URC

The US Economic Interests in Greater Central Asia:
The Development Process and the Expected Future

Binqiao Chen
Robert Tian*
Medaille College

Abstract

The Greater Central Asia Region (GCAR) has been playing an important role in the trade between the East and West. In this paper, we will discuss the economic relationship between the United States and the GCAR. We will demonstrate the significances of economic connections between the two regions and analyze the economic situation and rationales that the GCAR keeps continuous and stable connection with the United States, in terms of both international and regional trading cooperation. We will also highlight the major strategic economic interests and the current economic policies of the United States. Finally, we will probe the problems that the United States needs to identify and solve.

Key Words: Greater Central Asia Region (GCAR), Comparative Advantage, Economic Connection, Trading, US Economic Interest

Introduction

Before the sixteenth century, the Greater Central Asia Region (GCAR) bridged Europe and East Asia as well as North and South Asia, becoming a location of religious, scientific, and cultural development of the Islamic world.1 By becoming part of Tsarist Russia in the mid 1700s and, after the Russian Revolution in 1917, part of the Soviet Union, the GCAR was greatly shut out from the rest of the world—only trading between the enclosed region and the Soviet Union. Because of the seventy years of Soviet rule that followed the Russian Revolution, the region’s economies became closely linked with one another, and international trading was scarce and almost non-existent. 

The Soviet Union’s economy was once considered to be the second largest in the world. However, the Soviet economy became sluggish when responding to change, adapting cost-saving technologies, and providing incentives at all levels to improve growth, productivity, and efficiency, which lead to its eventual dissolution after sixty-nine years of rule. In 1991, the Soviet Union was disintegrated, and five new countries in Central Asia were established: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. These five countries, as well as Xinjiang and Afghanistan, now constitute what is known as the GCAR, the Greater Central Asia Region.2

The GCAR suffered from a severe economic collapse after the Soviet Union was dismantled. Poverty increased greatly, decreasing the living standard and the gross domestic product (GDP) in that area. However, because of the breakup of the Soviet Union, the bridges once between China, Iran, and Afghanistan with the Central Asian Region were again reopened. The reestablishment of these bridges was and still is crucial for the Greater Central Asia Region’s survival. Regional trading and cooperation among these countries is what must continue for the GCAR and the enactment of international trade with foreign developed countries, such as the United States of America. The US can offer goods and resources as well as economic guidance to the GCAR.3

Internationalism is defined as the principle or policy of international cooperation for the common good.4 The GCAR and the US will greatly benefit by having connections and cooperation with each other. Economic support through international trade with the US and regional trade among the countries will further stabilize and stimulate the GCAR economies. In return, the US would benefit from local GCAR natural resources such as natural gas, oil, coal, copper, zinc, lead, gold, and other valuable, natural elements. This international cooperation will bring further success to the American economy by way of importing natural resources and help jumpstart the countries of the GCAR through importing the latest technologies and goods used to commence industrialization.5

The Asian GDP under Soviet control rose between 1970 and 1989 and under Post-Soviet control declined precipitously until 1999. Because of regional and international trade, the countries’ economies have bounced back, thus further highlighting the importance and need for regional and international trade.6 Small, underdeveloped countries like those in the GCAR are very vulnerable to fluctuations in world prices due to their limited size and dependence on international markets.7  The need for further international trade and influence from developed countries such as the US will help the GCAR better manage their underdeveloped and under industrialized economies.

The United States’ economy is the largest national economy in the world with an estimated nominal GDP of $14.66 trillion in 2010.8 The US economy also maintains a very high level of output per person, a stable overall GDP growth rate and a low unemployment rate. The US GDP per capita, based on the year 2006 dollar estimates, was highest of major economies totaling around $47,200, approximately a quarter of nominal global GDP; other countries included in this statistic were Italy, France, United Kingdom, Canada, and Japan. Canada was second highest with a GDP per capita of $39,400. The US economy also maintained a very high level of output per capita. In 2010, it was estimated to have a per capita GDP (PPP) of $47,284, the 7th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners in 2010 were Canada, China, and Mexico.

The United States’ economy grew significantly since the founding of the nation in 1776. The economy is well integrated and well industrialized and responsible for a quarter of the world’s economy. The main causes of industrialization and integration in the US economy were a large unified market, a supportive political-legal system, vast areas of highly productive farmlands and natural resources, as well as an entrepreneurial spirit and commitment to investing in material and human capital.9
The United States’ well-developed economy enhances the economy of the GCAR through its extensive import and export system. By having a trading system with the GCAR, the exported goods and resources to the GCAR aid in the development of new technologies for the region and begin the driving force of industrialization. Exports of natural resources from the GCAR to the US, in return, aids the US in producing more goods and services that will help the circular flow of income and expenditure in all the involved countries.

