The Obama Administration’s Priorities in South and Central Asia

Remarks by Assistant Secretary Robert O. Blake, Jr., Rice University, Houston, TX, January 19, 2011

 It’s always a treat to get out of Washington, but it’s truly an honor to speak at the James A. Baker III Institute for Public Policy at Rice University, risen to become one of the leading think tanks. The demands of my job usually require me to travel overseas frequently, and I wish I could have more events in the U.S. like this, although some in Washington might question whether coming to Texas is still considered domestic outreach.

 In any case, I welcome opportunities like this to discuss our foreign policy with informed Americans. I had a great interaction with students this afternoon, and I look forward to a similarly lively exchange after my remarks.

I thought I would offer a brief review of the South and Central Asia region, with a particular emphasis on issues of importance to Houston. I deal primarily with the region from Sri Lanka in the south to Kazakhstan in the north, from Maldives to Bhutan, with a Special Representative taking the primary job of coordinating policy in Afghanistan and Pakistan.

For many Americans this part of the world is primarily defined by the challenges we face in Afghanistan and Pakistan, but it is also marked by great promise and opportunity. Central Asia lies at a critical strategic crossroads, bordering Afghanistan, China, Russia and Iran, which is why the United States wants to continue to expand our engagement and our cooperation with this critical region. And South Asia, with India as its thriving anchor, is a region of growing strategic and commercial importance to the United States in the critical Indian Ocean area.

In total, the region is home to over two billion people -- roughly one fourth of the world’s population. It is incredibly diverse, ranging from the crowded metropolises of India and Bangladesh to the vast stretches of unpopulated steppe in Kazakhstan.

The Silk Road once linked the South and Central Asian regions through an extensive trade network. Cultural and political linkages came later. Timur, whose legacy still holds strong in Uzbekistan, established a strong cultural link between these regions in the late 14th century when his armies conquered Multan and Delhi. He planted the seeds of the powerful Mughal dynasty that would later go on to produce cultural marvels like the Taj Mahal in India.

Today, however, the region is one of the least integrated in the world, as I experience every time I travel to the region, when I often have to transit through Istanbul, Moscow or Dubai to get from one Central Asian capital to another.

With rapidly growing economies like India, emerging markets in Bangladesh and Kazakhstan, and resource-rich countries like Uzbekistan and Turkmenistan, greater linkages in this region would bring tremendous benefits to its citizens, as well as the world. There are some nascent efforts in that direction such as TAPI that I will describe later.

Administration Priorities

Given this dynamic regional context, we have three primary objectives in the South and Central Asia region:  

• Support international efforts in Afghanistan;
• Build a strategic partnership with India; and
• Develop more durable and stable relations with the Central Asian countries.

 After describing these priorities at greater length, I will then focus on energy resources in Central Asia, which I imagine is of particular interest in Houston. I’d also like to give a shout-out to a few countries in South Asia that don’t fit neatly in these priorities, but hold importance for the U.S. all the same.

Afghanistan and Pakistan

My bureau’s single most important priority is supporting stabilization efforts in Afghanistan. The President, Secretary Clinton, Secretary Gates and other members of the Cabinet have spent countless hours reviewing and honing our efforts in the region. I am pleased to say that Central Asia and India have played a critical role in supporting coalition efforts in the region.

The Northern Distribution Network – the NDN – runs through most of the Central Asian countries, supplies a growing percentage of provisions for our military effort and offers an alternative to the more widely used southern supply route through Pakistan. The NDN increasingly offers the people of the Central Asian countries the opportunity to sell goods and services to NATO troops in Afghanistan, and we hope it can help catalyze greater trade and economic cooperation between Afghanistan and Central Asia.

Even beyond the NDN, the Central Asian nations have underpinned our efforts to fight the Taliban and rebuild Afghanistan. Kyrgyzstan hosts the Manas transit center, which facilitates troop transport and supports refueling missions for coalition forces in Afghanistan.

Electricity from Uzbekistan and Turkmenistan power the lights of Kabul, while the completion of a railhead in Mazar-e-Sharif this year will link the Uzbek and Afghan railways. Cultivating broad and long-lasting relationships with the Central Asian countries is the only way to ensure a common understanding and gain their long-term support for our efforts in Afghanistan.

 We hope that the Afghanistan-Pakistan Transit Trade Agreement, which will enter into force on February 11, will also lead to increased trade between Afghanistan and its northern neighbors Tajikistan, Uzbekistan and Turkmenistan. Further afield, we also see the agreement as opening an opportunity for India and Pakistan to ramp up commercial engagement.

