The role of regional linkages in permitting and sustaining conflict and as obstacles to transformation remains very important as the conflict dynamics that arise from economic, military, political and social networks within regions can lead to “regional conflict complexes.” Afghan

reconstruction also has a regional dimension. Just as the conflict in

Afghanistan negatively affected the surrounding countries, post-conflict

reconstruction is bound to bring in opportunities for regional development and greater integration. It has to be recognized that there must be a stable relationship among the countries of the region.

This political equilibrium needed respect for every country’s independence and territorial integrity, non-interference in each other’s internal affairs, the

notion of equality, and the recognition of the right of each country to establish economic and political relationships that they determine to be in their best interest. All these needed strong and mature political relationships. Regional economic integration, the need to reduce barriers to investment and trade, issues of trade facilitation were crucial issues to address before the government in 2001. Another projected goal is that

of making Afghanistan a land bridge between South and Central Asia and

therefore needs the creation of an economic environment that fosters the

growth of mutually beneficial productive investment amongst all of the countries of the region. All these need sound economic fundamentals that promoted mutual advantage and not based on short term “predatory exploitation.”

Afghanistan needs to move out of being a mere transit for trade between its neighbours and must seek to develop activities that add value to imported inputs to produce outputs for export and benefit to a greater extent from its crucial role in regional trade.

The problem with the transit

trade is not that it adversely affects the balance of payments. The field survey-based estimates quoted above show that though there was a small deficit in terms of the indigenously directed and originating trade, Afghanistan did not suffer from a trade imbalance that needed significant external financing. The real difficulty is that unregulated growth of such trade creates disincentives for investment aimed at increasing domestic employment and value-added through processing and production activities within Afghanistan.

To be continued....