```

[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

              

113th Congress                               Printed for the use of the
1st Session            Commission on Security and Cooperation in Europe
_______________________________________________________________________

             THE NEW SILK ROAD STRATEGY: IMPLICATIONS FOR ECONOMIC 
                              DEVELOPMENT IN CENTRAL ASIA

                [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                

                             JULY 31, 2013

                            Briefing of the
            Commission on Security and Cooperation in Europe
______________________________________________________________________

                            Washington: 2015

                                     

            Commission on Security and Cooperation in Europe
                     234 Ford House Office Building
                          Washington, DC 20515
                              202-225-1901
                          [email protected]
                          http://www.csce.gov

                      Legislative Branch Commissioners

                                                            
             SENATE                               HOUSE
BENJAMIN L. CARDIN, Maryland,           CHRISTOPHER SMITH, New Jersey,
  Chairman                                Co-Chairman
SHELDON WHITEHOUSE, Rhode Island        JOSEPH PITTS, Pennsylvania
TOM UDALL, New Mexico                   ROBERT ADERHOLT, Alabama
JEANNE SHAHEEN, New Hampshire           PHIL GINGREY, Georgia
RICHARD BLUMENTHAL, Connecticut         MICHAEL BURGESS, Texas
ROGER WICKER, Mississippi               ALCEE HASTINGS, Florida
SAXBY CHAMBLISS, Georgia                LOUISE McINTOSH SLAUGHTER,
JOHN BOOZMAN, Arkansas                    New York
                                        MIKE McINTYRE, North Carolina
                                        STEVE COHEN, Tennessee

                                  (ii)
                                     

           *         *         *         *         *
     ABOUT THE ORGANIZATION FOR SECURITY AND COOPERATION IN EUROPE

The Helsinki process, formally titled the Conference on Security and 
Cooperation in Europe, traces its origin to the signing of the Helsinki 
Final Act in Finland on August 1, 1975, by the leaders of 33 European 
countries, the United States and Canada. As of January 1, 1995, the 
Helsinki process was renamed the Organization for Security and 
Cooperation in Europe (OSCE). The membership of the OSCE has expanded 
to 56 partici- pating States, reflecting the breakup of the Soviet 
Union, Czechoslovakia, and Yugoslavia.
The OSCE Secretariat is in Vienna, Austria, where weekly meetings of 
the participating States' permanent representatives are held. In 
addition, specialized seminars and meetings are convened in various 
locations. Periodic consultations are held among Senior Officials, 
Ministers and Heads of State or Government.
Although the OSCE continues to engage in standard setting in the fields 
of military security, economic and environmental cooperation, and human 
rights and humanitarian concerns, the Organization is primarily focused 
on initiatives designed to prevent, manage and resolve conflict within 
and among the participating States. The Organization deploys numerous 
missions and field activities located in Southeastern and Eastern 
Europe, the Caucasus, and Central Asia. The website of the OSCE is: 
.

           *         *         *         *         *
       ABOUT THE COMMISSION ON SECURITY AND COOPERATION IN EUROPE

The Commission on Security and Cooperation in Europe, also known as the 
Helsinki Commission, is a U.S. Government agency created in 1976 to 
monitor and encourage compliance by the participating States with their 
OSCE commitments, with a particular emphasis on human rights.
The Commission consists of nine members from the United States Senate, 
nine members from the House of Representatives, and one member each 
from the Departments of State, Defense and Commerce. The positions of 
Chair and Co-Chair rotate between the Senate and House every two years, 
when a new Congress convenes. A professional staff assists the 
Commissioners in their work.
In fulfilling its mandate, the Commission gathers and disseminates 
relevant information to the U.S. Congress and the public by convening 
hearings, issuing reports that 
reflect the views of Members of the Commission and/or its staff, and 
providing details about the activities of the Helsinki process and 
developments in OSCE participating States.
The Commission also contributes to the formulation and execution of 
U.S. policy regarding the OSCE, including through Member and staff 
participation on U.S. Delega- 
tions to OSCE meetings. Members of the Commission have regular contact 
with 
parliamentarians, government officials, representatives of non-
governmental organiza- 
tions, and private individuals from participating States. The website 
of the Commission 
is: .

                                 (iii)
  
                                     

 THE NEW SILK ROAD STRATEGY: IMPLICATIONS FOR ECONOMIC DEVELOPMENT IN 
                              CENTRAL ASIA

                                  ------------

                                 July 31, 2013

                                   WITNESSES

                                                                   Page
Craig Steffensen, North American Representative, Asian Development Bank
                                                                      2
Danica Starks, Senior Desk Officer for Russia, Caucasus and Central 
Asia, U.S. Department of Commerce......................................
                                                                      4
Eric Stewart, Executive Director, U.S.-Turkmenistan Business Council...
                                                                      8
Joshua Kucera, Freelance Journalist and Analyst........................
                                                                     11

                                  PARTICIPANT

Shelly Han, Policy Advisor, Commission on Security and Cooperation in 
Europe.................................................................
                                                                      1

                                  (iv)

 
 THE NEW SILK ROAD STRATEGY: IMPLICATIONS FOR ECONOMIC DEVELOPMENT IN 
                                              CENTRAL ASIA

                              ------------

                             July 31, 2013

Commission on Security and Cooperation in Europe
                                                         Washington, DC

    The briefing was held from 2:05 to 3:46 p.m. EST in 340 Cannon 
House Office Building, Washington D.C., Shelly Han, Policy Advisor, 
CSCE, presiding.
    Ms. Han. Good afternoon. I'd like to welcome you all to the 
Commission on Security and Cooperation in Europe's briefing on economic 
development in Central Asia. We're focusing our attention today on what 
is broadly called the New Silk Road strategy. It's a strategy that's 
been around for quite some time but has been resurrected as part of our 
post-2014 strategy for Afghanistan.
    The U.S. has struggled to define a strategic value for engagement 
in Central Asia that goes beyond security or counterterrorism or 
energy, and Central Asia has become more important after the invasion 
of Afghanistan in 2001and then a similar shift occurred in 2009, with 
the creation of the Northern Distribution Network.
    Over the past few years, I get the impression that our economic and 
foreign policy in the region has been led by military logisticians and 
that it will create some challenges as we move away from the need for 
these supply lines and to seek other avenues of engagement.
    All of the countries in Central Asia face economic challenges, even 
the resource-rich countries like Kazakhstan and Turkmenistan. 
Kazakhstan and Turkmenistan are both facing problems, even though they 
literally have oil and gas to burn. They're having problems creating a 
more coherent economic strategy that can provide jobs, and then also 
the high employment and the fragile economies in Tajikistan and 
Kyrgyzstan and Uzbekistan mean that job seekers often have to leave the 
country in order to find work. Remittances have become important 
linchpins in these economies.
    Combine these economic challenges with the lack of political 
freedoms and we have a recipe for potential future instability.
    Because we have a limited time for discussion today, we're going to 
leave aside an in-depth discussion of the political challenges and 
focus on the challenge of economic development as a key component of 
stability in the region. I realize that the political and the economic 
are always intertwined, and nowhere more so than in Central Asia, but I 
think that we've all heard the very good and persuasive political 
arguments on why economic integration is important. But what I think 
would be most interesting to do today--and it doesn't get as much 
attention--is hearing the business case for investment in Central Asia.
    I'd like to ask the panel to talk about where we are in terms of 
building a better foundation for that economic development and how 
integration to the south, east and west can help accomplish that.
    Once we hear from the panelists, I'll kick off the question-and-
answer period, and then we'll open it up to the audience for questions 
as well.
    I'm going to start with Craig Steffensen, who is the North American 
representative for the Asian Development Bank. Craig just moved to 
Washington in May. I think you just came from Thailand, right? Before 
that, had spent time in Afghanistan and Kazakhstan, and so bring some 
good experience from the region. I look forward to hearing your 
thoughts.
    Mr. Steffensen. Thank you, Shelly and members and staff of the 
Helsinki Commission, for this opportunity to join you this afternoon. 
I'd like to especially thank Senator Cardin and Representative Smith 
for hosting this discussion on economic development in Central Asia.
    By way of introduction, I'm originally from Alexandria, but I've 
lived and worked in Asia for 30 years, most of them with the Asian 
Development Bank, almost all of them in the field. I hope, therefore, 
that my view from the trenches that you'll hear when we move to the 
discussion section will be useful.
    The ADB has embarked upon the rebuilding of a New Silk Road that 
connects Afghanistan with Central Asia--and there's no stretch to say 
the Eurasian supercontinent--beginning in 2001. Much of the required 
investment that's taken place has been administered through the Central 
Asia Regional Economic Cooperation, or CAREC, program to what the ADB 
serves as a de facto secretariat. I was the head of the CAREC unit in 
Almaty, Kazakhstan, for a few years, in 2004 to '07.
    To date, CAREC has funded some 136 projects, focusing primarily on 
transport, energy and trade facilitation, valued at more than $21 
billion. Some $7.5 billion has been financed by the ADB, $4.2 billion 
by the governments themselves and another $9.4 billion by our 
development partners who work with us on CAREC.
    For those of you who don't know CAREC, it's a voluntary grouping of 
10 countries from Azerbaijan to Mongolia, including all the ``stans,'' 
together with six multilateral institutions--ADB, the European Bank for 
Reconstruction and Development, the IMF, the Islamic Development Bank, 
UNDP and the World Bank. It's not founded by a treaty or a charter. 
It's a very practical, results-oriented sort of building block approach 
to development.
    The officials involved are not from ministries of foreign affairs. 
They tend to come from economic ministries, most of them at the 
technical level.
    There's annual ministerial-level conference that signs off on 
things. There are quarterly senior officials meetings, who prioritize 
and sequence what needs to be done. Then there are lots of working 
groups in transport, energy, trade policy and in trade facilitation 
that meet as needed to flesh out the details of what can and should be 
done.
