On paper, the US Department of Defense wants to turn the Northern Distribution Network into an engine for economic development in the Caucasus and Central Asia, one that helps regional companies and US-based firms alike. But regional analysts say that such grand plans are giving way to the exigencies of the US surge in Afghanistan.
The Defense Department included a reciprocity clause to a trade waiver that was designed to allow companies from the Caucasus and Central Asia to participate in the development of the Northern Distribution Network (NDN) and the re-supply of US and NATO troops in Afghanistan. [For background see the Eurasia Insight archive].
Under the clause, companies that secure Defense Department contracts are obligated to inform their respective governments of their success. The tender winners are also required to notify authorities that the firms are unlikely to obtain more business from the US government unless American companies gain wider access to local economic opportunities.
The clause specifically states that local firms cannot expect to have contracts renewed, or to win additional contracts, "unless their governments provide reciprocal procurement opportunities to US products and services and suppliers of such products and services."
Regional analysts have dismissed the clause, believing the US government lacks the will to enforce it. Washington, they say, is not about to do anything that might jeopardize the supply of US troops by pressing for the kind of quid-pro-quo arrangement that is outlined in the clause.
The clause is included in a July 9, 2009 memo from Deputy Defense Secretary William Lynn. The memo authorizes a waiver of Section 302(a) of the 1979 Trade Act Agreement, which compels the Defense Department to buy American goods and services. Under the waiver, an exemption is granted to nine countries including Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan and Uzbekistan.
Lynn, in a separate determination, also dated July 9, 2009, said the relaxing of Federal Acquisition Regulations was necessary to build to political support for the war in Afghanistan by giving neighboring countries a commercial stake in it. It is also a matter military and financial expediency to source goods and services locally and therefore in the US's national interests, he maintained.
Mars Sariev, a Bishkek-based political scientist, told EurasiaNet that the reciprocity clause will have little impact on procurement policies in Central Asia or the Caucasus because the NDN's growing strategic importance will trump immediate economic concerns. Ruling political elites will also resist any attempt by the United States to alter current domestic economic arrangements in regional states, he said.
"It's not possible to talk about all the Central Asian countries in a uniform way, as each has a unique political regime. In Uzbekistan and Turkmenistan, the most authoritarian states, all questions are solved by the heads of state," Sariev said. "In Kyrgyzstan, where we have a [US transit] base, we have an interesting situation with oil and fuel tenders that are controlled by a group of businessmen. The question of a second or third tender is unlikely to arise as independent companies will not take part in the tender process."
"Ultimately, this clause is a formality," Sariev continued. "The supply of troops in Afghanistan is the top priority and that won't be stopped by tendering issues."
Deirdre Tynan is a Bishkek-based reporter specializing in Central Asian affairs.