 This is a very interesting topic. It's one of our most interesting questions, I think. Think tanks, you know, they're very pretentious. And we think we're doing great big things all the time, you know, which is not true. But this is an exception. It was back in the 16th century when we started to see a fundamental change in the creation of a modern international system. It really had never been a true international political system until the 16th and 17th century. And it occurred with the rise of the nation-state in Europe and the creation of empires, globe-spanning empires, with the rise of this European imperial system. And to compete against each other, they sent expeditions around the world and they created colonies and created these vast colonies to feed the central empire in Europe for their competition in Europe. The consequence of this was remarkable because it took the dynamism of the modern economy at that time, modern economy, and pulled it to the coastline because that's how the empires interacted with these colonies. And so the great cities in Asia really are along the coastlines because that was how international commerce pulled them in that direction. We're now seeing a historic change, something that Andy Cutchins talks about is the reconnecting of Asia. It's one little factoid that I think will give you a sense of the significance of this. A container that leaves Shanghai to get to Rotterdam takes 45 days if it goes by sea. If it goes by rail, it's 13 days. You see the power that this new economy is creating a dynamic that's pulling Asia together again. I mean, it's popular to talk about the so-called new silk route, but it's very real. And there are huge economic forces that are underneath this. It's going to happen. And it's not just a modern economic development. It is a historic reversal of a 400-year trajectory. So this is a very, very important thing, a very big deal. We started this project about a year ago, I think it was. And it's to say, what does this dynamic mean, this reconnecting of Eurasian continent, this supercontinent? What does it mean with a focus on Central Asia? Central Asia is the right term. It's right in the middle. Everything is going to revolve around the Central Asian republics. Well, what does it mean for them? What does it mean for us? That's the purpose of this inquiry. It's a very important effort for us. And I think it's a truly epochal significance. It's not the normal think tank study. This is much bigger. So this is the start, I hope, of a very intensive look into what does this dynamic mean? What does it mean for America? What does it mean for the Central Asian republics? How do we support them in this transition? It's a really powerful new inquiry. I'm very grateful that the Assistant Secretary would join us today. She's got a very busy agenda, especially with what's going on in Nepal. As you all heard this morning, there were additional earthquakes, big earthquakes in Nepal. And that delayed her from arriving right now. But I think she is going to be addressing this topic. I want to say thank you, Nisha, for being here. The Assistant Secretary came to the department in 2013, but had been at USAID for, I think, four years. And before that was up on Capitol Hill was the chief clerk for the House Foreign Ops Subcommittee and the Appropriations Committee and on the International Relations Committee before that. So she's exactly the right person to be talking with us today. Her responsibility includes this region. And we're looking forward to her remarks. So with your applause, please welcome and thank the Assistant Secretary, Nisha Nipal. Well, thank you. It's a pleasure to be here. And thank you, Dr. Hamry, for that kind introduction and for including me in this very important event. As you noted, it is a day where we have to note the events overnight in Kathmandu as Nepal was struck with yet another significant earthquake, 7.3 magnitude, which really our hearts go out to the people of Nepal. I have to say, if there is one brief silver lining, our urban search and rescue teams, which were scheduled to depart this past weekend, were on the ground because of a mechanical delay in their aircraft, and so now have redeployed and are actually out there digging through some of the collapsed buildings and about, and are able to provide immediate relief and rescue services. So glad that we had the people there that were necessary at this time. I wanted to be here, though, nonetheless, because I think this is such an important opportunity in Central Asia, and this report really is an important piece of work in that. You know, in the 20 plus years that I've worked in the policy community in Washington, as John Hamry noted, as a congressional staffer at USAID and now at the State Department, I've always benefited from the tremendous work, the intellect that resides in this institution. And CSIS actually follows one of the key lessons that have been imparted by one of my mentors, and that's Bill Burns, former Deputy Secretary of State. Bill, in his parting advice to the Foreign Service Officers at the State Department, said it's not enough to just understand and admire a problem. You have got to offer solutions. And the reason I think that CSIS is such an influential think tank is that it makes a conscious effort to provide policy recommendations and pragmatic solutions. So I just wanna commend the team here at CSIS and Dr. Hamry's leadership for consistently making the job of government easier by providing sound analysis and pragmatic solutions. I also