CPEC and Uzbekistan’s SCO Chairmanship | By Dr Mehmood Ul Hassan Khan


CPEC and Uzbekistan’s SCO Chairmanship

China-Pakistan Economic Corridor (CPEC) stands for sustainable economic development, greater regional connectivity, immense socio-economic integration and last but not the least, eradication of poverty in the country. It has now entered into its phase-II. It is hoped that CPEC, being the flagship project of the BRI, would further enhance prospects of regional connectivity, especially with Afghanistan and Central Asian countries.

The Governments of Pakistan and China have been striving hard to get connected with all the neighboring countries with the help of numerous infrastructure projects of the CPEC. In this regard, ML-1, Gwadar Seaport, trans-regional project of Pak-Uzbek-Afghan rail project, TAPI gas pipeline and CASA-1000 would play an important role in the extended role of CPEC in the region.

Moreover, TIR, Cluster Trading Mechanism (CTM), Integrated Transport Trucks System (ITTS), QATA, Trade Through Seaports (TTSs) and last but not the least, Commercial Cargos System (CCS) would play very decisive role in the further strengthening of intra and trans-regional trade volumes in the days to come.

Early implementation of PTA, FTA, standardization of custom duties and incentives, people & business/investment policies, corridor of knowledge and formation of strategic partnership would foster inflows of FDIs, FPIs, Joint Ventures (JVs), establishment of special economic zones and last but not the least, building of reciprocal trade houses would be value-addition in the days to come.

Currently, the Republic of Uzbekistan holds the “Chairmanship” of Shanghai Cooperation Organization (SCO). It is worth mentioning that Uzbekistan has already chaired the SCO “three” times: in 2004, 2010 and 2016.

Most recently the IMF (April 2022) has improved its estimate of Uzbekistan’s economic growth in 2021 to 6.1 percent. In April, the IMF predicted that the economy of Uzbekistan will grow by 5 percent. In 2022, experts expect Uzbekistan’s GDP to grow by 5.4 percent; earlier it was predicted 5.3 percent. Thus its current chairmanship of the SCO would further enhance its macro-economy and accelerate chances of regional connectivity in the days to come.

Furthermore, the rating agencies have upgraded Uzbekistan due to its external and fiscal achievements. Gradual fiscal consolidation, continuing access to external financing and reforms in agriculture, construction and industrial sectors are the main reasons for its upgradation.
In this regard, significant improvement of governance standards, improvement in rule of law, accountability, regulatory quality and control on corruption has further improved economic efficiency, pace of productive channels and last but not the least efficacy of the State. Thus SCO chairmanship provides an essential platform to Uzbekistan to achieve further improvement in the political, social and economic systems.
However, it suggests that economic success will depend on improved global economic conditions and progress made on structural reforms for increasing private sector growth, reducing state dominance in the economy and improving economic inclusion. Promotion of green financing and the private sector is the need of the hour.
The visionary President of Uzbekistan H.E. Shavkat Mirziyoyev has already revolutionized the macro-economy of his country. In this connection, the 3.5 billion population of the SCO which roughly accounts for half of the world having a combined GDP exceeding 25% of the global GDP would be an ideal opportunity for Uzbekistan to move forward and achieve desired goals of socio-economic development.
A “holistic” and “comprehensive” plan for the development of intra-regional trade through elimination of trade barriers, align technical regulations and digitalize customs procedures should be pursued in Uzbekistan’s SCO chairmanship. Thus “strategic road-map” for the qualitative economic expansion of the SCO would provide “win-win situation” for all the member countries because greater business activities, inflows of FDIs, imports & exports, meaningful PTA, FTA and grant of custom & duty incentives would further enhance economic scope and strategic utility of the SCO. Thus the role of CPEC is vital.
Special focus on institutionalization of artificial intelligence technologies and digitalization of societies and economies alike would have multiplier socio-economic effects. Hopefully, the SCO chairmanship, Uzbekistan would lead the member countries towards greater socio-economic integration, resolution of conflicts, combating state and non-state security threats, smart economies, smart living, green revolution, carbon neutrality, poverty reduction and e-commerce & governance.
To conclude, the SCO Interbank Consortium and the SCO Business Council should pool efforts for the purpose of implementing joint economic projects and expediting the approval of a road-map to increase the share of national currencies in reciprocal payments.
On the other hand, the shortage of containers and the need to expand the capacity of entry points on borders between the SCO countries have become a critical issue in rail transit amid the COVID-19 pandemic which would be further enhanced with the inclusion of CPEC in the days to come.
It is suggested that the Mazar-i-Sharif-Herat, Mazar-i-Sharif-Peshawar and Uzbekistan-Kyrgyzstan-China railways should be completed as soon as possible, which will help the Central Asian States to gain access to seaports and develop their economies.
Moreover, these railways will also become a key element of the East-West and North-South routes and enable the SCO to enhance its role and authority as it works to ensure peace in Afghanistan and facilitate its integration in the system of regional inter-connectedness. Thus the role of CPEC is on the rise.
The primary focus of the SCO is the enhancement of regional security. The Regional Anti-Terrorist Structure (RATS) coordinates activities such as information sharing and confidence building, to combat the “three evils” of terrorism, extremism and separatism would also be matching propositions for the CECP in Afghanistan and Central Asian Region.

Economic integration is also growing which may also be further enhanced due to the extended role of CPEC in Uzbekistan. Moscow has proposed connecting the Russian-led Eurasian Economic Union (EEU) with China’s Silk Road Economic Belt thus CPEC has a golden opportunity to get connected with Uzbekistan and many other regional countries.

Beijing and Moscow have already agreed to a $400 billion gas deal and Russia is now China’s largest source of natural gas. The China-Iran Strategic Partnership of $400 billion would also be useful for the extended role of the CPEC.

SCO members are also beginning to expand cooperation on development and infrastructure issues, including resolving transnational water disputes, expanding transportation integration and deepening cultural exchanges.

South Asia provides Uzbekistan with the shortest and cheapest gateway to transport its natural resources to the international market via Gwadar or Karachi ports. Uzbekistan can expand its trade volume by utilising warm waters via Pakistan. It would also get access to the Middle Eastern and African markets without increasing its dependence on Russia, the US and Europe.

Furthermore, the Pakistan-Uzbekistan Transit Trade Agreement (AUPTT) has been operationalized. The two countries have expanded their bilateral cooperation in science, technology, cultural exchange, tourism, media, environment and establishment of inter-parliamentary groups of collaboration. Moreover, both countries have agreed to start regular flights from Tashkent-Lahore and Tashkent-Islamabad to facilitate the business community and enhance people to people ties. Thus Uzbekistan’s SCO chairmanship and CPEC would be an ideal combination to proceed further for achieving the dreams of greater regional connectivity and immense socio-economic integration.

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