Promoting Regional Security and Economic Opportunity

Press Availability
Fatema Z. Sumar
Deputy Assistant Secretary, Bureau of South and Central Asian Affairs
Bishkek, Kyrgyzstan
March 20, 2014

DAS Sumar: With your permission, maybe I’ll start just big picture with how we’re thinking about New Silk Road and our key priority areas because I think it will help answer your questions.

As you know, the New Silk Road was launched in 2011 by then Secretary of State Hillary Clinton. The idea back then was to look at Afghanistan’s relationships in the neighborhood and reignite historical trading routes linking Afghanistan to the neighborhood.

Secretary Kerry, when he became Secretary of State very much was looking for a way to further promote regional security and stability in Afghanistan but also in Central Asia and in South Asia. As you know, as we’re drawing down our troops in Afghanistan and with the political transition happening, we believe one of the ways to strengthen regional security and stability is to promote greater economic ties between Afghanistan and its neighbors. Not only does that help Afghanistan’s economic future, but it also creates economic and security opportunities for the Kyrgyz Republic and for the other Central Asia countries.

So there are four areas where we are, the United States is looking to support in the next few years.

The first area is regional energy. We are supporting the Central Asian and South Asian countries to create regional energy grid connecting Central Asia and South Asia. Here the idea is to look at how an energy-rich Central Asia can fuel an energy-starved South Asia. Both Afghanistan, Pakistan, but also going into the Indian subcontinent.

The second area is trade and transit. This is looking at how to create the trade infrastructure and architecture so that goods can move across countries easier.

The third is customs and borders. This is looking at how to create customs harmonization, how to create open but secure borders so that the borders can be secure, but also facilitate trade.

The fourth is people to people. This is really connecting our businesses in the region. Almost every month now we’re holding trade forums in different cities across South Asia and Central Asia where we bring businesses from Kazakhstan, Kyrgyzstan, Uzbekistan, Afghanistan, Pakistan, India.

Those are the major policy areas we’re looking at in partnership with the countries.

On the regional energy market front there are different possibilities that we are looking at. The first one, as you know, is CASA-1000, which we can talk about in a little bit more detail. There are other energy projects that could come on-line if we see some success. For instance, the Asian Development Bank has a project called TUTAP. It’s another energy line that would connect Turkmenistan, Uzbekistan, Tajikistan, Afghanistan and Pakistan on electricity. That project is being looked at right now. There are discussions underway on TAPI which is the Turkmenistan, Afghanistan, Pakistan, India gas pipeline. So there are many projects that we’re looking at on the energy side.

On trade and transit, the United States has launched a new project. It’s a $78 million project from Afghanistan, looking at countries in Afghanistan, Kyrgyz Republic, Tajikistan, Uzbekistan, to see how the countries can generate more trade and increased revenue. That’s a USAID project.

Another project, from USAID, is RESET. RESET is looking at how to create a regional energy grid and support the domestic reforms that would need to be undertaken.

Other projects don’t necessarily involve a lot of money but it’s helping support the goals that I laid out. For instance, we are supporting countries’ efforts to join the WTO, World Trade Organization. Of course Kyrgyzstan already joined the WTO. But Kazakhstan still needs to join, Afghanistan is looking to accede, and of course Uzbekistan and Turkmenistan are not part of the WTO. We’re looking at trade and transit agreements and helping facilitate those kinds of trade.

Those are some of the examples of the different types of projects that we are supporting in partnership with the Kyrgyz Republic and other countries in the region.

Question: CASA-1000 is mostly Afghanistan project as far as I can see in terms of --

DAS Sumar: We’re very excited about CASA-1000 moving forward. We hope that the World Bank will bring the project to a vote before its board soon. If the countries are able to reach a deal on pricing negotiations and finish the other technical pieces, then we are hopeful that the project construction can start later this year, in 2014.

Question: [Through Interpreter]. We know that you have been to Tashkent before coming here, and we know that the World Bank Board is going to look into this project and is going to vote on it to approve. So once you have been to Tashkent, we know that Tashkent, Uzbekistan is a [gas] project, so have you talked about this project or this issue in Tashkent?

DAS Sumar: Yes. I raised this with the Uzbek government and our partners there so that they understand that U.S. support for the project, we are excited about the project because we think that if the project goes forward it’s the first time that you will see an energy grid connecting Central Asia and South Asia.

