Central Asian States Woo Investors: Pamela Ann Smith Reports on an Anticipated Upturn in Investor Activity in the Central Asian States Following the Announcement of a Massive Aid Injection into Neighbouring Afghanistan. (Business & Finance)

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Foreign investment and trade in the Central Asian states of Kazakhstan, Uzbekistan and the Kyrgyz Republic is expected to increase dramatically in the wake of the huge global aid programme being planned for Afghanistan and the region. The successful installation of an interim government in Kabul has also provided a badly needed spur in the neighbouring Muslim republics to renew their efforts to .promote political cooperation and economic integration 10 years after achieving their independence from the Soviet Union.

In the past three months, Astana, Tashkent and Bishkek have witnessed a remarkable influx of delegations from aid organisations such as the International Monetary Fund, the World Bank, the European Union and the United Nations, as well as several high-profile visits by world statesmen such as US Secretary of State Colin Powell. In the coming months, they are expected to benefit from substantially increased international aid and credits and from enhanced trade, not least because of their participation in the multi-billion dollar reconstruction programmes now envisaged for the war-ravaged country. Peace in Afghanistan could also further unlock the region's huge oil, gas, mineral and agricultural potential and pave the way for more foreign private investment in their industries, utilities, infrastructure and service sectors.

The new mood was apparent at a meeting of the heads of state of the Central Asian Economic Community -- which consists of the three Republics and Tajikistan -- held in Tashkent at the end of December. In a joint press conference following the Summit, Kazakhstan's President, Nursultan Nazarbayev, pointed out that the four states had not only achieved stability and security but had also managed to reach peaceful agreements delimiting their interlocking -- and often inaccessible -- state borders. "The personal trust between the heads of state helped this to a great extent," he asserted, adding that the borders had now become a single "border of friendship and confidence."

President Islam Karimov noted the progress that had already been made in liberalising matters such as customs checks and tariffs, taxation and the payment of accounts between former Soviet state-owned companies in the Republics. Entry and exit fees for Tajik cargoes transiting Uzbekistan were being "halved," and plans were underway to ease and alleviate customs problems with the Kyrgyz Republic. A renewed determination to counter the threats of terrorism, religious extremism and drug trafficking throughout the region, as well as in Afghanistan, he added, would remove "the Sword of Damocles" that had prevented further cooperation and integration.

President Askar Akaev of Kyrgyz, whose country is widely regarded as the most progressive on issues such as human rights, freedom of the press and democracy, paid tribute to the open and frank way in which the four heads of state discussed matters of common concern. He also expressed his conviction that their joint determination to increase "trade, economic, cultural and humanitarian" ties would be followed by "mobilising solutions" to implement the new policies.

Investors, both foreign and local, are now waiting to see the rhetoric translated into action. Of the three, Kazakhstan has been the most successful to date in attracting large sums of both aid and investment, not least because of its massive oil and gas reserves both in the Caspian Sea and onshore. But the rapid pace and depth of its economic reform programme, launched by President Nazarbayev shortly after independence, has also been a vitally important factor. The Republic currently has the most prosperous economy in the Commonwealth of Independent States (CIS) -- the grouping that replaced the Soviet Union -- and has reached a level of performance that puts it on a par with central Europe and the Baltic states.

Last year, the Kazakh economy grew by more than 12 per cent, while inflation was less than 7 per cent. …