want to welcome and thank members of the diplomatic community who are here today, ambassadors, Excellencies, thank you so much, as well as colleagues from civil society, from the Hill who are also with us today. And I wanna commend the scholars that really put the time and effort into this report, Andrew Cutchins and Jeffrey Mankoff. The uptick in focus on Central Asia in this town is much needed and long overdue. And this report's focus on Central Asia's vital role in a reconnecting Eurasia highlights both the critical opportunities and the daunting challenges that the region faces. While the report notes that many are concerned about the geopolitical forces that are buffeting the region and we'll get to that in a few minutes, this is also as I noted a time of substantial opportunity. For the countries themselves, as well as for US engagement in the region. Andy and Jeff expertly paint a picture of a region of tremendous opportunity and potential to connect with and profit from regional and global markets. And that's precisely why promoting Asian connectivity is a major pillar of the US government's Central Asia strategy. Deputy Secretary Tony Blinken outlined in his recent speech on Central Asia, the enhanced US security is increasingly dependent on stability across Asia and stability in Central Asia is best achieved by sovereign independent states with secure borders, connected economies and accountable governments. Corresponding to these goals, we're working on several lines of effort in our engagement across the region with a focus on economic connectivity that can boost trade and investment and support for more accountable and inclusive governance that respects and advances human rights, as well as focusing on and strengthening the defense and law enforcement cooperation necessary to create a more secure and stable region. Now, for much of our history, the world's most sought after resources came from and moved through the countries of modern day Central Asia. This was not just about the silk and the spices, but technologies fundamental to the civilization's progress like irrigation, animal husbandry, gunpowder, paper, all traversed over the trade networks of the Eurasian steppe and were later adapted, modified and of course used to change the course of human history. Music, religion, science, math, philosophy, all journeyed along these routes, influencing the cultures, the societies and the institutions of Europe, the Middle East, Persia, India, China and beyond. But these historic connections were disrupted during most of the last century. Today, we see the global landscape looking more and more like it once did with an economic center of gravity that is shifting back towards an integrated Eurasia that connects the Asia Pacific and Europe. So the independent and sovereign states of Central Asia are once again seeking to link and supply these hungry markets to their east, to their west, to their north and to their south. However, and I think the report also focuses on this, in order for a region to be more connected, these countries are gonna need to take some significant steps to remove barriers to trade and to boost infrastructure. And that's exactly what we're focusing on when we look at our new Silk Road Initiative. We have four priority areas, which involve the support, creation of a regional energy market, development of trading systems and transport corridors, the streamlining of customs and border processes, and creating networks of peoples and businesses and academic institutions. On the first pillar of creating a regional energy market, we've seen some real momentum in recent weeks and months, particularly as we look at the Central Asia, South Asia, regional energy market, Karim, Casa Rem. I wanna talk a minute about the Casa 1000 electricity grid, which just last month moved from planning to implementation after a signing ceremony in Istanbul where the supplier countries and the buyer countries came together and they signed a final agreement on Casa. This ceremony will now move into implementation to link Kyrgyzstan, Tajikistan, Afghanistan and Pakistan into a regional electricity grid. Complimenting that is the two top grid, which would connect Turkmenistan, Uzbekistan, Tajikistan, Afghanistan and Pakistan. Eventually, the plan for the countries of Central Asia is to extend these grids into India, where hundreds of millions still lack reliable access to electricity and where Central Asian energy can provide a much needed commodity to the South Asian market. Efforts to promote rules-based trade and develop transport corridors are the other aspect of the New Silk Road strategy and we are working very intensively with Kazakhstan, for example, on its plans for WTO accession, which we hope will be completed later this year. Tajikistan is looking to join Afghanistan and Pakistan in a trade and transit agreement, which they have made some progress in moving forward. And we're working on supporting a cross-border transportation agreement between the Kyrgyz Republic, Tajikistan and Afghanistan as well, as well as proposing other deals with Turkmenistan and Afghanistan. The focus behind all of these things is essentially to take a region which is one of the most disconnected in terms of trade and transit and turn that on its head to create a much more integrated and connected region. The completion of these and other arrangements will help companies move goods around and across the region for less money at higher speeds and in greater quantities. What's more, the Central Asian