KABUL: Afghanistan’s traders fear the expected placing of Pakistan on a global terrorist financing watchlist could seriously affect bilateral trade, which is mostly conducted in Pakistani currency.
The traders are already facing financial losses from the recent re-imposition of US sanctions on neighboring Iran.
The US and its European allies recently co-sponsored a motion calling for nuclear-armed Pakistan to be placed on a gray list of nations deemed to be doing too little to comply with anti-terrorist financing and anti-money laundering regulations under Financial Action Task Force (FATF).
The motion is expected to be enforced this month.
Afghan traders and money-changers, conducting transactions in Iranian currency, are already reeling from the fallout of US sanctions on the Islamic Republic.
Afghanistan’s Chamber of Commerce fears the placing of Pakistan on FATF’s gray list will have an even more devastating effect on the country’s foreign-reliant economy.
“In general, our concern is that sanctions on Iran and the inclusion of Pakistan on the gray list without doubt will damage trade and transaction,” Khan Jan Alokozai, deputy head of Chamber of Commerce and Industries, told Arab News on Wednesday.
“We are worried about it, about its effect on our trade,” he said.
Afghanistan’s exports to Pakistan, one of the country’s main trading partners, is conducted in Pakistani rupees, he said.
In about a dozen of the provinces, Afghans normally conduct their daily transactions in the markets by rupee, despite repeated government moves to ban the use of foreign currency in routine transactions.
Alokozai said his organization has not formally suggested that traders avoid stocking rupees or halt the currency’s use in daily business.
Afghan money traders fear for their business if Pakistan falls on FATF’s gray list again. However, they continue to trade in rupees.
“We are aware of this, but people extensively use rupee like before. We do not know of any government announcement or policy in this regard,” Hajji Farooq, a money dealer in Kabul, told Arab News.
The inclusion of Pakistan in the gray list is part of a broader US strategy to pressure the country to cut its alleged links with militants fighting in Afghanistan.
Pakistan denies any links and has shrugged off a US aid suspension worth $2 billion. But inclusion on the FATF watchlist could inflict real damage, bankers and government officials say.
Islamabad has sought to head off the motion by amending its anti-terrorism laws and by taking over organizations controlled by Hafiz Saeed, who is blamed by Washington for the 2008 Mumbai attacks that killed 166 people.
Pakistan’s $300 billion economy is expanding at its fastest rate in a decade at above 5 percent, but could lose steam if the country is placed on the FATF watchlist.