    In simple terms, CAREC--it's all about projects. It's also the only 
ADB-supported regional cooperation program that has a results framework 
which has been endorsed by all the country ministries to monitor the 
programs' effectiveness.
    Is CAREC achieving the results? Well, I'm probably not the one to 
say so, but I believe yes, it is. As part of CAREC's transport strategy 
that calls for six transport corridors running east and west, north and 
south, ADB has already helped build about 2,500 miles of new roads, 
2,000 miles of new railways, 1,500 miles of transmission lines, and 
trade facilitation or the time it takes to get goods, people and 
vehicles across borders has seen a 50 percent improvement in time.
    In Afghanistan, CAREC is helping to rehabilitate the Ring Road, a 
1,367-mile highway that links major cities like Kabul and Kandahar with 
Mazar-e Sharif and Herat. It's also supporting the development of a 
north-south corridor that will one day provide improved access for 
Central Asian countries to the ports of Karachi and Gwadar in Pakistan.
    It's also supporting a new expressway linking Kabul with Jalalabad, 
and a new 46-mile railway line that connects Mazar-e Sharif with 
Uzbekistan and, for that matter, with the railway network of Central 
Asia, Europe, Russia and China.
    So I'd like to believe that CAREC is playing a pretty important 
role in linking Afghanistan with its neighbors.
    You may have heard of the TAPI project or the Turkmenistan-
Afghanistan-Pakistan-India natural gas pipeline project. It's something 
we've been supporting for about 10 years. We put about a million 
dollars a year into it. I used to think it was a pipe dream, but I 
think every time they meet there's a little bit of progress, you know, 
towards moving this project towards reality. It's currently envisioned 
to be able to transport 90 million cubic meters of natural gas a day 
from Turkmenistan to Pakistan and India.
    In Afghanistan, I think the--my proudest moment working there for 
six years was the day that the Ministry of--the Ministry of Energy 
flipped the switch for lights to come on in Kabul via a transmission 
line from Uzbekistan across some pretty mountainous country in 
Afghanistan to reach Kabul. It currently provides about 40 percent of 
the town with 24-hour-a-day reliable adequate power.
    Let me skip ahead here and say that the construction and formation 
of the New Silk Road--it's very much underway, and there's been a lot 
of success over the past 11 years. We project that by 2020 more than 
$50 billion in additional infrastructure is required to complete the 
six transport corridors, improve energy security and promote new 
corridors.
    We look forward to the continued support to our multilateral 
partners to support the United States, one of ADB's largest 
shareholders, together with Japan, on these initiatives. The U.S. has 
been very important to ADB over the years, and we look forward to 
closer collaboration with the U.S. to ensure that Afghanistan resumes 
its rightful place at the heart of the Silk Road.
    Thank you for your attention, and I look forward to the discussion.
    Ms. Han. Thanks, Craig, I appreciate that.
    Next, we're going to turn to Danica Starks, who is the senior 
international trade specialist in the Office of Russia, Ukraine and 
Eurasia for Market Access and Compliance in the International Trade 
Administration of the Department of Commerce. Danica spends basically 
all day of every day trying to promote U.S. engagement, particularly 
economic engagement, in the region. So I'm looking forward to hearing 
her thoughts.
    Ms. Starks. Great, thank you, Shelly and thank you to the members 
of the Helsinki Commission for having me on this panel today. You all 
have my statement; I will run through parts of it as briefly as I can 
and am definitely open to questions later.
    My role today is centered around three primary areas that I'll talk 
about, and that is looking through strictly a commercial lens, what is 
there to be gained by the strategy, the New Silk Road strategy? Is it 
viable going forward? What are the challenges that need to be overcome 
to make the strategy effective? How is the Commerce Department in 
particular leveraged its mission in terms of promoting American 
business, but also its expertise in trade and investment and economic 
development, to promote regional--the regional integration policies of 
the New Silk Road strategy?
    As has been mentioned before, the idea of a regional approach into 
development is certainly not new. I can say, at least for the last 10 
years, there have been various iterations of regional integration 
versus North-South corridor, and there's always been a certain amount 
of controversy going with it, especially the idea of integration for 
the region. There is a lot of sensitivity coming from many of the 
countries of the region with integration sort of having a context of 
domination, that the idea of integration would mean therefore a zero-
sum game in terms of less political and economic independence, for 
nations that were legitimately trying to struggle for an independent 
identity, as well as an independent economic identity.
    But one of the things that I would like to offer is that regardless 
of the terminology, regional integration, New Silk Road and other 
things, that the greater issue is that regional collaboration at the 
very least needs to increase in order for the economic viability of 
this regional to be fully realized.
    New Silk Road or not, no matter what we call the policy, 
ultimately, companies are going to go where the opportunities of the 
market meet what they perceive as the risk and what their risk 
tolerance level is. In looking at the region, the question becomes, 
does this strategy or how do the strategies that the U.S. government is 
working on help to mitigate this risk? That is definitely something 
that the Commerce Department in particular is looking at.
    Taking it back to Economics 101, I think we still believe that the 
development of economies of scale and the pursuit of comparative 
advantage still increases economic efficiency and is still a viable 
economic model that companies often look to in making a decision as to 
whether or not they're going to export to, invest, import from the 
region. Companies will go where the market is, and the greater the 
market and economic opportunity, the greater of amount of risk that 
they generally are willing to pursue.
    In my work, I meet with companies pretty much on a daily basis, 
answering questions about what the business environment in the region 
is like and what are the opportunities, and I've been told on many 
occasions that in their--companies are often in a wait-and-see mode. 
They're either in the region doing certain projects and waiting to see 
whether or not they can expand to other countries in the region and do 
other projects, or they're waiting on the margins of the region, often 
doing business in countries such as Turkey or Russia, looking at 
opportunities in Central Asia.
    In some cases, depending on the business model, the companies do 
not see the potential of just operating ad hoc-ly in one or two markets 
in the region. They really need to see a fuller, more developed market 
of the whole region, partly for population reasons, in terms of selling 
consumer products, consumer goods, but also logistics in order to make 
it viable to enter into the region. So for example, if a company wants 
to set up in Country X, they would like to be able to use Country X to 
be able to export to Countries Y and Z.
    The other thing that we have noticed is--I'll take an example of 
the franchising sphere--we've done quite a bit of work trying to help 
facilitate U.S. franchise businesses to take root in the region. We 
noticed that especially looking at a lot of the smaller markets, given 
the logistics with both supply chain, as well as the need to control 
quality, to control branding, that often, the master franchisers are 
looking for the ability to conduct a franchise agreement with the 
region, not just one country. In other words, they don't necessarily 
want to go through what it would take to set up in, say, Kazakhstan 
alone, without there being a plan to use that as a base for further 
work in the region.
    So often, when you see a franchise open up in one country, very 
often, the person who got that license actually has a license for the 
whole region, not just one country.
    In addition to those things, the geography of the region, mainly 
the fact that the region is landlocked--and even the countries that 
border a sea do not border an ocean there's increased transportation 
infrastructure links, ease of customs administration on a regional 
level in order for individual countries to be successful in getting 
their goods out to market, especially outside of the region.
    There really is simply a lot more business that could be done if 
the region would work together.
    There's a recent article that I came across in Industry Magazine 
called ``Cold Facts,'' and it was a newsletter and it was an article 
written by a gentleman named Bsrat Mezghebe and he's the knowledge 
manager for the Global Cold Chain Alliance. He noted that there are 
many opportunities for further investment and further work in exports 
agriculture from the region if the cold chain storage infrastructure 
and transportation and road infrastructure were improved. He noted that 
from the Caucasus to Central Asia, fresh vegetables and fruits, frozen 
produce often do not make it to market due to the poor infrastructure 
and the lack of cold storage capacity.
    In this case, this is an example of why regional collaboration is 
imperative. If one country were to develop an elaborate road system and 
one for cold storage, that's great, if you're only staying in that one 
country. But if your goods need to move anywhere else, you need every 
country the route to have developed the same level of capacity.
    Some countries have made more progress than others, ultimately, it 
really depends on a regional approach to looking at things such as 
supply-chain management. We've seen some successful examples of where 
regional collaboration has led to transformative projects and success. 
Assistant Secretary Blake from the State Department spoke in March and 
he mentioned the Baku-Tbilisi-Ceyhan pipeline as an example in the 
energy sphere of a promising area. And he said, and I quote, that the 
Baku-Tbilisi-Ceyhan energy corridor shows us that linking producers in 
the region with consumers in Europe is a win-win. The leadership and 
collaboration among Azerbaijan, Georgia and Turkey and the development 
of the pipeline was critical not only in opening up that pipeline and 
that corridor, but also paid forward for further projects, as the Baku-
Tbilisi-Kars railway.
    Mr. Blake also went on to note the TAPI project that my fellow 
panelists also mentioned, the Turkmenistan-Afghanistan-Pakistan-India 
gas pipeline, and that this project, just like BTC, could be another 
transformative moment in the region, opening up not just the energy 
corridor, but a corridor for goods in transit.
    As we look specifically to Afghanistan, it's definitely imperative, 
based on a lot of the nascent industries in Afghanistan, that 
transportation links be improved. The benefits in general, again, are 
not just limited to the New Silk Road. It's not just about Afghanistan 
and Central Asia. A lot of this regional collaboration is necessary if 
these countries are going to compete with the world and are going to be 
able to do business with the world. The challenges have been 
enumerated, the invitation to this event actually laid out very well a 
lot of them, in terms of the governments being able to create the 
necessary conditions, the questions about infrastructure development, 
customs regimes, reliable transportation networks, and the political 
divide.
    I would like to proffer two other challenges from the commercial 
perspective that we see: One is looking at the area of public sector 
procurement. Companies have noted to myself and my colleagues very 
often that they're unaware of the opportunities in the region, because 
there is a lack of advance notice about opportunities in mining, in 
road construction and other things that are done by the governments of 
the region. Even when these opportunities are announced, often the 
window for applying is very short, they're very short lead times.
    Also, there's often a nontransparent or perceived nontransparent 
selection process for many of these tenders, so we have had experiences 
where U.S. companies have wanted to go after projects in the region and 
have not been able to, solely because they can't actually bid on the 
tender.
