RICHARD HOAGLAND'S REMARKS AT ROUNDTABLE ON EAST-WEST CORRIDOR FOR TRADE & ECONOMIC COOPERATION

FROM:  U.S. STATE DEPARTMENT
Roundtable on East-West Transport Corridor for Trade and Economic Cooperation
Remarks
Richard E. Hoagland
Principal Deputy Assistant Secretary, Bureau of South and Central Asian Affairs
As Prepared
Embassy of Azerbaijan
Washington, DC
February 10, 2015

As we continue our discussion of regional trade and economic issues, I would first like to thank Ambassador Suleymanov for hosting today’s roundtable and for being such a gracious host.

It is a very timely discussion, and I want to use this opportunity to provide U.S. perspectives on how trade and transport are developing in the region. I will offer a few thoughts and then turn to my colleague Deputy Assistant Secretary Rubin for his perspective.

We recognize all the work countries in Central Asia and the Caucasus are doing to diversify trade routes across the Caspian Sea, through Turkey and into Europe.

But to expand the region’s potential as a trade corridor, countries in the region must work together to limit border delays and reduce transport costs. If we look solely at the World Bank’s Doing Business report to gauge the number of days and costs associated with importing and exporting containers of goods, we miss examples of how the region is changing to make trade and transport easier. I believe it is important to recognize those changes.

We see the construction and expansion of port facilities in Kazakhstan and Turkmenistan mirrored across the Caspian Sea in Azerbaijan. New rail lines linking Kazakhstan and Turkmenistan have come at the same time as the development of the Baku-Tbilisi-Kars railway.

We have seen the benefits of the rail line from Uzbekistan to Mazar-e Sharif in Afghanistan, and note the Asian Development Bank’s development of plans for a rail line from Turkmenistan, through Afghanistan, and toTajikistan with Mazar-e Sharif serving as the link in the middle. We have watched Kazakh wheat being exported not only south into Afghanistan, but also west across the Caspian along faster export routes.

We applaud additional efforts by countries in the region to enhance regional trade and transportation, and we encourage you to work more closely with your neighbors to diversify and expand the trade and transport routes that build economic growth throughout the region.

To advance regional connectivity, you have likely heard the Secretary highlight the importance of our New Silk Road initiative, a theme underscored in Assistant Secretary Biswal’s recent Wilson Center speech.

Through development of a regional energy network, better trade and transport links, streamlined customs and border procedures, and greater people-to-people and business-to-business ties, the New Silk Road initiative supports a more stable, secure and prosperous future for Afghanistan and its neighbors in Central and South Asia.

Through the Northern Distribution Network, we have seen inbound and outbound flows of goods to and from Afghanistan pass through Central Asia and the Caucasus. This experience provides the foundations for viable commercial corridors between Europe and Asia. Upgrading east-west linkages across the Caspian as well as north-south transit corridors from Central to South Asia facilitate trade across the region.

To expand these connections, the United States supports the Asian Development Bank-led Central Asia Regional Economic Cooperation (CAREC) Program, which aims to construct or renovate nearly 7,800 kilometers of roads and close to 3,800 kilometers of rail lines in the CAREC region by 2020. As a result of work already completed, we have seen the speed of transport increase and measurable progress in reducing the costs of crossing regional borders.

Through USAID assistance, our International Narcotics and Law Enforcement and Export Control and Related Border Security and programs, the customs working group under the U.S. - Central Asia Trade and Investment Framework Agreement and numerous other measures, the United States continues to pursue activities that lay the foundation for greater regional connections. Our support for Kazakhstan, Afghanistan and other countries seeking World Trade Organization membership represents the value we see in global trade standards. Cross-border cooperation among border and customs officials is an area where we need to concentrate our efforts in the future. We are aware of security concerns and we will continue to offer our support through joint training programs organized in the region or in the United States. At the same time, we need to see a stronger commitment from all governments in the region to implement streamlined standards that reduce time and costs at the borders. It can be done, but it takes political will.

We value the role of our partners in the region. As we focus on greater regional trade and economic cooperation, we should also recognize the important role the European Union plays in the region. Latvia, as the current chair of the EU presidency, has made deepening EU-Central Asian ties a top priority. We recognize the value of additional steps, such as the Enhanced Partnership and Cooperation Agreement initialed in Brussels last month between Kazakhstan and the EU, to broaden Central Asia’s links with its western neighbors.

The extension of the EU’s Border Management Program in Central Asia coincides with our own bilateral efforts to streamline and improve border and customs practices as well as our collective efforts through the Asian Development Bank CAREC program I mentioned earlier. All these efforts increase the opportunities for expanded and diversified trade flows in the region.

Although we are discussing Central Asia’s trade and transport links across the Caucasus and Turkey into Europe, I should also mention two other countries that are active in Central Asia. Through its own Silk Road Economic Belt, we see China seeking to develop infrastructure and trade links that we agree can complement our efforts and those of the international community in the interest of a more secure, stable and prosperous future for the region.

Russia has historical ties to Central Asia. Unfortunately, Russia’s actions in Ukraine have not contributed to a more secure, stable and prosperous future for anyone. With Russia’s economy on the cusp of recession, today’s interconnected world means that problems in Russia impact its economic partners.

We know that Russia will continue to be a major economic force in the region. At the same time, Central Asian states are best placed to decide for themselves how to further their economic development, expand their trade ties, and deepen their integration with global markets.

