The New Silk Road and Regional Economic Integration

Robert O. Blake, Jr.
Assistant Secretary, Bureau of South and Central Asian Affairs
Turkic American Convention
Washington, DC
March 13, 2013

Good morning, and thank you for that kind introduction. It is my pleasure to join you here at the Turkic-American Convention. The Turkic-American Alliance has assembled an impressive and dynamic schedule for today’s theme of “Energy, Trade, and Development.” The Alliance plays a key role in growing the economic, political, and cultural connections between our countries and between our people.

That is why I am pleased to see so many friends here from the region – the discussions and connections in fora like this one, between government and business, investors and entrepreneurs, between neighbors from east and west of the Caspian, are helping drive connectivity, cooperation, and integration across the region.

This Convention is also an opportunity to highlight Turkish leadership in the region. The Istanbul Process, launched in November 2011 with Turkish leadership to promote cooperation among the countries of the region in support of Afghanistan, continues to gain momentum. In April, Kazakhstan will host the third Istanbul Process foreign ministerial in Almaty, good evidence of the strong regional ownership of this initiative.

The story of Turkey’s role in the region also highlights the increased integration and connectedness of all of the region’s economies. In Turkmenistan, for example, Turkish construction company Polimeks is building an Olympic-style sports complex for the 2017 Asian Indoor Games, as well as a new international airport in Ashgabat worth $2.2 billion. Turkey and Kazakhstan already enjoy a robust trade volume of more than $3 billion a year, and the two countries have recently undertaken to triple that volume in three years. Business leaders signed 15 agreements to implement projects worth over $1 billion during President Nazarbayev’s visit to Turkey in October.

Today, I would like to focus my remarks on why this regional interconnectedness is so important, both as a driver of economic development and as an anchor of regional security.

The dynamic region stretching from Turkey, across the Caspian Sea to Central Asia, to Afghanistan and the massive South Asian economies, is a region where greater cooperation and integration can lead to more prosperity, opportunity, and stability.

Almost two years ago Secretary Clinton articulated the New Silk Road vision of increased trade and economic integration in South and Central Asia. The countries of the region, from Turkey to Afghanistan and beyond, have embraced this vision. The promise of regional connectivity and integration, and the potential rewards, are tremendous.

  • Pakistan, for example, has a 30 percent electricity deficit, while Tajikistan has significant potential to export surplus summer power, and Uzbekistan has almost six hundred million barrels of proven oil reserves.
  • While India has only half the natural gas it needs, Turkmenistan’s Galkynysh gas field is the second largest in the world.

Many were skeptical in the beginning about the New Silk Road vision, as this region has historically been one of the least economically integrated in the world. But we are encouraged by the increasing regional consensus around it and the progress to date. We see this happening in two important ways.

First, the region is becoming more connected through infrastructure – which includes roads, bridges, electrical transmission grids, railways and pipelines – to connect energy, goods, services, and people.

Azerbaijan’s planned construction of a sea port at Alat on the Caspian and its purchase of additional cargo ships will expand the region’s capacity for increased trade. Both Turkey and Azerbaijan are upgrading their railroads, and with the completion of the Bosphorus tunnel, a rail link will connect the Caspian through Turkey to the rest of Europe, greatly increasing volumes and decreasing transit times of goods between Europe and Asia.

Energy is one of the most promising areas for increased trade and transit. The Baku-Tbilisi-Ceyhan energy corridor shows us that linking producers in the region with consumers in Europe is a win-win. We hope to see the Turkmenistan-Afghanistan-Pakistan-India, or TAPI, gas pipeline, as a similar boon for South and Central Asia.

By connecting abundant energy reserves in Turkmenistan with rapidly rising demand for that energy in South Asia, TAPI can be transformative for the region. There are still many hurdles to overcome, but TAPI is much closer to reality today than many skeptics thought possible just a few years ago.

Afghanistan’s role in TAPI is especially significant. As NATO forces transfer full security responsibility to the Afghan National Security Forces by the end of 2014 and Afghanistan adjusts to lower levels of military spending and foreign aid, the energy and transportation corridors connecting South Asia and Eurasia via Afghanistan will play an increasingly important role for the economic future of Afghanistan and the region.

One of the lynchpins in this regional approach is the Asian Development Bank-led Central Asia Regional Economic Cooperation program, or CAREC. Since its inception in 1997, the program has implemented more than 100 projects in the region, facilitating over $20 billion worth of infrastructure and investment. As one of the two largest shareholders of the ADB and the largest shareholder of the World Bank, the United States supports CAREC through two of its primary funding mechanisms.

Secondly, and just as importantly, the region is becoming more integrated through trade liberalization – which includes the reduction of non-tariff trade barriers, improved regulatory regimes, transparent and efficient border clearance procedures, and coordinated policies – to accelerate the flow of goods, services, and people throughout the region.

We see tremendous progress in the efforts of the region to accede to the WTO, for example, as Kyrgyzstan and, just recently, Tajikistan have already done. Azerbaijan, Kazakhstan and Afghanistan are all making good progress in their accession processes. And Uzbekistan and Turkmenistan have recently shown new interest in the WTO. WTO access will open markets and increase economic opportunity for the people of the region.

Beyond the WTO, Kyrgyzstan, Tajikistan, and Afghanistan have formalized a Cross-Border Transport Agreement. Afghanistan and Pakistan are also working to implement a transit trade agreement which will reduce trade costs and transport delays, and now Turkmenistan, too, is considering entering into a Cross-Border Transport Agreement with Afghanistan.

But for all of this progress and promise, we’re also clear-eyed about the challenges. Despite real gains in Afghan stability, we understand the region is anxious about security challenges. That’s why we continue to expand our cooperation with Afghanistan and other countries of the region to strengthen border security and combat transnational threats. We also use our engagement to tackle important issues related to human rights, the rule of law, and corruption, because we recognize that these are vital not only for the investment climate, but also for the region’s long-term stability and security.

In closing, let me just say that I’m very optimistic about the region, and very excited to see so many here ready to harness its potential. Over the last several decades, so many countries – like Turkey and India – have built dynamic growth, opportunity, and hope for their peoples. And in the 21st century, with the support and engagement of partners like the Turkic American Alliance, this region can become a part of that global success story.

Thank you, and I look forward to seeing many of you later today at the session on Turkmenistan and exploring in more detail the opportunities we see there.