    Another area that has reduced and has potential to reduce 
commercial interest in the region is the limited infrastructure for 
innovation, and by this I mean the legal infrastructure: poor and in 
some cases nonexistent protection of intellectual property rights, a 
lack of legal basis for technology transfer, judiciary systems that are 
not equipped to adjudicate commercial disputes and commercial issues 
and also that are perceived as being heavily influenced by the 
executive or other government ministries, and then an often outdated or 
nonexistent policies regarding standards and other quality control 
items that disincentivize not just U.S. but any companies coming to the 
region to innovate but also discourage local innovation as well. In 
terms of a commerce response, in my statement that you have in paper, 
you'll see that we have a lot of programs to offer. But I wanted to 
really emphasize that our goal is broader. It's--in our opinion, it's 
not just narrowly about a new Silk Road. It really is about enabling 
this region to be the commercial partners that will allow people on 
both sides of the water to do more business. I note that, you know, 
ideally we would love for Kyrgyz farmers to sell their food in markets 
not just to Kyrgyzstan but Afghanistan and Pakistan. If Uzbek traders 
could fly directly to Dushanbe, if businessmen flying from New York 
could visit Azerbaijan, Kazakhstan and Turkmenistan in one week--how 
many of us in this very room have tried to string together three 
countries on a trip to Central Asia and just can't do it because the 
flights don't exist? You can't drive. It's definitely a challenge. We 
want to move beyond just a new Silk Road to really helping these 
countries to be competitive globally. Listing several of the programs 
that we have working in this area, I'm from the International Trade 
Administration, which, broadly speaking, strengthens competitiveness of 
U.S. industry by promoting trade and investment. We work to improve the 
global business environment. We work to promote U.S. exports to this 
region and all the regions of the world. We support efforts, for 
example, with accession to the World Trade Organization, which several 
countries in the region are pursuing. We have another program that I'll 
be mentioning, our Special American Business Internship Training 
Program, which we lovingly called SABIT, and that program brings 
managers from all over Eurasia, as well as Afghanistan and Pakistan, to 
the U.S. for sector-specific training and interaction with U.S. 
companies. We have an Afghanistan Investment and Reconstruction Task 
Force that supports the development of the Afghan private sector 
through business, business matchmaking and various other programs. We 
have our commercial law development program, which is under our general 
counsel's office, which works to try to help U.S. foreign policy goals 
by advising on commercial legal reform.
    I'll just list out a couple of examples. The rest you can read in 
the statement. The Regional Business Integration program of our 
Afghanistan reconstruction task force is going to be assisting its 
participating Afghan firms to develop relationships that can produce 
opportunities for trade. One of the programs that they have coming up 
is called Sheep to Shop, and it's an interagency initiative to develop 
Afghanistan's carpet sector. The carpet sector is still Afghanistan's 
top legal export. The idea is to help introduce Afghan carpet producers 
to wholesale retail markets and also giving them a sense of what modern 
trends are in terms of rug design. We're also doing several business 
missions, helping Afghans to access markets in Oman, Turkey, the UAE, 
Singapore and others places. Our Special American Business Internship 
Training Program, among the sectors that it runs programs in, we have 
programs in transportation and logistics and cold-chain storage, where 
we bring these companies from the region to meet with U.S. companies 
and logistics in these areas. I can explain more about that later. Our 
commercial--our development program has been implementing programs in 
Kyrgyzstan as a pilot for the rest of the region, looking at legal 
infrastructure. They've been working on intellectual property rights. 
They've been working on customs. They've been working on public 
procurement. They submitted a proposal in cooperation with the U.S. 
trade representative to do a regional program looking at standards and 
customs. In conclusion, I wanted to emphasize that we do not believe 
that our core mission, which is primarily to support American business, 
American exports, is not mutually exclusive to helping the countries of 
the region. In fact, we believe that as we, the U.S., are looking to 
promote our own economic growth and to grow domestic jobs, that 
building opportunities in this region only helps us. This region taken 
together does have tremendous opportunity for U.S. exports, does need 
U.S. goods and services, lots of needs and equipment in other areas. 
Creating better markets there creates better markets for U.S. products.
    Our efforts are not in vain. Our SABIT program that I mentioned has 
received a 14:1 return investment for the money--U.S. government money 
that was used--that has been used to run the program, they have 
generated over $900 million in U.S. exports.
    We believe that in helping these countries to compete not just 
locally but globally, that there will also potentially be investors for 
the U.S. One of the things that this administration has looked at is 
how to increase foreign investment in the U.S. I have to put in the 
obligatory plug. The Commerce Department is having a first-ever 
SelectUSA Summit--Investment Summit October 31 to November 1st, where 
we're encouraging people from other countries to come and learn about 
opportunities to invest all over the U.S. We would love one day, if not 
this year, to see companies from Central Asia coming to maybe franchise 
their products and to franchise their businesses in the U.S. and to 
employ U.S. workers. We believe that there's return on investment in 
these programs, that there is potential but tremendous amount of 
challenges. But we're looking forward to working to try to do what we 
can to meet those challenges. Thank you.
    Ms. Han. Thanks, Danica, that's great.
    Next, I'd like to ask Eric Stewart to offer his expertise. He is a 
partner with the Washington, D.C., firm of Williams & Jensen, and he 
also serves as the executive director of the U.S.-Turkmenistan Business 
Council. Prior to that, he was a deputy assistant secretary for Europe 
at the Department of Commerce. But Eric gets a gold star in my book 
because he's the first U.S. businessman I met at an economic forum of 
the OSCE. So he's one of the few U.S. businesspeople who understand 
that OSCE process. So over the years I've followed your work, and am 
interested to hear how the U.S.-Turkmenistan Business Council is going 
and how that parlays into the new Silk Road strategy.
    Mr. Stewart. Great. Thank you very much, Shelly. I thought I was 
going to earn the gold star because I drove back from vacation today 
for this hearing.
    Ms. Han. That too, that too.
    Mr. Stewart. I'm going back to vacation right after this. Hence the 
tan. I have not submitted my paper to you yet, Shelly, but I will do 
that after this.
    Ms. Han. Taking away the gold star.
    Mr. Stewart. Yeah, yeah. I'm going to just talk a little bit and--
rather than go directly through my paper, just give some collective 
thoughts on my view of the region and these ideas, something that we've 
been talking about, Danica and I have been talking about for many, many 
years. What do we do? If somebody actually put out a map out front, 
which was really nice to have the map so everyone can see where the 
countries are. But if you look at the map, Central Asia really is in 
the middle of the world. When you consider the fact that you are 
surrounded by China, Europe, Russia, India and the Middle East, the 
only thing you're really missing is the Americas and Africa. I mean, 
other than that, you're surrounded by the world. And so what a great 
strategic asset. In addition to oil and gas and minerals and 
agricultural, what a great strategic asset. But there's always a but. 
There's a hook, right? So the Central Asian countries are in the most 
wonderful strategic location in the world, but the hook is, you're 
landlocked. If you're landlocked, you can't develop maritime. Well, 
right now, the maritime between Europe and the West, if you will, the 
West more generally and Asia, 90 to 95 percent of all the goods going 
back and forth between Asia and the West is maritime. Utilization of a 
supply route is something you can't utilize. So what do you do? You 
develop the land transportation, and that's essentially what really 
needs to happen. And you're starting to see a fair amount of the land 
transportation being developed: Kazakhstan, China, Turkmenistan, 
Russia. A lot of the countries are developing the rail and putting a 
lot of emphasis and investment into rail, which is a great idea. But 
roads need to also be significantly developed as well, because road 
transportation is a great mechanism not just for the long haul between 
Europe and Asia, but for the short-distance trading. And why is this 
critical? Because this is where the Central Asian countries will input 
their goods and their products into the--in the process as well. So if 
the roads aren't developed along with the rail, then what you're 
essentially doing is building a bridge over or through Central Asia, 
and that's obviously not the strategy or the development that will lead 
to a long-term development for the republics of Central Asia. It's 
critical that we not only have rail development but we have road 
development as well.
    In a previous sort of life, if you will, I ran a program at the 
U.S. Chamber of Commerce called the Eurasia Business Platform. It was a 
program that we ran for a number of years that was focused literally on 
this very idea of how do we develop and create an interesting policy 
program that would be of interest to American companies and doing more 
business in Central Asia, because at the end of the day, you know, each 
of the countries is doing well enough, right? Each of the countries is 
developing. Each of the countries is developing at their own pace. They 
are having success. Kazakhstan, obviously, has attracted billions of 
dollars in U.S. investment. Turkmenistan--we have--as the head of the 
Turkmenistan Council, we have almost 20 American companies that are 
members of our council, which is absolutely significant. The countries 
are, themselves, doing well in many respects.
    They could be doing better, though. That's the idea, and that's the 
discussion that we're having today is, how do you--how do you make it 
better? What Danica has talked about, and what's been discussed for 
many, many years, this idea of the great Silk Road is, you create some 
type of regional hub, you create some type of regional interaction.
    The fact of the matter is, those discussions--the way we have had 
those discussions are not working, in my opinion. The reason they're 
not working is, we continue to have these discussions, in my opinion, 
with the Central Asians as a group. We group the Central Asians 
together and say, you are Central Asia.
    That doesn't work very well, in my opinion. Each of the individual 
countries need to be treated as individual nations, as individual 
republics, and on a very bilateral basis, with the same messaging and 
the same points, but not together as a group. This is something that I 
think the U.S. government and specifically the USTR recognized a number 
of years ago when they had this Central Asia TIFA--the Trade & 
Investment Framework Agreement, which is supposed to be a mechanism 
leading to future free trade agreements, if you will and a number of 
years ago, made the decision to not just have Central Asia discussions 
regionally, but made a decision to have regional discussions and 
bilateral discussions.
