Large scale Barter trade is an centuries old concept of commence that has traditionally thrived within the South Asian region since the very start of recorded civilizations. It comes with various advantages that many people across the border (Both Pakistan/Afghanistan) continue to rely upon well within the 21st century.
It is exactly due to these advantages and circumstances linked with barter trading that the Government of Pakistan has been making various efforts to formalize the concept and implement trade barter mechanisms. This article will dive briefly into the need for and importance of barter trading between Pakistan and Afghanistan.
First of let’s start with small introductions, barter is an act of trading goods or services between two or more involved traders without the use of money or any financial currency (Goods are exchanged for different Goods). Hence international barter trade between Pakistan and Afghanistan is an occurrence of exchange in which people from both countries directly exchange goods or services for other goods or services without using currency such as intentionally standard US dollar as a medium.
For example, due to current ongoing war in Ukraine fuel prices have soured internationally, as a result Pakistan has started to source coal from Afghanistan instead of previous South African suppliers, in exchange for exporting coal Afghan traders import meat and wheat from Pakistan due to food shortage and ongoing humanitarian crisis in Afghanistan (Exchange of goods).
This system is particularly important due to the ease of trading it provides for locals, promotion of commercial activities across borders and most importantly absence of using US Dollars to trade of which both Pakistan and Afghanistan currently are in shortage (Pakistan facing economic crisis and Afghanistan facing western sanctions). These advantages are listed in more detail below:
Circumnavigating International banking and Dollars
Typically, international trade involves usage of international banking processes and exchange of currency (US dollars) for goods or services, however this is not a good option in the situation that US dollars are in short supply, international sanctions limit the use of banking resources or banking infrastructure being inadequate.
For trade between Pakistan and Afghanistan, the situation is bad on multiple spectrums as western sanctions on IEA / lack of adequate banking infrastructure within Afghanistan limits its access to international banking and resulting economic restrictions reduced dollar supply, Pakistan is also facing its own dollar shortage due to economic shortcomings. This means Barter trade between Pakistan and Afghanistan where goods are exchanged for other goods has become a good method of circumnavigating international banking restrictions and reducing dependency upon US dollars.
Using Barter trade, people on both sides of the border can easily access various products and services which are in short supply locally but available in abundance across the border without the need for relying upon complex international banking. Western banking restrictions upon trading with IEA government and inability of Afghans to pay in dollars can be countered by simple barter trade. Here the threat of money going to “Regimes” as west terms it is also reduces as in barter the main beneficiaries are local people trading need-based goods rather than weapons.
Resolving the humanitarian crisis and securing Peace
Currently Afghanistan is still in facing a humanitarian crisis partially caused by sanctions placed on the country which limit its options in importing necessary food, medicine, and other essentials. By making use of Barter trade with Pakistan has the pressure been reduced upon Afghans as they were able to trade various local products sitting in surplus such as coal in exchange for various necessary items such as wheat.
Furthermore, as Afghans continue to reopen various lost local industries its options for barter exports to Pakistan increase in exchange for which Afghanistan can continue to import essentials until the crisis gets resolved. The government of Pakistan has listed assisting Afghanistan within the crisis as one of main motivating factors behind formalization of barter trade. This is because Pakistan understands that peace within Afghanistan is long overdue and a necessary step towards establishing economic development framework in Pakistan’s western frontier.
Increasing economic cooperation and development
As things stand, both Pakistan and Afghanistan have economic issues now. Both issues differ from one another in circumstance and intensity, regardless it is the long-term goals of both to countries to establish an environment where economic cooperation and development can be achieved. Barter trading in this context is a great start as in its nature it requires both parties to cooperate, whereas development is a natural byproduct of increased local commercial activities.
As Barter trading is relatively simpler than international banking, more and more local traders within Afghanistan and Pakistan have access to this trade network and can benefit directly. As the government fully implements a fully comprehensive barter trading system, the cooperation level of both countries will increase dramatically where long term economic planning will become possible.
Furthermore, as traders start taking advantage of surplus products from each side while making up for shortages at home, economic development rate is expected to rise. Such is the power of barter trading between two culturally close nations.