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 is 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.

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 is generally not fully understood... 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 of 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 World Trade Organization, 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 $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.

The region is also at risk from the effects of drug trafficking. While illicit drugs are moved through all Central Asian countries, Tajikistan bears the brunt of the scourge due to its location at the northern border of Afghanistan. Up to 100 tons of heroin are estimated to pass through Tajikistan each year, which is equivalent to the estimated annual North American and West European demand. Unless Central Asian countries and their neighbors cooperate in controlling drug production, use, and trafficking, this source of major health risks, corruption, and crime will not be eradicated.

The good news today is that most of the Central Asian countries, their neighbors and the international community have recognized the importance of cooperation, openness, and integration. Kazakhstan, Kyrgyzstan, and Tajikistan are actively opening up and working together on many fronts. Unfortunately, not all are equally interested in open borders and close cooperation: Turkmenistan stands aside and Uzbekistan’s borders remain substantially closed.

Cooperation clearly is not only for the region’s governments; businesses, traders, and civil society must be involved as well. Yet it will be up to the leadership in the region to overcome obstacles to openness and co-operation. Market-oriented reforms and good governance are preconditions for effective cross-border ties. The international community, which has a shared interest in a prosperous, stable, and cohesive Central Asia, can and should play a supporting role in these efforts.




Contributed by Kalman Mizsei, the Assistant Administrator and Regional Director for Europe and the Commonwealth of Independent States at the United Nations Development Programme and Johannes F. Linn, the Executive Director of The Wolfensohn Initiative at the Brookings Institution in Washington DC. Reprinted with permission from Project Syndicate.

To read another Global Envision article about foreign investment in Asia, see The Soft Underbelly of China's Growth.



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