Rebuilding the Silk Road: Encouraging Regional Economic Cooperation in Central Asia ADB Approach February 2002

Regional Economic Cooperation contributes to harmonious and sustainable growth. enhances private sector development. is complementary to national development strategies. is an important means to achieving stability. By focusing on key regional issues that require joint efforts of countries, economic cooperation generates additional gains to participating countries beyond national development efforts. In particular, hard infrastructure (e.g. road link between two countries) and policy improvements will directly facilitate development of the private sector, which is the engine of growth in the long run. As such, economic cooperation adds momentum to growth and development, thus contributing to stability of the region. e.g. while no direct link is made, poverty and mistrust provide fermenting ground for extremism.

Development Constraints in Central Asia land-locked and remote location small domestic markets need for rational use of resources especially energy and water

Challenges of Regional Cooperation in Central Asia Nationhood building and transition Need to enhance understanding of potentials of regional cooperation Premise of consensus building among countries

The Phased and Pragmatic Approach Phased: increasing awareness, fostering trust and building consensus Results-oriented: concrete progress in investments and policy improvements as building blocks in the process

Sectoral Focus Transport To lessen the economic isolation of the region Energy To support efficient and rational use of energy Trade To promote trade, traffic, and transit within, and to/from, the region

Transport Almaty Transport Conference (2000) Almaty-Bishkek Regional Road Rehabilitation Project (2000) Other priority transport projects (e.g. Kyrgyz Transport Corridor)

Energy Regional Power Transmission Modernization Project (2002) Regional Gas Transmission System Improvement (TA feasibility study in 2002) Energy and Water Nexus Study (formulation of action plan)

Trade Facilitation Customs Sector Study (2001) Central Asia Customs Cooperation Meeting (January 2002) Customs modernization in TAJ and KGZ (2002)

Economic Cooperation Central Asia and Afghanistan Reconstruction of Afghanistan in the sub-regional context Cooperation between Central Asia and Afghanistan, and South Asia through Afghanistan

ADB Approach To develop concrete subregional projects that will improve the life of Afghan refugees. make supplies and services available to Afghan people. restore trade links between subregions. provide transit outlets for Central Asia’s natural resources.

Forthcoming Ministerial Conference 25-26 March 2002 at ADB headquarters in Manila, Philippines Objectives prioritize and mobilize financing for investment projects explore cooperation prospects in the context of Afghan reconstruction strengthen coordination among the international community