The new Uzbek-Afghan free economic zone on the border promotes better ties with the Taliban

The new Uzbek-Afghan free economic zone on the border promotes better ties with the Taliban
Uzbekistan has opened the $70mn Airitom free zone on the border with Afghanistan and promote trade and improve ties with its unstable neighbour. / bne IntelliNews
By Emma Collet in Termez September 22, 2024

Uzbekistan is once again asserting itself as one of the most active countries in Central Asia in its pragmatic rapprochement with the Taliban in Afghanistan. To minimise the risks posed by the unpredictable Islamist regime, which has been on the doorstep of its borders for three years now, Tashkent has just completed the construction of a sparkling new shopping centre, accessible from both sides of the border via visa-free access for Afghan and Uzbek traders.

Those from Afghanistan will travel a few kilometres along a ‘green corridor’, braving the recurrent little sandstorms on the Uzbek-Afghan border, that will take them directly to the “Airitom free zone”, where they can stay for 15 days without a visa and enjoy tax-free trading. The 36 hectares place is located on the Uzbek side of the ‘Freedom Bridge’, spanning the muddy waters of the Amu-Darya that separates the two countries -- the same bridge retreating Soviet troops used in 1989 after their defeat in the Afghan war.

The Airitom zone, named after one of the districts of Termez, the regional capital of the southern Surkhandaryo region, which is closest to the Afghan border, was inaugurated on August 29, in the presence of Uzbek Prime Minister Abdulla Aripov. He invited a Taliban delegation, as well as ministers and diplomats from Kyrgyzstan, Kazakhstan and Azerbaijan, showing that the zone represents a new step towards another act of normalising the Taliban in Central Asia, with Uzbekistan taking the lead.

“The project has already been in the pipeline since 2020. When the Taliban came to power we had to continue discussions with them. It went rather well,” explains Kodis Parpiyev, the manager of the commercial complex. 

On August 18, the Uzbek prime minister even went so far as to travel to Kabul to meet his Taliban counterpart and sign a number of commercial and investment contracts worth $2.5bn, becoming the first head of government in the world to visit the Afghan capital. However, this first visit did not come as much of a surprise on the international stage. Relations between Afghanistan and Uzbekistan go back a long way, developing as soon as President Shavkat Mirziyoyev came to power in 2016, when he made opening up Afghanistan a top priority, turning the page on the quarter-century of economic and diplomatic autarky under President Islam Karimov. 

Since the Taliban's return to power three years ago, President Mirziyoyev has stressed that instability in Afghanistan is the main security risk in Central Asia. Uzbekistan has taken the initiative to improve relations between the two countries, which are separated by a short stretch of border some 137 km to the south, near the regional capital Termez. 

Between the two ultra-militarised border checkpoints, where queues of goods lorries line up on the Uzbek side to reach Afghan territory, now lies this massive tax-free economic zone, an architectural UFO with brand new buildings straight out of the ground. At a cost of $70mn, the Airitom complex was built by the private holding Afka, owned by Jahongir Artikkhodjayev, business tycoon and former mayor of Tashkent. The Uzbek government provided a $20mn credit line over five years to support its construction, which explains the presence of the state-of-the-art Afka medical hospital, and of several Afka subsidiary stores, omnipresent in the commercial space of the economic zone.

In addition to the hospital designed to attract Afghans seeking medical treatment – a crucial service given the dearth of modern healthcare facilities in Afghanistan, the complex includes a Hilton hotel and a luxury restaurant serving Turkish and Uzbek specialties. But most importantly, four large blocks are intended to house around 300 retailers, specialising in fresh produce, building materials and automotive products.

Some Uzbek citizens are already buying and negotiating stands to set up their business, sniffing out the good opportunity offered by the creation of this tax-free zone, which aims to attract buyers not just from Afghanistan but from all the countries in the region. Bismallah Yusufi, a Termez resident of Afghan origin, has already set up a branch of his lighting shop in one of the malls. He rents the 100-square metre space for $1,000 a month. “For the moment, business isn't good because the Afghans haven't arrived yet,” he says.

Indeed, the huge trade and exchange zone looks like a ghost town, as in mid-September the Taliban had not yet authorised Afghan traders to cross the green corridor into the economic zone. “It's only a matter of weeks now,” says a slightly distraught Kodis Paripyev. The zone is designed to generate $1.4mn in monthly trade, according to the complex's director, who is fairly optimistic about its potential, and to attract more than 1.5mn people a year. 

For $80,000, Mukhamad Oqsoqol, a Termez businessman, bought a site on the corner of one of the large commercial blocks. “For the moment, I don't really know what I'm going to sell, because the list of products isn't clear yet,” explains the entrepreneur, who runs several shops selling manufactured goods in Termez. According to the authorities, this information should be released in October, possibly.

The businessmen who are flocking to the new economic zone are mainly Uzbeks of Afghan origin. The town of Termez is home to a large diaspora of Afghans, most of whom settled here in the 1990s after the Taliban first took power in Afghanistan and have since been joined by a few dozen compatriots who fled the Taliban in 2021. “There are 400 Afghan companies in Termez,” says Otabek Tursunov, Termez hokimyat’s (mayorial) deputy. “Most of them are very involved in trade with Afghanistan,” he adds.

Many of them are then looking favourably on the brand new commercial centre at the border, according to several representatives of the Afghan diaspora in Termez. The modernity of the economic zone, just a few hundred metres from an Afghanistan ravaged by an unprecedented economic and social crisis, is impressive and illustrates Tashkent's efforts to adapt to the challenges posed by its underdeveloped, Islamist-ruled neighbour.

On the floor of one of the shopping malls a university has also been created and is ready to welcome 200 Afghan students per term, who will be housed and fed on the premises of the business complex. A subsidiary of Central Asia University, the courses will be taught in English and Pashto, and will cover the basics of business. However, only men will be allowed to attend, reflecting the restrictions imposed on women's education under the Taliban regime.

The free trade zone is expected to employ around 3,000 people, with a third of the jobs reserved for Afghans. To make things easier, a bus service between Mazar-e-Sharif and the free zone is being prepared so as to provide daily transport for Afghan workers.

“Afghans who want to set up their business here will have access to subsidies,” explains Kodis Papriyev. But as well as Uzbek companies and a few Afghan brands, international groups have also been invited. On the site, we can already see a Russian truck stand in front of one of the malls. “In addition to the Russians, Ukrainians and Belarusians have already shown interest in buying a stand. But it's mainly the Chinese who are the most interested,” explains Kodis Parpiyev.

There is no doubt that the new economic zone will give a further boost to cross-border trade, which has continued to accelerate between Uzbekistan and Afghanistan, despite the arrival of the Taliban. “Here, the ‘Friendship Bridge’ was only closed for three days, just long enough to clear the bridge of the cars of Afghans who had fled the Islamist regime across the border with Afghanistan”, recalls Nodirbek Djalilov, director of the Termez Cargo Centre, a logistics centre for cross-border trade on the Uzbek-Afghan border. According to him, between 100 and 150 lorries cross the border every day on both sides, not counting the 500 to 1,000 tonnes of humanitarian aid sent daily by the UN, which continues to pass through Uzbekistan.

From Afghanistan, dried fruit and a few fizzy drinks cross the border, while from Uzbekistan, flour, wheat and above all fuel head south. 30% of the lorries go to Pakistan, a country that has the advantage of having global seaports for the countries of Central Asia.

“The new economic zone will create more competition in the goods trade,” concludes Nodirbek Djalilov. This can only bring positive things to business and to peace.”

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