National Interest

by Amel Metjahic

    Central Asia’s investment in Afghanistan could reduce the region’s dependence on Russia without US recognition of the Afghan Taliban.

    In early October 2026, the Afghan Taliban completed a 121-kilometer (75-mile) gravel road through the Wakhan Corridor, the narrow valley in Afghanistan’s far northeast that links the country to China. Afghan reports show that Kabul paid for it from the national budget, 365 million afghanis (about $5.5 million), with no reported Chinese investment.

    Over three years, Kabul pressed Beijing to open a border crossing at the corridor’s end and bring Afghanistan into the Belt and Road Initiative. No Chinese representatives were reported at the opening and Beijing has not announced that it will open its side. Trade through Wakhan would support Afghanistan’s economy and the Taliban administration’s standing, while China would gain a direct land route to the Afghan market and its mineral deposits.

    While Taliban officials claim China aims to invest in joint infrastructure projects, Beijing has been more cautious. In January 2026, China’s state news agency Xinhua wrote that the corridor’s security situation is complex, that its elevation and climate make it impassable most of the year and that opening a border crossing is unrealistic in the short term. Yet, China has already solved the terrain problem at the nearby Khunjerab Pass.

    The obstacles lie on the Afghan side of the border. Beijing fears that militants could use an open corridor to reach Xinjiang. Chinese companies cannot reliably transfer profits from Afghanistan and Afghan contracts have proven unreliable. Kabul’s conflict with Pakistan adds a political cost for Beijing. Until these problems are addressed, the new road will carry little trade. Meanwhile, Central Asia already offers China and other traders a working route into Afghanistan and Washington has a stake in keeping it open.

• Afghanistan’s Resources Have Nowhere to Go

    Although much of the country remains unsurveyed, Afghanistan holds significant deposits of copper, iron ore, lithium and rare earths. Its non-fuel mineral wealth has been estimated at more than $1 trillion and its copper resources could rank among the world’s five largest if proven accessible. Little of this wealth has been exploited. The flagship Chinese project, the Mes Aynak copper mine, was awarded in 2007 but only entered development in late 2025 and in May 2026 Afghan authorities were still pressing the contractor to begin production.

    Trade flows reflect the same problems. According to China’s Ministry of Commerce, China exported $1.544 billion of goods to Afghanistan in 2024 but imported just $42 million, down 34 percent from the year before, despite granting Afghan products duty-free access.

    Xinhua’s terrain argument doesn’t hold up. China’s Khunjerab Pass, in Tashkurgan, the same county that borders Wakhan, sits at 4,733 meters (15,528 feet), comparable to the 4,923-meter (16,152-foot) Wakhjir Pass at the corridor’s end. Until 2024, Khunjerab closed every winter. Beijing approved year-round operation in May 2024 and opened it that December. The following month, cargo through the pass rose more than tenfold year over year, although from a low winter base.

    China can keep a high-altitude crossing open year-round when what lies on the other side justifies the cost. Militant risk exists on the Pakistani side as well. In March 2024, a suicide bomber killed five Chinese engineers working on the Dasu dam. In return, Pakistan offers an army that guards Chinese projects and a banking system Chinese firms can use. Wakhan opens onto a country that offers neither.

• Why Afghanistan Is Capital-Dry

    After the Taliban’s return to power in 2021, Afghanistan was cut off from the international banking system, its central bank reserves were frozen and foreign banks cut their correspondent relationships. Five years later, the banking sector remains fragile. The World Bank’s latest update names limited access to finance as a core barrier to private investment. China’s own Ministry of Commerce spells out what this means for its companies. No Chinese bank operates in Afghanistan and dollars are often routed through Bank of China’s Dubai branch. There is no direct yuan-afghani settlement.

    Sending money out of the country requires approval from Afghanistan’s central bank, which it generally does not grant and repatriated dividends are taxed at 20 percent. Foreign firms cannot obtain local financing and the two countries have never signed a bilateral economic agreement. Under these conditions, the cost and risk of doing business in Afghanistan are too high for most firms other than state-backed ones. Repatriation is only part of the risk.

    Contracts offer foreign investors little protection under the Taliban administration. In January 2023, Taliban officials signed a 25-year contract with China’s Xinjiang Central Asia Petroleum and Gas promising $540 million in investment to develop oil fields in the Amu Darya basin. In June 2025, the deal collapsed, with the Taliban citing repeated contract violations. Chinese employees interviewed by NPR described something closer to expropriation at gunpoint and warned that foreign investors would stay away in such conditions.

    Security adds to the deterrents. Islamic State Khorasan Province (ISIS-K), the Islamic State’s Afghan branch, claimed responsibility for the January 2026 Kabul restaurant bombing, which killed one Chinese national and six Afghans. China’s Commerce Ministry’s 2025 Afghanistan guide lists the East Turkistan Islamic Movement (ETIM) among militant groups active in Afghanistan; a UN Security Council monitoring report likewise records member state reporting of ETIM/TIP’s presence there.

• The Pakistani Problem for Afghanistan

    Kabul’s conflict with Islamabad further complicates the picture. Pakistan has long been the Taliban’s closest patron and is China’s key partner through the China-Pakistan Economic Corridor (CPEC). In August 2025, the three governments agreed in Kabul to extend CPEC into Afghanistan, a framework that ties Afghanistan’s trade with China to Pakistani routes.

