Afghanistan post Saudi-Iran deal: Opportunities and pitfalls for Kabul

Afghanistan need not immerse itself in the Pakistan-China camp, as it would provoke India and the US. Afghanistan’s foreign policy now requires preparing for a multilateral relationship, prioritizing the economically driven interests of Afghanistan.

Representational Photo

Iran and Saudi Arabia agreed in March 2023 to resume diplomatic relations in a deal brokered by China, ending a seven-year rupture and jolting the geopolitics of the Middle East. The deal suggests that regional powers in the Middle East, particularly Saudi Arabia, are re-aligning in the face of Washington’s de-prioritization of the region. On the one hand, US hegemony in West Asia is waning, and on the other hand, a rising China is expanding its influence.

China’s diplomatic efforts in bringing the two regional powers,  Iran and Saudi Arabia, to the negotiating table is an early sign of a changing global order, influencing the geopolitical dynamics of South and Central Asia in particular. There will be regional paradigm shifts if the deal brokered by China truly materializes.

Afghanistan has suffered for almost four decades caught in the middle of Iran-Saudi rivalry as both countries supported different warring factions of the Mujahidin. New Delhi and Tehran notably both supported the Northern Alliance — comprised of a mixture of ethnic minorities, including the Shi’a — in the latter’s resistance to the predominantly Sunni Pashtun Taliban, which enjoyed good relations with Riyadh and Islamabad. (Ali, 2023)  What does a regional paradigm shift mean for Afghanistan?

Afghanistan should pursue economic relations with regional and global players. Avoiding the formation of alliances between the two ideological extremes, Iran and the Taliban, or entering the “Axis of Resistance” led and centered by Iran antagonizing Saudi Arabia. Furthermore, Afghanistan need not immerse itself in the Pakistan-China camp, as it would provoke India and the US. Afghanistan’s foreign policy now requires preparing for a multi-lateral relationship, prioritizing the economically driven interests of Afghanistan.

Afghanistan and China relations

China is marketing itself as Afghanistan’s main economic partner for the future  (Taneja, 2023) but the Taliban’s relations with the East Turkistan Islamic Movement remain a point of contention. China, for now, is cautious in its approach towards Afghanistan and mostly doing its homework by engaging with the Taliban albeit on a limited scale economically.

China continues to play a more significant role in the region's politics; and it may look to increase its investments and trade ties with neighboring countries, including Afghanistan. According to a report from Foreign Policy, published in May 2022, “Chinese miners were already in talks to access Afghanistan’s vast lithium reserves.” The same report states that China is eyeing the largest iron ore mine in the region, “The Hajigak iron ore deposit”. In addition, China has already invested heavily in various infrastructure projects in Afghanistan, such as the construction of a major road network, and this trend may continue.

According to another report by Financial Times, China has already offered to invest in energy projects. China's increasing influence in the region, and the need for the Belt and Road megaproject, may lead to further investment in Afghanistan, which could benefit the country's economy and provide much-needed job opportunities for its people.

Infrastructure development is crucial for Afghanistan, as it can help improve connectivity, facilitate trade, and promote economic growth. With China's financial resources and expertise in infrastructure development, it could potentially help Afghanistan to build and upgrade its transport infrastructure, such as roads, and railways.

Furthermore, increased economic cooperation with China could lead to greater investment in Afghanistan's natural resources, such as copper, iron, lithium, oil and gas. Afghanistan has significant deposits of minerals and gas, which could potentially be exploited for economic development. However, this would require significant investment in the country's mining and energy sectors, which China could potentially provide.

The Taliban’s relations with terrorist groups such as East Turkistan Islamic Movement (ETIM)  and their ability in containing Islamic State-Khurasan (IS-K) and maintaining security for Chinese projects will define future relations with China. Afghanistan and China’s engagement economically is important for both countries. China needs a secure Afghanistan for its Belt & Road Initiative as peace and security in Afghanistan will have a direct impact on the Central Asian countries vital for the Belt & Road Initiative. The Taliban will benefit from Chinese investment as it is the only relative economic and trade alternative for the US in Afghanistan and can add a lifeline to an isolated Afghanistan.

Afghanistan and Iran relations

Iran’s chief concern is the growing influence  of the Islamic State of Iraq and the Levant (ISIL or IS-K) in Afghanistan. Iran also shares concerns regarding water-sharing mechanisms, drug trafficking and migration to Iran. The nature of Saudi-Arabia and Taliban relations and the Taliban’s political exclusion of the Shiite minority in Afghanistan will also hugely impact Iran's behavior toward the Taliban in the future.

Iran considers the “axis of resistance”, which includes many Middle Eastern states, as a vital asset in defeating the US in the Middle East, and after the return of the Taliban, Iran sees the Taliban as part of this axis. Afghanistan must avoid getting dragged to the axis of resistance and remain neutral from the Iran-US rivalry in the Middle East. This will help the current government have cordial relations with Saudi Arabia and the US in the future.

Iran is willing to engage with the Taliban to contain the IS-K threat, if not eliminate it. Afghanistan can shape this engagement and advance Afghanistan’s economic interests with its Western neighbor. Iran is Afghanistan's second-largest trading partner, with an estimated $2 billion worth of trade between the two countries in 2019, and from March 2020 to March 2021, the value of Iranian exports to Afghanistan reached $2.3 billion, (Tookhy, 2022) but it fell 40 percent after the collapse of the republic on August 15, 2021. 

