Richard Boucher: Central Asia Power Sector Forum

Remarks at Electricity Beyond Borders: A Central Asia Power Sector Forum

Richard A. Boucher, Assistant Secretary for South and Central Asian Affairs

Istanbul, Turkey
June 13, 2006

Thank you very much. I want to thank all the ministers and government officials from the South and Central Asia nations who are participating in this forum. But it wouldn't be a real forum though unless we had the other important players in the sector—the multilateral development banks who can support these projects with funding and advice and the private sector firms who bring their international expertise and skills. I thank them for being here. And a warm welcome to our hosts from the Turkish government who are participating as observers, and to representatives from the Indian government who are with as us well.

It is a pleasure to be here in Istanbul working to implement the ideas of regional economic integration. It was only two months ago we went to Kabul to talk about the benefits of expanding economic links between the two regions. At that conference, and in my travels and meetings since then, I have found that virtually everyone agrees that linking the Central Asian nations with their South Asian neighbors is a win-win situation for all.

Since Kabul, there has been much serious thinking about how we can make this happen. The electricity conference in Islamabad last month was a major practical step forward. And today I'm happy to see how quickly we have moved to actually make the ideas a reality. We firmly believe that new connections and new opportunities in Central Asia can transform the region from a neglected space into a vital link and give its nations and its people new options and independence.

The Vision

This is an historic moment for the region and a strategic opportunity that we can't afford to miss. The end of the Soviet Union almost 15 years ago gave the Central Asian nations their independence. But in many ways they are still evolving, still establishing their own individual identities and their own places in their neighborhood and the world. While they are each unique—rich in their own resources, traditions and cultures—they share a common need to work together and to develop relations with all their neighbors, including those to the South.

One glance at a map shows that geography placed Afghanistan at the pivot point for interactions between South and Central Asia. Although throughout history it has been a crossroads between Europe and Asia, in the last two centuries Afghanistan has acted as a barrier dividing the two regions. Now it has regained its natural role as the pivot of Central and South Asia. It has the potential to be a land bridge connecting the vast Kazakh steppes and beyond with the great ports of the Indian Ocean and greater Asia.

This broad idea is merely a revival of the fundamental basis for the Silk Road. >From East to West and South to North, the great civilizations of the world found ways to move things back and forth between India and Asia and the Middle East and Europe. It was also a conduit for the exchange of ideas and knowledge. We hope that this region can once again bring together the goods, people and ideas of the world.

United States' Interests

The United States wants to see this happen. We have profound and long-term interests in South and Central Asia that I think are underscored by the number of recent high-level official visits to the region. President Bush's trip to Afghanistan, Pakistan and India in March, Vice President Cheney's visit to Kazakhstan in May and Secretary Rice's trip to the region last October highlighted our three primary goals: strengthening democratic stability and economic reforms, fostering regional security and cooperation on the war on narcotics and terrorism, and promoting economic growth and regional cooperation.

Although we're here at this conference to focus primarily on the third of these goals, we can't forget the importance of the first two. We feel strongly that all three fronts work together in order to achieve the lasting stability and prosperity that all citizens desire and deserve. We are not working, as some have accused us, to overthrow existing regimes and to take advantage of political and economic instability. In fact, we are supporting just the opposite. We are promoting the idea of long-term stability through reform. We want to help nations find enduring peace and prosperity by finding their own democratic and economic stability.

One of the best ways to achieve this is by giving the nations and people in this region options and opportunities. Nations should never be left with only one option—one market, one trading partner, one vital infrastructure link. Economic stability and independence come from having multiple outlets to the world—multiple sets of pipelines, multiple transport corridors, and multiple trading partners. The countries of Central Asia and Afghanistan are in the unenviable position of having no direct outlets to the world. That means they are all dependent on their neighbors and would benefit greatly from increasing their connections to each other. To help this happen, we see the need for multiple north-south links, as well as multiple east-west links, to be developed in energy, transportation, trade, and communications.

Areas of Economic Integration

As you know, the U.S. has a long and successful history of focusing on energy development in Europe and Eurasia. We have supported multiple outlets for Central Asian gas and oil not as a strategy to counter any one country, but rather as a way to increase export options and opportunities for all.