countries, the closer they align on trade policies, the more attractive their markets will look to foreign investors. And in my conversations with every single one of my counterparts in the region, attracting greater foreign investment and most particularly attracting greater US investment is very high on their list. And I know that Das Lali is gonna be on the panel and we'll be able to talk a little bit about both the opportunities and the constraints that we must deal with as we look to advance our trade with the countries of the region. We would like to see much greater investment in Central Asia, so we're working hard to create that environment. But we're also looking at the ways that US leadership can help improve the East-West connectivity between Europe and Asia, which was discussed really as far back as the Clinton administration in the early and mid-90s. Through the Asian Development Bank, the World Bank, and other multilateral institutions were supporting the development of several trade and transit corridors that could help spread across the Central Asian nations and branch West into Azerbaijan and Georgia and the rest of Europe, South into Pakistan and East into China. There are a plethora of other initiatives such as the Lapis-Lazuli corridor, the Silk Wind initiative, the Transcaucas and the Transcaspian initiatives. The list is simply gonna grow larger and larger as the region reconnects and takes advantage of the shifts in the global production and trade patterns. But we know that economic connectivity is not by and in and of itself enough to create enduring peace and prosperity. We need to support efforts to strengthen governance in the region and to increase transparency, accountability and inclusion, as well as to promote environmentally sustainable growth policies. So these are conversations that are built into every aspect of our dialogue and our engagement because we know that for Central Asian states to achieve the kind of long-term growth and peace and prosperity, they must be equally focused on the governance aspects. By partnering on economic connectivity with a focus on transparent, accountable and inclusive governance, the countries can more effectively also counter the forces of extremism and terrorism and provide a more hopeful future for their people. I would be remiss if I did not make note that tomorrow marks the 10th anniversary of the tragic events in Andijan. And I just wanna underscore that as we say to governments around the globe, the long-term stability and security cannot be achieved without respect for fundamental rights and freedoms. That's not just a theory or a belief, that is a fundamental truth that is borne out in the pages of history. And we know no country has a perfect record and we see every day that the United States strives to create a more perfect union and how we deal with these issues in our own country. But we also make sure that we engage on those issues consistently and constantly in our dialogue around the world, but also particularly in this region as well. And that we are cognizant that as we talk to the countries of Central Asia on these issues of human rights and religious freedom, that they also have a defining and fundamental concern which we share and which unites us all and that is the concern of the rise of violent extremism and how do we deal with that. So we are supporting the efforts that are being made in the region and Kazakhstan is going to be hosting a regional conference on countering violent extremism which we are participating in and which flows out of the global conference on countering violent extremism that we hosted here in Washington a few months ago. We have noted that countering violent extremism is not simply an issue of security and law enforcement but also a matter of dealing with communities in addressing issues of the root causes of extremism and how do we ensure that the peaceful expression of faith is not marginalized in an effort to contain extremism as well. So we are partnering together on all of these issues and we are discussing together on the ways forward and the path forward. But we're also deepening our cooperation on the security and law enforcement aspect by strengthening border security, working to deepen partnerships with law enforcement to counter narcotics flows and combat terrorism in a region that is increasingly concerned about those issues and to ensure that we can advance stability and security and there's a particular focus on all of this as we look at the security transition in Afghanistan. But I have to say we recently just had our Afghan briefing teams which included members of the military, the diplomatic community and the intelligence community that joined together and traversed the region and had briefings across all five of the countries to share with them our own analysis of where things are headed in the region, our own plans and projections and had a very good exchange. And I think that there is increasing comfort that there is capabilities that we are working on and investing in our counterparts in Afghanistan and across the region to address these challenges. In addition to the flows that come, the transition in Afghanistan, there's obviously also a lot of concern across the region about how to balance all of the different dynamics in the region, including balancing important relationships with important countries on their periphery. And that includes obviously to their north, their historically close and complex relationship with Russia as well as their growing ties with