The Uzbek government continues to have concerns about the project that they have shared with us and the World Bank. We are encouraged that the World Bank is having yet another technical meeting with the Uzbek government next week to further discuss the concerns that they have addressed. We are working together with Uzbekistan and all the other countries to make sure that we can put together the types of project that support regional stability and a fair sharing of energy and water resources.

Question: [Through Interpreter]. Another question, on implement the New Silk Road Project, what kind of support is going to be provided to Central Asian countries and especially to Kyrgyzstan?

DAS Sumar: For instance on CASA-1000 the United States made an announcement that it will contribute $15 million to the project. We are continuing through USAID a lot of support, development support, to support Kyrgyzstan’s economic growth and to support governance. I believe, if I have my statistics correct, the United States has provided the Kyrgyz Republic with over $2 billion of assistance since independence, so we have made significant contributions to help promote stability and prosperity in Kyrgyzstan and we will continue to use this assistance to support the New Silk Road regional economic integration and other projects of interest in our bilateral relationship.

Question: Do you think that Tashkent has a right of veto on CASA-1000?

DAS Sumar: The Uzbek concerns are well known now to all of the CASA countries, the World Bank, and to other donors. The World Bank is prepared to move the project forward as soon as the final negotiations are completed. So we are optimistic that the project will move forward.

Question: [Through Interpreter]. Within the framework of this project can U.S. help Kyrgyzstan to overcome the dependence, like energy dependence, from its neighbors like Russia?

DAS Sumar: Part of the U.S. support for the Kyrgyz Republic is to help create different types of economic and energy opportunities for the Kyrgyz Republic and to diversify options for your economy, for your businesses, for your marketplace.

Interpreter: I’m sorry.

DAS Sumar: In response to his question, part of the goal in supporting regional economic connectivity is to help countries like the Kyrgyz Republic have additional opportunities and diversify its marketplace.

The United States believes countries are stronger and more independent when their economies are not overly dependent. And regional economic integration, the New Silk Road is exciting because it can complement traditional East/West connections from China to Eurasia with North/South connections connecting Central Asia to South Asia.

Question: Right now is it symbolic that for the last several years China has made huge progress in Central Asia including [inaudible] oil pipelines, at the same time that CASA-1000 is still in a state of negotiations.

DAS Sumar: CASA-1000 is a unique project because it’s the first time in history that you will create an electricity line that connects Central Asia to South Asia. This has never been done before. So it is not just another pipeline or transmission line. It carries historic significance.

We know that the Chinese have been very active in Central Asia over the last few years with significant investments in hard infrastructure such as pipelines, rail, road. What’s striking to me is when you look at the Chinese investments, even the Chinese realize, as they have said to us and to our partners in the region, that for a lot of their economic opportunities and investments to work they also need customs and borders to work; they also need trade and transport facilitation agreements so that their trucks can move across borders; so that their energy and gas can flow across the borders.

So it is not just the hard investments in the hard infrastructure -- the pipeline, the rail and the road -- that you need to look at. It’s also what is the system of moving trucks, goods, people across these borders so that you can make money off of the investments that you have made.

So that’s what the United States, the United States is very much supporting looking at what we call the soft infrastructure, the trade facilitation so that the significant investments that have been made by the Kazakhs, the Chinese, even the Kyrgyz and others in the region help connect your economies ultimately.

In fact just to give you an example, the ADB has this platform called CAREC you may be familiar with -- Central Asia Regional Economic Cooperation. During the last summit in Astana in October it was striking because both the Chinese and the ADB Secretariat of CAREC, they both signaled and said it is now time to make investments in these soft infrastructure areas, in trade facilitation, in customs, in border coordination because if we don’t get these pieces to work, all of the billions of dollars that have been invested on rail, road, pipeline, won’t work. And so there’s a real realization amongst all these countries in the donor community that that is the real challenge over the next few years for this region.

Question: [Through Interpreter]. We have noted that lately the Kyrgyz authorities, they’re trying to maintain diverse vector or like many vectored approach to politics or to geopolitics, international relations basically. There is a political will in our government to keep up with this policy line. So if that will be like announced would U.S. support that?

DAS Sumar: I’m sorry. What would we support?

Voice: I think the question is that the Kyrgyz government up to relatively recently has been trying to kind of have relationships with U.S., China, Russia, the region, but now pressure to join the Customs Union could be reducing their options. So the question is getting at what is the United States position, or what is the United States prepared to offer in terms of assistance to keep the relationship with Kyrgyzstan strong.

Interpreter: To keep the relationship with all of the different parties, like countries.

