From Concept to Operations

The Central Asia Regional Economic Cooperation (CAREC) Program is a partnership of 11 countries and development partners working together to promote development through cooperation leading to accelerated economic growth and poverty reduction. It is guided by the overarching vision of “Good Neighbors, Good Partners, and Good Prospects.” Geopolitical conflicts exacerbated disruptions in the global supply chain and Central Asia has also been affected to a certain extent. The Central Asia Regional Economic Cooperation  comprises of two cross border economic corridors. CAREC is about the reintegration of the Eurasian Continent and has an investment of $45 billion including $39 in logistics and $6 billion for energy however investment in trade is abysmally low.CAREC aims for poverty reduction and sustainable development and has regional and operational clusters of economic, trade, tourism ,economic corridors, infrastructure, agriculture, water and human development. The tourism cluster aims to provide sustainable  and inclusive tourism. The CAREC countries represent a minimal share of the global GDP with China’s GDP constituting 91% of CAREC GDP, Pakistan stands at 4%, and Kazakhstan at 2% of the total CAREC GDP.

CAREC is in existence since 22 years and was formed in 2001 .Till date US$ 41.1 billion have been invested and 218 projects executed with US$ 15.6 billion worth of infrastructure financing provided by ADB, $ 16.3 billion by other development partners such as EBRD, AIIB and WB with US$ 9 billion being the CAREC governments share.

CAREC Transportation & Corridors

Inherited infrastructure from Soviet Union era is now going into financial losses.CAREC transport strategy 2030 is built upon the progress and lessons learned from the strategy of 2020.Presently emphasis is being placed on multimodal connectivity and road asset management.

There are six CAREC corridors. So far 9964 km of highways have been built and upgraded , 1995 km of new railway and 3433 km of railway have been upgraded, Akatu port and Border Crossing points (BCP’s) and logistic hubs improved . The BCP’s for Pakistan are Torkham ,Chaman and Wagah. Any analysis will be more disaggregated as averages depict tremendous variation in the region. Unlocking of the railway potential is the need of the hour. Kazakhstan and Uzbekistan have well developed rail networks. TIR will be the guaranteeing organization for training and capacity development. Russian railway in collaboration with CAREC is guaranteeing reduced container / km rates.

CAREC Energy

Integration of the energy market is expected to overcome the impact of uneven distribution of energy resources, improving energy security and reducing carbon footprint with development partners like ADB,WB,AIIB, EBRD ,IDB and UNDP.Some CAREC countries have a larger share of hydrocarbon ,coal and hydropower.Kazakhstan is the largest oil producer in Central Asia with the 12th highest proven crude oil reserves in the world and the world’s 9th largest coal producer (108 million tonnes). Uzbekistan is one of the world’s largest natural gas producers with an annual production of 60 billion cubic metres (bcm). The region’s energy generation capacity has been increased by 5482 MW.In the recent past 1692 km  of transmission lines have been installed and also upgraded.Seamless multimodal energy demand is demonstrating double digit growth till 2030 calling for renewed investment in energy infrastructure while at the same time ensuring that carbon footprint is kept within acceptable limits.

CAREC Vision 2030

CAREC Vision 2030 is a regional cooperation platform to connect people, policies and projects for shared and sustainable development.

China BRI and CAREC

China’s Belt and Road Initiative (BRI) has 3 transportation corridors operating between China and Europe as well as the world’s biggest dry port ,Khargosh Gateaway,capable of managing 24 trains daily . The push is towards implementation of Framework Agreement for Facilitation of Cross Border Paperless Trade and logistical Artificial Intelligence (AI). Pakistan and Tajikistan launched National Single Window for cross border paperless trade. Trade Agreements serve as alternate routes .Transit time for rail freight cargo now takes 5 days to cross Kazakhstan while the route from China to the Black Sea took 14 days. Before the Ukrainian conflict the route was China-Central Asia -Russia-Black Sea to European Union being the preferred route.

After the dissolution of the Soviet Union Kazakhstan inherited a railway system spread over 15,000 km  connected to Russia, Kyrgyzstan, Turkmenistan and Uzbekistan. The land mass of Kazakhstan ,a landlocked country, covers an area of 2.7 million sq km. Kazakhstan is developing into a logistic hub between Europe, Middle East, Asia and Russia and also an integral component of China’s BRI. The Kazakh rail authorities did not remain complacent and enhanced the inherited rail grid to 21,000 km of track earning the distinction of becoming the world’s largest rail network.

CAREC GDP as an Indicator of Development

Per Capita Income (In US Dollars)                          Nominal GDP

Kazakhstan                         27,000                                  245 billion

China                                   16,000                                   18.1 trillion

Turkmenistan                    16,000                                     82 billion

Georgia                                15,000                                     27 billion

Pakistan                                4,000                                    353 billion

Uzbekistan                                                                           92 billion

Azerbaijan                                                                            70 billion

Afghanistan                                                                         20 billion

Kyrgyzstan                                                                            12 billion

Tajikistan                                                                             1 2 billion

Mongolia                                                                               76 billion

Moving Forward

There are varying levels of Human Development and Economic Integration and cross border movement needed to enhance human and economic development . Trade agreements are policy instruments to tackle and overcome the barriers of tariff. CAREC is not a formal economic integration agreement and out of 11 countries 8 are landlocked. There is a pressing need to mitigate the geographical disadvantages within CAREC. There remains a heterogeneity of economic endowments due to marked differences in populations, land and natural resources. China’s trade dominates intra CAREC exports as in terms of share of agriculture in exports China, and Georgia export is 5% and 1/3 of total exports respectively. Kazakhstan mostly exports raw material whereas Uzbekistan exports minerals including copper, phosphorites, molybdenum and cotton (8th largest producer of cotton) . China’s trade constitutes 94 % of total CAREC trade. Pakistan has 3 all weather seaports connected to the major sea routes and can serve as transit ports for CAREC external trade at 1/3 of the cost as compared to the cost for Uzbekistan and Tajikistan exporting cargo and containers through Georgia’s ports and the Black Sea route.

By Nadir Mumtaz