China. And then in the south, as I mentioned, the transition in Afghanistan and now increasingly attention being paid to the Southwest, to the emergence of Iran, depending on how the talks on the nuclear agreement move forward, I would stress that as the world looks at the prospects of a nuclear deal in Iran, that we're not there yet, that these are very much still negotiations that are in process. And I know that Secretary Kerry would want me to underscore that as we look at the prospect of an emerging Iran to ensure that we understand that it is not yet across that threshold and that there is a lot of work that still needs to be done. So we express caution to all those who are looking at boosting their ties to just wait until we see that the agreement is in place. But let me make clear that as we look at all of these big relationships, that we don't see this as a zero sum equation. We don't see this as a win or lose proposition. In fact, we believe that every region, every country has a productive role to play in this region and that all boats can rise, whether it's the Eurasian Economic Union, which has been promoted by Russia and Kazakhstan, or the One Road, One Belt strategy that is being promoted by China, all are focused on the connectivity that Central Asia brings between Europe and Asia. Our only stipulation is that trade should be inclusive, multi-directional, and rules-based. Eurasian Economic Union, for example, could be very instrumental in reducing transit times and costs and could be a good thing as long as it is trade liberalizing and not trade restricting. And it does not end up undermining the international obligations of its member states. And I know Michael will probably address some of that on the panel. We also welcome new multilateral institutions like the Asian Infrastructure Investment Bank, which can meet some of the pressing infrastructure financing needs of the region. But we do expect that it will respect international standards and best practices in how it moves forward. And so we look at these opportunities and challenges that are facing Central Asia, and we think that this is an incredibly dynamic time for the region and an incredibly dynamic time for U.S. engagement in the region. And let me just conclude by saying since we are reminded of the fragility and the vulnerability of the physical landscape with the earthquake in Nepal, that that earthquake has caused countries around the world to ask themselves if they're ready, if they're prepared to deal with such a calamity in their region. And we've seen the heartbreaking images that have flashed across our television screens, villages flattened and of landscapes permanently altered. Nowhere is that risk and that fragility more underscored than in the Central Asia region, which sits on the intersection of the Indian and Eurasian tectonic plates. And one estimate, I think, by the World Bank said that there's a 40% chance of a 9.0 magnitude quake that could hit in the Central Asian region within the next 20 years. Now that study was done 19 years ago just to underscore that we are mindful that as we engage with these countries on the areas of opportunity, that we also need to be focusing on building the resilience and the preparedness to deal with these kinds of issues that challenge all of us. And so we will continue those efforts as an additional area and to work with and to build upon the capabilities should there be such a calamity. But let me just say as I wrap up that this is a time when we're very focused on the opportunities ahead for the region and the opportunities for the United States in our engagement with the region. And I know that this conversation today is gonna explore some of the very key areas of focus as well as some of the constraints. And I look forward to hearing about that conversation. And I just wanna end again by thanking CSIS for taking this on. I know that this has been a long undertaking and I wanna thank you for the quality of the work that you've done. It will also help us in shaping our own engagement in the region, so thank you again. I just wanna express my personal thanks to Assistant Secretary Biswall and also that of all of us at CSIS for coming over here today and sharing her thoughts on a very, very difficult day. And I must say, hearing those as a California who grew up in San Francisco, the stories of the 1906 earthquake from my grandparents all the time, hearing that number of a 40% possibility in 20 years, 19 years ago for a 9.0. Sobering indeed, and this is certainly an area that I think disaster relief. I know that our colleague, Johannes Lin, has been urging us to emphasize in our work. At any rate, thank you again, Nisha, for your thoughts. And let me call up the panelists and then turn the floor over to the boss for the rest of the show, Jeff Mankoff. Thanks, Andy, and thanks again to Assistant Secretary Biswall for coming out and discussing the US government's vision of this region with us this morning. And thank you to all of you for coming here and joining us as we kick off the new CSIS Eurasia Initiative. The report that you saw when you came in this morning and hopefully that you managed to grab a copy of is the first piece of what we hope is going to be a much larger initiative, what we're calling the Eurasia Initiative that's designed to look at Eurasia in a holistic way because historically, in the US government, in the academic community, in the think tank community, in the private sector, there's been an emphasis on the different regions of Eurasia, on Central