The Economics of Pakistan–Afghanistan Relations: Implications for the Region

Pakistan and Afghanistan are partners in the War against Terrorism that has tremendous repercussions on their economies. Bilateral relations have been difficult, as Afghanistan blames Pakistan of interfer-ing in their internal affairs, while the war in Afghanistan has spilled over to Pakistan. Plans to tap the natural resources in both the countries, to link the gas and oil fields of Central Asia to the Sea and to exploit the opportunities of the emerging markets in Central Asia cannot materialise as long as the disturbances in Afghanistan and western Pakistan go on. Economic factors are intertwined with non-economic ones, mutually determining each other. As the USA and their allies have started to pull out their troops from Afghanistan, the neighbours have to find a new modus vivendi. In August 2013 their leaders begun to sort out problems of the transit trade that is vital for Afghanistan and that Pakistan has to make sure not to lose