TheNewSilkRoadInitiative: TowardsaNewStrategyforRegionalEconomicCooperation Statementby H.E.ShamL.Bathija SeniorEconomicAdvisertoPresidentHamidKarzaiofthe IslamicRepublicofAfghanistan SAISCentralAsiaCaucasusInstituteand CenterforStrategic&InternationalStudies,JohnHopkinsUniversity ForumonaNewSilkRoadStrategy Washington,D.C.

29September2011
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Your Excellency Under Secretary Hormats, Mr. Miranda, and our hosts, ProfessorStarr(SAISCACI)andDr.Kuchins(CSIS), DistinguishedGuests, LadiesandGentlemen, Iwouldliketoextendmyappreciationtoourhosts,theCentralAsiaCaucasus InstituteatJohnsHopkinsSAISandtheCenterforStrategicandInternational Studies,forkindlyhostingthisforumonaNewSilkRoadStrategy.Atitsheart, this dialogue and related dialogues in Kabul and elsewhere today, such as duringtheUNGeneralAssemblylastweekwithcontributionsfrommorethan 25 Foreign Ministers, senior UN leaders, and the head of the ADB seeks to advance a vision of regional economic cooperation to achieve a stable, democratic, and prosperous Afghanistan for the benefit of its surrounding regionand,indeed,forthewiderinternationalcommunity.AsIstressedwhen launching the New Silk Road Initiative nearly one year ago at the Fourth Regional Economic Cooperation Conference for Afghanistan, held in Istanbul, onlyagenuinelyregionaleconomicstrategyandregionalpracticaloperational effort involving all countries near Afghanistan will ensure that my country is placedonanenduringpathtowardsstabilityandprosperity. WhenIacceptedthisinvitationtospeak,Ihadeveryintentiontobewithyou in person today. But it is perhaps fitting that I am able to use modern technologies to have a conversation with you, via long distance, from the Indiansubcontinent,whichhashistoricallyservedasamajorcomponentofthe Silk Road trading routes for many hundreds of years. This region is also expectedtogrowasanincreasinglyimportanttradingpartnerofAfghanistan,

