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lisa curtis, senior director for central and south asia, national security council: u.s. economy and energy investments in central asia and the caucasus

Lisa Curtis, Senior Director for Central and South Asia, National Security Council: U.S. Economy and Energy Investments in Central Asia and the Caucasus

Author:Caspian Policy Center

May 24, 2019

Introduction Thanks to Amb Dick Hoagland and to the Caspian Policy Center for organizing this important conference and for inviting me to speak about the U.S. commitment to the region’s economic and energy development. For the last 27 years, the U.S. has been deeply engaged in the Central Asian and Caucasus regions, working to foster independence and self-reliance of the nations of the region.  The Departments of State, Commerce, Agriculture, Energy, as well as USAID, USTR, and other USG agencies have partnered with governments across this region to help build capacity for trade and commerce. Economy Bordering China, Russia, Afghanistan, and Iran, the Caspian Sea region is located at the intersection of several key geopolitical interests of the U.S. Government. As part of our efforts to demonstrate a commitment to the region, we have worked to create platforms for engagement between the U.S. and the five Central Asian Republics as well as the three Caucasus Republics. Through both bilateral and regional efforts, the countries address common challenges related to security, economic connectivity, and the environment. Our economic development efforts provide alternatives for countries that want to avoid conditional economic engagements and debt-laden development practices. Our private sector investments improve people’s lives and strengthen the sovereignty and independence of these developing countries. The U.S. Government’s regional connectivity programs are aimed at supporting greater regional trade to enhance economic growth and reduce dependence on external actors. The visit of Secretary Ross last fall to Kazakhstan and Uzbekistan in conjunction with a certified business delegation was an example of our commitment to reach out and foster business connectivity. The United States is also supporting Uzbekistan and Azerbaijan’s accession efforts to the World Trade Organizations—as we did with Afghanistan, Armenia, Georgia, Kazakhstan, the Kyrgyz Republic and Tajikistan. We seek to promote legal infrastructure and practices, including compliance with international business and banking standards, to build international confidence and encourage investment in these countries. The Central Asian and Caucasus countries face enormous challenges to increase regional trade.  A low level of cooperation between countries in the region places them among the least economically integrated regions in the world. Lack of action to integrate trade corridors or streamline customs procedures has been a significant disincentive to foreign direct investment. Borders have frequently been closed in response to foreign policy issues, and slow transit of cargo across borders has crippled business and trade efforts. However, signs of hope for regional trade connectivity are now evident. U.S. programs with customs and border regimes have helped establish licit tax and duty systems, as well as facilitated cooperation and slashed transit times. It’s also important to note that, with the 2016 election of President Shavkat Mirziyoyev, Uzbekistan, began a new policy of regional cooperation that has had a significant influence on all of Central Asia and across the Caspian to the Caucasus. With Uzbekistan’s impressive reform agenda, regional connectivity has become more feasible, flights between Central Asian capitals have resumed, numerous border crossings have been reopened, and cross-border trade has been reignited. Kazakhstan is also undergoing its own leadership transition and economic reform process.  The combined economies of Kazakhstan and Uzbekistan create a more attractive market for international business, opening up all of Central Asia to increased trade opportunities. Energy Energy is another key component of U.S. diplomatic and development efforts in the region. In the period after Soviet independence, Azerbaijan, Kazakhstan, and Turkmenistan became massive sources for extractive energy, primarily through the development of Caspian Sea resources.  Ironically, the region’s internal energy capabilities began a period of a significant decline in the post-Soviet era, due to lack of cooperation within the region. For this reason, regional electricity trade between these countries declined by more than 90 percent from peak levels recorded in 1990.  U.S. assistance is now working to establish a new power grid [CAREM—Central Asia Regional Electricity market] that not only will provide for energy stability and security, but will allow Central Asian countries to monetize surplus energy. U.S. efforts also support the Central Asia-South Asia Power Project (CASA-1000) which will harness surplus hydro-power from the Kyrgyz Republic and Tajikistan and transit energy across Afghanistan to markets in Pakistan.  Once completed in 2021, the Kyrgyz Republic and Tajikistan will sell 1,300 megawatts of electricity to Afghanistan and Pakistan to meet their rising electricity demands. Similarly, the United States is encouraging the development of Caspian reserves and trans-Caspian energy corridors to link Central Asia, the Caucasus, and Europe.  Natural gas reserves in Kazakhstan, Uzbekistan and Turkmenistan can be piped to diverse markets to the West and the South, as well as through existing routes to the East and North. We strongly encourage cooperation between Turkmenistan and Azerbaijan to develop such a route that could become a major supply route for European energy needs. These and other U.S.-supported energy efforts work to bridge supply with demand, promote cooperation between markets, and to foster market independence for the economies of the trans-Caspian region. Conclusion We see tremendous potential for deeper and more substantive economic relationships between the U.S. and businesses in the extended Caspian Sea region. Each of these countries is in the process of undertaking significant economic and fiscal reforms, in order to be competitive in global markets.  Their various restructuring efforts hold the promise of building solid foundations for further economic growth and partnership. Energy is both a driver of domestic stability and security, but also a serious commodity to help power the entire region’s future development. Five years ago, the region looked very different, with trans-border cooperation unthinkable on many issues.  Today, however, we see greater cooperation among the three Caucasus, the five Central Asian states and Afghanistan than ever before, and with that greater opportunity for U.S. business to enter this formerly closed market. The Caspian Sea region is once again becoming a critical, intraregional trade center, reestablishing Silk Road trade routes between Europe and Asia.  I am confident that the encouragement of energy corridors and deeper trade and investment opportunities between all of our countries will yield more jobs and prosperity for American, Caucasus, and Central Asian citizens. Thank you again for the opportunity to speak this morning. To watch the full webcast, please click here. Photo: Lisa Curtis, Senior Director for Central and South Asia, National Security Council at the White House, delivering keynote remarks at the 4th Trans-Caspian Forum on May 23, 2019 / © Trans-Caspian Forum 2019

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