    That's something that I think is absolutely essential and critical, 
but I think for me and the number of companies that I talk and the 
businesses that I talk to, what's essential is to work with the Central 
Asian republics to the point where they see the future value and the 
immediate value of developing what I consider to be the lowest common 
denominator of working together, which is to create some type of 
harmonized customs and border procedures, going to Danica's point from 
the Commerce Department, because individually, the largest country in 
Central Asia is just under 30 million; the smallest is a couple of 
million.
    Well, for the distance, the complexity, the cultural differences 
that we have--that's a long way to go for many American companies to 
make an investment. Now, if you bring all the Central Asian governments 
together, now you're looking at a substantial market. You put the 
Central Asian and the Caucasus together, now you have a market of 80 
million people, which is roughly the size of Germany. Now you have an 
interesting--from a business standpoint, an interesting market that has 
a lot of consumer potential for not only trading but also investing and 
potentially creating hubs.
    The lowest common denominator, in my opinion, that needs to be 
accomplished, is to have some type of harmonized customs and border 
procedures. And again, I believe this is something that needs to happen 
individually with each of the nations and understanding what they would 
be comfortable with and what they're willing to do, recognizing that 
security is going to be a--one of the top issues on that agenda, in 
addition to the ease of doing business.
    But as we talk about this and go through this process, I'm sort of 
struck by curiosity as to what's in the Russia-Kazakhstan-Belarus 
customs agreement, and, you know, here is something that was able to be 
accomplished between three neighbors, two of them very important--or 
three of them, really--all three of them very important for the land 
bridge, if you will, between Asia and Europe. Is there enough in there 
that would allow for the transparency, the security, the stability for 
some type of mechanism that Western companies would be comfortable 
with?
    I don't know the answer to that question; I'm simply throwing the 
question out to experts who might. But I think, in my opinion, that's 
really what it comes down to, is really finding a way to develop the 
borders, because if you don't, then they will--each country will 
continue to develop on its own pace, which is not, frankly, in my 
opinion, fast enough for each of the countries to allow themselves to 
really take their God-given potential in this global economy and 
developing at the rate they should be for where they're located and for 
the great natural resources that they have.
    I think, in order to achieve this has to be an approach with a lot 
of organization--we call them the alphabet soup, if you will; the ADBs, 
the UNCTADs, the UNECEs, WCO, UNDP, World Bank--I could go on and on; 
you name it--but also with the countries themselves, the Turkeys and 
Russia and China and the European member states. What else is really 
interesting about this is because the first contact points into 
Europe--if you were to truly develop a private sector Silk Road that 
really made sense are some of the U.S.' closest friends and allies 
anywhere in the world. I mean, and a lot of the first entry point 
countries are going to be Poland, Romania, Lithuania, into the European 
Union. These are countries that we worked with very closely.
    I think also, it is very interesting--these are countries, I think, 
that would be good partners and good role models and good interlocutors 
with Central Asian countries simply because of some of the shared 
history and some of the shared challenges that they have jointly gone 
through together, and especially when you look at some of the Baltic 
countries, the--a lot of the populations are similar in size. So I 
think they could be good interlocutors in the process. And in fact, 
over the last five years or so, we've seen a lot of heads of state from 
the Baltic countries and Central Asian countries visiting one another, 
and from Central Europe as well. So I think there's a--there's a real 
potential there.
    I've gone longer than I expected to talk, but the bottom line is, 
my message is, very simply, the importance of some type of custom 
harmonization border control program that not only allows trade between 
Europe and Asia, but allows the Central Asian countries to participate 
and develop in that, so they service the land bridge, but then they 
also participate in the land bridge as well. If that's possible, then 
we end up with a win-win-win-win situation, thanks.
    Ms. Han. Thanks, Eric. Batting clean-up is Josh Kucera, who is a 
journalist who writes for EurasiaNet. He also has his own blog--or do 
you--the Bug Pit is your blog, right?--and travels a lot in the region; 
just recently came back from Tajikistan and also an extended trip to 
the Caucasus and the Baltic countries. I've asked Josh to sort of step 
back from the details that we've been talking about and give a little 
broader view of what's going on, in your perspective. Thanks.
    Mr. Kucera. Well, thanks, Shelly, for inviting me to this. So as a 
journalist covering Central Asia, and especially U.S. policy towards 
the region, I've been closely following the development of the U.S.' 
New Silk Road Initiative since it was formally announced by Secretary 
of State Clinton two years ago, and even before that, when it was a 
concept being worked out by think tanks here in Washington and by 
military policy planners at CENTCOM who were looking at long-term ways 
to stabilize Afghanistan.
    For those of you who are--don't recall the New Silk Road Initiative 
when it was rolled out, Secretary Clinton spoke--it was almost exactly 
two years ago in India; her sort of takeaway quote from this--
announcing this New Silk Road Initiative--let's work together to create 
a New Silk Road; not a single thoroughfare like its namesake, but an 
international web--a network of economic and transit connections. That 
means building more rail lines, highways, energy infrastructure like 
the proposed pipeline to run from Turkmenistan through Afghanistan 
through Pakistan into India; it means upgrading the facilities at 
border crossings, such as India and Pakistan are doing now at Wagah, 
and it certainly means removing the bureaucratic barriers and other 
impediments to the free flow of goods and people. It means casting 
aside the outdated trade policies that we are all living with and 
adopting new rules for the 21st century.
    That's a very ambitious statement. Even before this initiative was 
rolled out two years ago, there was a lot of skepticism about whether 
it was workable. Two years since then have only given more reasons to 
doubt its efficacy. Two years after it was announced and a year--only a 
year before the U.S. starts to pull out its forces from Afghanistan, it 
seems that the New Silk Road remains more of a talking point than an 
actual initiative.
    When we talk about the New Silk Road, it's important to clarify 
exactly what we're talking about. Generally speaking, the New Silk Road 
is basically a marketing term that encompasses anything that involves 
trade between Asia and the West, whether the former Soviet Union or the 
Middle East or Europe.
    No doubt there are connections like that popping up all over the 
place. That was an inevitable result of the collapse of the Soviet 
Union.
    With the opening up of the borders of Russia and Central Asia--the 
Central Asian states of China and South Asia--of course, cross-border 
commerce of all kinds is filling that vacuum that was artificially 
created by those hard Soviet borders. Companies now ship goods by rail 
from China to Europe through Kazakhstan. New railroads are being built 
from Kazakhstan through Turkmenistan to Iran. China, Iran and Turkey 
are building roads and bridges in Tajikistan.
    However, when we talk about the U.S.'s New Silk Road initiative, 
this is something much more specific. This initiative puts Afghanistan 
at the center, as a hub of regional trade. This is why the U.S., when 
it talks about the New Silk Road initiative, you'll hear them over and 
over mention two specific projects: TAPI, like several people here have 
already mentioned, and the CASA-1000 electricity export project, which 
would ship electricity from Kyrgyzstan to Tajikistan to Afghanistan and 
Pakistan.
    However, while this U.S. vision is more specific, the means by 
which the U.S. intends to implement it remain very unclear. U.S. 
officials emphasize they are supporting a regionally-owned vision 
rather than putting their own money into it or developing their own 
projects.
    But the problem is that very few existing regional integration 
projects involve Afghanistan, for the obvious reason, that it's very 
unstable and has very poor infrastructure. There are very few pairs of 
countries that if you try to imagine, you know, the most advantageous 
way to get goods from one to the other that the route would pass 
through Afghanistan. Making this even less likely is that the U.S. 
explicitly says that it doesn't want these projects to include Iran, 
Afghanistan's giant neighbor and probably its most convenient corridor 
to Europe. So effectively, that leaves only trade between ex-Soviet 
Central Asian republics and South Asia projects like TAPI and CASA-
1000.
    So those projects, even if they do develop, hardly seem like the 
kind of game-changing projects that Secretary Clinton said were part of 
the U.S.' vision of the New Silk Road. This focus on Afghanistan I 
think is the fundamental flaw to the U.S.' vision of the New Silk Road.
    However, there's also a number of more specific reasons that it 
won't work. I'm going to focus primarily on, you know, Afghanistan's 
northern neighbors, the ex-Soviet Central Asian republics. I think 
there are analogous issues. Pakistan's relationship with Afghanistan 
obviously is very complex, not to mention with India, that sets on a 
set of issues but I'm going to focus here on the Central Asian 
question.
    The first problem is the lack of a market for this sort of 
commerce. U.S. officials have repeatedly argued that the Northern 
Distribution Network, the series of military transport routes that it 
uses to ship cargo to soldiers in Afghanistan can serve as a proof of 
concept for the New Silk Road. And NDN has indeed been a success in 
terms of ensuring relatively smooth delivery of supplies to the 
military in Afghanistan via the Central Asian states. Recently, the 
U.S. celebrated its 100,000th container shipped via the northern spur 
of the NDN, originating in the Baltics. But the NDN has a market: 
troops in Afghanistan. Absent the military, the U.S. has failed to 
demonstrate what sort of market there might be for an Afghanistan-
centered New Silk Road.
    The second reason, and this is a big one, is that these countries 
fear Afghanistan. Most Central Asian countries want nothing to do with 
Afghanistan. They see it as a source only of potential problems, 
primarily drugs, radical Islamism and guns.
    One buzz word that you now regularly hear in Central Asia, Central 
Asian capitals, is spillover. This is the idea that once U.S. forces 
leave Afghanistan, the chaos there will increase and spread into 
Central Asia. I would argue that these fears are somewhat overblown and 
exaggerated for their own internal reasons. Nevertheless, it's obvious 
that these countries see Afghanistan, especially post-2014, as more of 
a problem than as a solution.
    U.S. government officials, when they talk about the New Silk Road 
initiative, indirectly acknowledge this fear by saying that increased 
trade will result in positive spillover from Afghanistan. But this--
while it's a nifty rhetorical device, there's no indication that 
Central Asian governments believe it.