The same principle applies to the reason we are gathered here this week—to focus on the exciting possibilities for electricity trading between Central and South Asia. Many economic analyses have noted the excellent potential for hydro dams on Central Asian rivers and the complementary seasonal demand for power between Central and South Asia. Like the original Silk Road, good ideas don't need policy-makers to make them happen, but we can help things along by helping create the environment so that they can happen.

That is what this conference is all about. At this conference we hope that the government participants will establish a framework to develop together a regional power-transmission corridor linking Central and South Asia. Following on the Islamabad conference last month, this is only one of what will need to be many steps. But it is an important one.

Equally important at this conference is the inclusion of the multinational investment banks and of private sector companies. Large infrastructure projects like hydro-power plants and long-distance power lines are too expensive for individual governments alone to finance. Regional initiatives such as these are best pursued with international development financing and technical expertise that can only come from the private sector. Their participation is vital, and cannot be taken for granted. To attract private businesses, governments need to do their part to assure transparency, rule-of-law and protection of investments. Corruption, excessive tax burdens, and ambiguous regulation all have a negative impact on the investment climate.

Another area we are focused on is transportation. Just as cheaper and more stable electricity will benefit all the economic sectors that use power, better transportation infrastructure can be the catalyst for regional and international trade.

In Central Asia, the Asian Development Bank (ADB) has been instrumental in financing various road projects and providing technical assistance. We have been working hard, with our multiple international partners, on the Afghan ring road. The main sections are now almost completely rebuilt.

Joining these two important achievements, a U.S.-funded bridge will open next year over the Pyanj River between Tajikistan and Afghanistan. This new $36 million bridge will be open 24-hours a day with customs and border facilities on both sides. With the capacity to handle 1,000 vehicles per day, it can open a new era of trade for south and north alike.

But we know that poor infrastructure is only one obstacle to trade. Bureaucratic and political trade barriers are major factors as well. To work on that side of the problem, our U.S. Trade Representative leads an initiative with the Central Asian nations and Afghanistan to lower regional trade and investment barriers. And our Agency for International Development is also working on the customs side, implementing a project to harmonize, streamline, and strengthen customs clearance.

Communications is another area that we are looking at. Moving ideas and information between all peoples of the region at 21st century speed and efficiency should be the goal. We want to see the backbone of this network constructed alongside new power lines and transport links.

The U.S. as a Partner

These are big goals and we know that we would not get very far working on them alone. We are cooperating with all the governments in the region, with their neighbors, and with other countries, as well as with the regional institutions —the South Asia Association for Regional Cooperation and the Central Asian Regional Economic Cooperation program and others.

We support the important role that the international financial institutions—the World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development —are all already playing in the region.

And we want to continue to emphasize the ties that the nations of Central Asia have developed with Turkey, the European Union, with NATO, and with the Organization for Security and Cooperation in Europe. All of these relationships are important and no one should think that our efforts to expand new links to the south signals in any way a desire to lose existing connections. The legacy of connections through Russia and the new connections through China also play a key part in the overall picture. All these connections and opportunities support and complement one another.

We envision our main role as one of helping to bring people together. As with this conference, we want to be a convener, a facilitator, and a catalyst for action. We want to help pry open some of the bottlenecks and to use our diplomatic influence when needed.

Next Steps

In order to keep our engagement focused, I intend to create a new position within the Bureau of South and Central Asian Affairs at the U.S. State Department. This high-level official will help implement our regional integration initiative and assist in building partnerships within the region. Once named, this official will travel frequently to the region to work with all our partners to keep the momentum going.

This year, through the U.S. Agency for International Development, we will provide $3.5 million in new targeted technical assistance to help establish a transparent and competitive Central Asian energy market.

We are also signing today an $800,000 grant from the U.S. Trade and Development Agency to support the partnership between the Tajik government and the U.S. energy company AES. They have formed a joint company that will rebuild existing power lines and export excess Tajik power to Afghanistan by the end of 2008. This is the first stage of a project that will eventually build new Tajik hydro capacity and export electricity across Afghanistan to Pakistan.

Thank you again for your participation in this forum. It's an exciting time to be working in this area and I'm happy that the U.S. is able to play a part in this important initiative. We will remain engaged. We will be watching to make sure that progress is made and you can count on hearing from me and many others in my government on this topic for years to come.

Thank you.

Released on June 13, 2006

ENDS

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