The Brilliant, Unworkable Idea of the New Silk Road

by Joshua Foust on 10/10/2011 · 8 comments

ISTANBUL — Turkey seems as good a place as any to ponder the latest grand policy idea for Central Asia filtering out of the U.S. government. Parag Khanna ably sums up the current zeitgeist for the “New Silk Road,” as Secretary of State Hillary Clinton, Fred Starr, and others are calling it:

In many respects, New Silk Road is the obvious approach that should have been executed a decade ago: locally owned, private sector enabling and regionally focused. Afghanistan may remain the poorest country in Eurasia for many years to come, but it stands a better chance of prospering as the “Asian Roundabout” – a crossroads for Euro-Asian commerce – than as a permanent American protectorate. As Hillary Clinton recently said in Chennai, the New Silk Road would “not be a single thoroughfare, but an international web and network of economic and transit connections.” Substituting a self-sufficient economic model for military occupation is the only way to achieve the “transition dividend” the administration is hoping for.

This is actually an amazing idea… if it was workable. The problems with it become obvious when you unpack the assumptions underlying it: that Afghanistan actually is well suited as a commercial hub, that any other country in Central Asia really wants to trade with any other country in Central Asia, that the local governments would actually support “locally owned, private sector” economic initiatives (however those words are defined) and so on.

As a brief example, let’s look at a frequent subject of debate on, Uzbekistan. I warily support the policy of increasing U.S. Security Assistance to the country to expand the NDN so that policymakers will have alternates to relying on the far more toxic, abusive, and dangerous regime in Pakistan. It is a least bad option to me, which doesn’t mean it’s a good choice (and that was very sloppy phrasing on my part). Still, people like our own Michael Hancock disagree with even that, and that’s okay — this isn’t easy, not by a long shot.

In order to tie Uzbekistan into a New Silk Road, which is necessary if the goal of making Afghanistan a commercial crossroads to Eurasia is to become reality, several things must happen. The first thing that must happen is Islom Karimov must care, even a little bit, about Uzbekistan’s business community. He clearly does not. And he’s not alone: Turkmenistan also has a very business-hostile climate, and Kyrgyzstan is hardly a friendly place for investment and business creation (I’m actually on my way to Kyrgyzstan right now to investigate some issues relating to local business issues).

So on a very basic level, the very good idea of tying together Central Asia based on locally-driven economic development runs up against the very real (and for the past twenty years unmovable) hostile climate for business investment. Despite that very real reality, that is very obvious to anyone who spends a tiny amount of time actually examining the business climate in this region, the prospects of a New Silk Road driving regional prosperity already seems to be entrenched as official policy. Without a great deal of further thought, years of planning and diplomatic cajoling, and no expectations for real change on anything less than a decade, this is pretty terrible magical thinking.

To wit: last year, Parag Khanna was pushing this same idea, only for China. Like the new, U.S.-driven model, his Old New Silk Road Idea was plagued by magical thinking, and only made sense if you use the simplistic crayola history of economic and political development of the region you’d learn from, say, watching the first 30 minutes of Syriana several times over. I mean, look at this:

Appropriately then, all of the anchor projects currently being funded and considered in the New Silk Road process involve regional resource corridors, meaning they are focused more on physically connecting oil, gas and minerals such as copper and lithium to markets irrespective of which political borders they lie within or across. The TAPI pipeline could carry natural gas from Turkmenistan’s Caspian Sea coast all the way through Afghanistan and Pakistan to India. A national railway system for Afghanistan, already supported by CENTCOM, is already under construction and would help transport Afghanistan’s abundant mineral wealth to the emerging markets around it. And the CASA-1000 project will transfer electricity from Kyrgyzstan and Tajikistan via Afghanistan to Pakistan. The New Silk Road, then, is both North-South as well as East-West.

TAPI is not going to happen. China already has a gas pipe running east; Russia controls the rest of them going west. Afghanistan is far too unstable — and will remain far too unstable — to support a massive, vulnerable infrastructure development like a pipeline for a very long time. And by then, the economics just won’t work out (just ask Unocal, who tried this in 1998). Same thing with the railway system. There is a good reason China has not yet build railways to cart away Afghanistan’s gold from the mines it owns: the economics and security just don’t support it. ISAF can barely keep its highways clear of IEDs. And they’re meant to also secure a rail network, somehow, while also withdrawing troops? I don’t get it.

And don’t even get me started on the phantom regional electrical grid. Afghanistan’s purchasing of electricity from Uzbekistan is tenuous enough; transmitting electricity from two electricity-poor countries to a much less electricity-poor country makes absolutely no sense.

These ideas, like most of the New Silk Road theories, sound feasible if you don’t think about them too hard. It’s the Unicorn School of Geopolitics: if only everything were awesome and everyone got along, we could totally build a new regional framwork!

Recent meetings around DC to push this idea—shepharded by Fred Starr, who’s been all about it for several years now—are great at pulling together the terminal countries: Afghanistan and Germany, as they did last September 29. What they have not yet succeeded in doing is drawing together any of the countries between, say, Afghanistan and Germany… like Uzbekistan. Considering this event was literally up the road from the Uzbek embassy, this sort of omission is pretty glaring.

