TAPI: From pipedream to pipeline for prosperity
As the US intervention in Afghanistan reaches a denouement, regional trading opportunities put on ice can once again be revived. Negotiations between Washington and the Taliban are reportedly at a point where a declaration of a “comprehensive ceasefire” is possible and would enable the exit of
troops from Afghanistan and the inclusion of the Taliban in a new ruling setup.
An indication of this emerging reality is the signing last month of the 'Host Government Agreement’ between Pakistan and Turkmenistan for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. Under the agreement, Pakistan would assist the TAPI Pipeline Company Limited (TPCL) in laying a gas pipeline in its territory against which it will receive a transit fee.
Turkmenistan is home to the world’s second-largest deposit of natural gas, and TAPI would allow the Central Asian country to diversify its exports destinations by delivering energy to India and Pakistan. The 1,814 km pipeline will run from the Galkynysh gas fields in Turkmenistan through Afghanistan and Pakistan to India. In Afghanistan, the pipeline will be constructed alongside the Kandahar–Herat Highway in western Afghanistan, and then via Quetta and Multan in Pakistan. The pipeline will be 56 inch in diameter and is expected to bring 33 billion cubic meters of natural gas per annum (bcm) from Turkmenistan to the Pak-India border. If the ultimate ambitions of TAPI are realized, it will create an integrated India-Pakistan-Central Asia oil and gas network servicing a huge, and rapidly growing market.
A concerted, focused effort by Pakistan, India and the Central Asian states can lead to the optimal commercial development of Central Asian oil and gas resources, and at the same time address the energy security needs of 1.5 billion South Asian consumers. To take advantage of the vast untapped oil and gas reserves of Central Asia, Pakistan is becoming an active stakeholder in the development of pipeline infrastructure, as well as playing a lead role in the commercialization mechanism of such resources.
If the ultimate ambitions of TAPI are realized, it will create an integrated India-Pakistan-Central Asia oil and gas network servicing a huge, and rapidly growing market.
Central Asia and Afghanistan’s importance to Pakistan’s international economic engagement matrix is not limited to energy. The Central Asian region has enormous potential for economic development based on its other industrial raw materials and agricultural produce. Pakistan, with the help of international investors, can emerge as a partner for Central Asian economies in their economic transformation and modernization, including the development of third country markets for joint ventures in various sectors. Development of integrated production networks that combine Pakistan’s competitively priced skilled and unskilled labor with Central Asian energy, natural resources and agricultural products, will go a long way in uplifting the region’s economies. Afghanistan will gain as a central part of this production network as an important transit country.
Investment opportunities will also arise because Central Asian economies are undergoing an economic transformation. Pakistani firms and companies, with their unique technological and entrepreneurial know-how suited to low cost, low-technology environment, can partner with Central Asian efforts by investing in new ventures in the region’s countries, and by helping them develop new export markets. As trade flows and traffic grows on these transit routes, new jobs in the logistics sector in areas such as warehousing, trucking and packaging would also be created in the Afghan economy.
Besides direct employment from the transit economy, small-scale manufacturing and agro-based industries can potentially develop in Afghanistan given the accessibility to Southern Asian and Central Asian markets. Access to cheap energy resources and relatively cheap labor would result in the development of labor-intensive export-oriented manufacturing geared towards western and other markets. Such an export-oriented strategy has the potential to takeoff and create a large number of jobs.
Development is likely to be the most impressive in the border areas with Pakistan and the northern areas bordering Uzbekistan and Tajikistan, leading to better prospects of peace and stability in the region. Since the benefits of a well-developed cross-border infrastructure and improved trade regime is most likely to be felt in the border areas of Afghanistan, the population in these regions would have the most to lose from the disruption to war and strife. Thus, a successful Central Asian initiative in the medium to long-term will create a huge incentive for the local population to lend their support and sustain such agreements, thus creating a strong domestic constituency for peace and economic development.