Asia, on the former Soviet Union, on South Asia, on Europe, on East Asia. But what's interesting, and both Dr. Hamry and Assistant Secretary Biswall alluded to this in their remarks, is that these various regions are interacting more and more in a way that for much of the past century, if not longer than that, they haven't been able to do, through the development of new trade, migratory, infrastructure, and economic linkages. And what we're trying to do with this Eurasia Initiative is to focus on these linkages and to focus on Eurasia as a single space to understand how these different geographies are interacting with each other and what the bigger significance is for the global economy and ultimately from the United States. So as I said, the report that you received when you came in is the first piece of this broader Eurasia Initiative and it's the first report in what we hope will be a series of reports focused on different countries and regions within Eurasia. In the next several weeks, there should be appearing a series of country study reports on each of the individual countries of Central Asia. And then later this year in the fall, there'll be a similar report series looking at the countries of the South Caucasus. And then ultimately we wanna tile this together and focus on the interactions among these two regions and the surrounding regions of East Asia, Turkey, Iran, Russia, Europe, and elsewhere. But the first piece, the focus on Central Asia is where we wanted to start because Central Asia really is central. It's at the heart of many of these processes of connection that are taking place across this broader Eurasian landscape. And when we conceived of this project and this focus on Central Asia, we were gonna call this first phase of it Eurasia from the inside out as the first piece of the Eurasia Initiative. And we decided ultimately not to do that because somebody realized that the acronym that that produced was E-I-E-I-O. That was Jeff who realized that. Well, but nonetheless, the idea of looking at Eurasia from the inside is ultimately what is driving this project, what is driving the report that we're gonna be discussing today with our panelists and the broader focus on Central Asia that we're gonna be doing over the next weeks to months. And Central Asia is really a dynamic place. Since it became independent at the end of the Soviet Union, I think we have tended to look at Central Asia through the lens of that Soviet past. But more than 20 years on now, what we see is the process of differential evolution where the individual countries of Central Asia are developing and evolving in different ways, both politically and economically, and in ways that set them off from the countries of the South Caucasus, Eastern Europe, and indeed Russia itself. And part of what makes them distinct is the way that they're interacting with other parts of this Eurasian geography, the relationship that they're developing with countries like China, India, Turkey, Iran, and others. And so we wanted to carry out this project to create these reports on Central Asia in order to better understand these transformations, both how they're happening and what ultimately they mean. What initially got us thinking about it was the announcement of the drawdown of U.S. and allied forces from Afghanistan. Because for much of the past decade or more, U.S. engagement with Central Asia has been filtered primarily through the prism of the conflict in Afghanistan. And that's meant that U.S. policy toward Central Asia has been heavily defined by security priorities and by how the Central Asian countries can contribute to the U.S. military effort in Afghanistan. But now as that drawdown proceeds, we're at an inflection point. One where the nature of the relationship between the United States and Central Asia is changing. And where the interests of the Central Asian countries themselves are going to be a more important part of what brings in and what justifies the engagement of the United States in their region. And so in order to better understand what those interests are and in order to create a better framework for thinking about U.S. policy in the region, Andy and I engaged in what we call the listening tour throughout the region over the course of a couple of months in the spring and summer of 2014. This listening tour took us to all five of the countries of Central Asia as well as to the three countries of the South Caucasus where we had an opportunity to discuss with members of the government, the private sector, civil society, how they see the world changing around them, how they see these economic forces playing out, how they understand the significance of what's happening and ultimately what they would like to see from the United States. Our goal in conducting this listening tour and in writing these reports is to provide the perspective of these countries to decision makers and opinion makers here in the United States and to help them understand what the significance of Central Asia is for United States interests at a time when the focus on Afghanistan is not going to be driving U.S. engagement in the region anymore. We couldn't have carried out this project without the assistance of a lot of people, both here at CSIS in the region itself and outside as well. I want to take this opportunity to thank everybody who contributed in one way or another, many of those people we spoke with. We can't name them, but we're very grateful for all of their assistance. I would also like to thank those whose financial support