    One telling statistic is that while about 80 percent of military 
cargo going into Afghanistan has been shipped via the NDN, only 4 
percent of the goods being shipped out go via the NDN. That's because 
Uzbekistan, which is the first stop after Afghanistan on the main route 
of the NDN, has thrown up a number of barriers to traffic coming out of 
Afghanistan, making it almost prohibitive to use that route. Shipping 
companies working on the NDN say that the government of Uzbekistan is 
apparently afraid that contraband can be smuggled via these trains 
carrying U.S. military cargo back. The U.S. is sending scanners to the 
Uzbekistan border to help expedite this process of clearing these 
shipments, but it speaks to the great mistrust that Uzbekistan has of 
Afghanistan.
    A third big problem is regional mistrust, not just of Afghanistan 
but among the Central Asian countries themselves. No Central Asian 
regional integration plan can work without Uzbekistan. This is 
something everybody agrees on. It's the most populist country in the 
region, the only ex-Soviet Central Asian republic to border all the 
others. It's the hub of the Soviet legacy transportation system and has 
by far the best connection from Afghanistan's north to the rest of the 
world. However, it has very bad relations with nearly all of its 
neighbors and has exhibited no interest in U.S.-backed regional 
integration programs like the Istanbul process.
    In addition to the problems mentioned before with Afghanistan, 
Uzbekistan has also systematically cut off commerce with Tajikistan. If 
you look at the map, you'll see that Tajikistan really relies on 
Uzbekistan to--for commerce with the rest of the world. Uzbekistan has 
used--with various political problems, has used that fact as a lever to 
pressure Tajikistan in various ways. Over the past decade, Uzbekistan 
has mined the border, repeatedly raised import duties, imposed visa 
regimes on Tajikistan citizens and blocked rail traffic.
    Neighboring countries have begun to react to this by creating rail 
projects that bypass Uzbekistan, like the Kazakhstan-Turkmenistan-Iran, 
and the Tajikistan-Afghanistan-Turkmenistan projects. And while the 
projects are necessary lifelines for these countries to avoid the road 
blocks that Kazakhstan is throwing up, a real regional strategy has to 
include Uzbekistan. U.S. officials, however, almost never acknowledge 
Uzbekistan's intransigence on this, let alone criticize it, needing to 
stay on the good side of the government for the sake of the NDN.
    Fourth big reason is the lack of interest in free trade in the 
region. Boosters of the New Silk Road initiative argue that it doesn't 
require hardware. It doesn't require the U.S. to necessarily spend any 
money on large infrastructure projects, but only software, like 
reducing bureaucracy on borders.
    Like Eric said, that is the--you know, the primary barrier now to 
trade in the region, but the bureaucracy on these borders, that is the 
high customs fees and the pervasive corruption are in the minds, of 
Central Asian government not bugs but features. Control of border 
traffic is a sinecure which all Central Asian governments use to pay 
off elites, including their family members. So while free trade may be 
good for the countries of Central Asia, it would be bad for the members 
of the government and their allies. That's who these governments serve. 
That is a problem that the U.S. is incapable of solving.
    The final problem is the lack of U.S. resources. This is an 
incredibly ambitious vision with a lot of obstacles. The U.S. has 
promised basically that it's not going to devote any resources to 
implementing it. With a resurgent Russia exerting its authority again 
in Central Asia, a China that's obviously becoming increasingly 
economically active in the region, the U.S. has less and less clout to 
throw around in Central Asia. Absent that, and without spending any 
money, it's not clear what Washington hopes to do to steer these 
regional integration projects in the direction that they want them to 
go. Furthermore, U.S. interest in Central Asia is certain to decline 
even more as the pullout from Afghanistan progresses.
    In addition to the large amount of skepticism that Central Asia 
watchers have regarding the New Silk Road initiative, among its few 
backers, there's a frustration that the State Department and other 
officials who are supposed to be implementing it are in fact slow 
rolling it and not doing anything to implement it.
    Taking that all into consideration, it's hard not to escape the 
conclusion that the New Silk Road initiative is effectively a little 
more than a talking point, a rhetorical fig leaf to make it appear as 
if the U.S. isn't abandoning Central Asia after 2014.
    Thanks for having me. And I look forward to your questions.
    Ms. Han. Great way to start the discussion, Josh. I'm going to kick 
off with a couple of questions for the panelists. There will also be an 
opportunity for the rest of you to maybe react to some things that Josh 
has said.
    I think it's true that the term the Silk Road--and the State 
Department does have a specific definition I believe on Silk Road 
strategy itself, the New Silk Road, but we could look at it as a larger 
issue of just economic development and whether or not you're looking at 
Afghanistan being integrated with South Asia, India, Pakistan, or if 
you're looking more at Central Asia or if you're talking about China to 
Europe going through Central Asia, if we just look at this broadly and 
ask, what are the opportunities?
    I'm curious because Eric had touched on something that's always 
been a question in my mind is if we look at the markets and where goods 
go there was a great New York Times article last Sunday about Hewlett 
Packard sending computers from China to Europe going across the--
Central Asia by rail. You mentioned that, you know, just rail routes 
aren't going to cut it because you need the road infrastructure so 
that--because even--but to me, it seems like even with roads, Central 
Asia is just becoming another transit point.
    Then how does transit then translate into economic development, 
because it seems that without having any sort of value added by the 
Central Asian states or inherent markets that it's difficult to have 
growth, economic growth? They'll just become transit opportunities. And 
no matter how many truck stops you would build, how is that going to 
help the country?
    If we could talk a little bit about what we see as opportunities 
for actual development and what those things would be. It gets also 
into the question of harmonization. I think the ADB and CAREC do a lot 
of work on this in terms of the harmonization of the infrastructure. 
And maybe you could talk a little bit more about what the ADB has done 
and what Eric was talking about, the need for doing that. And Danica, I 
think you also have that as well.
    If you could also perhaps comment on the Eurasian Union proposal 
and then also how, China, I believe, has also proposed a Shanghai 
Cooperation Organization free trade area as well, and how those types 
of opportunities could help or hurt this type of harmonization strategy 
that is needed.
    I'll start with Craig, then go to Danica and then Eric and Josh, if 
you all want to weigh in.
    Mr. Steffensen. Before moving to Washington a few weeks ago I 
headed up ADB's office in Bangkok. And I worked quite a bit when I was 
there on something called the Greater Mekong Subregion Economic 
Cooperation program, which is a predecessor in some ways to the CAREC 
program.
    We like to show a PowerPoint where we show the sort of evolution of 
the road and network across the sub-region. It shows transmission lines 
and Internet, telecommunications, trunk lines, pipelines, what have 
you.
    From 1992, you know, you see one sort of grid, sort of a skeleton 
framework, and then it switches to 2002 and then 2012, and the final 
slide is what things, you know, may look like in 2022. It's all very 
impressive to see these cascading slides of this road, power network 
appearing.
    That's the most dynamic region in the world today. We thought for a 
long time that, GMS investments were sort of--undergirded a lot of the 
development that's taking place.
    But I saw some slides at a tourism forum recently--it had really 
nothing to do with GMS program because it was all private sector--but 
they showed the evolution of a low-cost air carrier network in that 
part of the world. And it got started sort of in 2001, I think. And 
they had only a few slides, but if you look what happened between 2001 
and 2013, it makes everything that's happened on GMS look like, you 
know, like it's not--it was wired. It looked like the backside of a--
you know, a computer chip under a microscope. It was amazing how 
quickly the regional air network has come together. It's not something 
that ADB or the governments were directly involved in. These are all 
private investors. It's not something that really required a whole lot 
of attention on our part. On the contrary, no one was really paying 
much attention to this at all. Maybe that's the reason it's taken off 
so well.
    But extrapolating all this and applying it to Central Asia--and 
what I'd like to say is that sometimes I think we sort of take as a 
given that there are things we have to do for things to happen. I think 
that maybe the low-cost air carrier network and the GMS shows that if 
the conditions are right, if entrepreneurs believe that they can make a 
buck, and that the government is not going to shut them down, and if 
the demand is there, you know, if there are tourists who want to fly 
from Bangkok to Mandalay, to Luang Prabang, up to Da Nang in Vietnam 
and back to Bangkok, sort of a tourism circuit there, if the same thing 
were to happen in Central Asia between--you know, between Tashkent and 
Bamyan, and then Bishkek, and I could go on, there's nothing that 
anyone really would have to do except to make it known that this is 
possible. It's always been sort of a mystery to me why there aren't 
more low-cost air carriers across the subregion.
    I don't want to look at a glass half empty here and see what's 
wrong with the place. I see just all kinds of opportunities. For all 
the sort of attention that--for all the reports we read in the media 
about how things aren't going so well militarily, even politically in 
Afghanistan, my view from the trenches there is that, at least 
economically--and if you look at what development partners together 
with and others are doing, you know, there's a real success story that 
can be told.
    Who has the upper hand at this point? I don't know. The politicians 
or the business people? You know, one could really muck it up for the 
other, but I can't help but think that things aren't as bad as maybe 
we'd like to believe sometimes.
    On harmonization, what can I say? The fact that Russia has joined 
the WTO is huge, and now that they've sort of set terms and conditions 
for their own participation, I think the expectation for a long time 
has been that Central Asian countries will follow suit, you know, with 
a very similar package.
    When it comes to some of the trade issues we've been hearing about, 
I think WTO will sort of provide a framework where everyone can 
negotiate a way forward. There's a spaghetti soup of trade agreements 
across the region that sort of, you know, has everyone confused, if not 
paralyzed at the moment, but thanks to WTO, I think, you know, there's 
a way out of this mess yet.
    Ms. Han. Danica, is WTO sufficient or what else do we need to do to 
get harmonization going?
    Ms. Starks. Sure. Well, being in the WTO alone is not sufficient. 
It's what you make of it. Passing laws is not enough. It's enforcement. 
However, it does provide an incredible framework. The actual process of 
accession is a tremendous opportunity to take a look at the entire 
trade infrastructure from a policy standpoint.
    But again, a lot of it comes down to something that Josh implied 
when he was talking, which is political will, that you can have all the 
great laws in the world, but if there are interests who benefit from 
those laws not working, then you ultimately are not going to be able to 
move forward.