South Asian countries also have supported international efforts to rebuild Afghanistan. Bangladesh’s largest NGO, BRAC, runs activities in all 34 of Afghanistan’s provinces. India has been a major contributor to reconstruction, with more than $1.3 billion in assistance so far, including the construction of highways, transmission lines, and the parliament building.

As a sign of our close partnership in the region, the President announced during his landmark visit to India in November that we would work with India on women’s empowerment and capacity building in Afghanistan.

Advancing the U.S.-India Strategic Partnership

 These projects with India in Afghanistan mark a small but important part of a significant new global development - the emergence of a global strategic partnership between India and the United States. As President Obama said in his November 8 speech to the Indian Parliament, “For the first time ever, our governments are working together across the whole range of common challenges that we face. Now, let me say it as clearly as I can: The United States not only welcomes India as a rising global power, we fervently support it, and we have worked to help make it a reality.”

India’s democracy, diversity and knowledge-based society make it special, a model of a tolerant pluralistic society in the region, and one that now actively seeks to work with the U.S. and others to help solve problems on a global level.

Growing ties between our societies, our economies and our governments have helped sustain and accelerate India's rise. The nearly three million Indian-Americans in this country, including many in the Houston area, provide a powerful connection between us, as do the more than 100,000 Indian students studying in U.S. universities.

Bilateral trade has more than tripled in the last decade, creating jobs and opportunities for both of us. Cooperation in counter-terrorism and defense modernization is at unprecedented levels.

The strength of India’s economy makes it the powerhouse of South and Central Asia’s growth. India’s economy grew about 7.4 percent in 2010, one of the fastest in the world, and by 2025 India is expected to become the 3rd largest economy in the world, behind the United States and China. Its middle class now numbers 300 million and is expected to double over the next 20 years.

India’s growing economic power has also made it among the fastest growing investors in the United States. Over the last decade, investment from India to the United States grew at an annualized rate of 53% reaching an estimated $4.4 billion in 2009.

Engagement across the U.S. and Indian governments has never been as robust and comprehensive as it is today. The President’s dramatic visit to India highlighted the vast ties between our two countries, and our cooperation on critical issues ranging from climate change, to counter-terrorism, nonproliferation and energy diversity. President Obama acknowledged India’s growing role in the world by endorsing India for a permanent seat on the UN Security Council.

Our people-to-people linkages likewise have grown tremendously. During his stop in Mumbai, President Obama announced business and defense deals that exceeded $14.9 billion, with $9.5 billion in U.S. export content, supporting the creation of over 50,000 jobs.

Texas has played a crucial role in furthering our partnership. In fact, while I served as the DCM in our Embassy in New Delhi in 2005, Houston-headquartered Continental Airlines was the first American carrier to start direct flights between Delhi and the United States. The large Indian diaspora here illustrates the personal ties that exist without that do so much to catalyze better relations.

We will build on the President’s visit in the coming year through an intensive program of collaborative activities, high-profile visits and even greater engagement. Of particular note, we welcome the opportunity to work with India closely during its two-year tenure on the UN Security Council, which started January 1.

On the business side, Commerce Secretary Locke will travel to India in February to attend Aero India, the biannual Indian aerial fair that has grown in importance as India itself has grown. India will soon announce the winners of a tender worth up to $12 billion to supply 126 medium multi-range combat aircraft – a competition in which both Boeing and Lockheed Martin have entered their jets.

Secretary Clinton and other Cabinet officials will also travel to India this spring for the U.S.-India Strategic Dialogue, which oversees the entire spectrum of our cooperation.

I could go on into our joint activities to promote healthy families, reinforce food security in Africa, engage in regional consultations, develop innovative clean energy, bring monsoon forecasting data to farmers…and the list goes on. What we ultimately aim to do is develop the habits of cooperation that establish a partnership that will shape the 21st century in a way that bring peace and prosperity to the world.

Energy-Rich Central Asia

We also aim to expand our cooperation and engagement with Central Asia. President Obama’s and Secretary Clinton’s successful reset of our relationship with Russia has given us the political space to engage more deeply in the region without sparking fears of a new Great Game. In fact, U.S.-Russian cooperation on Central Asia has never been closer. In April 2010, for example, we worked closely to respond to the political and humanitarian crisis in Kyrgyzstan, which prompted an unprecedented Joint Statement by President Obama and President Medvedev. We are now looking at new cooperation in areas such as counter-narcotics to complement our political dialogue.