Besides which, China is already developing trans-regional transportation networks. And it ain’t easy: despite taking half the time it would take to ship something from China to Europe by sea, it is far more expensive and difficult. I can see the urge to look at that and say “let’s try to make this easier and cheaper.” But until it really IS cheaper to ship something 6,000 miles over land than it is to ship it 10,000 miles on a container ship, the whole thing is just badly immature.

Central Asia desperately needs a development policy, and it wouldn’t hurt from some U.S. leadership on the issue. But utopian dreams of a Central Asian Customs Union, or something, are so far out into left field I’m actually shocked it has gained the traction it has. Central Asia needs logic and planning, not Rudyard Kipling masquerading as geopolitics. The New Silk Road isn’t it.

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This post was written by...

– author of 1848 posts on 17_PersonNotFound.

Joshua Foust is a Fellow at the American Security Project and the author of Afghanistan Journal: Selections from His research focuses primarily on Central and South Asia. Joshua is a correspondent for The Atlantic and a columnist for PBS Need to Know. Joshua appears regularly on the BBC World News, Aljazeera, and international public radio. Joshua's writing has appeared in the Columbia Journalism Review, Foreign Policy’s AfPak Channel, the New York Times, Reuters, and the Christian Science Monitor. Follow him on twitter: @joshuafoust

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Metin October 10, 2011 at 2:22 pm

“In order to tie Uzbekistan into a New Silk Road, which is necessary if the goal of making Afghanistan a commercial crossroads to Eurasia is to become reality, several things must happen. The first thing that must happen is Islom Karimov must care, even a little bit, about Uzbekistan’s business community. He clearly does not. ”

the link you’re referring (Nathan’s entry about business climate) as the evidence of Karimov’s hostility to business is very weak one. Relocation of some small shops from one place to another does not change business climate that much. You’d better look at the volume of foreign direct investments and its dynamics over the last few years which is far better indicator of business environment.

Tom October 10, 2011 at 3:02 pm

I’d agree with Metin on this, though the principle still stands. There is little respect for foreign investment in Uzbekistan, Oxus and WimmBillDann being two of the more obvious recent examples.

Nevertheless, a very interesting piece. I think you hit the nail on the head with your penultimate paragraph when you ask why transport by land when you can go by sea. It would take something pretty drastic to make going overland via a New Silk Road better value…

Nathan Hamm October 10, 2011 at 3:25 pm

Tom, aside from the man-made problems, overland is apparently faster in Eurasia.

Tom October 11, 2011 at 4:13 am

At least when you’ve got the Telegraph’s transport correspondent watching.

You’re quite right though. Going overland is much more direct and should be quicker. Man-made problems are what will slow this down and make it unworkable for the foreseeable future.

Nathan Hamm October 10, 2011 at 3:29 pm

Can we look at the volume, aside from resource investments, over the last decade instead? You’ll see why investors are rightly scared.

How’re things going at the microeconomic level, by the way? Have the moves gone well and without significant costs? Are new people running the businesses? It’s not the moves that are the problem so much as that they happen suddenly and that they make businesses worry that they’re being squeezed out, especially if they shut down for weeks or months at a time so that demolitions can be done on schedule for independence day (as was the rumor). That’s a bad business environment.

CG October 11, 2011 at 8:57 am

Metin, backing up a point with a link to an another blog post is definitely acceptable when opinion blogging, but I agree with you that it is always better to look at hard data instead of relying on one opinion piece as a back-up for an argument. At the same time we know meta data alone doesn’t tell the whole story.

Anyway, if you look at both stats and at stories about investment- and business climates coming out of Uzbekistan Joshua’s general argument holds.

For example, German investments into Uzbekistan are about 1/10 of German investments into Kazakhstan, the difference grows even starker when you count it as investment per capita. At the same time you have an abundance of stories from UK, Turkish and German investors who ran into a lot of trouble with their work in Uzbekistan and got effectively screwed over. Then you have all the stories about the hassles that SMEs in Uzbekistan have to go through to operate. So I don’t think you can make any evidence-based argument for any particularly positive business environment in Uzbekistan, which allows you to draw some conclusions about the will or the ability of the Karimov regime to push for a sustainable economic development in the country. And if you go one step further and tie in what we know about under what logic the Uzbek government operates it becomes apparent that there is a reason for that, namely that the existence or emergence of any sort of prosperity that is independent from the goodwill of the regime and its bureaucracy is interpreted as a serious threat by the regime itself.

Metin October 11, 2011 at 1:00 pm

CG, I agree with you that business climate in Kazakhstan is more favorable. However, this does not suffice to claim that Uzbek government is hostile to business. The government looks like interested to attract big investors with commitment for staying long in the country.
As for troubles with investors you mentioned, they are unfortunate. However, such disputes are not unique; they happen everywhere, and Uzbekistan is not exception. There must be mechanisms for settling investment disputes by legal means. Those investors, if they were wrongly screwed, should get a chance to defend their interests.

Don Bacon October 10, 2011 at 5:09 pm

This goes back awhile in the U.S.

March 17, 1999 — H.R. 1152:
Silk Road Strategy Act of 1999
106th Congress
To amend the Foreign Assistance Act of 1961 to target assistance to support the economic and political independence of the countries of the South Caucasus and Central Asia.

Didn’t pass.

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