    Answering Eric's comment about the Eurasian Economic Community and 
the Customs Union, it has been very interesting to watch. The interplay 
between Russia, Kazakhstan and Belarus as they negotiate, in some cases 
not negotiate, tariffs and other--and common borders and looking at 
intellectual property rights and other things, it's a little bit 
complicated because, for example, Russia got into the WTO; Kazakhstan 
is still acceding. And so there are things that have had to change over 
time.
    But it's been fascinating to watch because it's forced a dialogue, 
and the dialogue is not between countries of the region and the U.S. 
It's not about what the U.S. or Europe or what anybody else wants. It's 
them looking at their own country, their own nascent industries and 
trying to work out among neighbors.
    It's an interesting idea, but I don't know that the complexity that 
it requires is something that there's political will for right now in 
Central Asia in terms of looking at that level of harmonization that's 
needed.
    I do think that your example, Eric, of looking at the Baltics or 
some other countries as there a country--interlocutors and models is a 
great idea. Again, I use the term ``regional collaboration'' over, say, 
integration not because integration in some cases is necessary--Eric 
and others mentioned that harmonization is a key area--but in some 
cases, the collaboration is to enable each country to develop 
individually. But right now, in a lot of cases, they are competing 
against each other.
    Everybody is trying to make the same things. Everybody is trying to 
sell the same commodities. The region has not really realized the 
comparative advantages that it could if countries could actually 
specialize amongst themselves. If everybody would agree that this is 
the country that's going to specialize in this area, this is the 
country that's going to specialize in this area--there were some 
examples given the other day that there are countries that are 
producing products that they really don't have the economies of scale 
to make enough money on.
    It would be great if they could just stop producing those products, 
but that's not that easy to tell a country that's struggling to prove 
that it can operate independently and on its own, but a regional 
approach in terms of collaboration and looking at where are the niche 
areas that we can fulfill.
    You mentioned the Baltics. I look at Estonia. I was there actually 
on vacation recently, and I'd gone on a cruise. You pull up to the 
port, and they basically did everything possible to encourage you to 
get off that ship and spend money in Estonia. I mean, everything but--
come on and wheel you around in a golf cart. In terms of making it very 
easy to enter into the port, no bureaucracy in terms of getting into 
the country; English and Chinese, Japanese speaking tour guides waiting 
around, and sightseeing and those types of things.
    Then I look at a lot of the countries in the region that have some 
of the--have similar touristic ambitions but it's impossible just to 
buy a plane ticket over the Internet in some cases. So the ability to 
actually develop a niche, but to have the political will to make the 
changes necessary I think is key.
    In terms of the idea of harmonization, I think one the tacks that 
we've taken is exactly what Eric mentioned, that, in some cases, it 
doesn't always work to put everybody in the same room and try to get 
everybody to speak the same language. You're right. In addition to the 
Central Asia Trade Investment Framework Agreement to have bilateral 
working groups to work individually with countries.
    Our commercial--our development program--I believe we have a 
representative here, Emily Lanihan. In the back. They've put together a 
proposal that would do just that, that would look at standards and 
customs and other issues but work individually with each country to get 
them up to international standard. If you get everybody up to 
international standard, then you eliminate just right there a lot of 
the barriers. Then you can talk to each other on a regional level 
because everybody's speaking from the same page.
    So that's another strategy going forward. Whether or not the sort 
of Customs Union idea would work, I just--I'm not sure. It remains to 
be seen. It's still in the development stages for what it is, but it is 
an interesting model to look at.
    Ms. Han. Eric, do you have a comment?
    Mr. Stewart. Sure. Just building on this idea. There's so many 
cultural differences and so many ways of doing business that are 
different from us and Central Asia. That's the reason I suggested 
looking outside the box.
    I don't think you can continue to say this is the way we do it and, 
Central Asia, adopt our programs. It's not going to work. We've got to 
find ways to do things together that make sense from a Central Asian 
perspective and working to their culture and their ideas for business. 
That's the reason I threw out something what I think as sort of 
unconventional, if you will.
    But to go back to your question, Shelly, on the idea of investment 
and how does Central Asia play a role and not just be, you know, passed 
over or passed through, if you will, transient from one to the other.
    If you look at where American companies and Western companies and 
any kind of companies invest, they're not political decisions, they're 
decisions based on costs, on supply chains, on consumers and the 
ability to, you know, efficiently run an operation.
    I mean, you look at your example of HP. They've opened their plants 
in western China, where issues of corruption run rampant, where crime 
is high, where poverty is high, people are still on a couple of dollars 
a day. They are in the Wild, Wild West, if you will, of China with 
their plant. What country in the world doesn't want HP to open a plant 
in their country? Every country wants an HP plant, so western China has 
one. There's no reason that that same plant couldn't be housed in any 
one of the Central Asian countries, but there are reasons today why 
they are not. And one of them is the ability to move efficiently.
    I don't think it's so much just focusing on what do the Central 
Asians have today that they, you know, grow or that they develop or 
that they manufacture that would fit into the overall scheme. It's what 
opportunities can they attract, and what types of companies can they 
attract, and what types of companies can they bring in? Because a lot 
of countries around the world haven't necessarily developed from 
themselves what their niche is, right? They brought it in and they made 
themselves competitive.
    You have tiny little countries all over the world who have made 
themselves extremely competitive by being transparent and open and 
having the ability to create themselves as a hub for other parts of the 
world. I think that's the--that's the message to continue to push.
    Frankly, when I look at the countries of Central Asia, I'm not sure 
there is a single big American investment anywhere in Central Asia, 
outside of energy, outside of the energy sphere. I'm not sure that here 
is something significant. There are few things here and there. I mean--
I know Uzbekistan has an assembly planned from Case New Holland, and 
they've got the Ford----
    Ms. Starks. GM.
    Mr. Stewart. GM, sorry. That was an Uzbek sort of financed 
operation as they were losing the plant from another company. But I 
think the point being, for me, it still goes down to the very 
fundamental fact that this is what needs to be developed and it's the 
ability to move across borders. If that happens, as you talked to--you 
said, as you termed it, the soft--if that happens, the hard 
infrastructure will come. The companies will build the roads. The 
government doesn't need to do that, the companies will do it. If they 
see the opportunity to do business, they'll put the money into the 
infrastructure. They'll put the money into the ports, into the 
stations, into whatever it takes if there is a system there that shows 
them they're going to be able to move the goods.
    Ms. Han. Thanks. Just one more question from me and then I'm going 
to open it up to the audience, so you all can be thinking about what 
you might want to ask.
    I want to talk a little bit more about the role of China and the 
European Union, and how things are moving across, and what push and 
pull factors are there. I know that China is really active in Central 
Asia. You probably, Eric, run across trade delegations from China in 
Turkmenistan all the time. But I'm curious--do you ever run across 
European trade delegations with the same frequency? Do we see the same 
type of engagement? Then does the European Union support the ADB and 
CAREC programs? What kind of engagement do you have from Europe in 
terms of trying to create some sort of integration that way?
    Danica, how are you all working with China? Do you work with the 
Chinese in the region or is there any sort of engagement on that side? 
Thanks.
    Ms. Starks. In terms of Commerce specifically, I can't think of an 
area where we directly--in terms of third-party work, work with the 
Chinese on the region. I think--as far as commerce is concerned, we're 
market oriented. We're following what the companies are doing. We are 
not taking the lead and telling companies where to go and what to do.
    Often, we will--we will look at opportunities where U.S. companies 
have expressed an interest in a certain sector, and there might be 
Chinese interest in that sector. We will do our best to try to promote 
the U.S. component.
    But in general, we have not had any sort of third country or 
bilateral cooperation with the Chinese in any commercial spheres. But 
yes, you do see quite a bit of engagement by the Chinese, as they 
should. They're neighbors. So that makes sense.
    Ms. Han. Do you see them opening up opportunities that U.S. 
companies might--perhaps the Chinese are willing to put in some extra 
time and effort or money that doesn't necessarily make sense for 
American companies.
    Ms. Starks. I would say in general, a lot of the sectors where 
we've seen a lot of the Chinese interest are not necessarily areas 
where U.S. companies have been as interested in general. So there 
hasn't been that cross-pollination as much.
    Ms. Han. Except for maybe energy would be the exception.
    Ms. Starks. But even there, look at, for example, Uzbekistan. 
There's quite a bit of Chinese interest in the energy sector in 
Uzbekistan, but you don't really have any U.S. majors that are doing 
exploration and development there.
    Mr. Stewart. Smaller energy. It's not the huge projects.
    Ms. Starks. Very small. Part of it is our interests are different. 
China actually borders Central Asia, so it's interested in pipelines 
and roads going to and from places that don't necessarily have an 
attraction for a U.S. company. It doesn't mean it's not good for the 
region, but I think there are a lot of areas where there's a Chinese 
interest that there just is not a U.S. interest, and that's OK.
    Mr. Steffensen. A lot of what Danica just said about China versus 
Central Asia is true. The EU--is there EU interest in CAREC? Yeah, 
definitely. We're both involved in trade facilitation work. They made 
very clear for years they're interested in joining CAREC, but as a 
bilateral at best. We kept them out because once we open the door to 
the EU, then the U.S. and the Germans and Chinese and others and Japan 
aren't far behind. And the countries themselves decided just to limit 
this thing to current membership plus or minus a couple of countries to 
ensure that it remains a forum where their interests--that is, the 
countries' interests--can be discussed and not those of their 
development partners. Yeah.
    You said something earlier regarding the New York Times article, 
and if I could share or relate something unrelated to Central Asia, but 
related to this railway. About a year ago, I had a discussion with the 
chief policy advisor to the Thai prime minister. He started talking 
about these time trials to move containers between Chengdu, China, and 
Lodz, Poland. And I didn't know what the heck he was talking about, so 
I went back and started Googling and found a few articles, including a 
good one on Business Week. The gist of the New York Times article. 
Bottom line is, you know, there is no rail connection between Southeast 
Asia and China for that matter between Southeast Asia and Europe today.
