Tuesday, November 01, 2011

Central Asia: Can Expanded Trade Pacify an Unsettled Region?

Originally published by EurasiaNet.org

by Joshua Kucera

Central Asia: Can Expanded Trade Pacify an Unsettled Region?

US Secretary of State Hillary Clinton worked quietly and diligently during her recent trip through Central and South Asia to lay the groundwork for a regional stabilization plan, dubbed the “New Silk Road.” The vision sees expanded trade as the balm that can heal the region’s wounds.

The New Silk Road aims to stimulate regional trade between Afghanistan and its neighbors. At its most ambitious, it envisions Central Asia as a trade hub between Europe and Asia, as it was in the days of the old Silk Road. Clinton promoted it on her recent trip through the region, including stops in Afghanistan, Pakistan, Tajikistan and Uzbekistan. In the coming weeks, she will continue to make a diplomatic push to enlist allies' support for the vision.

As Clinton sees it, commodity and energy exports have the ability to lift regional economies. Trade, in turn, could naturally suppress Islamic militant tendencies. “Turkmen gas fields could help meet both Pakistan’s and India’s growing energy needs and provide significant transit revenues for both Afghanistan and Pakistan. Tajik cotton could be turned into Indian linens. Furniture and fruit from Afghanistan could find its way to the markets of Astana or Mumbai and beyond,” Clinton said about the Silk Road strategy during a September speech at the United Nations.

As yet, there are few details on how the United States can make its regional trade vision turn into reality. Washington has identified up to 40 infrastructure projects that could be part of the plan, according to a US government official, and will also work to reduce legal and procedural barriers to trade, like onerous and corrupt border-crossing procedures. Clinton will attempt to gain allied support at two upcoming conferences, one November 2 in Istanbul and another in December in Bonn, Germany.

The United States needs to quickly develop an implementation plan if the strategy is to succeed, said S. Frederick Starr, chairman of the Central Asia-Caucasus Institute in Washington, DC. Starr cautioned that the State Department's version of the plan, as he saw it so far, needed to focus more closely on the “software” or border regulations, rather than on infrastructure. He also saw a need to develop a plan for short-, medium- and long-term projects. He proposed starting with relatively easy-to-implement but high-profile projects like truck convoys along a few key corridors. “Skeptics abound,” he told EurasiaNet.org. “We must prove to them that the United States can deliver tangible results that positively affect peoples’ lives, and do so in the short term.”

Starr has promoted a Silk Road vision for several years. The State Department has long been wary of the plan, with officials initially dismissing it as unworkable. But it began to gain favor last year at US Central Command, and its commander at the time, Gen. David Petraeus. Since Marc Grossman became President Obama's special envoy to Afghanistan and Pakistan, replacing the late Richard Holbrooke earlier this year, the State Department has come around to support the strategy.

Speaking in Islamabad on October 21, Clinton said: “We want to advance together the vision of a New Silk Road, which would increase regional economic integration and boost cross-border trade and investments between Pakistan and all of her neighbors.” The next day in Tajikistan, Clinton said she discussed the strategy with President Imomali Rahmon and “appreciated the president’s enthusiastic support for this vision.” In Tashkent she discussed the strategy “in some detail” to President Islam Karimov, according to a senior State Department official said, speaking on condition of anonymity.

Doubts remain about the strategy's feasibility. The State Department, in its public statements on the plan, has highlighted a handful of existing or proposed projects on which the New Silk Road could be modeled, including a free-trade agreement signed last year between Pakistan and Afghanistan, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. Skeptics note that the Pakistan-Afghanistan agreement, which was laboriously, personally brokered by Holbrooke, hasn’t yet been implemented. And implementation appears unlikely in the foreseeable future, due to strained bilateral relations. In a similar vein, versions of the TAPI pipeline have been on the drawing board since the 1990s, but insecurity in Afghanistan has scared away companies that might have the capital to complete the project.

With US and NATO troops scheduled to depart by 2014, the security situation is likely to decline even further, a problem that the Silk Road plan's boosters acknowledge. “We have continued insecurity and instability in Afghanistan,” Sham Bathija, senior economic adviser to President Hamid Karzai of Afghanistan, said at a recent conference in Washington on the strategy. “Yet we have no choice but to forge ahead.”

The Silk Road project may be making too many geopolitical assumptions, especially in the area of diplomatic relations among regional states, suggested George Gavrilis, an expert on Central Asia and borders at the Washington, D.C., think tank The Hollings Center. He noted that many of the countries in the region seem locked in persistent diplomatic spats with their neighbors; Pakistan with Afghanistan and India, Uzbekistan with Tajikistan and Kyrgyzstan. Trade agreements are fragile and vulnerable to political difficulties, as evidenced by the fact that the border between Uzbekistan and Kyrgyzstan has been closed for 18 months, following last summer's violence in southern Kyrgyzstan. The border only reopened this week. “I love the idea [of the New Silk Road] but I just don't see how it can be implemented,” Gavrilis said.

Another potential pitfall is the cost of infrastructure projects. “Unless the job is funded, it ain't going to happen,” said Juan Miranda, Director General of the Central and West Asia Department of the Asian Development Bank, which is a supporter of the project and has been carrying out a related infrastructure project, the Central Asia Regional Economic Cooperation, for several years. “So we have to think about that and it will be a challenge.”

Obama administration officials are mindful of a domestic political environment that is opposed to new government spending, has emphasized that it doesn't plan to allocate a lot of money on the Silk Road project. “With governments all around the world facing economic challenges, we have to focus on ways to make this work with limited government support,” said Robert Hormats, undersecretary of state for economic, energy and agricultural affairs, in a recent speech. “So, for the 'New Silk Road' vision to realize its potential, it is critical that the Afghan government and its neighbors take ownership of the effort.”

Editor's note:
Joshua Kucera is a Washington, DC,-based writer who specializes in security issues in Central Asia, the Caucasus and the Middle East. He is the editor of EurasiaNet's Bug Pit blog.