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U.S. Plan for Central Asian Integration Gets Thumbs Up From Key Players

  • The B5+1 plan aims to create a single market in Central Asia with reduced trade barriers and improved regulations.
  • The initiative emphasizes public-private partnerships and private sector leadership.
  • The US hopes to promote a positive-sum economic model in contrast to the approaches of Russia and China.
Central Asia

A US-led effort to help Central Asian states reshape the region’s business landscape is achieving some of its initial objectives, putting the initiative on a more solid foundation for potential success. Key Central Asian governments are reacting favorably to the plan.

Heading into the inaugural meeting of what is called the B5+1 process, a primary aim was to institutionalize an annual gathering bringing together private and public sector leaders from all five Central Asian states for discussions aimed at breaking down trade barriers that hinder outside investment and promoting a regional market. That goal has been achieved. Regional governmental interest in developing the B5+1 appears strong: Kyrgyzstan and Uzbekistan are already reportedly jockeying to host the forum next year. 

In addition, the Kazakh government appears supportive of the initiative. In closing remarks made at the initial B5+1 forum, held in Almaty from March 13-15, Kazakh First Deputy Minister of National Economy Timur Zhaksylykov expressed the government’s readiness to explore ways with the private sector to improve trade prospects in such sectors as agribusiness and e-commerce, as well as work toward developing a unified regional market.

The US State Department quickly issued a statement on March 15 lauding the meeting’s accomplishments. “With support from the U.S. Department of State, the Center for International Private Enterprise (CIPE) will continue to lead B5+1 activities in pursuit of sustainable and inclusive economic growth in Central Asia,” the statement concluded.

The United States designed the B5+1 concept as an extension of a political dialogue between Washington and the five Central Asian states – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The B in the B5 stands for business. The US role is that of facilitator: the concept rests on the expectation that Central Asian states will take ownership of efforts to integrate the region’s economy via strong public-private partnerships. Private sector actors are likewise expected to shape the process.

At the Almaty forum, private sector participants issued a communique expressing an intent to coordinate work that “improves trade, transit, and investment facilitation,” while also striving to “harmonize regulations in key industries” beyond the energy and extractive sectors, which have received the overwhelming majority of all Western investment coming into the region to date. The B5+1 is prioritizing five economic sectors for development: trade and logistics, agribusiness, e-commerce, tourism and renewable energy.

The communique stated that a near-term priority is the creation of a region-wide chamber of commerce to develop and advocate for economic integration. “By coming together and exchanging ideas, leading voices of the business community can help promote collective efforts towards dynamic economic growth and mutual prosperity,” the statement read.

Another priority for the B5+1 is the establishment of a regional arbitration mechanism, effectively a one-stop shop to resolve commercial disputes. “Reliable protection mechanisms will make the region more competitive in attracting investors internationally,” according to the communique. Acknowledging that some Central Asia states may be willing or able to move faster in establishing an arbitration system than others, the communique tacitly endorsed a two-tiered system, in which some lead, and others follow. If two or more Central Asian states can quickly demonstrate the effectiveness of a dispute-resolution system, it would send a “positive signal” to hesitant governments and give impetus to region-wide expansion, the communique read.

Working groups covering the five priority economic sectors outlined specific next steps in the communique. A common need identified across all five sectors is the development of transnational mechanisms to harmonize regulatory and customs frameworks. 

Some targeted recommendations to promote transnational trade included the development of a common digital CMR, or contractual documentation in an electronic format enabling truck-borne goods to move across borders smoothly. Many customs procedures at present are not yet digitized. Another recommendation calls for the abolishment of visa requirements for truck drivers involved in import-export activities. To promote tourism, meanwhile, the B5+1 wants governments to adopt a Schengen-like tourism visa that enables sightseers to move freely within the five regional states.

Although the B5+1 is off to an encouraging start, lots of challenges still stand in the way of success. In a region where authoritarian methods tend to shape governmental policy, it remains uncertain how much of the initiative officials are willing to cede to private sector actors. Meanwhile, private sector capabilities in such areas as policy development and advocacy are largely untested. Previous efforts to promote a greater degree of regional economic integration have fallen flat, and efforts to promote a single Central Asian market run counter to the interests of Russia and China.

If the B5+1 maintains its forward momentum, the outcome is envisioned as a well-regulated, efficient single market that opens the floodgates for Western investment. Integration under the B5+1 vision can also ensure the individual sovereignty of each Central Asian state, helping them withstand political and economic pressure exerted by neighboring states and other outside actors.

“Governments and businesses should unite efforts to position Central Asia as an attractive [investment] destination, rather than merely a transit zone in global value chains,” the B5+1 communique reads. 

Advocates of the US-led process admit that Washington is hoping to increase its influence in Central Asia with the B5+1 process, but they draw a sharp distinction between this new American approach and Russia’s and China’s. The B5+1’s strategy aims to grow American influence in the region organically in ways that are diametrically opposite to the methods used by Moscow and Beijing.


“All FDI [foreign direct investment] is not created equal,” Eric Hontz, who heads CIPE’s Center for Accountable Investment, said during the Almaty forum. He noted that FDI can have a positive-sum effect, in which both parties in any agreement reap benefits, or zero-sum, in which any given deal has a clear winner and loser. A zero-sum approach, when employed as an FDI strategy, often aims to achieve the “stagnation and capture” by the investor of an entire sector of another state’s economy.

The B5+1 concept is grounded in positive-sum thinking, striving to root Central Asian states in an economic framework with clear and evenly applied rules of the game, enabling the broadening of prosperity. The concept encourages Central Asia to take control of its own destiny and does not seek to turn the region into a zone of Western influence. Central Asian nations would remain free to trade with all states as they see fit. But if the principles outlined in the B5+1 communique can sink deep roots, the region’s underlying economic philosophy would be antithetical to that espoused by both Russia and China. Central Asia, then, would theoretically find it more reliable and lucrative to look West than in other directions.

By Eurasianet.org 

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