    But he was talking about the importance of engaging the Chinese 
now, even before a rail connection is built maybe through Myanmar or 
Laos or Cambodia and Vietnam, to ensure that one day Thailand has 
access to the Chinese railway network to be able to export its 
containers to Europe in a way that's cheaper and almost as fast as--
well, cheaper than air transport--almost as fast as sending it by ship 
that's green and that would, you know, improve logistics and lower 
transport cost and improve Thailand's competitiveness.
    This railway experiment, it's potentially a game-changer, I think, 
in the way we see trade across the continent. The Thai authorities are 
looking at it very carefully. ADB has begun to look at it in terms of 
the intermodal possibilities that we could be--should be supporting. 
But it's potentially a huge development, yeah.
    Ms. Han. All right. Eric and then Josh, I don't know if you have 
anything to say about China and EU. I'll let Eric start, then you can 
finish. Then we'll go to questions.
    Mr. Stewart. Before I forget, let me also just include talks about 
WTO. Please keep focusing on WTO. It is a very, very good thing. From 
the Turkmenistan perspective, we're extremely pleased that Turkmenistan 
has started down this process. It's a good thing. It's a painful, long, 
arduous thing to go through, but at the end of the day it's positive 
regardless of how it plays out.
    I think what's actually going to be interesting, going back to your 
question, well--one--actually one historical thing that's sort of 
interesting. If you look back at the European Union, back when it was 
the EEC, before it was the European Union, you know, land 
transportation was a big component of that actually coming together and 
frankly bringing countries like France and Germany to be able to do 
business together. I think actually Europe continues to be--and again, 
going back to the point of the Baltic and the Central Europeans, a 
good, I think, interlocutor for working with the Central Asian 
countries.
    Every dynamic has politics in it. There is some politics involved 
obviously in that because the Europeans want oil and gas coming from 
the region. That's not a bad thing, that's a good thing. But that is a 
factor. I think what's actually interesting and I don't know the answer 
to this, but I think what's actually interesting and maybe this is not 
accurate, but it would seem to me that post-Afghanistan, actually the 
U.S. would be a sort of a benign interlocutor in a sense because there 
is less of an agenda in the region, right? I mean, the agenda at this 
point, will be simply, you know, business opportunities for American 
companies and the development of the Central Asian countries.
    I think that's actually a very interesting question, sort of 
flipping it around and looking at it post-2014.
    Mr. Kucera. Well, I'd make the point sort of the converse of what 
Eric just said that the U.S. has a very different interest in all of 
this than China and the EU in that China, especially, to a lesser 
extent EU, I mean, they actually have an economic interest in this 
trade. I mean, they can get cheaper stuff or export their stuff 
cheaper, whereas the U.S., you know, only very indirectly will benefit 
economically from trade in Eurasia. The U.S.' interest is kind of more 
geopolitical. I think that to the extent that the U.S. is doing 
anything, it's more driven by geopolitics than economics.
    Whether the U.S. being an outsider makes them an honest broker, 
like you suggested, or if, in fact, you know, maybe they have less at 
stake, and so they're more willing to meddle without getting benefit. 
Maybe China and Europe's interest is in fact sort of pure in that we 
want open markets to--for our benefit for open trades.
    One more point I wanted to make that I was thinking about the 
Eurasian Union. In my presentation, I made blanket statements about all 
of Central Asia. I think Kazakhstan is an exception in a lot of ways to 
what I said, that Kazakhstan is in fact interested much more than the 
other countries in free trade. I mean, this HP example is one. I 
sometimes get the sense that people in Astana are more interested in 
the New Silk Road initiative than people in Washington are. They're 
constantly asking about it. They're promoting the port at Aktau for the 
U.S. to build up and so on.
    This also speaks to the Eurasian Union, that they're willing to do 
this with Russia and Belarus as well. Kazakhstan does seem to be, in 
fact, quite interested in free trade. It's the other ones that we 
should have questions about.
    Ms. Han. All right, thanks. Now, I'm going to turn to the audience 
to see if anyone has any questions. We do have a microphone, I think, 
Max, is that right? We're not sure. OK. We do need you to speak into 
the mike, though, right? If they don't speak into the mike, is that OK?
    All right. If you're going to ask a question, please speak loudly. 
We can hear you, but we just need to make sure that the 
transcriptionist can hear you. If you could identify yourself, that 
would be great. Anyone have a question? Yes over here.
    Questioner: Hi. I hope this is loud enough. My name is Charlie and 
I'm working for Senator Sheldon Whitehouse. I just have a question. I 
wonder if the rest of panel could react to Mr. Kucera's depiction of 
the economic outlook for Afghanistan. I'm wondering if the U.S. is 
mistaking economic hopes or fantasies for economic strengths in the 
post-2014 world.
    Ms. Han. OK. Anybody want to take on Afghanistan? Maybe Craig.
    Mr. Steffensen. Yeah, I lived and worked in Kabul for six years. 
And I don't know what to say except Afghans are born entrepreneurs and 
you know, if the security situation were to improve and if there were 
opportunities made available to them, other than to carry a gun, I 
think they'd be, you know, out there running a business before we knew 
it happened.
    That's sort of generally speaking, but the mining sector there, as 
I think it's, you know, it's no secret whether it's Ainak or Hajigak or 
other parts of the country, iron ore and copper, you know, one estimate 
made by a Norwegian mining specialist working in the Ministry of Mines 
and Industry was that Hajigak alone could bring, I think it was $3 
billion a year in revenues to the government for centuries.
    Now, that's not as much as USAID was putting in at one point, but 
it's a lot for Afghanistan and it would free up the government, I 
think, from using a lot of the funds that we're now providing by way of 
support to cover recurrent costs, I mean salaries of government 
officials and all that, to begin investing in things, so that the 
mining sector could actually take off. By that, I mean railways and 
power and training for people to work in that industry, et cetera.
    Nothing's going to happen overnight. These are long term solutions 
to problems. But I don't doubt for a second that Afghanistan has the 
potential to become, you know, a leader economically in that part of 
the world. Someone said at one point that--I mean, it was the ministry 
of mines said that Afghanistan has more underground than China has in 
international reserves in banks. Someone went on to say, well, there's 
a big difference between having money in a bank and having it 
underground. But that's the, you know, that's the amount of resources 
that we're talking about.
    Ms. Han. Thanks. Anyone else? Yes.
    Questioner: Hi. My name is Olga Kuzmina. I'm from the Center on 
Global Interests. It's a new think tank that focuses mostly on U.S.-
Russia relations. To me it seems like Russia here is the big elephant 
in the room that we haven't really addressed. I mean, you've mentioned 
the customs union and the Eurasian Union that Russia's kind of trying 
to build in this area. It seems like your kind of idea's maybe that the 
U.S. can kind of piggyback often the progress that's made there, like 
if they free up the trade borders and have some kind of internal visa 
regime, that would make it easier for the U.S. to trade with the region 
as a whole.
    I think the kind of understated fact is that Russia is kind of 
trying to, you know, contain this area for itself with these projects. 
How do you envision working with Russia or what problems do you 
anticipate, with Russia as the U.S. has been a supporter of the Silk 
Road plan and how do you intend to address them or involve Russia 
probably could be better?
    Ms. Starks. Sure. I don't think that involvement of Russia and our 
interests are mutually exclusive. I think Russia not being brought up 
today mostly was because my brief from Shelly was to talk about Central 
Asia, not to talk about Russia. It wasn't an intentional slight. I 
cover Russia as well and there're actually far more U.S. companies now 
that are doing business with Russia that if Central Asia--if 
opportunities to transit to Central Asia, even from Russia, were to 
open up, that they could benefit.
    I don't think they're mutually exclusive. I think they could 
actually work together. I think there're a lot of U.S. companies now 
that are doing business in Russia that are not in Central Asia could 
foresee having better opportunities because they already have a base 
from which to operate. But right now, going back to, Eric's point about 
the harmonization and customs and other issues, just being in Russia 
doesn't necessarily mean that the Central Asian market is open for you.
    In the case of the customs union with Russia and Kazakhstan, there 
are some U.S. companies that have benefited from the opening of transit 
between Russia and Kazakhstan. Companies that are already doing 
business and producing or doing things in Russia have been able to 
benefit by being able to send goods duty-free into Kazakhstan.
    I don't think that it's an issue. I don't think that the U.S.--and 
I'll let my State Department colleagues take over the political 
aspect--but commercially, we're not looking to compete with Russia in 
the region. I think similar to China, a lot of our interests 
commercially are very different. Right now, as Josh mentioned, the 
amount of U.S. investment and trade in the region, apart from oil and 
gas, is quite minimal. In terms of the commercial perspective, I don't 
think that we could compete with Russia even if we tried at this point.
    I don't think that we're necessarily going after the same things. 
For example, one of the areas in which several of the countries of the 
region are looking for investment is in hydropower. Hydropower is not 
an area generally where U.S. companies invest in and manage projects. 
We might supply equipment and services, but it's not an area where you 
see a lot of U.S. interest in investment. That's a major area where 
we're not actually competing with anyone. It's not an area where we 
feel that we have an advantage looking forward.
    In terms of this, whatever sphere Russia may or may not want to 
create, we cannot--that's Russian foreign policy. That's their choice. 
I actually had a lunch, several years ago, with trade attache's from 
Russia, Japan, Germany and a couple of other countries in Uzbekistan. 
We all had the same challenges. The Russians, the Europeans, the 
Japanese, everybody was facing some of the same business environment 
challenges, so I think actually greater Russian investment and looking 
at opportunities in the region could still actually promote a lot of 
this opening of doors and opening of harmonization. I don't think it 
would be to our detriment if there was greater Russian interest in the 
region on the commercial sphere.
    Politically, that's a whole different ballgame, but commercially, I 
don't know that that actually takes anything away from us.
    Mr. Stewart. Yeah, my point in mentioning the issue or throwing out 
there the issue was simply--look at it from a Central Asian 
perspective. If you've got this--Kazakh perspective--you've got this 
customs union already with Belorussia and Russia. The Americans come 
along and say we've got this great new border harmonization program we 
want you to implement. Then here we go again. Is it the Russians or the 
Americans? I mean, you're stuck in the middle of the two, right? My 
point in saying the businesses aren't interested in the political 
jockeying. The businesses are interested in getting business done.