Throughout history, Central Asia has acted as the strategic crossroads linking China to Russia, and Europe to South Asia. The countries themselves have embraced their growing role in determining world events.

Kazakhstan just completed its tenure as Chairman of the Organization for Security and Cooperation in Europe, during which it hosted a Summit – the first in 10 years – that reaffirmed the Helsinki Principles, which outline basic human rights expected in post-Soviet Eurasia. In 2011, Kazakhstan has assumed the Chairmanship of the Organization for Islamic Countries, giving it an influential role in this key gathering of nations.

Kyrgyzstan emerged as Central Asia’s first parliamentary democracy last year. And President Berdimukhamedov in Turkmenistan almost single-handedly resurrected the Turkmenistan-Afghanistan-Pakistan-India pipeline, which if successful will finally link the resources in Central Asia with the markets of the south. More on the TAPI pipeline later.

To use the window of opportunity to establish a deeper and broader dialogue with each of the Central Asian countries, the U.S. established Annual Bilateral Consultations last year. In each of those held last year, we engaged in frank discussions about trade, human rights, democratic reform, defense cooperation, regional issues such as Afghanistan, and any other issue that either side thought relevant. I look forward to starting the second round of ABCs with Uzbekistan next month in Tashkent.

Given your university’s location in Houston, you undoubtedly have interest in the energy opportunities in the region. Let me go into more detail about those opportunities, as well as the TAPI pipeline.

Kazakhstan

Kazakhstan is arguably the economic powerhouse of Central Asia. President Nazarbayev’s decision to invite major oil companies to develop the country’s vast hydrocarbon resources in the 1990s was a game-changer for Kazakhstan’s future. Already a significant oil producer, Kazakhstan will account for one of the largest increases in non-OPEC supply to the global market in the next 10-15 years as its oil production doubles to reach 3 million barrels a day by 2020.

Ensuring this oil reaches the world market is crucial. Such a rapid increase in production will force the Kazakh Government, major oil companies, and investors to work fairly quickly to establish new export routes for the additional volumes of oil. This will require a range of political and economic negotiations, as well as significant infrastructure investment. However, the Kazakh Government has indicated that it may seek to retroactively change the terms of contracts already signed. Such actions would significantly damage Kazakhstan’s credibility and reputation with potential foreign investors. The U.S. will continue to work with the Government of Kazakhstan to ensure the best possible trade and investment climate for our companies.

Uzbekistan

Though often overlooked as an energy source, Uzbekistan has substantial hydrocarbon reserves of its own and produces about as much natural gas as Turkmenistan. Located at the heart of Central Asia, much of the region’s infrastructure – roads, railroads, transmission lines, and pipelines -- goes through Uzbekistan, offering it a unique opportunity to expand its exports with little investment in new infrastructure.

Uzbekistan currently exports gas to Russia, Tajikistan, Kazakhstan and Kyrgyzstan. The natural gas pipeline between Turkmenistan and China crosses its territory, making exports to China possible, at least in theory.

Turkmenistan

After over a decade of near-isolation under former President Niyazov, Turkmenistan is slowly opening to the world. The country’s substantial natural resources may make Turkmenistan one of the top five countries worldwide in terms of gas reserves. These reserves have attracted the attention of many countries interested in securing Turkmen gas for various pipeline projects.

The recently-opened Turkmenistan-China gas pipeline was an important step in enhancing Turkmenistan’s economic security by diversifying its export routes. Turkmenistan’s initiative to send natural gas to India through Afghanistan and Pakistan, known as the TAPI pipeline, would further reduce its reliance on a single energy market.

The U.S. has welcomed renewed interest in TAPI, although the challenges to completing such a project are numerous and real. The project would require a multi-billion dollar investment to build a pipeline that would cross volatile areas of Afghanistan and Pakistan as well as the tense border between Pakistan and India.

Despite these difficulties, there has been recent progress on TAPI and important steps continue on the part of the participating governments. The Presidents of Turkmenistan, Pakistan, and Afghanistan and the Minister of Petroleum and Natural Gas of India signed an Intergovernmental Agreement on the TAPI pipeline on December 11, 2010.

