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Afghanistan Reconnected Regional Economic Security Beyond 2014 Afghanistan Reconnected: Regional Economic Security Beyond 2014 Afghanistan Reconnected Regional Economic Security Beyond 2014 Afghanistan Reconnected: Regional Economic Security Beyond 2014 Report on the Abu Dhabi Process Consultations 2013-2014 May 2014 Copyright © 2014 EastWest Institute Illustrations: Dragan Stojanovski, Dan Page Photos: Reporters.be/AP _ Report prepared by Anna Deister, Mohammed Shinwari, Wael Abdul-Shafi, Dr. Beate Maeder-Metcalf (Regional Security Team, EWI Brussels Center). Editor: Sarah Stern; Coordination: Anna Deister The views expressed in this publication do not necessarily reflect the position of the EastWest Institute, its Board of Directors or staff. _ The EastWest Institute seeks to make the world a safer place by addressing the seemingly intractable problems that threaten regional and global stability. Founded in 1980, EWI is an international, non-partisan organization with offices in New York, Brussels, Moscow and Washington. EWI’s track record has made it a global go-to place for building trust, influencing policies and delivering solutions. _ The EastWest Institute 11 East 26th Street, 20th Floor New York, NY 10010 U.S.A. +1-212-824-4100 _ [email protected] www.ewi.info ACKNOWLEDGEMENTS The EastWest Institute (EWI) in Brussels wishes to thank the governments of Abu Dhabi and of Germany for co-funding the Abu Dhabi Process consultation series “Afghanistan Reconnected” in 2013 and 2014. The consultations held in Istanbul, Islamabad, New Delhi and Berlin would not have been possible without the invaluable diplomatic support of the governments of Turkey, Pakistan, India, Afghanistan and Germany. We also would like to thank our partner organizations, in particular the Federation of Indian Chambers of Commerce and Industry (FICCI), New Delhi, the Sustainable Development Policy Institute (SDPI), Islamabad, as well as the German Council on Foreign Relations (DGAP), Berlin, for their cooperation. AFGHANISTAN RECONNECTED The articles of this report were kindly provided by the participants of the “Afghanistan Reconnected” consultation series. 5 AFGHANISTAN RECONNECTED 6 CONTENTS Introduction By Ambassador Dr. Beate Maeder-Metcalf 8 Afghanistan in the Heart of Asia By Ambassador Dr. Michael Koch 12 Afghanistan and the Region: Facts and Figures By Regional Security Team 16 Perspectives from the Region Changing Discourse through Integration By Prof. Gulshan Sachdeva 26 Regional Economic Cooperation in Central Asia: Challenges and Perspectives By Ambassador Miroslav Jenča 29 The Historic and Current Relationship between Afghanistan and Central Asia By Ambassador (ret.) Robert Finn 32 Investing in Energy Development and Trade: Progress and Prospects By Ambassador Sapar Berdiniyazov 34 Regional Economic Cooperation: Prospects and Challenges Regional Economic Cooperation: An Overview By Dr. Najam Abbas 38 Transport Infrastructure Regional Transport Infrastructure: Prospects and Challenges By Zubair Kerami 44 Regional Cooperation in Transport By K.L. Thapar 48 Trade and Investment Harnessing Afghanistan’s Economic Potential By Ambika Sharma 54 Jump-Starting Afghanistan’s Economy By Prof. S. Frederick Starr and Adib Farhadi 56 Energy Security AFGHANISTAN RECONNECTED Energy Security and Regional Cooperation By Mohammad Naeem Shinwari 62 Electricity Trade between Central and South Asia: Potential and Prospects for Afghanistan By D.N. Raina 63 Afghanistan’s Energy Security: Internal Aspects By Dr. Danila Bochkarev 66 The Role of Afghanistan in the Energy Security of Pakistan By Hilal A. Raza 71 Conclusions and Ways Forward The Role of Parliaments in Rebuilding Afghanistan’s Economy By Anna Deister 76 Private Sector Development in Afghanistan and Pakistan By Ozan Acar 79 7 Interconnecting the Region: Ways Forward By Mohammad Naeem Shinwari 84 Afghanistan Reconnected: Conclusions By James Creighton 86 Annexes 88 Introduction Ambassador ith the end of the ISAF mandate, lenges and opportunities in 2013—on in- Dr. Beate Afghanistan will enter the “de- frastructure in Istanbul, on energy trade in Maeder-Metcalf cade of transformation” in late Islamabad and on investment in New Delhi. 2014, and assume security for In a fourth meeting, held in Berlin in April Vice-President Wand within the country. The challenges with 2014, we reviewed progress and defined and Director for regard to security and governance are obvi- future activities. Our philosophy in this se- Regional Security, ous; they attract much political and public ries of “Afghanistan Reconnected” consul- EastWest Institute attention. 