Afghanistan-Pakistan tensions are strangling regional prosperity

The ceasefire between Afghanistan and Pakistan brokered by Qatar and Turkiye may have silenced the guns for now, but as several analysts note, the durability of such agreements is always in doubt where mutual distrust runs deep. While many obsess over security doctrines and political posturing, the more insidious and lasting damage is economic. The central, tragic argument is that Pakistan and Afghanistan, two of Asia’s poorest countries, are engaged in economic destruction, where the immediate security costs are dwarfed by the long-term devastation to trade, livelihoods, and human capital.

The most significant and immediate economic impact of the Pakistan-Afghanistan border conflict is the severe disruption to bilateral and transit trade. With monthly bilateral trade of over USD 300 million, border crossings like Torkham and Chaman which facilitate on average $15 million in daily trade, are forced to close during clashes. This halts the flow of essential goods, such as Afghan agro supplies and coal heading south, and Pakistani pharmaceuticals, cement, surgical items, and textiles heading north, leading to widespread spoilage of perishables, stranded trucks, and inflationary pressures as seasonal demand goes unmet in both countries.

The human cost of this trade disruption is immediate. A single border closure instantly cuts off the direct income for an estimated 11,000 daily wage workers, including porters, drivers and handlers, who depend on the crossings for their livelihood. This sudden loss of earnings pushes an estimated 55,000 of their family members in the impoverished border regions into severe hardship, exacerbating the local poverty crisis. Furthermore, the closures undermine exports from Pakistan’s Balochistan and Khyber Pakhtunkhwa provinces while depriving Afghanistan of essential imports and crucial customs revenue. It is not surprising that many unemployed youths in this part fall to social evils. 

Beyond the direct losses to trade and livelihoods, the conflict imposes heavy secondary economic burdens on both countries. Significant, yet uncalculated, costs are incurred through increased fencing and military expenditures and damage to critical border infrastructure. This diverts scarce public funds away from essential social and development programs, a particularly damaging consequence for two countries already facing severe fiscal strain.

This feeds directly into a crisis of human capital. Schools and clinics near the border become collateral damage or are forced to close for extended periods. A generation of children is growing up with interrupted education and the constant trauma of violence, which severely limits their future productivity. The UN’s World Food Programme has repeatedly warned of acute food insecurity in Afghanistan and border regions of Pakistan, and border closures directly impede the delivery of aid, worsening a humanitarian catastrophe. The conflict effectively acts as a regressive tax, punishing the poorest and most vulnerable, who have no buffer against such shocks.

The guns are quiet for now. The question is whether the two countries will use this silence to build or simply to prepare for more ruinous noise.

Vaqar Ahmed

The ceasefire announced is a necessary first step, but it cannot be the last. Treating it as merely a security arrangement, a pause to re-arm and re-position, would be a missed opportunity. The conversation must immediately pivot from monitoring troop movements to revitalizing economic lifelines and people to people relations.

The follow-up bilateral meetings must not be dominated solely by defense teams on both sides. It must include trade ministries, chambers of commerce representatives from both sides, and think tanks who can continue track-II engagements.

The agenda should also be concrete and commercially focused. First, normalize trade: establish a permanent, verifiable mechanism to keep the Torkham and Chaman borders open, regardless of political tensions. Ensure digital customs clearance to reduce bottlenecks and opportunities for corruption, a major impediment to trade. 

Second, invest in border economics: supplement investments in fencing and fortifications, both governments, with support from international partners, should invest in border infrastructure — modern terminals, cold storage facilities, and shared industrial zones. This would transform the border from a barrier into a bridge for shared prosperity. 

Third, formalize the informal: a significant portion of cross-border trade is informal. Efforts should be made to bring this into the regulated economy, which would increase state revenue and provide traders with legal protections and access to finance.

Afghanistan and Pakistan are bound by geography, history, and, most powerfully, economics. The path of conflict has led only to shared poverty and deeper insecurity. The ceasefire offers a chance to choose a different path, one where the flow of goods replaces the barrage of shells, and where economic interdependence becomes the best guarantor of a lasting, and more prosperous, peace. The guns are quiet for now. The question is whether the two countries will use this silence to build or simply to prepare for more ruinous noise.

-Dr. Vaqar Ahmed is an economist, former civil servant, and the President-elect of Rotary Club Pakistan Corporate (RCPC).