U.S. Supports Trans-Caspian Trade and Transport Diversification
On February 28, the Biden Administration announced that it will add $20M in funding to expand upon the preexisting Economic Resilience Initiative in Central Asia (ERICEN). The ERICEN was first implemented in September 2022 following Russia’s unprovoked war on Ukraine, through which the United States provided $25M in funding to “diversify trade routes, expand investment in the region, and increase employment opportunities by providing the populations of Central Asia with practical skills for a modern job market.” The augmentation of the ERICEN displays the United States’ commitment to the region and deploys additional support for trans-Caspian trade and transport diversification.
In addition to adding $20 million to last year’s total, the United States will include another $5 million aimed specifically at economic and energy programs to promote “regional connectivity.” The expansion of this initiative in 2023 will endow a total of $50 million for regional programs.
The announcement comes as U.S. Secretary of State Antony Blinken concludes his visit to the region and participation in his fourth C5+1 Ministerial. In a joint press event during his visit to Astana, Secretary Blinken detailed that the ERICEN is intended to “build up the regional economy and, especially, to make sure that people have the skills they need to succeed in this global economy.”
The U.S. Department of State outlined three pillars in which the ERICEN will focus its efforts to strengthen economic resilience in the region. The first will be to “expand trade routes,” emphasizing work towards enhancing transport infrastructure, particularly for Trans-Capsian trade routes. The United States will also help to expand alternative routes and provide additional logistical support. The second pillar is aimed at “bolstering the private sector” by facilitating access to new markets and encouraging Western multinational companies to move to the region and increase employment opportunities for citizens. The third outlines projects for “investing in people through training and education” – including English-language and professional training programs for current and rising workforces across region. Carrying out these projects with Central Asian countries “will benefit the region for many years to come,” according to Caspian Polic Center (CPC) advisory board member, writer, and expert on the region, Bruce Pannier.
In his joint press statement, Blinken stressed that the expansion of the ERICEN in 2023 is intended not only to boost the regional and global economies, but to “empower and connect the people of Central Asia.” The launching of a project to increase English-language proficiency for over 1,000 young professionals in the government sector is one way in which they hope to carry this out.
The ERICEN announcement and Secretary Blinken’s visit to Astana and Tashkent “will resonate strongly in Central Asia and beyond, coming at a time when Kazakhstan and Uzbekistan are answering the economic and political challenges that have arisen since Russia’s invasion of Ukraine a little more than a year ago,” CPC’s Senior Fellow, Richard Spooner remarked. Since February of last year, Central Asia has felt the ripple effect of the nearby war in Ukraine and a brutal winter. High costs of food, inflation, unemployment, disruptions in exports, and masses of Russians fleeing conscription have affected the region. At the same time, the war has accelerated closer regional ties and energy relations with Europe.
Sanctions on Russian oil and gas have simultaneously created challenges for countries whose transport systems are intertwined with Russia’s, and opportunities for Central Asian governments and companies, given the global need to fill critical energy gaps. In Tuesday’s joint press statement, Kazakhstan’s Foreign Minister Mukhtar Tleuberdi stated that Kazakhstan has faced particular challenges related to sanctions. Spooner noted that “the U.S. administration’s ERICEN initiative is aimed directly at helping diversify trade routes, expand investment in the region, and support programs to train the work force in Central Asia for the modern job market.” These efforts could help ease some of the challenges the region faces brought about by the war and related sanctions.
Increasingly, Central Asian and South Caucasus countries are taking greater strides away from Russia’s sway by focusing on greater regional connectivity and diversifying economic and political relationships. According to Secretary Blinken, the United States is taking pointed measures to support Central Asian countries by issuing licenses for “companies or entities in countries that are engaged with sanctioned Russian companies so that they have time to wind down those activities and cut their ties with Russia.”
The ERICEN and take-aways from Secretary Blinken’s visit make “an important statement about U.S. priorities in the region and support for the stability, sustainability and growth of Central Asia’s two key economies,” said Spooner. Notably, the United States aims not only to boost political and economic relations with the region, but also to support regional goals for connectivity and long-term development.