#6010
[Second Issue of the Day]
#10
Times of Central Asia
January 7, 2002
Outlook for 2002
By Giorgio Fiacconi
BISHKEK--The introduction of reforms to take advantage of the recent Afghan war will be an even greater challenge to Central Asia than the ten years of transition.
During the last ten years Central Asia has not been able to achieve stabilization or the economic balance between development and human rights. Nevertheless the region has moved forward, and today a new challenge lies ahead in the introduction of much demanded and needed reforms. The current rebound of International cooperation and support is offering a unique opportunity to all Central Asian leaders to create a new approach and a favorable investment climate.
There will be plenty of cash around to be used in infrastructure and development, but the region should understand the importance of cooperation, and work toward a regional economic zone. Although many claim this to be the solution few really try and introduce such a zone. If in other parts of the world September 11th has created stagnation in the economy and a general slowdown, this should not be the case in Central Asia, where the economy can take advantage of the enormous influx of funds for humanitarian aid and civil reconstruction. Uncertainty has been one of the main problems for foreign investors in Central Asia.
The step forward made by Kyrgyzstan in lifting all barriers that impede investment and create an obstacle to development is now under the scrutiny of several working groups. In few months proposals should be published along with a draft for a new investment law, as well several procedures relating to company's inspections, licenses and permits, judiciary, tax system and incentives. This time reforms should not stop with the preparations of laws but should obtain wider implementation. If terrorists have destroyed one of America's symbols, the war against them is bringing economic development and better human rights; demonstrating that globalization and world cooperation is stronger than any act of terrorism and that it is dialogue that is the key to development.
2002 should see the stabilization of Central Asia through the deployment of an international military force, that while supporting humanitarian aid and the reconstruction of Afghanistan, will also be instrumental in providing the whole Central Asia region with much required stability and act as watch dog on human rights.
In our outlook for 2002 we cannot avoid considering the legacy of the 90's as described by John Naisbitt & Patricia Aburdene in their book Megatrend 2000, published in 1990 by The New York Times. The book with its optimistic views did not consider the possibility of such a cruel event as September 11th 2001, but nevertheless the overall economy although subject to a temporary slowdown will rebound again, and Central Asia may represent one of the most active regions.
If in other, more prosperous, parts of the world, the job market may slowly react and remain weak for some time, in Central Asia employment should surge to new levels and bring growth that was not achieved in the previous ten years of independence.
The amount of money promised, not only for Afghanistan, is staggering, and expected investments are to the tune of several billions dollars. The situation after the Afghan war should see the beginning of the Turkmenistan- Afghanistan - Pakistan gas pipe line at a cost of approximately 2 billion dollars. It is estimated that the proven reserves of oil and gas that various Central Asian States, such as Kazakhstan, Uzbekistan, Azerbaijan and Turkmenistan jointly hold in the Caspian sea region may account for around 20-30 billion barrels of oil and around 240 trillion cubic feet of gas. At an average market rate, these reserves have been valued at $4-5 trillion.
It is out of question that a peaceful Afghanistan and a stable Central Asia can play a role in connecting pipelines from Central Asia to the international markets of Europe and South Asia. Not only the American Unocal project may see a new life with their 1600 kilometer pipeline form Turkmenistan to Pakistan, but there is now a real possibility that the project may also continue to India.
The Europeans will also be quick to resurrect the Traceca project, which through Central Asia will connect Europe to China. In addition there are proposals to construct railways that would connect China to Uzbekistan via Kyrgyzstan, with a branch probably connecting Tajikistan and Afghanistan to Kazakhstan in order to create an integrated Central Asian railways system.
While China is building a new pipeline from Bejing to Xinjiang the natural progression would be connection to the Caspian Sea oil trough Kazakhstan.
After a decade of trying to change their ways through a new economic approach and unbalanced development, Central Asia now has great opportunities and it is really at a cross roads. The region may start the New Year with a stabilizing military force based in Kyrgyzstan and other countries in the region and this will certainly reassure any foreign investor. The long suffering, badly paid Central Asians may see their poverty dramatically reduced. Local and foreign investors, through the new entrepreneurial leadership that may inject the necessary confidence, should provide new jobs.
The lack of political will within a bureaucratic and corrupt system that has kept investment at bay for several years should be replaced by a new wave of leaders that keep the future of their countries at heart.
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