light of great power competition, and while the United States (US) and its allies have, in the main, remained aloof towards the Taliban regime, there are calls from within the US to engage in some way with it. It is possible that China’s outreach to Kabul and its desire to make the most of the possibilities that the absence of the international community has presented to it will eventually nudge the US to talk more deeply with the Taliban. That said, unlike in the case of several other countries that it has marched into, China’s foray into Afghanistan is likely to be much riskier, and the results unpredictable.

Since the US was forced to leave Afghanistan in 2021, its attention towards the country diminished and then virtually disappeared. The absence of US engagement allowed Beijing to advance its interests and capitalize on the power vacuum. Even before that, China had been considering Afghanistan’s involvement in the BRI since 2017, when an Afghan delegation attended the second International Belt & Road Forum in Beijing. When the Taliban re-captured power on 15 August 2021, China was already better placed and more open than other powers to work with the new regime. Beijing quickly embraced the power shift, refrained from condemning the Taliban’s seizure of power, and kept its embassy open through the fall of Kabul. China has maintained extensive diplomatic contact with the Taliban leadership and although it has not yet been extended official recognition, the Islamic Emirate is permitted diplomatic representation in Beijing.

For the Taliban regime, which has failed to gain international recognition from any country yet and remains isolated and under enormous economic pressure, aid, trade, and other support from Beijing is a veritable lifeline. The United Nations (UN) has said that the Taliban requires $4.6 billion in 2023 just to help more than two-thirds of the country’s 40 million people, most of whom are living in extreme poverty. In this milieu, China has spoken out in Afghanistan’s favour at global forums, calling for the unfreezing of Afghan assets and the lifting of sanctions and other restrictions. The Taliban has harboured hopes for China to boost investments in the country’s rich resources, estimated to be worth $1 trillion, which is precisely what China has also been eyeing.

With the stake involved being substantial, it came as no surprise that when Chinese Foreign Minister Qin Gang and his Pakistani counterpart Bilawal Bhutto Zardari met with the Taliban’s top diplomat Amir Khan Muttaqi in May, they decided to take the plunge and enter Afghanistan’s murky and perilous waters. Pakistan’s Foreign Ministry, while informing of the agreement, stated that “The two sides agreed to continue their humanitarian and economic assistance for the Afghan people and enhance development cooperation in Afghanistan, including through extension of CPEC to Afghanistan”. It added that Chinese and Pakistani officials had previously discussed extending the project to Afghanistan, and that the cash-strapped Taliban government had expressed readiness to participate in the project. As brought out in the EFSAS Commentary of 13-01-2023, the Taliban had signed its first China contract in January this year with the Xinjiang Central Asia Petroleum and Gas Company (CAPEIC), a subsidiary of the China National Petroleum Corporation (CNPC). Worth $541 million, the agreement is a 25-year contract to extract oil from more than 1,700 square miles of the Amu Darya basin in Afghanistan and provides the Taliban with a mere 20% stake but for no investment, involvement or risk whatsoever.

Sudha Ramachandran, an India-based independent researcher and journalist, reminded in the 19 May issue of the China Brief of The Jamestown Foundation that although China shares a border with Afghanistan, it has remained largely aloof from developments in the country for decades. Beijing also did not maintain official diplomatic ties with the first Taliban regime (1996-2001). However, “Unlike in 2002, China is keen to play a major role in Afghanistan today. With the U.S. gone, China is the dominant power in Afghanistan. Moreover, Beijing hopes to advance its substantial, yet largely unrealized, economic interests in the country. Within months of the Taliban’s return to power, contracts for projects that failed to take off under successive Republican governments, such as the Mes Aynak and Amu Darya projects, were reviewed and signed. Gaining access to Afghanistan’s lithium reserves is a priority for the Chinese economy. Chinese businesses have also expressed interest in investing in the agricultural and infrastructure sectors, including power projects”.

