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BUSINESS & ECONOMICS

EURASIAN TRADE AND TRANSPORT: NEW SILK ROADS OR OLD PIPEDREAMS?
Richard Weitz 7/24/07

A recent panel discussion in Washington, DC, expressed hope that new trade opportunities arising in Greater Central Asia will help promote regional stability.

The July 18 discussion, titled The New Silk Roads: Transport and Trade in Greater Central Asia, was sponsored by the Central Asia-Caucasus Institute (CACI). It was designed as a follow-up to the First Kabul Conference on Partnership, Trade and Development in Greater Central Asia, held in April 2006.

Participants generally agreed that long-standing barriers to trade between Europe and Asia are breaking down, opening up new possibilities for commerce. In particular, the Soviet Union’s collapse and China’s economic awakening are encouraging the development of "new Silk Roads." But participants stressed that sound policy-making remains essential in order to turn opportunities into reality.

The first panelist, Masood Aziz, the Councilor at the Afghanistan Embassy in Washington, explained how Afghanistan is well positioned to benefit from a surge in inland commerce via Eurasia. According to the Asian Development Bank (ADB), basic improvements in transportation links between Central Asia and Afghanistan could almost double direct trade to $32 billion annually. Of course, this assumes that the Taliban insurgency in the country, which has intensified over the past 18 months or so, can be contained in the near future by the Afghan government, backed by US and NATO forces. [For background see the Eurasia Insight archive].

Although Pakistani leaders regularly highlight the country’s pivotal location at the crossroads of South Asia, the Middle East, and Central Asia, political conflicts between Pakistan on the one hand, and neighboring Afghanistan and India on the other, have thus far severely limited overland commerce between Central and South Asia. Growing internal political turmoil may also limit Pakistan’s ability to reach its potential as a transport hub. [For background see the Eurasia Insight archive]. Reflecting on this situation, S. Frederick Starr, CACI Chairman, characterized Pakistan as a "cork in the bottle" for the expansion of Eurasian trade and transport. He added, however, that Pakistan was nevertheless developing a core transportation infrastructure that could possibly provide the basis for integrating Central and South Asia.

Aftab Kazi, professor of international and comparative politics at the American University in Bishkek, said Central Asia governments may push for an expansion of road and rail routes to Pakistan in the coming years. In addition, regional planners are once again exploring the feasibility of a 1,700-kilometer natural gas pipeline connecting Turkmenistan and Pakistan, via Afghanistan.

The last speaker, Taleh Ziyadov, the deputy executive director of the US-Azerbaijan Chamber of Commerce, explained how Azerbaijani experts forecast a doubling in the volume of inland transportation through their country. In particular, improved inland transportation should enable Turkey to increase its trade with Central Asia substantially by overcoming maritime bottlenecks.

Panelists observed that many governments and experts outside the region are now paying more attention to Eurasian trade and transport possibilities. A plethora of institutions -- the ADB, World Bank, European Bank for Reconstruction and Development, the Shanghai Cooperation Organization, and Organization for Security and Cooperation in Europe -- are all supporting programs in this area. External governments have also sought to boost continental commerce. For example, the US State Department has designated a special ambassador for trade in greater Central Asia, and has reorganized its geographic bureaus in order to deal with Central and South Asian affairs via a single office.

One complication of having so many international institutions and foreign governments involved is a lack of integration among competing development plans. Some analysts advocate establishing an overarching regional structure to coordinate the diverse international actors engaged in the process. Other observers, however, see the diversity of players and programs less as a problem than as an opportunity.

Editor�s Note: Richard Weitz is a senior fellow at the Hudson Institute in Washington, DC.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

The views expressed in this publication do not necessarily represent the position of the Open Society Institute and are the sole responsibility of the author or authors.