By having a relationship with the GCAR, the US will benefit immensely from the plethora of natural resources found in the foreign region. Kazakhstan is rich in natural gas and oil and is ranked sixth in the world for the most mineral reserves, valued at around ten trillion American dollars. Having a trading agreement in place with this country could lead to further production of goods in the US, and in return these goods could then be shipped back to the area of Kazakhstan and the rest of the region for their use. Kyrgyzstan is rich in iron ore, estimated at having around five billion tons. Also, this is the location of what used to be the Soviet Union’s largest gold mine, which is located in Makmal. Tajikistan, Turkmenistan, and Uzbekistan are also very rich in natural gas, coal, petroleum and many other natural elements.10 

Currently, the shortage in natural gas and oil in the United States could bring significant attention to the fact that these foreign countries have a surplus. Having a good relationship and cooperation between the US and GCAR could lead to further import of natural gas and oil to the US, thus bettering the price level for Americans and eliminating the shortage in America. In return for exporting the gas and oil, the Greater Central Asian countries will benefit from tariffs paid by the US. The amount of money paid per unit, as well the tariff placed on imports and exports of the involved countries, shapes profit for the countries.

 Also, a quota must be agreed upon between the involved countries in order to set a legal limit on how much of natural gas and oil will be imported into the US. The key to successful international trade between the GCAR and the US is cooperation and communication. Proper actions must be taken in order to have all the countries benefit to the fullest degree; the countries must agree on terms of trade, or how much one good exchanges for a unit of another good.11 Exporting natural gas and oil from the GCAR and importing it into the US is just one example and one possible approach to this international trading agreement. Bartering is another approach, which entails no money exchange but a direct exchange of a good or resource for another good or resource. So by the GCAR supplying the US with natural gas and oil, the US in return could exchange goods or resources that could be used in the GCAR.

The law of comparative advantage comes into play when discussing international trade. The country with the lowest opportunity cost of producing a particular good should specialize in that good. So, in this case, the US is in need of natural gas and oil, so the GCAR can give the US the gas and oil to produce goods that are more costly for the GCAR to make. By the GCAR offering the US the oil and gas, they are realizing that it is cheaper and more economical for the US to make certain goods that will be imported into the GCAR from the US, thus saving the GCAR time, money and effort to producing those goods and helping the US produce the goods at a cheaper amount because they have the resources supplied by the GCAR. This cooperation between the countries can benefit them, whether it is from stimulating the economy or supplying much needed resources.

This research paper is conducted in order to further understand the importance of international trade and foreign relations as well as gain information about why regional cooperation is crucial to a country’s success. The research also helps to highlight what has worked and what has not worked in the past, allowing future engagements to shape accordingly and becoming aware of mistakes that have already been made.

U.S Domestic Economies and Economical Connections with GCAR

Two thousand years ago the two halves of the world met each other through a Florentine man with the name of Francesco Balducci Pegolotti, who was a merchant on the Silk Road, one of the great trade routes of the world. This legendary caravan trail brought the East and the West together through a pathway that began in China, snaked its way through Central Asia, and then ended in Rome. The route was not a continuous line between cities and cities, but it split into different passageways from Central Asia to the Middle East. It would take a caravan up to a year to make the whole 4,000-mile trip. Silk was the most popular good moving from east to west, and from the opposite direction came wool, ivory, glass, and precious metals. Throughout time, various kinds of goods went through the Silk Road whether it was expensive cloth or mundane ox hide.12

That blend of mutual interest and mutual respect is easier said than done today. The United States wants to expand cooperation in a wide range of areas with Central Asia when it is once again at a critical strategic crossroads. Central Asia has for thousands of years served as a bridge between East and West, North and South. The old Silk Road transported not only goods and people, but also technologies, religions, and philosophies, which helped create great civilizations and foster great innovations.

According to Burns, Central Asia’s economic growth and political development can produce more reliable partners for combating global challenges, from non-proliferation to counter-narcotics to energy security. A stable future for Afghanistan depends on the continued assistance of the Central Asian partners – just as a stable future for Central Asia depends upon the success against violent extremists in Afghanistan. The energy resources of Central Asia can be a force for predictability in the global economy, ensuring diversity of sources and markets and transit routes, while at the same time bringing a new sense of economic possibility in the region itself. 13

Recent United States delegations found that interest among the countries of Central Asia is for stronger ties and cooperation between us. Assistant Secretary of State Bob Blake and other Ambassadors in the region are leading efforts to construct high-level bilateral mechanisms with each Central Asian country. The US wants to encourage regional partnership and understanding that seeks to deepen links to unique, independent, sovereign states, each with its own distinctive national culture, experience, people, and economy.14 In each of those relationships and across the region, four inter-connected issues are at stake: energy, economic and political modernization, security, and people-to-people contacts. United States is aiming to make progress in relations with the countries of GCAR in all of these areas.