1 tations is similar to the Istanbul or Heart of Asia Process, with its regional confidence In 2012, the EastWest Institute chose to fo- building measures. We engaged stakehold- cus on the economic and regional aspects ers from Afghanistan and from the region, of the transition. Afghanistan’s economy is including however not only governments, an important factor in the future stabiliza- but also the business sector and parlia- tion of the country, and so is the develop- ments. We wanted to generate knowledge ment of economic cooperation with her and interest in the region in Afghanistan’s neighbors. economic potential and highlight the win- win potential of economic cooperation. For The departure of foreign troops by 2014 this, we believe it is essential to engage also and a gradual medium-term decline in over- the private sector, which is attracted to new all donor support are expected to lead to a business opportunities. It has proven to be considerable drop in economic growth in very helpful to have Members of Parliament Afghanistan. After years of robust economic at the table—mostly from Afghanistan and growth with GDP rates of around 10%, the Pakistan—as they have a say on legislation, growth is projected at 3.5 percent for 2014, trade and mining laws for example. Govern- according to the World Bank, before rising ments, on the other hand, tend to be more gradually to around 5 percent as the secu- “conservative” and remain mindful of old rity situation stabilizes and mining projects patterns of conflict and rivalry. come online.2 Afghanistan’s economic pol- icy needs to move away from the “security A World Bank Representative stated in one economy” and aid dependence, and exploit of our meetings that, while there is growing the country’s considerable potential which trade between the region of South Asia and exists in agriculture, in mining and as a tran- the rest of the world, economic cooperation sit hub at the crossroads of Asia. within the region has been stagnating. This is due to instability in Afghanistan, located The EastWest Institute convened three in the center of Asia, as well as to long- meetings on cross-border economic chal- lasting problems among neighbors. It goes, however, against the global trend towards AFGHANISTAN RECONNECTED 1 This introduction is based on a speech greater connectivity in terms of infrastruc- delivered at the European Parliament, ture and exchange. And last year, the first 8 December 18, 2013, at the High Level intercontinental railway line was opened in Conference “Afghanistan and Central Istanbul connecting Europe to Asia. Neither Afghanistan with her specific challenges in Asia: Prospects and Challenges after the “decade of transformation,” nor the re- Withdrawal of NATO/ISAF Forces.” gion as a whole, can afford to be left out of 2 World Bank (Jan. 2014) “Global global trends for growth. It is time to over- Economic Prospects”, p. 79, URL: http://www. come the old zero-sum-game mindset. worldbank.org/content/dam/Worldbank/ GEP/GEP2014a/GEP2014a_SAR.pdf. AFGHANISTAN RECONNECTED 9 General Findings from of natural gas per year from Turkmenistan over 30 years. The Asian Development Our Consultations Bank will advise on the establishment of the TAPI pipeline company owned by state One of the most frequent debates was gas firms of these four countries. The 1,800 about the link between security in Afghani- kilometer gas pipeline will allow landlocked Central Asia is stan and economic development: some ar- Turkmenistan to diversify its gas export gued there could be no economic develop- markets to the southeast, provide a vital endowed with ment without a secure environment. Others new fuel source for southern Afghanistan considerable argued that there was no time and perhaps and help Pakistan tackle chronic fuel short- no need to wait for more secure conditions, ages. In India, it will allow the northern re- gas, oil, and as long as local ownership and benefits gion to access a steady supply of gas to fuel water resources were guaranteed in any major undertaking. its growth. The Asian Development Bank While long-term investment would require stressed the transformative potential of and seeks to confidence in the government and in the the project: “It will bring multiple benefits diversify its economy, short-term and medium-term to the participants, including access to new measures were possible, if arrangements markets, enhanced energy security and job supplies, while could be made. The economy can’t wait, opportunities and have transformational Afghanistan, and quick gains may flow from improved impact on regional cooperation.” logistics, reduction of tariffs and removal of Pakistan and impediments at border posts. Progress was also made in 2013 on another India need landmark regional energy project known as A second observation is on the regional na- the “CASA-1000.” This electricity transmis- these resources ture of this economic vision: it will require sion project will allow Tajikistan and the Kyr- to ensure sus- long-term pro-active
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