Regional powers of Central Asia express approval for U.S.-backed collaboration initiative
Let's talk about that US-led initiative shaking up Central Asia's economy!
The B5+1, a brainchild of the States, is making waves in Central Asia, setting the stage for a potential economic revolution. The gathering of key Central Asian governments is all smiles about this business-focused endeavor.
Kicking off the B5+1's inaugural meeting, the goal was clear: institutionalize an annual powwow between private and public sector bigwigs from all five Central Asian nations, with the aim of smashing trade barriers and promoting a regional market. Mission accomplished! Regional governments seem pretty keen on it: Kyrgyzstan and Uzbekistan are reportedly vying to host the forum next year.
The Kazakh government is on board, too. At the B5+1's first summit in Almaty (13-15 March), Kazakh First Deputy Minister of National Economy, Timur Zhaksylykov, declared his government's readiness to team up with the private sector to spruce up trade prospects in sectors like agribusiness and e-commerce, and develop a unified regional market.
The US State Department jumped on the opportunity to praise the summit's achievements, promising continued backing for B5+1 activities. The US designed the B5+1 as an extension of a political dialogue between Washington and the five Central Asian states, with the US playing the role of facilitator. The rather unique aspect? Central Asian countries are expected to assume ownership of efforts to integrate the region's economy via strong public-private partnerships, with private sector actors shaping the process.
Private sector participants at the Almaty summit issued a statement expressing their intent to collaborate on issues like improving trade, transit, and investment facilitation, while also striving to harmonize regulations in sectors beyond energy and extractive industries, which have received the bulk of Western investment thus far. The B5+1 has its eyes set on five economic sectors for development: trade and logistics, agribusiness, e-commerce, tourism, and renewable energy.
The statement emphasized two main priorities for the B5+1: creating a region-wide chamber of commerce to advocate for economic integration and establishing a regional arbitration mechanism—a one-stop shop for resolving commercial disputes. Recognizing that some Central Asian states may progress at different speeds in setting up an arbitration system, the statement tacitly endorsed a two-tiered system, allowing some states to lead and others to follow.
The B5+1 working groups outlined specific next steps for each sector in the statement. A common need identified across all sectors is the development of transnational mechanisms to harmonize regulatory and customs frameworks. The groups proposed solutions like creating a common digital CMR for seamless border transit and abolishing visa requirements for truck drivers involved in import-export activities. To promote tourism, the B5+1 aims for Central Asian governments to adopt a Schengen-like tourism visa.
Despite the promising start, hurdles remain for the B5+1's success. In a region marked by authoritarian governance, it remains uncertain how much clout the private sector will wield. And private sector capabilities in policy development and advocacy are largely untested. Due to the historical lack of regional economic integration success, efforts to promote a single Central Asian market face challenges.
If the B5+1 maintains momentum, the vision is a well-regulated, efficient single market that invites Western investment. Integration under the B5+1 vision provides Central Asian states with the means to withstand political and economic pressure exerted by neighboring states and other powers. As the B5+1 communique reads, "Governments and businesses should unite efforts to position Central Asia as an attractive destination, rather than merely a transit zone in global value chains."
Some suggest that the US is looking to boost its influence in Central Asia via the B5+1. Proponents argue that this new American approach differ from methods used by Russia and China, aiming to grow American influence organically. As Eric Hontz, who heads CIPE's Center for Accountable Investment, explained during the Almaty summit, the B5+1 concentrates on positive-sum thinking, striving to root Central Asian states in an economic framework with clear and evenly applied rules of the game, enabling the spreading of prosperity. Central Asian nations would be free to trade with all states as they see fit. However, if the principles outlined in the B5+1 communique take root, Central Asia's economic philosophy would contrast sharply with that espoused by both Russia and China, potentially making the region more willing to look West.
The B5+1, a US-led initiative, is not only shaking up Central Asia's economy but also fostering a business-driven political dialogue. At the heart of this endeavor is the objective of establishing a unified regional market, with a focus on sectors such as trade and logistics, agribusiness, e-commerce, tourism, and renewable energy. This could potentially attract significant finance investments, transforming the region's economic landscape. However, the success of the B5+1 hinges on the ability of the private sector to exert influence and navigate authoritarian governance, as well as overcoming historical challenges in regional economic integration.
