Over the recent years, regional economic integration has gained unmatched momentum and importance in the increasingly multipolar world order as the multilateral regional economic alliances have emerged as influential factors in global trade scenarios. The states are entering into economic agreements with their immediate neighbours and see it as the most logical choice across the globe. These developments have provided new impetus to the ECO, as it aims to enhance investment and trade among the member countries that will eventually lead to economic integration of ECO region.
The ECO is an intergovernmental regional organization encompassing countries from Europe, Caucasus, Central Asia, the Middle East, and South Asia with more than 460 million inhabitants and over 8 million square kilometres connecting Russia to the Persian Gulf and China to Europe. The overall objective of the Organization is the sustainable economic development of its Member States and the Region as a whole. Established as Regional Cooperation for Development (RCD) in 1964 by Iran, Pakistan and Turkey, the Organization was renamed as ECO in 1985. In 1992, in the aftermath of the disintegration of Soviet Union, the Islamic Republic of Afghanistan and six former Soviet Republics, namely, Republic of Azerbaijan, Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Turkmenistan, and the Republic of Uzbekistan also joined the Organization, forming one of the biggest regional blocs in Asia and beyond.
In the last few decades, the ECO Member States have been making concerted efforts to accelerate the pace of regional economic growth and development. Drawing on shared cultural and historical affinities and recognizing the value of collective efforts they have gone a long way utilizing existing channels of communications and exchanges to realize the hopes and aspirations of a prosperous and harmonious regional economic and political order. . In March 2017, Heads of States/Government of the Member States in the 13th Summit held in Islamabad endorsed “ECO Vision 2025” which set the future trajectory of the ECO. The 14th ECO Summit was conducted virtually on March 4, 2021 under the theme of ‘Regional Economic Cooperation in the aftermath of COVID-19’. The Heads of States/Government of the Member States recommended various significant initiatives aimed at expediting the process of development in the region in the wake of COVID-19.
Recently, the 15th ECO Summit was hosted by Turkmenistan on November 28, 2021 in Ashgabat. The event, organized under the theme of “Together into the Future”, was chaired by the honourable President of Turkmenistan, H.E. Mr. Gurbanguly Berdimuhamedov while the honourable President of the Republic of Turkey, H.E. Mr. Recep Tayyip Erdogan as the Chairman of 14th Summit Meeting inaugurated the forum.
The Summit also adopted the Ashgabat Consensus for Action, renewing the Member States’ commitment to the shared progress, prosperity, and development in the region, as well as promotion of ECO as a more effectual regional economic forum. The Heads of ECO Member States agreed to expand and develop their trade and economic ties in the shared areas of interest, highlighting some priority areas of cooperation, trade, transport, and energy. While noting the progress and implementation of some joint projects, the ECO leaders also put forward various ideas, initiatives, and proposals for development of some new projects in diverse fields. Moreover, they appeared poised to remain united and make concerted efforts to address the challenges to regional economies due stemming from the pandemic.
Despite the fact that the ECO region has immense potential for collective economic growth, it remains least integrated in terms of trade and investment. The ECO countries are rich in resources, are geographically contiguous, have many commonalities in terms of culture, and heritage. However, there is only eight percent of total trade among the ECO members. Therefore, there is a need to unlock the tremendous potential for the economic growth among the ECO countries. Thus, the ECO region has a significant potential to become more integrated through greater intra-regional trade and investment flows. ECO countries can provide easier access to each other’s markets because of geographical proximity, and shared economic, social, and cultural characteristics.
There are three important steps that need to be taken to realize the true potential of the ECO. Firstly, the implementation of ECO Vision 2025 can significantly contribute to achieve ECO’s objectives based on “ECO will pave the way to a territory of integrated and sustainable economies as well as free trade area achieved by highly educated societies and improved governance through enhanced cooperation”, as the “ECO Vision 2025” is based on the following core principles of “Sustainability”, “Integration”, and “Conducive Environment”. This Vision includes six areas of cooperation: Trade, Transportation & Connectivity, Energy, Tourism, Economic Growth & Productivity, and Social Welfare & Environment.
The “ECO Vision 2025”, envisions efforts to double the intraregional trade volume so that the share of ECO trade (specifically exports) is increased in the global trade and the regional trade potential for economic growth is tapped. This will be done by creating a favourable policy environment by removing various constraints on flow of goods and services. The focus will be on free flow of goods and services, policy harmonization, maximization of economic efficiency, and reduction of transaction costs.
This trade enhancement strategy entails early operationalization of ECO Trade Agreement (ECOTA) followed by further incremental trade liberalization to ultimately make ECO a free-trade area. Therefore, the free or preferential trade agreements are vital for boosting the intra-regional trade among the ECO members. Secondly, advancement of the transport corridors planned by the ECO under the Transit Transport Framework Agreement (TTFA) is the need of time. These transport corridors will have a leading role in the economic integration of the ECO region. The operationalization of Islamabad-Tehran-Istanbul Road corridor is a good step in this regard.
In addition to this, there are also three important projects that should be completed on immediate basis: the TAPI gas pipeline; the CASA 1000 electricity grid from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan; and construction of the Uzbekistan-Afghanistan-Pakistan railway line. For the completion of these projects, peace in Afghanistan is inevitable. Therefore, the ECO members should also ensure collective efforts to mitigate the emerging challenges in Afghanistan.
Thirdly, the Islamabad Declaration on enhancing regional trade and connectivity should be fully implemented. In that declaration the ECO members strongly support and encourage the implementations, operationalization and strengthening of the various mechanisms and arrangements within the ECO as building blocks for regional cooperation and integration as well as increase in the intra-regional trade and connectivity among ECO member states. As an example, the ECO Trade Agreement (ECOTA), ECO Trade and Development Bank, ECO Reinsurance Company, ECO Regional Institute for Standardization, Conformity Assessment Accreditation and Metrology (ECO -RISCAM), Agreement on Promotion and Protection of Investments among ECO Member States, and other institutional and regulatory ECO frameworks dealing with regional integration in terms of trade, finance, investment.
In short, the increasingly multipolar world order has given rise to the multilateral regional arrangements and thus the ECO has become immensely relevant in the region. In addition, the COVID-19 has caused high inflation across the globe and disrupted the supply chains. The ECO has important role to play in this scenario given its potential to lead the ECO members into a shared future of peace, and economic prosperity.