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'Biggest deal': Russia expands economic cooperation with Taliban

Asia (bbabo.net), - Russia is becoming more active in the Afghan direction. This week was marked by the conclusion of the largest deal since the Taliban came to power last year. Now Moscow has received a new status - the guarantor of the energy and food security of the "Islamic Emirate of Afghanistan" (IEA, the self-name of the country among the Taliban).

Deal details

Messages about a major agreement between Russia and Afghanistan have been broadcast in the information field for more than a month. Moscow has constantly demonstrated its readiness to expand economic ties with Kabul. Various symbolic gestures acted as signals. The visit of the Afghan delegation to the St. Petersburg International Economic Forum 2022 was no exception. However, the specifics in economic relations were introduced only this week. The preliminary agreement on the supply of fuel and grain reached between the governments of the Russian Federation and the IEA was officially confirmed by Zamir Kabulov, Special Representative of the President of the Russian Federation for Afghanistan. According to him, under the agreement, Russia will annually supply Afghanistan with about 1 million tons of gasoline, the same amount of diesel fuel and about 500,000 tons of liquefied natural gas (LNG). In addition to the fuel component, the Russian Federation, under the agreement, will annually supply 2 million tons of wheat to the country.

Earlier, the Acting Minister of Trade and Industry of the IEA, Haji Nuriddin Azizi, announced the agreement between the parties. He gave the same figures as Kabulov. According to available information, a trial period is provided for the mechanism of contracts, after which the parties expect to extend them. Most likely, it means that the trial period will last until the end of March, when a new, 1402 solar Hijri year begins. Goods will be delivered to Afghanistan by rail [to Uzbekistan] and by road. According to Azizi, Russia has agreed to provide a discount on global prices. Earlier, he said that the Afghan authorities consider the barter payment scheme a priority. If this scenario is impossible, the option using financial transactions is quite realistic. Moreover, Azizi personally discussed the terms of the contracts during his visit to Moscow at the end of August. After his departure, the technical committees continued their work.

The IEA authorities hope to improve the country's economic situation by relying on imports from Russia. The Taliban expect to bring prices on the domestic market in line with the purchasing power of the population. Zabihullah Mujahid, Deputy Minister of Information and Culture of the IEA, confirmed that contracts for the supply of Russian fuel and grain to Afghanistan have been signed and agreed upon for the next year. According to the Afghan minister, such factors as quality and price determined the choice of Russian products.

Severity of the deal

While there are media reports that the Taliban have made their biggest economic deal, the reality is not that big. At least for Russia. The announced million tons of oil will not significantly improve the situation in the Russian trade balance. For comparison: in 2021, Moscow supplied Europe with about half of all Russian exports of black gold - 111.2 million tons. In January 2022, the export of oil products to Europe amounted to 4 million barrels per day.

Vladimir Sotnikov, a senior researcher at the Department of the Near and Middle East at the Institute of Oriental Studies of the Russian Academy of Sciences, agrees with this assessment. In his opinion, the declared volume of trade should not be overestimated, however, already from these indicators it is possible to build fruitful cooperation with the new Afghan authorities.

“A million barrels of oil is not a very large amount, but for a start it will be enough to establish trade and economic relations with Afghanistan in the future,” the expert said.

The very principle of a barter deal also raises many questions, especially what is the IEA government going to supply in exchange for Russian imports? According to Sotnikov, in addition to traditional Afghan exports, and these are mainly agricultural products - raisins, almonds and lamb fur, Afghanistan can offer Russian companies participation in the development of deposits of rare earth metals, in particular, lithium. The barter proposal arose because Afghanistan was in an economic crisis, and in this way the country would save much-needed currency, since Afghan assets are still frozen in Western banks, and Moscow has a constructive non-hostile relationship with the Taliban government. “With the start of such barter trade, Afghanistan will be interested in investments in its economy from Russian companies. It can be expected that in the future Afghanistan will be able to attract investments from Russia, but, probably, with one condition: Russian companies must make sure that it is safe, that the Afghan side will ensure the safety of Russian specialists,” the expert believes.

Priority of politics over economics

Considering the formation of trade and economic relations between Russia and the IEA, it is worth mentioning right away that the figures are not decisive. In the current context, it is much more important that it was Moscow that was the first to conclude the largest deal with the Taliban. Therefore, it is necessary to correctly place the accents. In the current situation, it is a correctly structured policy that will be able to recreate a fertile ground for the development of economic relations with Kabul in the long term.

Rais Suleimanov, an expert at the National Strategy Institute, agrees with this assessment of the situation. In his opinion, the current cooperation can only be called beneficial politically.

“If Russia goes for it, it will be a political gesture. This is the case when the country will incur economic losses with the expectation of some future perspective,” he said.

According to the expert, there is a small range of goods in Afghanistan that can be supplied instead of the Russian one.

“This is an agrarian country, the level of economy there is very low. It is a mystery to me what they can supply - perhaps carpets or grain. The deal can be approved on the assumption that it will allow us to build better relations with the new de facto authorities in Afghanistan. Russia may ask to explore some mineral deposits, ”Suleimanov suggested.

Director of the Center for the Study of Contemporary Afghanistan Omar Nessar agrees with the current priority of politics over economics in relations between Moscow and Kabul. The expert believes that the deal should be considered more in the political plane than the economic one. Both on the part of Russia and on the part of Afghanistan, this is dictated by the established regime of sanctions and isolation. According to him, Kabul is unlikely to be able to carry out impressive purchases of fuel and lubricants, since the need for them has fallen sharply - especially after the withdrawal of foreign troops.

“The socio-economic situation has also seriously deteriorated: in large cities of the country, the number of cars has decreased significantly. There are also logistical difficulties. Therefore, from an economic point of view, Afghanistan will not become a big market for the Russian oil and gas sector,” Nessar states.

In the current conditions of sanctions pressure, Russia should develop ties with all the countries of the world majority, regardless of the governments existing in them. The same position is openly declared in the Russian Foreign Ministry.

“The Taliban, no matter how one treats them, is a reality that cannot be avoided. Therefore, we must work with them where it suits our interests and where it is required to solve the tasks facing Russia,” said Russian Ambassador to Afghanistan Dmitry Zhirnov.

Thus, the small size of the Afghan market does not matter so much as building fruitful contacts with the EEA government, which promises significant benefits for Russia in the long term.

'Biggest deal': Russia expands economic cooperation with Taliban