Now these governments will begin to discuss issues such as pricing and transit terms. This suggests renewed interest and political will to move forward with the TAPI pipeline project, which has been under discussion since the 1990s. This project, if realized, would provide revenue and jobs for Afghanistan at a critical time in its economic development. TAPI would also provide clean fuel to the growing economies of Pakistan and India. TAPI’s route may serve as a peace corridor, linking neighbors together in economic growth and prosperity. The road ahead is long for this project, but the benefits could be tremendous and are certainly worthy of the diligence and interest demonstrated by these four countries so far. After all, pipelines are long-term projects with long-term horizons and, consequently, long-term benefits.

CASA-1000

Complementing the TAPI project, the U.S. has worked with the World Bank on an initiative to take advantage of Central Asia’s lower production cost for hydro-electricity and South Asia’s insatiable hunger for energy. The Central Asia – South Asia 1000 Megawatt project, known as CASA-1000, envisions building a transmission line to export summer surplus hydroelectricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan.

Kyrgyzstan and Tajikistan would benefit from the sale of surplus electricity to Afghanistan and Pakistan. Afghanistan would have the secondary benefit of charging transit fees for energy exported to Pakistan. The four countries have agreed to explore the technical and commercial potential for this project.

The benefits of the CASA project would be transformational for all participating countries. We are encouraged the project is moving forward and want it to do so in a sound and transparent manner.

The CASA 1000 project has the potential to build on what is a small, but growing electricity trade between Central Asia and South Asia. Turkmenistan and Uzbekistan both export electricity to Afghanistan. These imports have resulted in a noticeable increase in northern Afghanistan’s electricity supply- particularly in Kabul.

The Other South Asian Countries

A review of my bureau would not be complete without mentioning the other South Asian countries that neighbor India: Sri Lanka, Nepal, Bangladesh, Bhutan, and Maldives. The growth of India has overshadowed the progress made in all of these countries.

Bangladesh has experienced an average of 6% growth in GDP over the last 18 years, which has helped lift millions of Bangladeshis out of poverty. Houston, with its large Bangladeshi diaspora community, has undoubtedly contributed to the $11 billion in global remittances Bangladesh receives each year. Bangladesh, with its inclusive growth model and newly stable government, represents another potential powerhouse in the neighborhood. The investigation into the Nobel prize-winning Grameen Bank, however, has raised concerns. Secretary Clinton has urged the government to maintain its democratic values and ensure its investigation is impartial and balanced.

Nepal and Sri Lanka have both ended terrible internal conflicts in the last few years, but each must now secure the peace. In Kathmandu last week, the UN Mission for Nepal withdrew, putting responsibility for completing the peace process squarely in the hands of Nepal’s fractious parties. I spoke with Prime Minister Nepal and Maoist Chairman Dahal last week to tell them that the United States Government will continue to support the peace process.

I urged all the parties to continue to respect their own commitments under the Comprehensive Peace Agreement and said it is incumbent upon Nepal’s leaders to bring the peace process to a much needed conclusion. The U.S. was pleased that the parties reached agreement on arrangements to continue the monitoring of arms and the armies. We hope that same spirit will help the parties reach agreement on the integration and rehabilitation of Maoist army personnel into the Nepalese army and police, and on a new constitution.

While Sri Lanka’s economy has thrived since the end of its brutal civil war, during the end of which I served as ambassador, its reconciliation has proceeded more slowly. I hope that the government will act on the recommendations of the Lessons Learnt and Reconciliation Commission it set up, as part of wider efforts that will be needed to help establish a lasting peace.

South Asia’s smallest countries, Bhutan and Maldives, both experienced peaceful transitions to democracy in 2008. The Bhutanese model of Gross National Happiness has shaped new thinking about economic growth in developing countries, and Bhutan is on track to achieve all of its Millennium Development Goals.

And the moderate Muslim nation of the Maldives, now led by a former Amnesty International Prisoner of Conscience, has punched above its weight in the global debate on climate change, and thought of innovative ways to illustrate the plight of its sinking atolls. The Cabinet meeting it held underwater certainly captured the attention of the world.

Conclusion

As you can see, I oversee a region that I cannot do justice to in 30 minutes. And while the region’s diversity opens many opportunities, it also presents a challenge in our efforts to encourage these disparate countries to work together. We have many obstacles to overcome still, but I hope that our effort to rebuild Afghanistan and develop deeper relations throughout the region will contribute to this vision.

Thank you for the opportunity to speak here today. I’d be happy to take a few questions.