    If that means taking the already existing--the only customs union 
that I'm aware of in the region and saying how do we use that as a 
starting point to create something broader that we can support and that 
we can buy into and that makes sense for American companies, then let's 
go that road. That was simply the proposal and the idea. To sort of 
further what Danica was saying, when I take business missions to this 
part of the world, almost every executive that comes from an American 
company is--not all of them, but a majority of them are based out of 
Moscow.
    This is for them a regional approach to doing business. If we can 
find ways to simplify it and to make it easy and make it happen, that's 
all we want.
    Mr. Kucera. I would just add that, you know, the U.S. does engage 
in a lot of Eurasian trade right now, which is the NDN. And Russia is, 
in fact, very cooperative with that. I mean, they host almost all of 
the equipment and have never really caused any problems from it.
    One thing I'm curious and this discussion got me thinking, and I 
wonder if somebody in the audience knows--if so, tell me afterwards--
you know, whether the customs union has made it in fact easier because 
most of this NDN traffic goes, you know, from the Baltics through 
Russia or through--but through Russia, then Kazakhstan, then the rest 
of Central Asia. I wonder if this customs union has made that Russia-
Kazakhstan border crossing easier.
    Mr. Stewart. On that point, you tried Josh and I think he did a 
good job of trying to clarify what is the Silk Road right now. I 
actually think there's two different things that we talk about. There's 
the north and the south and then there's the east and the west. They're 
very, very different proposals and programs. There is the potential for 
them to both work together and intersect together, but how that works 
at this point is yet to be determined. I mean, it's unclear.
    We know it works north to south now with military, but is that long 
term, sustainable via the private sector. Look at companies like Maersk 
that are moving goods from, you know, Klaipeda to Afghanistan. I mean, 
that's working great. You're seeing a neat supply chain that's building 
out of that. Hopefully, that's sustainable before '14, but the answer 
to that question is yet to be determined.
    Ms. Han. And Craig, that was one of the questions that I wanted to 
ask you was the issue of the north-south versus east-west. And 
certainly, I think, the U.S. is focused more on the South Asia 
integration. There's lots of ADB programs that focus on that. You 
support TAPI and other things, but I mean, do you think that there's 
relative value to one or the other, or is it an all-of-the-above 
strategy?
    Mr. Steffensen. The last time I looked, I think there was about 1 
percent of trade going north-south as there was going east to west. It 
was mentioned earlier. I think Josh mentioned it that a lot of 
countries would prefer, you know, not to pin their hopes on Afghanistan 
as a transport--trans-accorder at this point in time. That's exactly 
right.
    It's been stated as much in quite a few CAREC meetings. Until the 
security situation calms down and the cost of trucks from Central Asia 
transiting Afghanistan to Pakistan comes down as well.
    We didn't mention Russia very much. We also didn't mention Iran. 
The northern and western parts of Afghanistan have security incidents 
once in a while. They do. But it's a lot safer up there relatively 
speaking than it is to the east and south in Afghanistan. And if only 
Iran were part of the picture, you know, we might be able to facilitate 
movement of people, goods, and vehicles between Central Asia and, well, 
ports on the Caspian Sea.
    The ports in Bandar Abbas, in Chabahar are just waiting for these 
goods to move in their direction, but you know, until now, I think all 
of the incentives are to access ports in Pakistan. Until that changes, 
you know, I think it's unrealistic to expect the trade picture between 
Central Asia, South Asia to change a whole lot.
    Ms. Han. OK. I'm going to wrap it up with one last question and 
give the panelists one last chance to respond. I think one of the 
themes that we identified today is the issue of trust among the 
countries and how that, in conjunction with political will, is a 
necessary precondition to creating a better economic environment there, 
the precursors for a better economic environment. Wondered if you had 
thoughts on what sort of confidence building measures or what sort of 
things we should be doing, either from the U.S. government strategy or 
from international organizations or other areas that would help move 
that forward, the trust issue. I'll start with Josh. I know you're not 
a policy person, but give it a shot.
    Mr. Kucera. I think you have to think in generational terms, 
frankly. I think you have to think in generational terms. I think these 
political systems that have arisen in these countries are, you know, 
the closed borders and the insularity is built into the system. What 
can the U.S. do about that?
    Frankly I'm at a loss, other than, you know, wait and perhaps train 
younger cadres of people on how to do things more in the way that we 
would like them that in the case that there's a slow opening in the 
future, those people will have the technical expertise to do something 
better. But we have to think very modestly.
    Ms. Han. Danica.
    Ms. Starks. I don't know that it's something that the U.S. as a 
government can make people trust each other. I just don't know how that 
could possibly happen. Speaking as a commercial person, I would say 
commercial success that involves these countries working together to 
achieve a goal could do it. I go back to the Baku-Tbilisi-Ceyhan 
example, BTC, and look what that did for the relationship between 
Georgia, Azerbaijan, and Turkey. It created--friendship might be too 
strong a word, maybe it's not strong enough, but these countries now 
depend on each other and depend on each other's security for the 
viability of that pipeline.
    When Georgia faced troubles early on in the decade, Azerbaijan was 
very supportive of Georgia in helping them to develop and keep the 
lights on and that type of thing. There's a lot of interest in the 
security of the pipeline because Turkey had an interest in what 
happened in Georgia.
    I don't want to beat the TAPI horse too much, but that's why the 
State Department and others have pushed this and other similar 
projects, is if you can get these countries to work together for an 
overriding goal and have something that important at stake, that's what 
can build the trust, having something where everybody in this 
particular project is benefiting, but you need everybody to cooperate 
and having those kinds of things in place.
    But as Josh mentioned, that could be generational. I mean, these 
projects don't happen in one year. Craig said he's been working on TAPI 
for a decade. And it may not be TAPI. Maybe it's something else. But I 
do think that in the long term, there're going to be some projects that 
will not go forward unless two or more or three or more countries in 
the region come together. And the benefit and the economic benefit and 
the economic outlook of that project is going to be so good that it 
will force some people to come to the table.
    What that project is necessarily, I don't know, but it's going to 
be something--it's going to be a deal of a lifetime that the countries 
are not going to want to pass up. They're going to work together. That 
is one of the ways that trust can be built. But do I think that it can 
come from a random government policy? No. I think we can support 
projects and things that can, in small ways, help build trust, but I 
don't know that there's any one particular thing that we can do.
    Ms. Han. It's one way of doing it. Craig.
    Mr. Steffensen. Yeah, I agree with everything that Josh and Danica 
have said. Clearly there's a new form of multilateralism going on out 
there that doesn't include the U.S., and whether it's the Shanghai 
Cooperation Organization or the European Economic Community or CACO or 
some others. It's important for all of us just to be realistic about 
what the U.S. can say and achieve in a part of the world that others 
consider their backyard, not ours.
    Maybe we need to be a little more collaborative in our approach to 
getting things done. The bilateral approach oftentimes is easier, but I 
think the sure way to success is just doing something Eric said, 
meeting with people privately before you go to a meeting and talk about 
it as a group, you know, focusing the discussion on some issues that 
people aren't prepared to discuss and not allowing the discussion to go 
off course because the next thing you know, they're talking about 
trans-boundary water management and all hell breaks loose.
    As people have said, it's really a generational thing, not just in 
terms of addressing these problems because they're big problems, but I 
think a new generation of leadership in that part of the world is 
probably required too before we can see solutions to some of these 
things.
    Mr. Stewart. I think a lot of it is expectations; I mean, 
expectations on both sides. What I mean by that is, we're working very 
closely with Uzbekistan on the NDN and we say, Uzbekistan, what do you 
want? Well, we want investment. We want companies. We bring the 
companies, but then they don't invest. Then the Uzbeks look at us and 
say, what are you doing for us, right? I think managing the 
expectations that our system doesn't work that way, right? We can't go 
to HP and say, Uzbekistan is a great friend of ours, put a plant there. 
That just doesn't work that way.
    I'm going to beat my drum of the customs and border harmonization, 
that's what's going to bring the companies. But little that the U.S. 
government tells the companies is going to make a difference. What 
actually takes place in the region is what's going to make the 
difference and what's going to attract the companies.
    What else can we do? I think, going back to what I mentioned 
earlier, is I really think we need to engage Russia, engage the EU, 
engage Turkey, engage China and have these Central Asian talking 
points, something of common trilateral, multilateral, whatever you want 
to call it. And so when working with the Central Asians or working 
directly with the individual countries in Central Asia, they hear a 
common theme from Russia. They hear the same theme from the U.S. They 
hear the same theme from Turkey. Then it becomes the right answer 
versus what do the Russians want, what do the Americans want. They're 
constantly being pulled in so many different directions from so many 
different entities that want something. But if they continue to hear 
the same answer and the same issue repeatedly, then it becomes the 
right thing to do.
    From that perspective, going back to the question about Russia--
there are so many opportunities to be had in Central Asia and there are 
so many opportunities for investment, for trade. There's a lot of 
development that needs to take place. There's a lot of money to be made 
for each of the countries, but also for the interlocutors that are 
working with them.
    From the Russia perspective, they actually would have the upper 
hand from the Americans because of location and because of historical 
reasons, et cetera. I tend to believe--I'll put an American company up 
against any company in the world, head to head, and I'll take us. But 
at the same time, the natural advantage for Russia would give them--
would give them the lead. There are a lot of opportunities and I think 
there should be less us versus them and more, if we would do this all 
together, we're all going to benefit.
    Ms. Han. Yes, that's a great point. Because the U.S. does have 
interests there besides promoting U.S. business. I think we want to see 
economic development happen regardless if it's U.S. companies that are 
doing it or not. So that's a good point.
    I want to thank all of our speakers for participating today. You've 
made a great contribution to this discussion. I look forward to 
continuing the discussion on this as we go forward. Thanks for coming 
and thanks all of you for participating as well.

                                   [all]

                                    

  
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