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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Pakistan to Tax NATO Transit Supplies?

Consider – every single drop of fuel used by the NATO-led International Security Assistance Forces, largely composed of 90,000 U.S. military troops, must be brought into Afghanistan from outside the country.
But the ISAF troops aren’t the only mouths to feed in Afghanistan, as in 2010 the Pentagon's Central Command put the number of contractors for the U.S. military at 107,000.
For the last two months, not a drop of fuel, munitions or food has been delivered through Pakistan, as following a 26 November NATO aerial assault on two border posts in Mohmand Agency in Pakistan’s turbulent NorthWest Frontier Province that killed 24 Pakistani soldiers, the following day Islamabad promptly sealed its border with Afghanistan to NATO supplies.
Pakistan demanded an immediate apology for the incident.
Islamabad is still waiting, and so the country’s frontier crossings remain shuttered.
Prior to the embargo roughly 100 fuel tanker trucks along with 200 other trucks loaded with NATO supplies crossed into Afghanistan each day from Pakistan’s Torkham and Chaman border crossings.
And now, according to Pakistani port authorities, around 2,000 containers are stacked at Port Qasim in Karachi, while 1,700 containers and a similar number of U.S. military vehicles remain stranded at Karachi’s Kemari harbor.
And the situation is unlikely to change, as last week during a meeting of the Defense Cabinet Committee (DCC), chaired by Prime Minister Yousaf Raza Gilani, decided to keep the supply route closed following a review of the NATO inquiry report into the border “incident.”
Yet in an area of the world where reading between the lines is a fine art, there are hints that NATO’s beleaguered supply lines may soon be open again.
But, it’s apparently gonna cost the alliance.
Defense Minister Chaudhry Ahmad Mukhtar told journalists that the government is considering reopening the supply line but, "If the supplies are resumed, it will not be for free," adding that Pakistan’s roads are damaged by 3,000 containers that pass over them everyday, so "we will charge them (NATO) and repair our roads from these taxes."
Before 2009, almost 70 percent of ISAF’s supplies were shipped to Karachi and trucked through the Khyber Pass border crossings at Torkham and Chaman to Kandahar but when attacks on the convoys increased that year, NATO opened up its Northern Distribution Network (NDN), a railway link running from Latvia’s Riga Baltic port through the Russian Federation and Kazakhstan, terminating in Uzbekistan’s Termez on the Afghan border.
Pentagon Press Secretary George Little said earlier this month “We are hopeful that our Pakistani partners will reopen the ground supply routes” before adding that currently, supplies are adequate to continue the war effort in Afghanistan due not only to increased traffic on the NDN but increased air shipments of supplies into Afghanistan.
But how much leverage will reopening the supply routes actually give the Pakistani government? According to U.S. officials, now approximately 75 percent of all the logistical supplies for U.S. troops in Afghanistan is now being shipped along the NDN, of which 90 percent crosses into Afghanistan from Uzbekistan’s southern border crossing at Termez. The opening last month of a 47-mile long, $165 million railway line, largely financed by the Asia Development Bank, from Uzbekistan’s Hairatan border town to Afghanistan’s Mazar-e-Sharif is certain to play an increasing role in the shifting of supplies to the NDN network.
The stoppage has left hundreds of Pakistani truck drivers and the thousands involved in the transshipment of the supplies scrambling for alternative work, but the loss of the lucrative contracts have hit them hard, as a lorry driver hauling NATO containers earned about $500 dollars per month, while a non-NATO truck driver would usually be paid only $75-95 each month.
And, in the meantime, the Karachi Port Trust charges $15 per day per container for storage.
Looking down the road – err, railway line, last week China’s state-owned National Petroleum Corporation (CNPC) signed a $700 million oil exploration contract with the Afghan government, the first foreign company to do so. Afghanistan’s Mining Minister Wahidullah Shahrani hailed the concord “historic,” noting that it was “the first time that Afghanistan has signed a massive contract for the country’s oil exploration.”
Speaking of railways, in 2007 the 44 percent state-owned China Metallurgical Group (CMG) paid $2.9 billion for the Mes Aynak copper mine in Afghanistan’s Logar province and proposes to build a 500-mile rail line to export the ore to China, and late last year Kabul granted rights to an Indian government-backed steel consortium to develop the 1.8 billion metric ton Hajigak iron ore deposit between Bamyan and Wardak provinces, with the consortium proposing to build a $4.3 billion, 560-mile railway line from Bamyan to Zahedan in Iran, from where ore will be transported back to India..
Western military might making Afghanistan safe for Chinese and Indian businesses - ain’t capitalism wonderful?

By. John C.K. Daly of Oilprice.com

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