 Positive steps in one area can reinforce forward movement in the others; sound energy policies contribute to long-term prosperity, which is also underpinned by growth of the rule of law. Positive cooperation with GCAR in all of these areas will, in the end, greatly benefit the US. William Burns states in the article, “Silk Road Trade and Investment: New Pathways for US-Central Asia Economic Ties,” that healthier and more prosperous societies are better able to sustain their own security and contribute to regional security. Just as security against violent groups buys space for the development of modern economic and political institutions, more people-to-people exchanges highlight the reality that continuing relationships are not only about connections between governments but also about connections between individuals and societies.15

Recent energy crises and price fluctuations have shown the importance of developing new hydrocarbon resources and distribution routes worldwide to ensure that a single disruption in the supply chain would not cripple a country or impede its development. The United States considers global energy security to be a key to peace and prosperity. “Our partnership with Central Asia in this field has never been more important, which is why we have a Special Envoy for Eurasian Energy,” says Ambassador Dick Morningstar.16

Ambassador Morningstar, along with many American companies in the region, has been working diligently to ensure that the US energy strategy benefits countries throughout Eurasia, whether they are supplier, transit, or consumer countries. The hard work of the ambassador will surely benefit the country. Also, the expansion of the Caspian Pipeline Consortium and the development of the Kazakhstan Caspian Transport System Project offer the possibility of getting increased oil out of the Caspian into world markets. Burns stresses:

We’re also working with Turkmenistan on increasing its gas production with the hope that one day that gas can move across the Caspian. The recent signing of the Nabucco Intergovernmental Agreement was a major milestone for opening up a new natural gas corridor to Europe, which could include Turkmen gas. With all of this involvement between GCAR and the United States it will be a great deal to keep this continuous trade going. With the momentum of expanding Caspian Pipeline to increase oil in world markets to new natural gases from Turkmenistan.  It’s important that progress be made on gas pricing, transit, and any remaining issues needed to make the Southern Corridor a reality.17

The table below shows there is great potential for regional energy development and trade, which can benefit all of the countries of the region. Specifically, there would appear to be good prospects for development of hydroelectric resources in the countries with large potential, much of whose output could be exported to electricity-deficient countries to the south. In GCAR, Uzbekistan is considered one of the main countries of trade with the United States. In the excerpt from “Uzbekistan: On the Slow Lane of the Silk Roads,the author discussed the trade history between the United States and Uzbekistan and the aspects that make the United States interested in this peculiar and unique trading system. In the broad sweep of history, Uzbekistan’s current stance on trade is an anomaly. The United States will be drawn to Uzbekistan because it will find goods that cannot be found elsewhere.

Since the days of the famed Silk Road beginning in Roman times, the area that is now Uzbekistan has been an important transit route for trade and itself an active trader. Russian trade with the region grew rapidly through the eighteenth and nineteenth centuries, so much so that Russia thought it necessary to secure the region by occupying Tashkent in 1865. Greater Central Asia, Uzbekistan in particular, was and is the land bridge between many of the world’s great cultures and trading partners: Russia to the North, China to the East, India to the South, Iran and then Europe to the West. Even today, the Uzbeks’ trading heritage is evident to anyone visiting the Uzbek portion of the Ferghana Valley. Following the breakup of the Soviet Union Uzbekistan lost its protected markets in the Soviet Union.

Chart 1 – Primary Energy Resources in Wider Central Asia (WCA) and Main Neighbors

table 2.3.png

Figure 1 Uzbekistan and other Countries, Import and Export Performance since 1996

 cht1

Chart 2 - Imports and Exports of Uzbekistan from 2006 to 2010

uzbekistan.exports and imports.png

The past 15 years have seen a significant opening up of the region, when measured in total trade volumes. Chart 1 shows that Uzbekistan was initially an exception to this trend, but since 2002 the country has started to catch up in terms of total export and import levels (Figure 1). Today, Uzbekistan’s total trade stands at around 70 percent of GDP at market exchange rates, a little below the CIS average but well up from the low of just 50 percent recorded in 2002 (Chart 2).

