EWEC: linking South Asia with central and west Asia
A recently published RAND corporation study in partnership with Islamabad based think-tank makes a strong case for linking South Asia with Central and West Asia through a network of energy, infrastructure and digital corridors. The study titled, "Examining the Feasibility of an East West Economic Corridor (EWEC) for South and Central Asia", is based upon primary sources and interviews of experts from main stakeholder nations in EWEC.
The senior policy practitioners, politicians, business tycoons, academics and infrastructure experts participated in the study, making it one of the seminal contributions to the academic literature on regional connectivity and economic partnership.
Most important aspect of the feasibility study was the complete consensus amongst the Indian and Pakistani respondents about the value of trade and economic connectivity as a vehicle for sustainable peace in the region. The linkage of EWEC with CPEC and other regional and international connectivity initiatives like International North South Transport Corridors (INNSTC) and BRI was also acknowledged as a win-win formulation that should link all these economic corridors in a mutually beneficial equation.
The study also analysed past examples of success and failure of economic corridors between countries as well as continents. An interesting fact that emerged from the analysis of past corridors was the need for generating economic activity in the countries being served with these corridors, in the absence of which, a simple transport corridor might not generate any economic activity other than resources extraction, much like what happened in the African countries through the rail and road corridors that resulted in resource curse for the whole African continent.
The study cautioned against the unviable connectivity, pointing out that the true economic value of a corridor was a function of its high Social Internal Rate of Return Index (SIRR).
In Pakistan the average SIRR of such corridors was 52% whereas the same was 74% in India. The economic corridor becomes socially viable when the cost of capital for developing a corridor is lower than the SIRR. The past successful examples of such corridors include Trans-European Transport Network which was operationalised in 1996 in EU, and comprised nine networked corridors.
In Asia Greater Mekong Subregion Economic Cooperation Program (GMSECP) began in 1992 as a trade facilitation corridor. Established in 1992, GMSECP focused on trade facilitation for first 15 years before construction of infrastructure in 2008. The Central Asia Regional Economic Cooperation Program (CAREC), established in 2001, also initially focused on trade facilitation before developing into a road and railway connectivity corridor after 20 years.
The cases of some unsuccessful regional corridors include Turkmenistan Afghanistan Pakistan India (TAPI), Turkmenistan Afghanistan Pakistan (TAP), Iran Pakistan India (IPI) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC 1997, Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka).
According to scholars like Kapell ((Kapell, p.275) quoted in the study, the lack of success of regional corridors like IPI, TAPI and BIMSTEC was a result of Indian failure in three areas. This included failure to increase regional trade; failure to benefit the region through its supply chains; and inability to balance its development needs with the geopolitical preferences of global powers like USA. India's troublesome relations with Pakistan were also identified as a major contributor towards the failure of past regional connectivity initiatives.
The study, however, identified certain current developments that might facilitate EWEC in future. These include a growing Indian economy in search of markets; an improved regional connectivity amongst Central Asian States and a desire to link up with South Asia; an Afghan Interim Government in search of economic opportunities through transit fees of corridor; and a realisation in Pakistan to leverage its locational advantage to earn geo-economic dividends. Mindful of the inhibitors like Indo-Pak tensions, competing geopolitical interests of global powers, access to capital issues and unstable Afghanistan, the study recommends an incremental approach for realising the EWEC vision.
According to that approach the EWEC development should be sequenced in a manner that trust is built first through regional organisations like East West Economic Corridor Association (EWECA), where a research and advocacy group, representing each member country of EWECA i.e. Afghanistan, India, Iran and CARs, would be created to conduct research on several aspects of the proposed corridor to forge consensus through technical, financial and advocacy studies. Second mandate of the EWECA would be to manage geopolitical tensions both within and outside the region, somewhat like the ASEAN model. The third mandate would be promotion of connectivity projects through project management and financing access help.
To make EWECA friction free and effective, the governance structure of the organisation should be equitable and participative, with each member having a vote for decision making through consensus. One of the important conclusions of the study was the consensus amongst Indian and Pakistani respondents about the financing institutions that included Asian Infrastructure Investment Bank (AIIB) amongst others like ADB and World Bank. The importance of an entente cordiale amongst China and the US was highlighted as a desired concomitant of the regional corridors.
The network of proposed corridors includes TAPI, IPI, Trans Afghan Railways (Extending till CARs like Uzbekistan, Kazakhstan, Tajkistan, Kyrghzstan) and intra-CAR corridors like Tengez-Galkynysh linking with this network. This network would include road & railway lines, gas pipelines, telecommunications & digital highways, and trade facilitation infrastructure along the network of roads & railways.
The network of corridors would enable trade, commerce and energy supply between South Asia and Central Asia with the potential to link up with the European and West Asian markets. The Central Asian states would also be big beneficiaries linking up with warm water ports of Arabian Sea.
Corridors like CAREC, TAPI, INSTC and IPI would also get a new lease of life through EWEC besides linking BRI and CPEC in a mutually beneficial equation. The EWEC is proposed to be implemented in phases starting with small standalone projects with the trust building and assuagement of the geopolitical tensions as the precursors of the concept.
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