The expansion of the Eurasian Economic Union, for example, should not come at the expense of the ability of countries in the region to fulfill their existing international commitments, including commitments to the World Trade Organization, nor should it restrict their ability to enter into other bilateral or multilateral trade relationships.

I want to reiterate the importance of countries in the region taking steps to diversify and expand their trade and commercial outlooks. Key events in just the past two months have signaled the interest of Central Asian states to reshape their economic futures.

In December, senior officials from Afghanistan, Pakistan, Tajikistan, and the Kyrgyz Republic met in Istanbul to complete price agreements for the sale of Central Asian hydropower to sustain economic growth in Afghanistan and Pakistan – creating a sustainable regional energy market. In January, officials from Afghanistan, Pakistan and Tajikistan agreed to take steps to remove trade and transit barriers to allow the freer flow of goods across the region. Later this month, under the Heart of Asia Istanbul Process, regional countries will gather in Ashgabat to discuss regional infrastructure issues.

Looking at the countries of Central Asia, the United States will continue to support efforts for greater regional economic connectivity. Today’s focus on Central Asia’s links to the Caspian, the Caucasus, Turkey, Europe and beyond is important for not only the United States, but - more importantly - for the future of the countries in the region.

At this point, I would like to turn to my colleague, Deputy Assistant Secretary Eric Rubin, for additional insights and perspectives on trade and economic cooperation issues in the region.

STATE DEPARTMENT OFFICIALS REMARKS ON PROJECT SAPPHIRE

FROM:  U.S. STATE DEPARTMENT 
Project Sapphire 20 Years Later
Remarks
Richard E. Hoagland
Principal Deputy Assistant Secretary, Bureau of South and Central Asian Affairs
Center for Strategic and International Studies (CSIS)
Washington, DC
November 17, 2014

(As Prepared)

Ambassador Umarov, Senator Nunn, Senator Lugar (the distinguished senator from my home state of Indiana), honored guests, ladies and gentlemen: It is such an honor to participate in this conference marking the 20th Anniversary of Project Sapphire. Thank you to the Center for Strategic and International Studies (CSIS) for making this important dialogue possible. This is a hugely significant anniversary, and I am grateful that CSIS and the Embassy of Kazakhstan have made this public event possible. I have to admit, I feel a little bit like the U.S. Zelig of Central Asia, because I’ve been there since 1993 – and am so proud to have been there.

After the United States became the first country to recognize Kazakhstan’s independence in 1991, our two nations built a foundation of mutual trust, working together to prevent the proliferation of weapons of mass destruction. There is no better symbol of that trust than Project Sapphire, which rid Kazakhstan of approximately 600 kilograms or weapons grade uranium.

Kazakhstan, this new member of the community of nations, through its decision to carry out Project Sapphire, earned respect from around the world for its commitment to strengthening global security and for its support for international norms.

Since then, Kazakhstan has been at the forefront of nuclear nonproliferation efforts and a major force in the multilateral institutions that underpin those efforts. And nuclear nonproliferation cooperation remains a seminal pillar of the U.S.-Kazakhstan strategic partnership.

We appreciate Kazakhstan’s ongoing participation in the Nuclear Security Summit process – a priority for President Obama. The Summits have been an important venue in helping to secure vulnerable nuclear material worldwide, and Kazakhstan’s contributions in this regard have been very valuable.

For example, Kazakhstan shut down the BN-350 reactor on the Caspian coast and shipped its spent fuel to secure storage. I was there at the dedication ceremony, outside Kurchatov, snow sweeping across the steppe, and I was deeply proud – and deeply moved – to be privileged to represent my country at that important event. In other milestones of nuclear non-proliferation, Kazakhstan down-blended 33 kilograms of highly enriched uranium from its Institute of Nuclear Physics (INP) to low enriched uranium, and it also secured weapon-usable nuclear material at the Semipalatinsk Test Site through upgraded physical protection.

We are also proud of our growing partnership on science and technology and anticipate deepening our collaboration with Kazakhstan through the International Science and Technology Center (ISTC), which Kazakhstan will host at Nazarbayev University in Astana beginning in 2015.

The ISTC has played a pivotal role in the prevention of WMD-expertise proliferation over the past two decades, and Kazakhstan’s leadership in hosting the Center will be critical to the continued success of the organization.

Kazakhstan is also working with the United States on another priority issue. In his April 2009 Prague speech, President Obama called for the creation of a bank of low enriched uranium (LEU) under the International Atomic Energy Agency’s auspices, as part of a new framework for civil nuclear cooperation.

The fuel bank will provide an emergency backup source of reactor fuel in the event that the international market could not meet a country’s needs, and would thereby support the expansion of peaceful nuclear energy without increasing the risk of nuclear weapons proliferation. We support the LEU bank and appreciate Kazakhstan’s offer to host it.

In conclusion, today Kazakhstan is a leader in the region and a strong partner of the United States. It continues to set high goals and is taking on a leadership role on the global stage. The United States and Kazakhstan have an ambitious agenda together to address the challenges of the 21st century, whether in preventing the proliferation of nuclear weapons or in building an open and inclusive trade network linking Central and South Asia with China and Europe. This is a great expansion from Project Sapphire 20 years ago. I want to assure you that our broadening cooperation will help us to achieve these goals.