Identifier
Created
Classification
Origin
06ALMATY1646
2006-05-10 01:29:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
US Office Almaty
Cable title:  

A/S BOUCHER AND ADB REPRESENTATIVE DISCUSS REGIONAL

Tags:  ECONOMIC 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ALMATY 001646 

SIPDIS

DEPARTMENT FOR SCA/FO (JGASTRIGHT); SCA/CEN (JMUDGE)
PLEASE PASS TO USAID

SENSITIVE

E.O. 12958: N/A
TAGS: ECONOMIC
SUBJECT: A/S BOUCHER AND ADB REPRESENTATIVE DISCUSS REGIONAL
DEVELOPMENT

UNCLAS SECTION 01 OF 02 ALMATY 001646

SIPDIS

DEPARTMENT FOR SCA/FO (JGASTRIGHT); SCA/CEN (JMUDGE)
PLEASE PASS TO USAID

SENSITIVE

E.O. 12958: N/A
TAGS: ECONOMIC
SUBJECT: A/S BOUCHER AND ADB REPRESENTATIVE DISCUSS REGIONAL
DEVELOPMENT


1. (SBU) Summary: In a May 4 meeting, Craig Steffensen of
the Asian Development Bank (ADB) briefed A/S Boucher and NSC
Senior Director Millard on the projects the ADB is working
on in Central and South Asia. One of the problems for
regional development and integration, according to
Steffensen, is that cooperation between countries runs
smoothly at the technical level where all sides often agree
on the problems and solutions; however, agreements tend to
collapse as they get elevated to senior levels. Moreover,
Uzbekistan tends to be the weak link in regional cooperation
as it drags its feet on projects, periodically cuts ties
with neighbors, and fails to honor commitments. Steffensen
stressed that he viewed a north-south transportation
corridor as a key project to promoting regional integration
and trade. End Summary.


2. (SBU) Meeting Participants: SCA A/S Richard Boucher,
NSC Senior Director Elisabeth Millard, U.S. Ambassador John
Ordway, USAID Director Chris Crowley, Political Officer
Douglas Monk (notetaker),ADB Head of Central Asia Regional
Economic Cooperation Unit Craig Steffensen.


Coordination
--------------


3. (SBU) In a May 4 meeting with the Head of the Central
Asia Regional Economic Cooperation Unit of the ADB, Craig
Steffensen, Assistant Secretary for South and Central Asian
Affairs Richard Boucher related his impression that the
goals of the ADB and the USG are similar in Central and
South Asia. A/S Boucher stated that one of the goals for
the U.S. is to get Afghanistan actively involved in both
Central and South Asia.


4. (SBU) Steffensen commented that as in the case of the
U.S. Department of State, the ADB has recently reorganized
and created a Central and South Asia Department. His unit
works on transportation, energy, and trade issues throughout
Central and South Asia. They work closely with the IMF,
European Bank, Islamic Bank, UNDP, World Bank, and others.
He commented that the World Bank, which works many of the
energy issues, is not fulfilling its responsibilities in the
region.

ADB Projects
--------------


5. (SBU) Steffensen stated that the ADB has earmarked $2.2
billion in loans over the next three years for projects in
the region, more than one-half of which will go to
Azerbaijan. He commented that Azerbaijan is the only
country in the region that can afford the large loans. U.S.
Ambassador Ordway added that Kazakhstan can also afford

loans. Steffensen said Kazakhstan takes advice on projects
from international institutions, but funds them on its own.
This is leading to flagging interest on the part of the
banks in developing projects with Kazakhstan


6. (U) When asked about the problems ADB has with their
projects, Steffensen responded that cooperation between
countries goes smoothly at the technical level where all
sides often agree on the problems and solutions; however,
agreements tend to collapse as they get elevated to senior
levels.

Transportation
--------------


7. (U) The major transportation project on which the ADB is
working is the Almaty-Karachi road project, which will
create a transportation corridor from Almaty to Karachi and
the Arabian Sea. The corridor will connect Kazakhstan,
Kyrgyzstan, Uzbekistan, Tajikistan, Afghanistan, and
Pakistan. Steffensen commented that building through
Uzbekistan will be difficult because of the political
climate of the country, and thus plans are to first connect
through Kyrgyzstan and Tajikistan. A key part of this
corridor, which will open up Central Asia, will be the
bridge that the U.S. is funding from Tajikistan to
Afghanistan. The Chinese are also helping fund this road.


8. (U) One of the problems with regional development in
general, Steffensen stated, was the lack of a project that
will unite all of the Central Asian countries. He stated
his belief that a road from Russia, through Central Asia, to
the Arabian Sea may be such a project. This project,
however, has not yet received much attention.

Energy
--------------


9. (SBU) There are a number of problems in the electricity
sector stemming both from a lack of lines to homes, as well
as low generation. There is also a lack of political will
to create regional power sharing agreements. Steffensen
commented that the regional power trade agreement between
Uzbekistan and Tajikistan was killed by Uzbek President
Karimov because he was angry with Tajikistan over other
issues. The ADB does little with gas and oil projects.

Trade
--------------


10. (U) Central Asia has an abundance of high quality
fruits and vegetables, but they are traded inter-regionally
instead of competing where they would have a strong
competitive advantage, according to Steffensen. This is
because of high transport costs and delays. If the region
was able to overcome the transport problems and export their
produce, this could reduce poverty and boost trade.
Ambassador Ordway made the observation that transporting
along the Russian rail line is expensive because there is
not alternate route. When A/S Boucher asked what is needed
for Central Asia to be able to export into China, Steffensen
answered that China and Kazakhstan are currently funding the
construction of a duel-track train line across the border.


Customs
--------------


11. (U) Steffensen stated that there is a lot of work that
needs to be done on the customs front to ameliorate regional
trade. The border crossing between Almaty and Bishkek runs
relatively smoothly and quickly as long as truckers are in
compliance with regulations. However, if a truck is
overloaded, the driver is speeding, or is intoxicated, the
police and border officials will try to impose heavy fines
and create long delays. He commented that it is difficult
to persuade the authorities to reduce tariffs and customs
duties. The ADB and IMF are encouraging Central Asian
states that it is in their best interest to join the WTO as
soon as possible, and then work on joining customs unions.



12. (U) After a discussion about the abundance of Chinese
goods in Central Asia, A/S Boucher suggested that if goods
were coming into Central Asia from China, they ought to be
able to flow in the other direction. He suggested that it
appears the problems with trade are to a great extent
regulatory.

Conclusion
--------------


13. (SBU) After A/S Boucher asked Steffensen what he would
emphasize as the most important topics, Steffensen commented
that he would stress the importance of a North-South
connection and U.S. leadership in building transport
corridors. He stated that there is currently too little
trade between Central and South Asia, in large part because
of a lack of roads and united power grids. The ADB's
message to Central Asian countries is to cooperate or get
left behind.


14. (SBU) A/S Boucher followed up by stating that the U.S.
message is that we are serious about these topics. The U.S.
will put money into feasibility studies and help on the
planning and regulatory sides. The U.S. and the ADB should
coordinate their efforts to push the same points with
regional leaders.


15. (U) A/S Boucher cleared this message.