Conditional Interdependence and Stable Bilateral Relations: The Limits of Trade-Led Stabilization in the Pakistan-Afghanistan Case (2015-2025)

Abstract

This paper examines the relationship between economic interdependence and
bilateral stability through Pakistan-Afghanistan trade and transit relations
during 2015-2025. A basic assumption of Liberal theory is that expansion of
trade promotes peace and cooperation by raising the cost of conflict.
However, long-term economic exchange persisted alongside recurring
political tensions and security concerns in the Pakistan-Afghanistan context.
This paper employs a qualitative approach to analyze trade patterns, policy
developments and institutional arrangements and develops the concept of
conditional interdependence to explain why trade did not produce stable
bilateral relations. It finds that structural economic factors like geographic
proximity, market demand and Afghanistan’s reliance on Pakistan’s transit
routes were instrumental in sustaining trade and transit whereas political
tensions, security incidents, mistrust, asymmetrical dependence, issues with
institutional reliability and security-driven governance limited its stabilizing
effects. The paper argues that without credible institutions and environment
of political trust and accommodation, economic interdependence alone is
insufficient to ensure peace and stability.