Figure 2 shows that the southern rail link to Bandar-Abbas and the road link to Karachi would be highly competitive with northern and western routes to the Baltics and the Black Sea if infrastructure and policy obstacles to using these routes could be overcome. There are further significant transit trade opportunities related to the construction of a new East-West corridor from China across Central Asia, the Caspian, the South Caucasus and the Black Sea to Europe. Indeed, it is the East-West axis that was at the heart of such early concepts to revive the Silk Roads as the European Union’s TRACECA initiative. Uzbekistan is one possible transit country along a new East-West route, which would progress along the Ferghana Valley and connect to the Caspian port at Turkmenbashi in Turkmenistan.18

Figure 2 Trade-Transport Costs in Some Central Asian Republics

cht4


GCAR’s Benefits from International and Regional Trade

The GCAR, as previously mentioned, is made up of seven different countries.  Kazakhstan is one of the countries included in the region and has had the greatest economic growth since the fall of the Soviet rule in Central Asia. Kazakhstan’s gross domestic product has grown continuously over the years; in the year 2010 alone the GDP grew 7.0 percent.19 Because of its strong financial health, Kazakhstan was the first former soviet republic to repay all of its debt to the International Monetary Fund (IMF), seven years earlier than expected. The International Monetary Fund (IMF) is an organization of 186 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.20 

The healthy economic state of Kazakhstan is primarily due to its wealth of oil and natural gas. The production of oil and natural gas in the country amounted to 67.2 million tons in 2007, exporting 60.2 million tons to other countries. Natural gas production in 2007 totaled 16.6 billion cubic meters. These natural resources found in the country are crucial to Kazakhstan’s international trading partners, including the United States. In 2008, Kazakhstan was the United States 77th largest trading partner with $2.6 billion in total (two way) goods trade. Goods exported to Kazakhstan from the United States in 2008 totaled $986 million and goods imported to the United States from Kazakhstan in 2008 amounted to $1.6 billion. In 2016, Kazakhstan is planning to produce 102 million tons of oil annually, which is 28 percent higher than the rates in 2010, according to Interfax-Kazakhstan.

The production volume in 2012-2013 is projected at 83 million tons and 85 million tons in 2014. Corresponding data is featured in a forecast of the socio-economic development of Kazakhstan for 4 years, presented at the Lower House, the Majilis, of the Kazakh Parliament. At this time, the continued trade relationship between the two countries is more crucial than ever before because it relates to both countries’ economic stability but also to each country’s unemployment rate, poverty level, and GDP growth. Because of this relationship, Kazakhstan’s economy will continue to bloom thanks in large part to imported goods from the U.S., such as machinery, vehicles, aircraft, electrical machinery, and optical and medical instruments. These imported goods and latest technologies from the U.S. help Kazakhstan maintain their economy as well as continue to grow as a country. The United States benefited from natural resources exported from Kazakhstan: mineral fuels, oils, iron, steel, ores, slag, ash, inorganic chemicals (uranium), and other base metals (titanium).21 The United States is in great need of these natural resources in order to continue to produce and supply new technologies. 

    Yet another country located in the GCAR is Afghanistan. Afghanistan is one of the many Asian countries that took an economic beating because of past Soviet rule.  Most of the major social, administrative, and economic institutions of the country fell apart due to the Soviet occupation, population displacement, and continued heavy fighting brought on by almost eighteen years of war. The nation’s transportation and communication systems, heavy and small-scale industries, and education and agricultural infrastructure are among the most seriously damaged sectors that need a tremendous amount of investment when peace and stability return to the country.22 Because of the destruction of the country, the Afghan economy remains vulnerable to outside forces.

    The current Taliban movement, which has established somewhat of a nominal government in most parts of the country, has led to conflict within the country and its bordering countries, making the economic hardships worsen and regional trade and cooperation weak. Because of the continued fighting brought on by the Taliban, government rule and domestic trade have become difficult. Even cross-border trade of domestic goods and imported foreign goods remain scarce due to the conflict between the Taliban and other governments. Because tensions are so high, the Afghanistan economy is in shambles and in much need of foreign involvement. Much of the population, one-third to be exact, fled the country and now lives in surrounding countries as the result of the war. Due to the population decrease, labor as well as capital has decreased, disrupting trade and the overall GDP of the country. Foreign involvement in the form of trade is crucial to the restoration of the Afghan economy. 

