Khyber Pass economic corridor: A corridor of opportunity
PAKISTAN has been endowed with a unique and unmatched geopolitical position in the Asian continent.
With the advancement of modern technology and communication, the country is rapidly emerging as a bridge between different regions of Asia and is increasingly serving as a connecting route between Asia and Europe—an evolving concept known as the Eurasian Region. In this context, various strategic-level studies are underway. One significant initiative is the Khyber Pass Economic Corridor (KPEC), a concept developed by Pakistan in the late 1990s and the early 2000s. Although the corridor was slated for launch in 2017, its implementation has faced delays due to multiple factors, including security challenges, political instability in Pakistan and a range of technical issues.
Tracing the history of this concept, the planned corridor will be a revival of the traditional trade route between South Asia and Central Asia through Afghanistan. Economically, the KPEC aims to promote and boost economic growth at five levels; a) enhancing regional connectivity from Pakistan to Afghanistan and further expanding it to Central Asian region, b) promoting trade and commerce in various parts of Pakistan converging a Khyber, c), creating favorable security situation in Afghanistan for trade and commerce between Pakistan and Afghanistan, d) expanding the trade and commerce with Central Asian States by enhancing communication infrastructure and e) providing a gateway to Central Asian States and Afghanistan through well-developed Pakistani ports connecting these landlocked states with rest of the world via Arabian Sea and Indian Ocean.
These are the broad parameters and outlines of the KPEC while the bidding for its construction has been completed. Besides, the corridor aims at stabilization of the region which has been a war zone of major powers since the 1980s. Construction and operationalization of KPEC will open new avenues for major powers to make economic investment in the region for exploration of minerals and hydrocarbons through a cooperative mechanism which will reduce the chances of conflicts and proxy wars. Besides, Pakistan perceives that the corridor will focus on infrastructural development, preservation of regional cultural and heritage by providing a win-win situation for all; regional and extra-regional states through economic cooperation.
The construction of 48km-4-lane corridor (KPEC) from Peshawar to Torkham will greatly enhance the social and economic relationship of Pakistan and Afghanistan, which remained offline for quite some time. Some CBMs have already been initiated by Kabul and Islamabad. This will pave the way for trade and commerce between Pakistan and Afghanistan on one side and further connecting to Central Asia. Such an integration will further pave the way for integration of Afghanistan and Central Asian States to become part of a gigantic economic project; the China-Pakistan Economic Corridor (CPEC). It is worth mentioning that China is already engaged in Afghanistan and Central Asia through massive economic investment. KPEC will provide an opportunity for further investment by China in the region which will boost trade and commerce with new avenues.
Recently, the United States has also engaged with Pakistan for investment in various fields. KPEC may provide an opportunity to the US to play a constructive role through economic investment and mineral exploration. As the US recalibrates its Eurasian engagement after withdrawal of its military from Afghanistan in 2021, it has all the opportunities to cooperate with; Pakistan, Afghanistan and Central Asian states at economic level. Washington can become a vital land bridge for accessing Central Asia and Afghanistan for economic investment and development which it could not attain through use of hard power, the two decades of military invasion, continued from 2001 to 2021.
The corridor offers a secure and scalable overland corridor, circumventing high-risk transit through Iran or unstable northern routes. The US will have to adopt a cooperative approach this time rather than a conferential path with major powers which are key regional states; China and Russia; through a win-win methodology. Besides the US, the European Union has an opportunity to show their economic presence in the region through economic investments. This will open a wider cooperation for the promotion of economic integration, making Pakistan the hub of all economic activities.
Indeed, for quite some time finances for the KPEC has been a serious issue for Pakistan. In order to overcome its financial expenditures, the World Bank has signed an agreement with Pakistan for the financial support of the project. As signed, the World Bank will provide a loan of $406.6 million to support the project. It was signed in December 2019 yet delayed and now there are opportunities to formally start the project. It will reduce transit time and costs for regional and international trade and undo the bottlenecks which delayed the regional economic integration. It is added that, World Bank’s financing for the project also includes concessional credits and counterpart findings.
Pakistan foresees that apart from reducing the transit time, the construction of KPEC will create job opportunities for 100,000 people. The corridor will open avenues for two sides’ trade and commerce between Pakistan-Afghanistan and Central Asian states. The project is an opportunity for Pakistan and regional states to cooperate for a larger regional integration and economic progress. A wider regional integration initiating from KPEC will further promote the economic integration at global level where Pakistan will emerge as the pivotal actor. Pakistan must start the project sooner than later, as it has been delayed considerably.