The Taliban-Russia Trade Agreement
Asia & Pacific

The Taliban-Russia Trade Agreement

By Tiziano Marino
10.04.2022

On 28 September, the acting Trade and Industry Minister of the Islamic Emirate of Afghanistan, Haji Nooruddin Azizi, announced to have reached a provisional agreement with Russia for the supply of petrol, diesel, gas, and wheat at discounted prices. The Taliban government is trying with this move to break international isolation and respond to the severe economic and social crisis in the country. The agreement reached represents the first wide-ranging trade deal between the Taliban and a foreign government since the movement came to power in August 2021. The deal also has a strong political value by bringing together two countries that are both subject to sanctions. However, despite this rapprochement, a formal recognition of the Taliban government by Moscow still lacks.

Details of the agreement include the shipment to Afghanistan of one million tonnes of gasoline and diesel, 500 thousand tonnes of liquefied petroleum gas (LPG), and 2 million tonness of wheat over the next year. This supply diversification plan should enable Afghanistan to alleviate, at least partially, its growing food and energy insecurity. However, the precarious economic conditions of the Islamic Emirate, which has struggled in the last months to pay the debts contracted for the electricity supply with Uzbekistan and Tajikistan, could create problems to the implementation of the agreements and force the parties to renegotiate quantities and means of payment.

In July, Afghanistan had already reached an agreement with Iran for the supply of 350 thousand tonnes of oil at prices below-market prices. Overall, the Taliban’s goal remains to curb the race of energy prices, which, as in the case of diesel, have recorded increases of more than 20%, pushing inflation on essential goods to exceed 40% year-on-year.

As regard to the wheat supply, the agreement with Russia aims to secure foreign supplies that have become increasingly precarious with the outbreak of war in Ukraine. In particular, the imposition of quotas on wheat exports by Kazakhstan, the country's main supplier, decided last summer, threatened to cause serious supply shortages for Afghanistan.