There is a lot of potential for both Afghanistan and Iran to re-establish economic ties as Mir-Mohammad-Sadeghi, Vice President of the Iran-Afghanistan Joint Chamber of Commerce, expressed hope that if “the promises made by Taliban officials” are kept, bilateral trade could potentially reach $3 billion.  (Ali Fathollah-Nejad, 2021)

The resumption of diplomatic relations between Iran and Saudi Arabia could lead to greater stability and economic development in the region, which could translate into increased demand for unskilled labor, and raw materials from Afghanistan.

Iran is also a gateway for Afghanistan to access other markets in the Middle East, as it shares borders with countries such as Iraq, Turkey, and Turkmenistan. With the potential for greater regional integration and economic development, there may be more opportunities for Afghanistan to increase its exports to these markets.

The resumption of diplomatic relations between Iran and Saudi Arabia could lead to greater investment from both countries in the region namely Afghanistan. Iran has already invested in infrastructure projects in Afghanistan, including the construction of a railway line between Iran and Afghanistan. If Iran's large isolated economy grows stronger as a result of the deal, it could potentially lead to more investment in Afghanistan, which could benefit the country's economy and create job opportunities.

Building on the economic relations will help both Taliban and Iran in confidence building and result in security cooperation which will help both Iran in containing IS-K and Afghanistan with managing the flow of drug trafficking, migration, and importantly brain drain to Iran.

Afghanistan and Saudi Arabia relations

Having become more liberal and less fundamentalist in views, the Saudis have little common ground left with the Taliban (Siddiqui, 2021). Despite the peace deal brokered by China, it is yet to be seen if the deal materializes. Iran and Saudi Arabia will both try to enhance their soft influence in Afghanistan. “Saudi Arabia perceives Afghanistan as a vitally important landscape within its peripheral neighborhood (Siddiqui, 2021). Hence, Afghanistan’s closeness to Iran will always remain a point of contention within Saudi foreign policy.

Considering the cooling of Saudi-US relations lately, and the rearrangement relations in the Middle East, Saudi Crown Prince Mohammed bin Salman might benefit from the situation in Afghanistan in terms of finding a renewed utility toward the US. (Miles, 2021)

If Saudi Arabia decides to increase its economic engagement with Afghanistan, it could potentially have several economic advantages for Afghanistan,

First, Saudi Arabia is a major oil producer and exporter and as such, could potentially provide Afghanistan with access to affordable energy resources. This could be particularly beneficial for Afghanistan, which has faced significant energy shortages in the past.

Second, Saudi Arabia is a member of the Gulf Cooperation Council (GCC), which includes other oil-rich countries in the region. If Saudi Arabia decides to increase its economic engagement with Afghanistan, it could potentially lead to greater trade and investment opportunities with other GCC countries.

Third, Saudi Arabia has a large sovereign wealth fund, known as the Public Investment Fund (PIF), which invests in various sectors around the world. If the relationship between Afghanistan and Saudi Arabia improves, it could potentially lead to greater investment from the PIF in Afghanistan's infrastructure and other sectors.

Fourth, Saudi Arabia is also home to the Islamic Development Bank (IDB), which provides development financing to member countries, including Afghanistan. If the relationship between the two countries improves, Afghanistan may be able to access additional financing from the IDB to support its development needs.

Finally, Afghanistan has the opportunity to engage with and encourage Saudi Arabia to provide technical expertise and investment in Afghanistan's mining sector, which has significant potential but is underdeveloped. Additionally, there may be opportunities for Saudi Arabian companies to invest in infrastructure projects in Afghanistan, such as roads and power plants.

Options for Kabul

Drifting towards camps or alliances with great powers such as China or the US in the so-called ‘Democracy vs Autocracy' war from a foreign policy perspective will not serve the interest of Afghanistan in the long run. As Alexander rightly mentions, the Afghan dilemma cannot be solved by one country or group alone. (Alexander, 2023) And history has proven this reality. It is not in the interest of Afghanistan to align itself with either one country or a particular political group.

Afghanistan needs to pursue an economic-driven foreign policy. It is important to notice that a more stable and peaceful Middle East could have a positive impact on Afghanistan's security and economic situation. Afghanistan’s conflicts are always intricately linked with regional power dynamics. If Saudi Arabia and Iran can resolve their differences, it may lead to a reduction in the support provided by these countries to opposing factions in Afghanistan.

The changing global order and power dynamics may also present opportunities for Afghanistan to assert its own interests and play a more prominent role in regional politics. As the US continues to de-prioritize the region, Afghanistan needs to look to diversifying its relations, primarily economically, with its immediate neighbors, extended neighbors, and the larger region for support and partnerships.

However, these potential benefits are contingent upon the successful implementation of an economic foreign policy that prioritizes economic and trade partnerships in the region and avoids aligning Afghanistan with any political and security groupings.  

(The author is a perspective writer specializing in Afghanistan's conflict and peace analysis.  He can be contacted at Qais Mohammadi is an Adjunct Professor at the Institute of Political Economy at Carleton University Ottawa, Canada. Views are personal.)


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