especially with the introduction of the South Asia Free Trade Agreement (SAFTA)andAfghanistanPakistanTransitTradeAgreement. ItisnocoincidencethenthatSecretaryofStateClintonchosearecentspeech inChennai,IndiatoannouncetheneedforanewSilkRoadvisionthatinvests incriticalinfrastructureandadoptsnewtraderulesforthe21stcenturyacross thevastcontinentofAsia.SimilartoEuropeandChina,Indiassheermarket size today makes it a major destination and an enduser for Afghan and other regional goods and services that may transit through Afghanistan. Indeed, Afghanistans strategic geographic significance lies in its centrality in facilitating two great Asian trade and transit corridors: first, the traditional EastWestcorridorthatlinkedEastAsiawithEurope,butevermoreimportant isthesecond,albeitlesserknownNorthSouthCorridorconnectingRussiaand theenergyrichCentralAsianStatesthroughAfghanistanwithPakistan,India, andotherenergyresourcepoorcountriesofSouthAsia. Ashistoriansshowus,commerceutilizingtheAncientSilkRoadwhichwas actually a collection of intertwined trade routes linked the Chinese and RomancivilizationswhilepassingthroughterritoriesdominatedbythePersian and Indian cultures. It, therefore, truly represented the convergence of civilizationsandtheconfluenceofinterestsacrosstheregionandbeyond. Onceagainitisthisconfluenceofculturesandintereststhatpropelsthevision of the New Silk Road Initiative (NSRI) that we have joined to discuss today. Webelievethatthisinitiativecanonceagainrevivethesharedprosperitythat theAncientSilkRoadonceprovidedacrossAsia.Consequently,IviewRegional CooperationofwhichtheNSRIasanintegralpartoftheAfghanistanNational Development Strategy and the Kabul Process, a final transition through
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increased international alignment behind national priorities towards our commongoaloffullAfghanownership,responsibility,andsovereignty. TheNSRIwillincreaseregionalconnectivityandboosteconomicprosperityand stability through increased trade and investment. The resulting shared prosperityandjobcreationwillreinforceeffortstopromotereconciliationand thereintegrationofformercombatants,whichsufferedanenormoussetback last week with the assassination of my countrys late President Professor Burhanuddin Rabbani. Though not a comprehensive solution for turning all violent opponents of the Afghan State, Afghanistan views employment generation and the wider goals of the New Silk Road Initiative as operating handinhand with my countrys efforts to help create the conditions for politicaldialogueandsuccessfultransition. Working closely together, Afghanistan and the international community have made tremendous progress together over the past decade. For example, a great deal of farreaching reforms have been made in customs, revenue collection,bordermanagement,andotherpolitical,legal,andregulatoryareas to facilitate international trade and investment. Together, we have also invested in Afghanistans most important resource, its people, by vastly increasing access to education and improving healthcare for all Afghans. BeginningwiththestartoftheBonnConference,onDecember5,2001,whichI had the privilege to participate in, we have also established permanent institutionsofdemocraticgovernancethat promoteand guaranteetherights ofallAfghancitizens,womenandmen,youngandold. Numerous challenges, however, lie in the path of fully implementing this initiative, which would enable Afghans and citizens throughout the region to
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leverage a multitude of potential benefits and opportunities. Obstacles to regionaleconomiccooperation,suchastransitrestrictions,complexregulatory requirements, and poor roads and bridges, significantly impede crossborder commerce.And,forexample,Afghanistanlackstodaythemarketaccessto transport our fruit by road to regional and international markets or to transport our copper and ironore by rail to customers. Naturally, potential investors hesitate to make the plunge, and instead they channel capital into alternativeemergingorfrontiereconomies. But we do not have to be prisoners of our fate. We need an overarching organizing plan one that unifies our efforts within Afghanistan, with our neighbors, and with our broader international partners. We believe that the NewSilk RoadInitiative,withanagreedsetofpriorityinfrastructureprojects and emphasis on removing the barriers to efficient trade and transit, can becomethatunifyingstrategy. Specifically,theNewSilkRoadInitiativewillpursuethisambitiousyetpractical undertakingbybuildingthenecessarytransportationandenergyinfrastructure andestablishingAfghanistanasanefficienttradeandtransithub,connecting China with Europe and SouthWest Asia, and Russia and the Central Asian RepublicswithPakistanandIndia.Besideslargescaleinfrastructureprojects, suchasnewroadsandpowerprojects,theNSRIemphasizestheimportanceof capacitybuilding, trade reforms, communications, and harmonizing cross border procedures, such as customs. Having an efficient and harmonized regulatoryframeworkwillbringpredictabilityandconsistency,creatingamuch moreconduciveenvironmentforattractingforeigninvestmentintoourregion. ThisisanareaforwhichU.S.technicalexpertisehasbeenparticularlyvalued and beneficial over the past decade, and given the relatively low costs
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involved,weexpectandhopethattheU.S.willcontinuetoprovideleadership inthisareaamongthemajordonors. ServingasachiefeconomiccomponentofAfghanistanseconomictransition, thevisionoftheNewSilkRoadInitiativeisdrivenbybothcommonaspirations andsharedchallenges.LiketheancientSilkRoad,itstemsfromthebeliefthat commerce based on winwin propositions can raise the livelihoods of people across the region. Through increased regional connectivity and productivity, our common initiative, with partners across Asia and beyond, aims to transform our region by better leveraging the current, high level of technical, political, and financial resources being made available by the internationalcommunityandattractingprivatesectorinvestment. PartI:OpportunitiesandChallengestoRegionalTradeandTransit Some may wonder at a time of declining aid and military drawdown how support for such a large undertaking can beachieved.Ibelieve, by attracting privatecapitalthroughPublicPrivatePartnerships(PPP),wecanavoidplacing additional burdens on donor nations and transition to a new model of economic development and prosperity. By choosing this path, we will also transformthenatureoftheAfghaneconomyfromonedependentonforeign aid and consumption to one propelled forward by foreign investment, domestic production and exports put more succinctly, this is our aid to tradepolicy. Moreover,forastrategytobesuccessfulandwidelyaccepted,itmustexpand job opportunities for ordinary Afghans and generate substantial economic growthinareasonabletimeframe.Jobcreationisthehighestpriorityforus; we will not be able to stabilize Afghanistan without a vigorous job creation strategy. Given that Afghanistans mineral wealth has been estimated at
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betweenUS$2and$3trillion(andsomespecialistsestimateevenhigherlevels ofwealth),webelievethatmineraldevelopmentandregionalconnectivitycan maximize the use of local labour and generate exportled growth in Afghanistan and her neighbours. Beyond our abundant natural resources, transitfeesfromthetransferofnaturalgasandhydropower,aswellastransit ofgoodsservicesthroughAfghanistanviaroad,rail,andair,alsomaintainthe potentialforgeneratinghundredsofmillionsinannualrevenuefortheAfghan government. PartII:PracticalMeasuresforAction At present while intraregional trade accounts for only around 15 percent of total trade, the road, rail and power connectivity provided by the New Silk Road Initiative can boost regional trade significantly. The New Silk Road Initiative will build on the initial successes of regional organizations, such as theSouthAsianAssociationforRegionalCooperation(SAARC)andtheCentral Asian Regional Economic Cooperation organization (CAREC), and as well as bilateral agreements. Here I want to highlight specific examples of progress alreadymadeinthisregard: First, following more than three years of negotiations, the Afghanistan PakistanTransitTradeAgreement(APTTA)wassignedbytheGovernmentsof Afghanistan and Pakistan, on July 18, 2010. With an extensive and skilful convening role performed by the United States in support of the Afghan and Pakistani governments, APTTA is expected to serve as a model for further bilateralandwidertradeandtransitagreements.TheNewSilkRoadInitiative canalsohelptoexpediteAPPTAseffectiveimplementationforthebenefitof thewiderregion.