    Like other GCAR countries, Afghanistan is in need of economic stabilizers, and the United States can help greatly. William J. Burns explained at a U.S. Chamber of Commerce meeting in October 2009 that the United States has an important interest in stability, prosperity, security, and economic and political modernization in Central Asia and seeks to work with the governments and peoples of the region toward those ends. Burns went on to explain the importance of reinvigorating existing trade mechanisms that have already been established, such as the Trade and Investment Framework Agreement (TIFA). The terms and goals that were agreed upon in the TIFA are to simply enhance the bonds of friendship and spirit of cooperation between the two countries and promote further international trade and economic interrelationships.23

Burns discussed the impact the old Silk Road had on the Central Asian economy of Afghanistan. The Silk Road transported not only goods and people but ideas, cultures, and technology. It helped create great civilizations and foster great ideas.  Afghanistan and the rest of GCAR can have a similarly historic impact on society today. “Central Asia’s economic growth and political development can produce more reliable partners for combating global challenges, from non-proliferation to counter-narcotics to energy security,” explained Burns. The energy and natural resources of Afghanistan can be introduced into the global economy, bringing diversity of sources and markets and transit routes, while at the same time bringing a new sense of economic possibility in the region itself. When Afghanistan becomes active in the international trading market the country’s economy will prosper.24

In 2007, Afghanistan’s economy grew 13.5 percent, making it one of the fastest growing economies in the world as well as in the Central Asian Region. This growth was the result of its primary exports to foreign countries. Afghanistan’s primary exports include raisins, carpets, wool, pistachios, almonds, onions, and gemstones. Trade between the U.S. and Afghanistan has continued to grow over the years.25

US Trade with Afghanistan: 2010


Month

Exports

Imports

Balance

January

262.0

20.0

242.0

February

153.7

23.3

130.4

March

184.5

6.2

178.4

April

201.6

7.7

193.9

May

175.4

10.0

165.5

June

151.9

8.7

143.2

July

172.6

2.1

170.5

August

158.8

1.2

157.5

September

200.0

3.0

197.0

October

183.0

1.5

181.5

November

155.9

0.8

155.1

December

156.1

0.9

155.2

TOTAL

2,155.5

85.3

2,070.3


NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding.
TOTAL' may not add due to rounding. Table reflects only those months for which there was trade. CONTACT: Data Dissemination Branch, U.S. Census Bureau, (301) 763-2311 SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washington, D.C. 20233

In 2010, international trade between the United States and Afghanistan amounted to $2070 million (in US dollars) in combined totals of both imports and exports. This increase of trade between the United States and Afghanistan is improving the economic conditions in Afghanistan and has increased the United States supply of natural resources and goods that Afghanistan offers to the global market. Even though Kazakhstan and Afghanistan are just two of the seven different countries located in the GCAR, they are two countries that illustrate the varying economic conditions that region is experiencing. Even though Kazakhstan’s economic conditions are not as severe as Afghanistan’s, this does not mean that Kazakhstan is not in need of international support. Afghanistan is currently experiencing a hopeful economic upturn and will continue to prosper with the help of international cooperation from the United States as well as other foreign countries. Kazakhstan and other Greater Central Asian countries are in just as much need of international trade as Afghanistan. To have the international cooperation and trading agreements between other foreign countries promises future economic advancement and prosperity. 

US Trade with Afghanistan: 2011


Month

Exports

Imports

Balance

January

108.5

1.6

106.9

February

184.2

0.9

183.3

March

214.0

2.6

211.4

April

211.7

2.1

209.6

May

287.4

1.0

286.4

June

224.3

1.7

222.6

July

240.0

1.6

238.4

TOTAL

1,470.0

11.4

1,458.6

NOTE: All figures are in millions of US dollars, and not seasonally adjusted unless otherwise specified.
'TOTAL' may not add due to rounding. Table reflects only those months for which there was trade.
CONTACT: Data Dissemination Branch, U.S. Census Bureau, (301) 763-2311
SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washington, D.C. 20233

After Soviet rule, the GCAR experienced heightened unemployment rates and poverty, thus affecting the economy as a whole. Currently, international trade prevents future destruction of those country’s economies. However, regional trade is similarly important to these countries and has been restricted greatly in the past. Many of the current difficulties of regional trade in the GCAR can be traced directly back to the Soviet legacy. Moscow established administrative borders of its Central Asian republics in the mid-1920s, which followed neither natural geographic boundaries nor strict ethnic lines. Some recommendations to the Central Asian governments in efforts to eliminate these borders and promote regional trade are to simplify visa requirements as well as eliminate unnecessary vehicular restrictions and construct a transportation system to allow further flow of trade. The availability, quality, and costs of transport services in Central Asia are very different to other countries and lack interconnection.26

Central Asia has the potential to flourish as an area of transit trade between the countries of the region as it once did with the Silk Road. Cooperation between the countries is a major issue and is important to regional trade. If the countries of the GCAR join together, regional trade in the area will benefit each individual economy greatly, going hand-in-hand with the international trade with the United States and other foreign countries. The current economic situation in the GCAR is improving, and it is in large part due to international trade with foreign countries as well as the enactment of regional trade amongst the countries themselves. GDPs are strongly influenced by international trade and will continue to affect the advancement and success of countries’ economies in the future.

