Invigorating Economy

ECO must strengthen relations with regional blocs such as EU and ASEAN, gaining knowledge and know-how from their experiences. ECO summits must be held on either an annual basis or once every two years rather than five.

Posted on 09/24/17
By Ikram Sehgal | Via ViewsWeek
A night view of Uzbekistan's ancient city of Sanarkand that prospered over the centuries for being located on the Silk Road.
A night view of Uzbekistan’s ancient city of Samarkand that prospered over the centuries for being located on the Silk Road. (Photo by Khusen Rustamov)

Because of superpower rivalry and evolving geopolitical circumstances a group of countries of this region are coming together in a natural economic alliance.  The regional economic integration of trade, including both goods and services, and investments can potentially unleash dynamic paths of growth and development. Established in 1985 as a substitute for the US/UK-inspired Regional Cooperation for Development (RCD) comprising Iran, Pakistan and Turkey as the economic arm of the anti-communist Baghdad Pact succeeded by the Central Treaty Organization (CENTO), the Economic Cooperation Organization (ECO) was expanded in 1992 to include seven new members i.e. Afghanistan, Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Republic of Uzbekistan.


Twice the size of the world’s most successful region grouping, the European Union (EU), ECO occupies 8m square kilometers of area with a population of 440 million (2013 figures), making 6.20% of total global population. Bordered in proximity by Russia, China, the Indian Ocean, the Persian Gulf and the Caspian Basin.  ECO’s  total trade was US$688 billion in 2015 with the combined GDP of around US$1.96 billion, the average GDP per capita was US$ 4300. Foreign Direct Investment (FDI) inflows reached $37.7 billion in 2015.  On their “One Belt One Road” initiative, China will certainly commit much more in ECO. CPEC commitments by China in Pakistan alone amounts to US$ 46 billion (and counting) over the next 3 to 4 years.


On the pattern of the EU, ECO’s objectives are to promote regional economic, technical and cultural cooperation and sustainable economic development through (1) agriculture (2) trade (3) privatization (4) material (5) resources (6) ecology (7) culture, etc. Other objectives include removal of trade barriers and joint efforts for gaining freer access to markets outside the ECO region. Implementation of ECO objectives and strengthening its intra- and extra-regional economic linkages requires major effort in transportation, mobility and connectivity. The objectives of the Transit Transport Framework Agreement (TTFA), in force since 2006, are (1) facilitation of movement of goods and passengers and ensuring their safety (2) avoiding unnecessary delays during the transit traffic (3) cooperation and coordination of efforts to avoid incidence of customs frauds and tax evasion and (4) harmonizing necessary administrative affairs dealing with transit, etc.


ECO’s railway transport network is presently 55,000 km long, (1)Turkey-Iran-Pakistan Train Network is a part of their Trilateral Connectivity Networks covering connectivity through rail, road, air and optic fiber. The journey (6566 km) from Islamabad to Istanbul via Tehran takes 14-16 days, as compared to 40-45 days from Karachi to a Turkish sea port. An agreement has been reached to cut the journey time from 15 to 10 days through swift trains (2) Turkey-Iran-Turkmenistan-Uzbekistan-Kazakhstan train network will serve to bring together the Persian Gulf, the Gulf of Oman, Asian countries, China, Russia, Turkey and Europe, shortening the previous route that ran from Kazakhstan along the Turkmen-Uzbek border and to Iran by 600 kms, making the journey two days shorter (3) 80% progress has already been achieved in Qazvin-Rasht Segment (164 km) of Azerbaijan-Iran which means 60% progress in the whole Qazvin-Rasht-Astara route (4) Kazakhstan-Turkmenistan-Iran railway link is strategically situated for parties involved as it connects Central Asia to the Persian Gulf, via Iran, to be connected to the railway network for the access to ports. The railway will facilitate the access of European countries (direct route) the Persian Gulf ports.


Three times shorter than the Suez Canal route it will play an important role in creating new commercial and social environments in the region near the Caspian Sea and north territories from Bereket to the border with Kazakhstan. Developing interstate connections through railway lines is a must for the consolidation and extension of the economic, political and commercial relationships. A number of projects are underway for augmenting the railway network.


Establishing road corridors serving as trade enhancement projects for the region and beyond are also must for ECO (1) Turkey-Iran-Pakistan (2) Turkey-Iran-Afghanistan-Tajikistan-Kyrgyzstan (3) Turkey-Iran-Turkmenistan-Uzbekistan-Kazakhstan-Kyrgyzstan (4) Azerbaijan-Iran (5) Kazakhstan-Turkmenistan-Iran (6) Kazakhstan-Kyrgyzstan-Uzbekistan-Turkmenistan-Iran (7) Kazakhstan-Kyrgyzstan-Tajikistan-Afghanistan-Pakistan and (8) Kyrgyz-Tajikistan-Afghanistan-Iran.


Having a solid foundation of economic complementarities, possessing common cultural heritage, geographical proximity and an absence of serious disputes and hegemonic designs among its members, the conducive environment of external relations of member states is bound to help economic integration with the global market. With the biggest reserve of oil, natural gas and mineral resources and its unique geo-strategic position of being the shortest trade and transit route to Europe and Africa, this region is ideal for developing transport and communication facilities. The abundance of rich energy resources make ECO potentially an engine of world economic growth.


ECO’s little success during last 32 years is because of lack of political commitment of member states, trade and non-trade barriers, inadequate transport linkages, etc.  Half of the members have still to accede to ECO Trade Agreement (ECOTA) signed in July 2003. ECOTA aims at removing trade barriers for intra-regional trade. Members must strive to increase exports to other countries of the region and beyond.


Certain measures will have to be taken to encourage trade, ensuring intra-regional and extra-regional trade/linkages and motivate socio-economic development activities, start training and skill development on a war-footing to transform human resources into human capital and try keeping political and regional differences aside. For this there has to be a political will. Economic, social, and political problems as unresolved conflicts hinder economic growth and prevent realization of full economic potential of the region. ECO members must resolve these. To be able to a positive impact that SAARC has failed miserably in doing. ECO must strengthen relations with regional blocs such as EU and ASEAN, gaining knowledge and know-how from their experiences. ECO summits must be held on either an annual basis or once every two years rather than five.


Conquering most of the known world of his time by military means, Alexander the Great, a student of Aristotle, who was himself a student of the other two great Greek philosophers, Socrates and Pluto, was really the architect of the first de facto “United Nations”. By 325 BC Alexander’s armies had fanned out eastwards from Europe to Central Asia mostly on foot and horseback along ancient trade corridors. Alexander could never have imagined that the disparate kingdoms he defeated and brought together roughly established an ECO of sorts.  Twenty five centuries later, its unique geographical location, the modernized transportation routes, sophisticated modes of transportation and high-end technology makes the ECO grouping, with close friends Pakistan and Turkey economically most viable flanks because of their sea, road and rail connectivity is potentially a most dynamic and economically strong entity.

The writer is a defense and security analyst.

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