India’s foreign aid and investments in Afghanistan provide an example of how economic statecraft can be employed to gain geopolitically crucial allies. India and Pakistan both offered to help Afghanistan rebuild a stable democracy after the fall of the Taliban in 2001. India quickly became Afghanistan’s fifth largest donor and has since provided over three billion dollars in support. India gained more influence in Afghanistan as a direct result of its economic interventions. Since Pakistan is wedged between the two countries, it also recognized the importance of a strong influence in Afghanistan. Pakistan determined that maintaining a dominant position in Afghanistan would allow it to better mitigate any national security concerns if its two largest neighbors formed an alliance. In response, India relies on its investments in Afghanistan to counter Pakistani influence, reach greater energy security, and improve regional safety.
The fall of the Taliban regime offered India a chance to gain influence in Afghanistan and develop a strategic partner to the west of its main rival. Along with humanitarian assistance, India has supported Afghanistan by creating infrastructure, training army officers, and investing in their energy sector. While Indo-Afghani relations became prominent after 9/11, the two countries first signed a friendship treaty in 1950, a few years after Indian independence. Relations between the two countries soured during the Taliban regime, but India’s recent investments and donations in Afghanistan caused the countries to regain cordial relations. Afghani admittance into the South Asian Association of Regional Cooperation (SAARC) in 2007 added another platform where India and Afghanistan could engage in further diplomatic talks.
India paves a more accessible path to resources found in Asia by investing in Afghanistan’s infrastructure. Currently, Pakistan acts as an obstacle to the movement of goods between India and Afghanistan. Afghanistan depends on Pakistan’s port city of Karachi for foreign trade, since it is a landlocked country. Pakistan’s upper hand over Afghani trade allows it to limit the goods Afghanistan exports to India and completely prohibits Indian imports from moving through Karachi. In June 2017, India and Afghanistan began an air cargo service to exchange Indian agricultural products, especially fruits, for items like carpets from Afghanistan. This air cargo link is an important step in increasing trade between the countries because it bypasses the need to involve Pakistan.
India has taken other steps to circumvent Pakistan’s involvement. In 2016, Indian Prime Minister Narendra Modi pledged over $500 million to invest in Iran’s Chabahar Port. This Iranian partnership was intended to create a sea port that improves connectivity between India, Afghanistan, and other Central Asian countries. Located in Southeast Iran, the port would provide another alternative for transporting goods to and from India without involving Pakistan. India first showed interest in the project in 2003, but progress stalled until Chinese President Xi Jinping pledged $46 billion to Pakistan energy and transportation infrastructure.
China spread its investments throughout Pakistan, which allowed for easier trade between China and the Pakistani port of Gwadar. The Indian-backed port in Iran sits only 170 kilometers west of Gwadar, however, it remains much smaller than the Chinese-backed port. Chabahar’s port only has 2 berths, whereas Gwadar’s port has a total of 13 berths. On the other hand, India’s land transportation improvements in Afghanistan compare better to China’s infrastructure development in Pakistan. India already assisted in funding the construction of around 4000 kilometers of roadway in Afghanistan. This includes the Zaranj-Dilaram Highway which connects Afghanistan and Iran.
Additionally, India pledged to develop rail links between Iran and Afghanistan to improve trilateral trade. The connectivity India is building with Afghanistan also helps India achieve greater energy security. According to the International Energy Agency, India will surpass China’s population by the mid- 2020s. Consequentially, their demand for energy will also rise. India relies on coal for 58 percent of its energy demand. It hopes to decrease oil dependence and increase reliance on natural gas. India is concurrently involved in the Turkmenistan, Afghanistan, Pakistan, India Pipeline (TAPI) natural gas pipeline project. If successful, the pipeline will annually transport 14 billion cubic meters of natural gas to both India and Pakistan. This would equate to one and a half and 15 percent of each country’s respective total annual energy consumption. Though the Taliban has pledged to avoid interfering with the project, the tenuous security situation remains a threat moving forward.
By having an ally in TAPI though, India can deal with Pakistan from a position of strength. New Delhi could, in extreme circumstances, partner with Kabul to use the pipeline as leverage against Islamabad by threatening the flow of natural gas into Pakistan. If Afghanistan threatened Pakistan’s natural gas supply from the pipeline, India would inevitably lose its supply from the pipeline and suffer some as a consequence. However, the separate transportation infrastructure India created with Afghanistan would still allow for natural gas and oil trade between them.
The Council on Foreign Relations stated that the South Asian region is one of the least economically integrated regions in the world. Despite numerous SAARC trade agreements, trade barriers between South Asian countries persist. The India-Pakistan rivalry makes total regional cooperation difficult. Smaller states caught between this rivalry focus on keeping both countries satisfied rather than addressing pressing regional issues. Pakistan is currently Afghanistan’s largest trading partner, but India hopes to knock Pakistan to second place through heavy investments in the country. Relations between Pakistan and Afghanistan have already begun to publicly deteriorate. In 2016, Afghani President Ashraf Ghani accused Pakistan of harboring Taliban leaders responsible for attacks in Afghanistan. Therefore, continued aid and investment to Afghanistan is important for India to ensure that Afghanistan remains a reliable partner for India moving forward.
India’s increased trade and investment in Afghanistan positions them for stronger national security. By exerting soft power in the Afghani political sphere, India hopes to flush out terrorist groups, especially Pakistani-based ones, that threaten Indian security and impede Afghanistan’s progress. After the 2008 Mumbai attacks, India accused Pakistan of backing the perpetrators, Lashkar-e-Tayyiba. India then looked to the Afghani military as an ally in counterterrorism. India trained over 4,000 officers of the Afghan National Army since 2011 and provided helicopters to the Afghan Air Force to be better prepared when fighting Taliban forces.
In September of 2017, President Trump called upon India to step up its efforts in stabilizing Afghanistan outside the realms of aid and economic support. However, a sizeable Indian military presence in Afghanistan may create further issues. An increased military presence would threaten Pakistan and China and only create new problems. India’s current Afghanistan stabilization strategy of donations, grants, and investments may be New Delhi’s best route forward for several reasons. First, the approach minimizes the risk of physical conflict with neighbors. Secondly, it allows India to better position itself in South Asia by gaining Afghanistan as ally. This helps counter-balance a strengthening Pakistan and Chinese partnership. India is positioning itself to have greater energy security which could lead to greater economic prosperity. Finally, India’s aid and investments geared towards fighting the Taliban may assist in reducing turmoil in Afghanistan, which could lead to more stability in South Asia.