Fri, Dec 23, 2005 - Page 9 News List

Can Central Asia regain its leading role in Eurasia?

The region is isolated by history and geography, but although it has its fair share of problems, there are encouraging signs for the future

By Kalman Mizsei and Johannes Linn

Central Asia is frequently in the news these days -- and most of the news seems to be bad. The casual reader, viewer, and listener has become acquainted with a region of landlocked and poor countries -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan -- that share a legacy of isolation, squandered natural resources, environmental degradation, and Soviet-era political systems.

And yet, it is also a region with a distant history of great economic and cultural achievement in the Silk Road era, and that recently has emerged as a focus of renewed global competition reminiscent of the Cold War. Can Central Asia regain a key role at the center of the huge Eurasian landmass, surrounded by some of the world's most dynamic economies -- China, Russia, and India?

While there is a laudable international effort to help Africa grow out of heavy donor dependency in the next decade, the equally momentous economic-development and human-security challenges facing Central Asia are generally not fully understood. History and geography -- measured by distance from the closest seaports -- have isolated these countries physically, economically, and socially, and have exacerbated the difficulties of their transitions to market economies. The result is that development and governance indicators in Central Asia are on par with those in many sub-Saharan African countries.

The Central Asian Human Development Report, recently launched by the United Nations Development Program, argues that the countries of Central Asia have a great opportunity to capitalize on their location at the center of a dynamic continent, their abundant natural resources, and their still-strong potential to forge a prosperous, stable, and cohesive region. This will require them to open up to the rest of the world, cooperate with each other and their neighbors, and radically reform their antiquated political systems.

Regional cooperation should include areas ranging from trade, transport, and transit, to water and energy, as well as efforts to control drug trafficking. The Report estimates that by doing so, and by improving their investment climates and governance, Central Asian countries can double their incomes over ten years, modernize their economies, connect with the rest of the world, and improve the lives of their citizens dramatically.

Currently, the region suffers from tremendous transport and transit constraints. Trade times and costs are unnaturally high due to unintegrated and lengthy border procedures, high tariff rates, corruption, and underinvestment in transport infrastructure. These costs could be halved by better customs, border and transit management, improved transport corridors and more competitive transport services. By joining the WTO, improving their investment climates, and stopping interference with shuttle traders -- mostly poor women trying to make a living -- governments would give the region's businesses and farmers access to markets and attract much-needed new investment.

Central Asia is blessed with an abundance of energy and water resources, even though much is wasted by inefficient use and poor maintenance of infrastructure. An estimated US$1.7 billion of agricultural production is lost annually due to poor water management. The region is poised to become one of the main suppliers of oil and gas for world energy markets, and its big rivers, if properly managed, have the capacity to provide enough water both for irrigation and for electricity exports to China, India, and Russia. But cooperation is needed both within the region and with key neighbors in order to realize effective regional water and energy management.

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