DAS Sumar: I think the United States has shown that it’s a long-term partner for the people of the Kyrgyz Republic. Our support has helped grow your institutions, build capacity, support security, promote economic reforms, and the very positive relationship that we have with the government of Kyrgyzstan reflects I think the desire from the people and the Air Force of Kyrgyzstan is to want to continue a very robust relationship with the United States.

Question: [Through Interpreter]. Russia always looked at Central Asian countries as countries of their own geopolitical interest. After the Ukrainian crisis in the Central Asian countries they are starting being cautious on the threat coming from Russia on losing their like independence and integrity of the country. What do you think that Central Asian countries need to do in order to preserve this manufactured policy they’re making and to keep their independence and integrity?

DAS Sumar: I think it’s important as Kyrgyzstan develops, its economy develops, its democracy, parliamentary democracy, to look at ways that it can grow in many different directions. So there are many different types, for instance, commercial business opportunities with Russian firms, with Western firms, with Afghans, South Asian firms, but it takes time to develop these relationships. Change does not come about overnight. Kyrgyzstan is a landlocked country, so it’s important to keep reaching out, cultivating both government relationships, people to people relationships, business relationships. The more efforts that are made to improve rule of law, address corruption, and create a climate that is friendly for investors, and show the potential, the real potential of the Kyrgyz economy, not only in traditional markets that you’re currently engaged in, but for other markets that could be sources of opportunity.

I want to make very clear, the United States is not in competition with Russia, China or any other countries in Central Asia. In Central Asian countries we have supported consistently their sovereignty, independence and territorial integrity since independence, and we’ll continue to do so.

Question: Do you believe that the sanctions against Russian [inaudible] will ensure that the United States will somehow keep the independence and integrity of the Central Asian countries?

DAS Sumar: In regards to the sanctions, as you know, the sanctions were put in place to send a very strong message to the Russian government that there are clear consequences for actions that violate sovereignty and territorial integrity. We are in continuing conversations internally in the U.S. government and with our partners in Europe and elsewhere to continue looking at the sanctions package to see what other sanctions may be coming and to see what the effects may be. And I think there’s a recognition and understanding of looking at the entire impact, the economic impact of sanctions.

Question: Will it change international [inaudible] with the [inaudible] New Silk Road concept, implementation? There is some risk?

DAS Sumar: There’s not a link in my mind right now with sanctions and the New Silk Road project.

Question: The new international situation after the [inaudible].

DAS Sumar: There’s no link really for us right now between the two.

I want to be clear, the New Silk Road projects that I laid out in these four areas, the agenda for each of those projects is not driven by the United States. It’s driven by the countries in the region. It’s driven by our Central Asian partners, by our Afghan partners, Pakistanis, Indians. Then we support them. CASA is a very good example of that.

The reason CASA has been so successful is because it’s been driven by the Kyrgyz, Tajiks, Afghans and Pakistanis. We have come in with both financial support and political diplomatic support, but the United States doesn’t drive the train, but we can help support these kinds of projects when we get clear signals from these countries that these are their top priorities.

So going forward, I think you will see the same kind of engagement, where we take our cues and our signals from what the countries in the region think are their most important priorities to help connect their economies and their markets.

What’s so important I think right now, and what you’re seeing is that even though our footprint in Afghanistan is changing, many people have questioned is the United States still committed to this region. The answer is yes. We have a long term commitment to Afghanistan, to Central Asia. It is no longer an Afghanistan military commitment, but it is a political commitment, it is an economic commitment, development and diplomatic commitment. And in Central Asia I think it’s very telling that the United States is working with our partners in Central Asia to look at different types of opportunities, to help promote long term, sustainable economic and democratic growth in Central Asia. That’s really what this is about at the end of the day.

Question: [Through Interpreter]. I know United States supports democracy and building democracy values in the developing countries. So after 2010 Kyrgyzstan is doing a lot of effort in order to build democracy. However, we’re very dependent, energy very dependent, and that’s why are there going to be any precise support from the U.S. like our bilateral relations in order to overcome those difficulties and to support building democracy?

DAS Sumar: The answer is yes. The United States has a very robust partnership with the government and people of the Kyrgyz Republic. We give significant development aid. USAID, as you know, only opened up two new missions in the entire world recently, and one was here in Kyrgyzstan. It shows you, if we open up a new office here it shows you how committed we are to helping promote specific development projects, economic projects, governance projects, and we are spending tens of millions of dollars every year through our development aid here in Kyrgyzstan. It’s one of our largest foreign aid programs in the region.

Thank you very much.