Magazine article Washington Report on Middle East Affairs

Central Asia's Growing Links Improve Economy

Magazine article Washington Report on Middle East Affairs

Central Asia's Growing Links Improve Economy

Article excerpt

Central Asia's Growing Links Improve Economy

In the post-communist era the countries around the Caspian Sea have been seeking mutual links to improve their mostly difficult economic situations. One grouping that appears to be gaining strength is the triangle composed of Armenia, Turkmenistan and Iran. The three countries are developing cooperation particularly in the fields of energy, transport and banking and also in general trade.

Their efforts to achieve long-term energy integration is evident in both the natural gas and electricity sectors. The gas supply systems of Iran and Turkmenistan, two major producers, are scheduled to be connected to each other in September. Armenia plans to join this system next year, after the necessary construction work is finished. And Armenia started receiving high-voltage electrical power from Iran via a newly built power line on May 1.

The importance to Armenia of stable energy supplies can hardly be overstated. That small country is blockaded along its borders with Turkey and Azerbaijan because of the dispute involving the Azerbaijani enclave of NagornoKarabakh, which is populated mainly by ethnic Armenians.

Access to outside markets is therefore not easy for Armenia, particularly as there have also been problems in using the railway northwards through Georgia, where a section of the system has been disrupted through unrest. Therefore Yerevan hopes to reap benefits from another trilateral venture with Iran and Turkmenistan, namely the establishment of a joint transportation company, the headquarters of which will be in the Turkmen capital Ashkhabad.

The benefit of the Yerevan-Tehran-Ashkhabad axis also is being felt in general trade. Iran and Turkmenistan are already Armenia's biggest commercial partners, with their trade together exceeding that between Armenia and Russia.

The triangle would like to attract Russia to join them in their economic integration process. Armenia and Iran also are seeking to develop another program of trilateral cooperation with Greece. Armenia and Greece already are linked in the bigger Black Sea regional grouping of nations, but the mutual economic links of Greece with Armenia and Iran are not yet very active, and it is likely that the establishment of a basis for such economic cooperation will be a long-term process.

Tajikistan: Economy Still Suffering From War's Legacy, Says EBRD

The gross domestic product of Tajikistan, still suffering the legacy of civil war, fell by a further 7 percent last year, while inflation is expected to soar to 100 percent this year. That's according to a report issued this week by experts from the European Bank for Reconstruction and Development (EBRD).

The report says that since independence the Central Asian country, with its population of 5.8 million people, has been plagued by serious civil unrest, most notably the civil war that erupted in 1992. But with a new pact between the government and its opponents in place since last December and the cease-fire of 1995 still holding, conditions "could soon be in place again for an end to the country's political instability."

The report says Tajikistan offers much potential to investors. It is poised to become a leading producer of gold and has significant deposits of silver, coal, and precious stones. It is the third largest producer of hydroelectric power in the world, and there are good opportunities for eco-tourism. But, the report says, "Investor interest is offset at present by an array of uncertainties."

Turkmenistan: First Positive Growth Expected In Six Years, Says EBRD

The EBRD reports that the gross domestic product (GDP) of Turkmenistan is forecast to increase 10 percent in 1997 -- the first positive growth in the Central Asian country for six years.

Inflation also is on a downward curve, after the hyper-inflation of 1,330 percent in 1994; 1,262 percent in 1995; and 446 percent in 1996.

The report says that Turkmenistan, with the fourth largest natural gas deposits in the world and substantial oil reserves, has "vast economic potential. …

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