Ramachandran noted, however, that “in the past, major Chinese projects have failed to take off. Will the recent deals remain in limbo as well? China’s growing role in Afghanistan faces formidable challenges”. She elaborated by saying that “China today is in the crosshairs of far more terror groups than the US confronted in Afghanistan. Moreover, Beijing’s plans for Afghan stability involve consolidating Taliban rule. This is a shaky premise to begin with, as the Taliban is not a reliable ally. Roping in Pakistan to secure and stabilize Afghanistan is a non-starter, as Pakistan is itself roiled in unrest and instability and hardly in a position to put out fires next door”.

The Silk Road Briefing pointed out on 29 May that a majority of Chinese businesses have understandably been very wary of investing in Afghanistan due to threats and attacks by the Islamic State terrorist group, which is competing with the Taliban for influence. It quoted Chris Devonshire-Ellis as saying that “China’s Foreign Policy does tend to give priority to economic interests without undermining its domestic policy. To this end, Beijing is wary of undertaking unilateral projects in Afghanistan without assistance from Pakistan… Agreeing Afghan transit with Pakistan however has proved a stumbling block with the Afghanistan-Pakistan Transit Trade Agreement currently suspended as regional tribal factions disagree over financial and territorial issues. Beijing will have its work cut out to bring fruitful negotiations to an area long used to violent arguments and war”.

China is well aware of the risks of investing in Afghanistan and knows that sizable project investments need security and stability. The Taliban is still not a legitimate government, has no legal competence as a party to an economic contract and a reliable partner, and does not have a complete monopoly of power. The Silk Road Briefing also said that “China’s fears about committing significant resources to Afghanistan, coupled with a lack of water and electricity, and high operational costs are numerous. Apart from the lack of basic infrastructure, friction between Beijing and New Delhi, coupled with weak Taliban governance, means that investing in Afghanistan’s alleged US$1.3 trillion mineral reserves is also risky. (It should be noted not all analysts agree with the potential volumes of these reserves). China knows that establishing security in Afghanistan requires huge costs and major extremist groups such as ISIS can be a significant threat to the Belt and Road in Afghanistan. In addition, the Taliban’s political opposition does not consider the Taliban government to have any legal capacity due to the lack of national legitimacy and international recognition; and are afraid of negative consequences such as debt for Chinese investments. All these political factors have a negative impact on BRI projects and new infrastructure commitments in Afghanistan. Afghanistan is also in danger of economic and human collapse”.

In ‘Beyond BRI Connectivity: Chinese Access to the Indian Ocean Through Afghanistan and Pakistan’ for the South Asian Voices of the Stimson Center, Noorulain Naseem and Ishtiaq Ali Mehkri argued on 18 May that “By far, Afghanistan’s security situation remains a major challenge for China and its ambitions to connect South and Central Asia through the Belt and Road Initiative. While Beijing aims to stem the flow of militancy, radical ideologies, and narcotics into Central Asia and Xinjiang, it also seeks stability in Afghanistan to achieve regional connectively through the BRI and gain access to the Indian Ocean… The more China invests in Afghanistan and Pakistan through CPEC and BRI, the more these critical regions will rely on China. Increased connectivity and integration of CPEC and BRI routes from Central Asia to South Asia via Afghanistan could increase China’s reliance on Indian Ocean routes for its energy and trade needs. This could heighten the threat perception of the United States and its allies, including India, towards China’s potential naval dominance in IOR (Indian Ocean Region) and disrupt the geopolitical calculus in the region, resulting in increased naval competition in Indian Ocean”.

They continued, “As the United States shifts its focus to the Indo-Pacific, it could do well to be wary of the long-term consequences of China’s strategic use of economic diplomacy and connectivity via Afghanistan, Pakistan, and Central Asia to increase its presence in IOR… The United States may reconsider its strategy of non-engagement with the Taliban since China is actively investing in the political vacuum left to move strategically for its connectivity, IOR access, and political influence in Central and South Asia. Continuing with humanitarian assistance and women’s rights issues-based work in Afghanistan, both of which are much needed, and a long-term investment in the Afghan people, are some areas where the United States could keep engagement alive and leverage its own long-term diplomatic gains against China”.

Despite the significant challenges that lie ahead for it, Beijing’s renewed engagement with Kabul is aimed at exerting control over a desperate Taliban regime, exploiting Afghanistan’s considerable resources, and gaining greater access to the IOR, all of which run counter to the interest of the US and its partners.