On July 3rd, 2017, the President of Afghanistan, Mohammad Ashraf Ghani, visited Ashgabat (Turkmenistan) for official talks with the President of Turkmenistan, Gurbanguly Berdimuhamedov. During the meeting, one of the topics discussed was the joint implementation of large-scale transport projects, as well as regional economic cooperation1. Conversely, “Lapis Lazuli” plays its part in both areas mentioned.
The “Lapis-Lazuli” Transit, Trade & Transport Route is an initiative of the Government of Afghanistan in collaboration with the governments of four states taking part in the project: Turkmenistan, Azerbaijan, Georgia and Turkey. Other institutional partners of the project worth mentioning are China (through the Bank of China), the Asian Development Bank, World Bank and the governments of the Kyrgyz Republic, Tajikistan, Iran and United States. The corridor will begin from Afghanistan and continue to Turkmenistan, the Caspian Sea, Azerbaijan, Georgia and finally, it will connect to Turkey (to the cities of Kars and Istanbul), at the entrance to Europe2.
The initiative seeks to:
- Improve transport infrastructure – through regional logistics development (construction and optimization of routes), replacing aging vehicle fleets with fuel efficient equipment;
- Improve transport procedures (including for road, rail, and sea) – by reducing time for border crossings along the route by 30% by 2017, as well as by lowering the transport taxes;
- Increase the intraregional trade (with cement, cereals) volume by 50% by 2017, from the 2005 level (about 32 million tons);
- Increase the access for Central Asian countries to European markets, taking into account the significant volume of oil transit goods and petroleum products exported by Kazakhstan and Turkmenistan;
- Expand economic opportunities for citizens in countries benefiting from this new transport route: reducing poverty by modernizing transport routes and ensuring the efficient movement of goods and people in the CAREC (Central Asia Regional Economic Cooperation) region4.
Barriers to regional trade (fragmented regional transport networks and deteriorated infrastructure, high transport costs and long travel times, insufficient funding for maintenance) and transit and transaction costs will be reduced, in part, through:
- A new Customs Integration Procedure which involves joint customs operations in order to facilitate trade and transit, reduce transaction costs and extend market access for the countries part of the project;
- A new Cross-Border Transport Agreement between Afghanistan and Turkmenistan on cross-border transport, which gives signatory countries access to customs inspection protocols and reduces the number of customs procedures3.
The economic efficiency of the project is still to be assessed,but with a discount rate applied at 12%, the overall returns are expected to be positive. Moreover, the Asian Development Bank has allocated USD 130 million for the implementation of the Route, which will integrate Afghanistan into the region through road and rail transport infrastructure. Its projected impact is considerable not only because most of the needed infrastructure is already in place, but also because most of the investment required will focus on improving policy and governance through increased regional cooperation2.
Three technical discussion rounds on the “Lapis Lazuli” Corridor agreement were held, the most recent one on 31st of March, 2016, the aim of the negotiations being to reach, as much as possible, the agreement of the five countries. On November 16, 2016, the text of the “Lapis Lazuli” Agreement was finalized following a meeting of the delegations of the five states concerned in Azerbaijan. The next project evaluation will take place at the 7th Regional Economic Cooperation Conference on Afghanistan between 14-15th of November 2017 in Ashgabat, Turkmenistan2.
The Afghanistan Chamber of Commerce and Industry (ACCI) said Afghanistan is preparing to make full use of the “Lapis Lazuli” Corridor, especially for exports (coal, cotton) and imports (cereals, cement, sulphur, electricity, oil, etc.). This transit, trade and transport route aims to strengthen regional economic cooperation and connectivity between Afghanistan, Turkmenistan, Azerbaijan, Georgia and Turkey, as well as the expansion of economic and cultural links between Europe and Asia4.
“Lapis Lazuli” is also a US-promoted infrastructure project: the geography of the route is complementary to the American security constellation in the Caucasus (Azerbaijan-Georgia-Turkey), including the Baku-Tbilisi-Ceyhan oil pipelines, the Caucasus gas pipeline South and the Baku-Tbilisi-Kars route4.
The corridor complements the existing infrastructure in the region, with the potential to generate two-way flows, not just for trade and investment, but also expanding inter-city contacts between South Asia, Central Asia and Europe5.
4.http://wadsam.com/afghan-business -news/lapis-lazuli-corridor-agreement -inked-near-future-232/