Can CAREC fly?

A fresh push is in the works to enhance regional connectivity in Central Asia. The Asian Development Bank (ADB) has recently launched CAREC 2030. This is a new, long-term framework for the existing Central Asia Regional Economic Cooperation (CAREC) program that has been in vogue since 2001 and has spent over $30 billion on over 180 projects in the region thus far.

But what does it hold for Pakistan, one of 11 member-states including Central Asian Republics (CARs), China and Afghanistan. The CAREC-linked regional connectivity debate also figured prominently in one of the opening panels at the SDPI's twentieth Sustainable Development Conference in Islamabad yesterday.

Historically, CAREC's focus has been on trade facilitation, energy and transport. The CAREC 2030 framework expands into five clusters: economic & financial stability; trade, tourism & economic corridors; infrastructure & economic connectivity; agriculture & water; and human development. The new framework intends to work in tandem with the member countries' commitments to both national policies and international obligations (such as the UN SDGs and the Paris Climate Accord).

In Pakistan's context, CAREC pales into comparison with CPEC, which is the object of Pakistani imagination these days. CAREC is a donor-facilitated connectivity framework with a limited monetary muscle (overall, $1bn p.a. has been reportedly committed for the region over next five years) and the approval processes that go with the donor bureaucracies. What CAREC has invested in Pakistan since the latter signed up to it back in 2010 (reportedly, about $1.5bn) doesn't even come close to the billions that the Chinese-led CPEC projects have invested in Pakistan in just a couple of years.

However, CAREC 2030 still holds promise for Pakistan.

One, CAREC's new transport projects - some of which will be co-financed by the Pakistani government - would be complementary to CPEC initiatives. Reportedly, ADB will provide funding for up-gradation of two Railway main lines. (ML-1 is being upgraded through CPEC). In any case, CPEC is not a monolith super-highway financed entirely by the Chinese. A number of sections straddling the Khunjerab to Gwadar highways were previously built or are under-construction with financial assistance from donors like the ADB and USAID.

Two, progress in regional connectivity through CAREC projects can potentially help Pakistan make the most of its CPEC investments. CPEC cannot operate as just a north-south corridor between China and Pakistan - it must find markets sideways as well. The ADB has already identified a number of highway nodes linked to CPEC that can connect westwards.

But Pakistan is currently locked in a stalemate over trade with both Afghanistan and India. Some Af-Pak back-channels are said to have spoken lately to talk about trade. But a framework like CAREC can actually be an effective, third-party institutional mechanism.

And three, Pakistan's active engagement at CAREC platform will be good for the country diplomatically. It will send a message that Pakistan is open for business and willing to engage its neighbors. It will also suggest that despite CPEC's growing footprint on the local economy, Pakistan will continue to maintain relationship with regional and global multilaterals. (Besides the ADB, CAREC is also backed by leading development and financial institutions such as World Bank, IMF, UNDP, IDB, and EBRD).

To really fly, CAREC 2030 will need both speed and capital. Also, trying to emulate the EU or Nafta, while ignoring the region's security and political dynamics, may result in more languished projects like the TAPI gas pipeline and the CASA energy project.

A different approach is needed to bridge the economic divide between Central and South Asia. As for Pakistan, if it continues to sacrifice regional trade and investments at the altar of 'security risks', then it only reflects its own insecurity over its mammoth-sized security apparatus.