    Two months later, Pakistan closed its Afghan border crossings and in February 2026 the dispute escalated into military operations against the Taliban. Pakistani air raids on Afghan territory continued into October 2026. In March 2026, Beijing sent a special envoy to both capitals to mediate. Opening a direct route to Kabul now would look like taking sides and would weaken Pakistan’s role as Afghanistan’s main gateway to the sea.

• Afghanistan’s Challenges for Investors

    Taliban decision-makers hope the new Wakhan road will bring trade and foreign investment. Investors will look first at institutions. The Taliban administration would need a central bank that lets profits leave and courts that enforce contracts and protect foreign assets. It would also need tighter border security to assure Beijing that an open crossing won’t threaten Xinjiang. Few companies or governments will invest where their assets are at risk and their money cannot leave.

    Kabul cannot fix this alone. Correspondent banking and settlement depend on foreign banks and the frozen reserves depend on foreign governments.

    This gap gives Central Asia a role. Its states can act as intermediaries, letting Beijing trade with Afghanistan without opening its own border at Wakhan. Kazakhstan already carries Chinese goods to Afghanistan by rail and Kazakh-Afghan trade reached $581.1 million from January to July 2026, up significantly from the previous year. Two Kazakh banks have started correspondent relationships with Afghan banks. Uzbekistan has gone further, establishing an escrow system through Ghazanfar Bank that pays Uzbek exporters once their goods reach the Afghan border. Central Asian banks can provide the financial plumbing that Chinese and other foreign traders need to reach Afghanistan.

• Why Washington Should Care About Central Asian-Afghan Investment

    American policymakers would rather not deal with Afghanistan, yet the country now matters to a region Washington cares about. The United States left Afghanistan because staying no longer served vital US interests. Central Asia has since gained weight in Washington as part of the Middle Corridor and as one of the fastest-growing regions tracked by the EBRD, with new data center investment arriving. Its governments are pursuing new partnerships, including with the United States and reducing their dependence on Russia. Kazakhstan still sends more than 80 percent of its oil exports through Russia via the Caspian Pipeline Consortium. It now plans to generate more of its own electricity and is looking for export routes that bypass Russian territory.

    Kazakhstan’s rail links to China are expanding and Astana is shipping more oil west across the Caspian Sea. A southern route through Afghanistan would add access to South Asian markets and Pakistani ports. Astana has committed to the Turgundi-Herat railway and has signed a memorandum with Uzbekistan and the UAE to study a railway through Afghanistan to Pakistani ports. Russia, for its part, wants to become the outside power Kabul turns to first. It recognized the Taliban government in July 2025 and has courted it diplomatically since.

    But if Central Asia continues to pursue economic relations with Afghanistan, the whole region can strengthen its independence from Moscow and become more resilient. Andrew Kuchins, senior fellow at the Center for the National Interest, reaches a similar conclusion in his July 2026 report, The Case for Deeper US Engagement with Afghanistan. He writes that all five Central Asian states are “far ahead of the United States” in their engagement with Kabul and can serve as “a very useful bridge for US policymakers and private sector actors.”

    Washington once saw this clearly. The State Department’s 2019–2025 Central Asia strategy, released in 2020 when a US-backed government still ruled Kabul, pledged to “encourage connectivity between Central Asia and Afghanistan.” The logic still holds. Kuchins calls Afghanistan, part of both Central and South Asia, “a missing link in policies towards both regions.”

    A route through Afghanistan would give Central Asia a southern exit that bypasses Russia, complement the Middle Corridor Washington already backs to the west and be a crucial part of Washington’s C5+1 critical minerals push. Under the US Treasury’s General License 20, Central Asian banks can already work with Afghan banks without breaching US sanctions, as long as they avoid sanctioned individuals and entities.

    However, Washington’s signals have been mixed despite its clear interests. After a Saudi firm signed a $200 million oil and gas deal in Kabul in September, the State Department reminded companies of US sanctions law and told them to “exercise extreme caution.” Two days before Central Asian diplomats met with Taliban officials at the October 5 Moscow Format talks, the State Department counseled “against taking actions that could support terrorist groups, including the Taliban.”

    With four Central Asian governments at the table, the message was hard to miss. Compliance officers in Kazakhstan and Uzbekistan likely read such statements as warnings and Western banks that process Central Asian payments already steer clear of Afghanistan. Commerzbank, which handles euro payments for Uzbekistan’s KDB Bank, excludes any transaction involving Afghanistan. This leaves Afghan businesses trading through the few Central Asian banks involved and hawala, the informal transfer system used since the Silk Road era.

    Washington can support Central Asia’s role without recognizing the Taliban or releasing frozen reserves. The US Treasury should confirm publicly that General License 20 covers correspondent banking between Central Asian and Afghan banks and refrain from penalizing firms that trade within its terms. And if Washington stands behind General License 20, the State Department needs to stop issuing warnings every time a country Washington is courting does business with Kabul. No Central Asian state wants to jeopardize its partnership with Washington.

    Afghanistan’s problem lies beyond the Wakhan Road. Beijing sees a security threat across the border and money and contracts in Afghanistan remain unreliable. Until that changes, the corridor will remain a road to nowhere. While Beijing waits, Central Asia can carry Afghanistan’s trade and gain more control over its own economic future, provided Washington lets it.