U.S. Major and Strategic Economic Interests in GCAR

The United States has many strategic economic interests in Greater Central Asian Region (GCAR) and has a systematic approach to define its economic interests in the GCAR in line with its European regional strategy and economic goals in specific countries of the region. The policy of the US is aimed at bringing the region closer to the world markets and activating international economic relations between the regional states and Europe. Its strategic goals include weakening the position of OPEC in the world energy markets by additional independent supply of Central Asian Energy resources in the world market. By assisting certain nations in the GCAR to expand their transportation infrastructure, the US will be able to fulfill both its economic and military strategic goals. At the same time, the US is acting as the main force for promoting new energy routes that circumvent Russia. The US is also trying to keep the regional countries from transporting energy resources through Iran. The US is advising the Trans-Caspian gas pipeline project, which is an alternative to the Russian Caspian route.27 

The United States’ interest in Kazakhstan includes the security and elimination of Soviet-era nuclear and biological weapons materials and facilities. In Tajikistan, United States’ aids focuses on the economic reconstruction. Also, the United States energy firms have invested in oil and natural gas development in Kazakhstan, Turkmenistan, and Uzbekistan.28 For the United States, Central Asia is a region of both growing importance and of growing challenge.29 With its proximity to Russia, China, Iran, and Pakistan, it sets itself at the center of Global War on Terrorism. Also, its large energy holdings make it a strategic region where the United States has important and also essential interests.30 Some of the interests include geostrategic realities of security focusing in on the war on terrorism, on energy, and on liberalizing and democratizing reforms. Today the US is striving to promote peace, stability, sovereignty, and the security of the five Central Asia states.

The development of the economy in Central Asia is changing, and from these changes both the United States and Central Asia itself will benefit greatly. The flow of commerce, investment, and communication in Central Asia is shifting. The Greater Central Asia Region is opening up to the world, and this expansion will be a rapid and transforming process of changing the nature and character of the area. Currently there are existing railroads between Turkmenistan, Iran, Kyrgyzstan, Uzbekistan, and China, and highways are being constructed between these countries and China, Pakistan, and India.31 The infrastructure promotes trade in the area, and all these developments and improvements will make it more attractive to the United States. Trade, travel, and business will be easier, and Central Asia will no longer be viewed as the center of the war on terrorism.

Uzbekistan is the key piece to the puzzle, because of not only its location but also the interest of the United States in Uzbekistan. The US interest has a trickle down affect on the rest of the region. If the United States stays involved during development it will increase the level of trade, business, political values, and aid to these developing nations. United States policymakers and others have many views about the type and extent of the involvement of the United States in the region. With energy ties in Kazakhstan, the United States has crucial interest. Uzbekistan is the most crowded and popular regional state and is centrally located—thus shaping the range and scope of regional cooperation. Kazakhstan and its seamlessly endless energy supply make it a very attractive nation to the US.32 Central Asia and its neighboring countries are placed very strategically. Many are rich in natural resources and also at the cross roads of business between some of the most active of the world’s economies.33 Supporters believe that the United States will support reforms and be the stabilizing force in the region. 

Observers note that the United States has several levels of involvement in Central Asia, which have come into play for strengthening conditions linking aid to progress in improving human rights or in making progress in democratization and the creation of free markets. Opening up Central Asia States’ access to markets and energy companies allows Central Asia governments to expand their customer base and gain access to global market prices. To obtain energy access on equal terms to American and other related firms is the larger idea of safeguards, sovereignty, and the independence of states.34 In the globalised world, energy is a specific guarantee of dynamic development of the modern economy.

