First of all, thank you very much to The Eurasia Center and The Eurasian Business Coalition for the invitation to speak to you today, and congratulations on today’s program covering so many important concerns.
I would like to say a few words as someone on the ground, who is looking at the practical as well as the strategic aspects of the evolving new Silk Road.
The ancient Silk Road was not about loading a finished chair on a camel in Xian and unloading it in Venice. The road was not a “road,” as some may picture it today: it was a series of roads and routes linking marketplaces, workshops, and artisans in an extensive web of commerce. Trade along these “silk routes” flowed in every possible direction. Ancient burial sites reveal Baltic amber, Byzantine coins, Mediterranean iron and tin, and Chinese silks and pottery in the same graves. Coveted goods made their way across thousands of miles, exchanging hands and having value added at many steps along the journey. Chinese silks and carved Central Asian wood became furniture for palaces in Constantinople. European crowns were studded with rubies from the Pamir plateau in present-day Tajikistan and sapphires from India.
Like this ancient web of commerce, the New Silk Road initiative presents tremendous opportunities due to its multidimensional nature. At each waypoint along this road, economic and political progress should be – will likely be – mutually reinforcing. Nations that are part of this new nexus should not, will not only enjoy just the benefits of greater trade: their cooperation will engender cultural, educational and intellectual exchange, greater innovation. The New Silk Road will forge cross-border cooperation and strengthen partnerships across regions, creating new connections and networks – and repairing some of the ancient networks and connections that brought prosperity to these lands in antiquity.
These newly forged connections will create tremendous opportunities in trade and entrepreneurship, as well as in other ways for the United States and for the countries of Asia and Europe.
From the geopolitical perspective, the United States’ strategic interest in the success of the New Silk Road concept is rooted in very practical terms: it provides a route, for example, to enable Afghan farmers and others to sell their legitimate products, the pomegranates and other fruits and nuts they had long exported. It will also integrate other countries in the region with each other, but I would also suggest it can strengthen these countries’ ties with the Euroatlantic community.
However, there are practical commercial aspects as well, including the transport equipment and physical and software infrastructure needed as the countries and cities along these re-emerging trade patterns make the modern Silk Road a reality. As the ancient Silk Road clearly demonstrated, with established transit routes you can add local products at minimal extra shipping cost as well as moving goods efficiently from one end of Eurasia to another. Countries can determine their comparative advantage, whether in labor, energy cost, materials, or location.
Azerbaijan’s location, for example, has allowed it to provide multi-modal transit cargo capacity, more than doubling transit cargo by truck and rail. This is of interest for a number of reasons. Azerbaijan is developing into an increasingly important transit hub, with several successful demonstrations of its ability to move goods between China, Central Asia, and Europe through the Alat Port. Those are important steps toward the regional vision for the New Silk Road. As an alternative overland route, Azerbaijan’s New Silk Road provides a unique ability to merge east-west (and west-east) routes, as well as the new North-South Transportation Corridor, blending East Asian and South Asian products. Much of this is due to the significant investments Azerbaijan has made in its transport infrastructure, e.g., building 6,835 miles of new roads, about 300 bridges, and renovating and expanding its main roads connecting it with Georgia, Russia and Iran. Again, the investment in the new Port of Alat just south of Baku underlines Azerbaijan’s role as a key node in the transportation system.
Increasing transportation options open up additional trade avenues for wider Central Asia and the Caspian basin, with the potential to boost prosperity, stability, and resiliency throughout the region. Along these same routes, energy – not just oil and gas but also electricity – can flow among Caspian Basin and Central Asian countries. The World Bank’s CASA-1000 electricity project and the Asian Development Bank’s TUTAP projects help Central Asian countries generating seasonal surpluses of electricity find markets for that electricity to the south. This surplus has added 1,000 megawatts to Pakistan’s power grid, supplying power to more than 16 million people.
Energy can also flow between Asia and European markets, for example through Azerbaijan’s Southern Gas Corridor project, which will bring Caspian molecules to the European market. This diversification furthers regional and European energy security by ensuring competition, maximizing efficiency, and providing additional capacity. The Southern Gas Corridor is not only an important project for Azerbaijan, but a critical project for the energy security and political security of Europe. And just as the United States played a critical role in supporting the Baku-Tbilisi-Ceyhan pipeline back in the late 1990s, similarly, the United States sees this Southern Gas Corridor project as strategic. We will continue to work with the EU to support the government of Azerbaijan, the other governments in the region, and the companies involved to ensure its completion.
Along with physical trade and energy, information and ideas flow along these corridors. This sharing of ideas sparks new development and works against narrow, violent, extremist ideologies that fester in isolation and ignorance. Increased access to information means increased education, and a broader worldview more resistant to the poison of extremism. Sharing ideas and expanding economic markets also creates opportunities for young people, women, and minorities and enhances regional stability and prosperity. The U.S. has funded university studies for hundreds of Afghan students across Central Asia, and sponsored the Central Asia-Afghanistan Women’s Economic Symposium and South Asia Women’s Entrepreneurship Symposium in support of thousands of women entrepreneurs and business owners. In Azerbaijan, the U.S. Embassy has sponsored dozens of programs supporting women and youth entrepreneurship and increased participation by women in STEM (science, technology, engineering and mathematics) fields.
Improving trade connections is also inextricably linked with efforts to fight corruption, to boost predictability and transparency, and to improve the rule of law. There has to be a strong, able, independent judiciary, for example, to ensure the inviolability and enforcement of contracts, to provide the atmosphere necessary for value-added operations to start new businesses. Profitable regional trade depends on speedy and efficient transit and on border security and good governance. Border efficiency increases legitimate trade. Strong border security fights the transit of weapons and drugs as well as human trafficking.
The United States works with regional partners to reduce border wait times, increase cooperation at key checkpoints and crossings, and prevent the transit of illegal and dangerous material. We have had a number of these efforts underway in Azerbaijan, efforts which are especially key given that Azerbaijan is the only country in the world that borders both Russia and Iran, a reality that makes Azerbaijan particularly important when thinking about the evolving new Silk Road.
So let me ask the question a U.S. ambassador asks him or herself daily: what is our interest here? Above, I outlined the real, immediate results of these initiatives, reinforce regional stability and prosperity. However, along with broader economic growth, the exchange of ideas, and geopolitical stability, there is also the more practical, tangible side of entrepreneurial trade and investment. The United States is competitive in selling hardware and software for these New Silk Road routes, often in partnership with European and Asian companies. Whether it is a GE locomotive or consultants on the latest in port operations services and equipment, I have seen how well U.S. products and services compete in Azerbaijan and in every country where I have worked.
Some may say that the New Silk Road is unnecessary, or that it duplicates existing routes. To them, I point out that the U.S. has nine interstate highways crossing our country from east to west. Multiple routes provide resiliency, allow for expansion, and ensure competition keeps costs low. As outlined above, the New Silk Road plays a living and growing role in facilitating trade and economic growth in the Caucasus region, in Central Asia, and in linking Asia with Europe. Beyond the economic and trade benefits, progress in implementing the New Silk Road initiatives can have positive impact on lasting stability and security. It opens new avenues for countries to work together, reduces barriers to full economic participation for women and other underrepresented groups, and encourages the implementation of rule of law. The ties that are created and sustained should lead to greater security and prosperity for all countries involved.
So again – why is the new Silk Road important? Put simply, a safer, more secure, more prosperous world with more diversified energy and trade routes, and a more level playing field, will enable U.S. companies to compete and thrive in new marketplaces.