The ADB is stepping up its efforts in the former Soviet republics to encourage economic integration between the disparate states, says a senior Bank official. Although the Bank's ultimate goal is to help alleviate poverty across the region, it has set about doing so by developing cross-border transport links and by promoting a climate of cooperation when it comes to tackling the region's dire energy problems.
"As all the countries are landlocked, the development of regional integration must be the first priority," says Satish Rao, the ADB's director general for east and central Asia. "Integration is the means to address the main objective, which is to reduce poverty."
The Bank's efforts in the region form a key part of the Central Asian Regional Economic Cooperation Programme (CAREC), an initiative set up in 2002 to boost cooperation between eight countries (the five Central Asian republics plus Mongolia, China and Russia) and six multilateral institutions (ADB, European Bank for Development and Reconstruction, World Bank, UNDP, IMF and the Islamic Development Bank).
The scale of the initiative's challenge becomes apparent when considering country's such as Uzbekistan, which remains one of the most isolated of the former Soviet republics. Its president, Islam Karimov, has cut the country's trade links with its neighbours in recent years.
"The governments and institutions work as an alliance on the priority sectors, which are transportation, trade facilitation, trade policy and energy," says Rao. The ADB has helped build roads connecting Kazakhstan and Kyrgyzstan, as well as links between Mongolia and China. "Transport links are absolutely key in this region to expand the economies and create jobs," says Rao. The ADB has disbursed a total of $500 million in loans to central Asia for a variety of projects.
"The central Asian landmass is a link between China, Europe and the countries to the south," Rao adds. "Cooperation is required among the republics but also with neighbouring countries."
Ensuring energy distribution is a top concern for the region. A mountainous geography often implies that national interests clash over how to tap resources. Tajikistan and Kyrgyzstan are upstream countries, which want to keep their water during summer to use for power-generation during winter. However, Uzbekistan and Kazakhstan, two countries that lie further downstream, need the water for irrigation in summer. "This situation shows how closely the countries are tied to each other," notes Rao.
Governments are now developing an exchange mechanism, whereby downstream countries can supply upstream countries with coal and gas during winter. Such cooperation would allow Tajikistan and Kyrgyzstan to release water in summer without the threat of power shortages in winter.
The integration initiative is paying off. Every year at the CAREC's ministerial conference the programme's eight member countries meet as equals to discuss deepening their cooperation. "These countries were born overnight in 1991," points out Rao. Their first tendency was to look inwards. "After years of consolidating their national identity, the countries are realizing that it's important for them to cooperate with each other," he adds.