Today, energy resources are amongst the main aspects of the geopolitical importance of any country or region. The need of stable oil and gas supplies is heightened by the continuously growing needs of expanding economies. The US will benefit greatly for these expansions.35 Oil could be an engine of the economic development as well. Revenues from oil transit and downstream industries, such as petro-chemicals, are needed by the government in Central Asia to better their societies.36 Kazakhstan has a potential opportunity to become a major supplier of the petro-chemicals for leading economies around the world. Major world powers, as well as some regional ones, are currently engaged in a new Great Game for enhancing the influence in this particular region and seek to influence the location of oil and gas pipelines routes to their own advantage. With help from Kazakhstan this will lead to the growth trends needed by the Greater Central Asia Region. Economic ties hold the key to any bilateral, trilateral, and multilateral cooperation. Kazakhstan shares common perceptions about the need to have friendship and mutually advantageous economic relations.37

The Central Asian energy producing states recognize that their security and prosperity lie in the pipelines of the United States and Central Asia, leading to their interest in coming together in harmony.38 The concept of statehood government and a solid government is very weak throughout Central Asia and is only really shown in Uzbekistan. The United States is striving to make peace, stability, sovereignty, and security for the five Central Asian States.39 Thus, Central Asia is beginning a transformation of economic, political, and cultural change. The people of these nations are looking forward to getting involved in the new global economy, and the United States should be excited about the possibilities in the Greater Central Asia Region.

Conclusion

The Greater Central Asian Region bridging Europe and East Asia as well as North and South Asia is becoming a location of religious, scientific, and cultural development of the Islamic world.40 The GCAR suffered from a severe economic collapse after the Soviet Union was dismantled. The bridges once between China, Iran, and Afghanistan with the Central Asian region were again reopened after the breakup of the Soviet Union. Regional trading and cooperation among these countries is what must continue for the GCAR as well as the enactment of international trade with foreign developed countries, such as the United States of America. 

The US provides the GCAR with goods, technologies, and economic guidance, true to internationalism as defined as the principle or policy of international cooperation for the common good.41 The US and the GCAR can both benefit from the cooperation. Strong connections and stable relationships from both sides could make a smoother trading process. In return, the US would benefit from local GCAR natural resources such as natural gas, oil, coal, copper, zinc, lead, gold and other valuable, natural elements. This international cooperation will bring further success to the American economy by way of exporting natural resources and help jumpstart the countries of the GCAR through importing the latest technologies and goods used to commence industrialization.

US success in expanding trade and investment and strengthening relations in Central Asia will not depend solely on governmental actions. Business must encourage reforms and set up regulations that will help to promote the region as a good place for doing business. But progress will ultimately depend on the partnerships built among strong civil societies, individuals, and especially dynamic companies that make the final investment decisions. Connecting our citizens and communities will create the links needed to reach our common goals from the ground up.

This research paper focused on the reasons that regional cooperation is crucial to GCAR success and highlighted what has worked and what has not worked in the past, allowing future engagements to shape accordingly. In order to make advancements, the United States must first seek to understand each country and its interrelations with its neighbors and the regional powers in order to make peace, stability, sovereignty, and security of the five Central Asian States.42

1 Linn, J. (2005). Bringing down barriers: regional cooperation for human development and human security. Bratislava, Slovak Republic: UNDP Regional Bureau for Europe and the Commonwealth of Independent States.

2 Tian, R. (2008). Xinjiang and the greater central Asia regional economic cooperation. Sweden:  CA&CC Press AB Publishing House.

3 Linn, J. (2005). Bringing down barriers: regional cooperation for human development and human security. Bratislava, Slovak Republic: UNDP Regional Bureau for Europe and the Commonwealth of Independent States.

4 Agnes, M. (2001). Internationalism. Webster’s new world college dictionary. Foster City, CA: IDG Books Worldwide.

5 Linn, J. (2005). Bringing down barriers: Regional cooperation for human development and human security. Bratislava, Slovak Republic: UNDP Regional Bureau for Europe and the Commonwealth of Independent States.

6 Wikipedia, the free encyclopedia: Soviet Union, accessed in Jan. 2010 from http://en.wikipedia.org/wiki/Soviet_Union

7 Cali, M., & Willem Te Velde, D. (2009). Aid for trade in small and vulnerable economies. The Commonwealth Secretariat, (59), p. 1.

8 The Central Intelligence Agency. The world fact book. Retrieved in Sept. 2011 from
https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

9 Wikipedia, the free encyclopedia: Economy of the United States.Retrieved in Nov. 2009 from http://en.wikipedia.org/w/index.php?title=Economy_of_the_United_States&oldid323914722

10 The Central Intelligence Agency. The world fact book. Retrieved in Nov. 2009 from
https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

11 McEachern, W. (2008). Macroecon student edition. OH: Cengage Learning.

12Saccomano, A. (2002, January). Central Asia—a short history of the silk road world trade. Retrieved from http://www.stantours.com/ca_index_his.html

13 Burns, W. (2009, October 7). Silk Road trade and investment: New pathways for U.S.-Central Asia economic ties. Retrieved from http://www.state.gov/p/us/ rm/2009a/130389.htm#

14 Ibid.

15 Burns, W. (2009, October 7). Silk Road trade and investment: New pathways for U.S.-Central Asia economic ties. Retrieved from http://www.state.gov/p/us/ rm/2009a/130389.htm#

16 Ibid.

17 Ibid.

18 Reiser, M., & DeTray, D.  (2007). The New silk roads:  transport and trade in greater central asia. Washington, D.C.:  The Central Asia-Caucasus Institute.

