Afghans Fear Fallout from Iran Sanctions

By Hafizullah Gardesh in Kabul (ARR No. 230 28-Sep-06)
As the threat of United Nations sanctions continues to hang over Iran, Afghanistan looks on nervously, concerned that its close economic ties with its western neighbour could suffer serious damage.

Some analysts are warning that the Iranians might decide to support Afghan insurgent groups as a way of getting back at the United States, which has taken the lead in pushing for action on the Iranian nuclear programme.

Diplomats from six key UN members - the US, Russia, China, Britain, France and Germany - met last week to discuss what sanctions might be applied against Tehran if it fails to suspend uranium enrichment and come back to the negotiating table. Iran missed an August 31 to comply with a UN resolution imposed a month earlier, which contained the threat of sanctions.

The government of President Hamed Karzai has close ties with the Americans, so would find it difficult to flout any formal embargo on trade with Iran.

But Afghan officials and commentators are keenly aware that sanctions would have a major impact on their own economy, reducing much-needed imports and forcing Iranian investors to pull in their horns.

Although it is not clear what UN sanctions would include, they might reduce its capacity to export goods freely - bad news for the Afghans, who import fuel, construction materials, food and other items worth 500 million US dollars a year, according to Hamidullah Farooqi, chief executive officer of the Afghanistan International Chamber of Commerce.

Farooqi told IWPR that many of the estimated 2,000 Iranian private firms now in the country would be likely to close, reducing production capacity and costing jobs in Afghanistan’s devastated economy.

Other investors, too, would be affected. Mohammad Azim Wardak, who heads the foreign trade department at the trade ministry, said even those who are now bold enough to invest in Afghanistan would likely be scared off by the prospect of conflict in the wider region.

“As things stand, few investors are willing to invest in Afghanistan because of the lack of domestic security,” he said. “When one of its neighbours moves towards instability, even to war, because of sanctions, no domestic or foreign investor will ever invest in Afghanistan. Many of them now share this concern.”

The economic, social and political implications of possible sanctions are closely intertwined. For example, what would happen to the approximately one million Afghans who the United Nations says are still living as refugees in Iran.

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