Second,theGovernmentofAfghanistanisstrengtheningbordermanagement cooperation with neighbouring countries to ensure a united approach to addresscrosscuttingissues,suchasstrengtheningtradefacilitation;customs clearance harmonisation; environmental protection; and encouraging regular and deeper dialogue on border security and management with regional neighbours.Breakingdownbarrierstotradeandtransit,byreducingexcessive bureaucratic procedures and illegal rentseeking activities, could represent a hallmark of the New Silk Road Initiative, as well as a costeffective way to advancemarkedprogressinthenearterm. Third, we have also taken significant steps forward in the Turkmenistan AfghanistanPakistanIndia(TAPI)naturalgaspipelineprojectinrecentmonths, andwehaveevencommencedworkonwhatmanyoutsideobserversviewed asinconceivableinrecentyears:establishinganationalrailway.TheHairaton to MazariSharif line has been built. We are also in the process contracting ourHajigakironoremine,oneofthebiggestdepositsintheworld. Some of our distinguished participants today may wonder why and how privatecapitalcould beattracted by Afghanistan. Some mayevenwonderif wearemakingarealisticassessment.Indeed,atpresentinAfghanistan: Wehaveahighlyunderdevelopedtransportationinfrastructure; We need to further strengthen procedural frameworks and to reduce unnecessarilybureaucraticpracticesattheborder; Wehaveunfriendlybusinesspractices,particularlyatbordercrossings; WehavecontinuedinsecurityandinstabilityinAfghanistan.
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Yet we have no choice but to forge ahead for a simple reason all the challenges outlined above do not simply improve unless Afghanistan undertakes to forge with its neighbours and wider international partners a comprehensiveregionaltradebased economic strategy. For my country, the regionandtheworldtobemoresecure,wemustimplementthevisionofthe NewSilkRoadInitiative. Part III: The Way Forward: Introducing a New Afghan Strategy for Regional EconomicCooperation Specifically, we need to take full advantage of the upcoming conferences in IstanbulandBonntoadvancethisvisionthroughaNewSilkRoadStrategyfor RegionalEconomicCooperation.Thestrategyshouldbuildonthedialogueand commitmentsmadeinregionalforums overthepastdecade,suchasSAARC, CAREC,ECO,SCO,andRECCA,aswellastheKabulProcess.Atthesametime,it should be rooted in the current, unique historical context facing Afghanistan anditsneighbourhood. Inshort,Afghanistanfindsitselfatanhistoriccrossroads.Eitheritcontinuesto dependonforeignaidasaprincipledriverofeconomicdevelopment,aswell as a on foreign forces to safeguard its security, or it quickly shifts to a new model of development rooted in the private sector as the main generator of jobs and wealth and the Afghan National Security Forces as the chief guarantors of national and personal security. For Afghanistan, a landlocked country,tosucceedinthistransformation:
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 itmustbreakdownthebarrierstoregionaltradeandtransit; it must invest in the transportation and energy infrastructure to facilitatethegrowthoftransnationaleconomiccorridors;and itmustattractforeigninvestmentfromnearandfaronscalepreviously unforeseeninAfghanistan. AnewSilkRoadStrategyforRegionalEconomicCooperationwilladvancethis overarchingvisionbypresentingkeyprinciples,objectives,andprogramming priorities for consideration in Istanbul and adoption in Bonn. It could encompass agreed principles deliberated upon recently in regional forums, suchasRECCA,CAREC,SAARC,ECO,andSCO.TheStrategysobjectivescould furtherdrawontheCoChairsStatementpreparedfollowinglastweeksNew Silk Road Foreign Ministers meeting in New York. And programming and project priorities could highlight new initiatives, such as a national railway, energy pipelines from Central Asia to South Asia, and the extension of the AfghanistanPakistan Transit Trade Agreement to Afghanistans northern neighbours. And while consultations towards the development of this strategy should be broadbasedinbothAfghanistanandtheinternationalcommunityandlinked closely to ongoing consultations about Afghanistans National Priority Programs, special attention should be given to Afghanistans immediate adjacent and wider regional partners, including Pakistan, Iran, the Central Asian States and India. Their active participation and shared vision of a revitalized Silk Road can determine the pace and depth of economic integrationresultinginarangeofeconomicbenefitsacrossCentralandSouth Asia.

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In closing, we are thankful for America and the wider international communitys many sacrifices and continued commitment to Afghanistans transformation into a peaceful, democratic, and financially selfsufficient memberofthecommunityofnations.Ourpartnershipformsthebedrockfor catalyzing future efforts to both engage Afghanistans neighbours more constructively, as well as unleash the full potential of our shared partners in thebusinesscommunity.Welookforwardtoourcontinuedcollaborationfor peace,prosperity,andjusticeforallAfghancitizens,aswellasforthecitizens ofallcountriesinCentralandSouthAsiaandbeyond. Ithankyou.

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