19 GDP of Kazakhstan Retrieved in Sept. 2011 from http://xxw3441.blog.163.com/blog/static/753836242011443270204/

20 Dictionary.com unabridged, International Monetary Fund, Retrieved in Nov. 2009 from http://dictionary.reference.com/browse/International MonetaryFund

21 Travel document system: Kazakhstan Economy. Retrieved in Nov. 2009 from http://www.traveldocs.com/kz/ economy.htm

22 Afghanistan online: The State of the Afghan Economy.Retrieved in Nov. 2009 from http://www.afghan-web.com/economy/econstate.html

23 Burns, W. (2009, October 7). Silk road trade and investment: New pathways for U.S.-Central Asia economic ties.Retrieved from http://www.state.gov/p/us/ rm/2009a/130389.htm#

24 Ibid.

25 U.S. Department of Commerce. (2009). Afghanistan: Business Opportunities. International Trade Administration. Retrieved from http://www.trade.gov/afghanistan/doc_afghanistan_marketops.asp

26 Linn, J. (2005). Bringing down barriers: regional cooperation for human development and human security. Bratislava, Slovak Republic: UNDP Regional Bureau for Europe and the Commonwealth of Independent States.

27 Bratersky, M. and A. Suzdaltsev (2009). “Central Asia: A region of economic rivalry among Russia, china, the U.S., and the EU”. Central Asia and the Caucasus: journal of social and political science, Vol. 3 (57): pp.79-88.

28 Nichol, J. (2006). Central Asia:  regional developments and implications for U.S. interests [pp. 1-16]. (PDF), Retrieved from http://www.au.af.mil/au/awc/ awcgate/crs/ib93108.pdf doi: IB93108

29 Tian, R. (2008). Xinjiang and the greater central Asia regional economic cooperation. Sweden:  CA&CC Press AB Publishing House.

30 Blank, S. (2007). U.S. interests in central Asia and the challenges to them. U.S. Government. Title 17, United States Code, Section 101.

31 Cohen, A. (1999, March 17). U.S. interests in Central Asia. Retrieved from http://www.heritage.org/Research/AsiaandthePacific/Test031799.cfm

32 Nichol, J. (2006). Central Asia: regional developments and implications for U.S. interests [pp. 1-16]. (PDF), Retrieved from http://www.au.af.mil/au/awc/ awcgate/crs/ib93108.pdf doi:  IB93108

33 Tian, R. (2008). Xinjiang and the greater central Asia regional economic cooperation. Sweden:  CA&CC Press AB Publishing House.

34 Blank, S. (2007). U.S. interests in Central Asia and the challenges to them. U.S. Government. Title 17, United States Code, Section 101.

35 Bhatia, V. (2009). Indian-Kazakhstan relations-challenges and prospects. Retrieved in Nov. 2009  from http://www.mainstreamweekly.net/article1611 .html

36 Cohen, A. (1999, March 17). U.S. interests in Central Asia. Retrieved from http://www.heritage.org/Research/AsiaandthePacific/Test031799.cfm

37 Bhatia, V. (2009). Indian-Kazakhstan relations-challenges and prospects. Retrieved in Nov. 2009 from http://www.mainstreamweekly.net/article1611.html

38 Blank, S. (2007). U.S. interests in Central Asia and the challenges to them. U.S. Government. Title 17, United States Code, Section 101.

39 Cohen, A. (1999, March 17). U.S. interests in Central Asia. Retrieved from http://www.heritage.org/Research/AsiaandthePacific/Test031799.cfm

40 Linn, J. (2005). Bringing down barriers: Regional cooperation for human development and human security. Bratislava, Slovak Republic: UNDP Regional Bureau for Europe and the Commonwealth of Independent States.

41 Agnes, M. (2001). Internationalism. Webster’s new world college dictionary. Foster City, CA:  IDG Books Worldwide.

42 Cohen, A. (1999, March 17). U.S. interests in Central Asia. Retrieved from http://www.heritage.org/Research/AsiaandthePacific/Test031799.cfm


* This paper is a term paper by Binqiao Chen, an undergraduate student at Medaille College for her economics class under direction of Dr. Robert Tian.


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