made this project possible and that includes the Smith Richardson Foundation, the Ministry of Foreign Affairs of the Government of Kazakhstan and Carlos Bulbaroni, without whose support none of this could have happened. At this point, I want to turn the floor over to our panelists who are going to discuss different aspects of the report and the broader developments that are taking place in Central Asia and in United States policy towards Central Asia. You should have the biographies of our panelists in front of you, so I'm not going to spend a lot of time going through them, but just going from my left to right, we have Andrew Cutchins, the Director and Senior Fellow in the Russian Eurasia Program here at CSIS, Michael Lally, Executive Deputy Assistant Secretary for this region at the U.S. Department of Commerce, William Courtney at the RAND Corporation and also the Chairman of the U.S. Kazakhstan Business Council, Edward Chow, Senior Fellow in the Energy and National Security Program here at CSIS, and Martha Brill-Oilcott, Non-Resident Senior Associate at CSIS and at Michigan State University. So I'm going to give the floor over to Andy now who's going to go through the contents of the report and then we'll open it up to a discussion with the panel. So thank you again all for being here. Thanks very much, Jeff, for such a concise and comprehensive introduction to the program today. I think the first goal, as we see it for the so-called Eurasia Initiative, is really to redefine Eurasia and to define Eurasia in very large geographic terms, a Eurasia that goes from Europe to Asia, from Russia to the Indian subcontinent, including the greater Middle East and Southeast Asia. And on that supercontinent, there are a myriad of new connections, new trade investment, trade and investment relationships and political relationships that are extremely dynamic and that are hard to get a comprehensive picture of and that is what we strive to do in the context of the Eurasia Initiative, to really kind of provide the more granular detail of the vision that Dr. Hamry talked about in his opening remarks. And in the first phase, we start with Central Asia and yes, we think that Central Asia should be more important in U.S. foreign security policy probably than how it is considered today. It starts with geography. If you look where Central Asia is located, it is right next to four of the greatest foreign policy and security challenges that the United States faces today, Afghanistan, Pakistan, Iran, Russia in China. It seems fairly obvious that the United States of Washington would want to have a stronger and more constructive relationship with these states and be engaged more and have a greater presence. And that is certainly the desire of all five states that we traveled to in the course of the last year. And as Jeff noted, we see that we're on the cusp of a third era in U.S. policy towards Central Asia. And it was the announcement of the withdrawal of U.S. troops from Afghanistan that began to mobilize us because so much of U.S. policy since 9-11 had been centered around the war in Afghanistan. So let me just quickly turn to the policy recommendations that we included in the report and then we can move on to our other panelists. We had seven basic policy recommendations. And the first one was to create a senior level position on the National Security Council with responsibility for Eurasia, as Eurasia defined as I just did. The U.S. government, like most analysts, most institutions continues to focus on Eurasia's disparate regions separately with little consideration of Eurasia as a whole or the forces increasingly tying Eurasia together. And while overcoming the stovepiping in various cabinet agencies is a longer term challenge, the White House could move more quickly to establish a directorate for Eurasia with the National Security Council while maintaining the existing regional directorates. The senior director for Eurasia should be charged with advancing U.S. interests across the Eurasian landmass with a special focus on promoting trade and economic engagement. And when that position is created, I am tanned, ready, and rested. Just kidding, sort of. Two, rebalance U.S. engagement to emphasize trade and investment. And this is again something we heard consistently throughout all five states. All of them would like to see U.S. engagement focus more directly on promoting trade and investment ties. And though the volume of U.S. trade investment will remain relatively limited, the United States has several major comparative advantages from which the Central Asian states would like to benefit, including a culture of innovation, technology, management. And from the U.S. perspective, a greater emphasis on economic diplomacy would create a platform in relationships for deeper engagement down the road on other issues. A focus on economic diplomacy would also create an opening to focus on the governance and rule of law issues that have held back Central Asia's development and remain an obstacle to deeper regional integration. And I think that this is something that Michael Lally will elaborate on certainly in his remarks. The third recommendation comes from the certain degree of skepticism that Central Asian elites have about the U.S. New Silk Road Initiative. Where there's a sense that the resources do not match the rhetoric. And that maybe too much U.S. thinking about the New Silk Road has focused on Afghanistan. Now while Afghanistan is gonna benefit from any improvement in trade conditions in the region, it's too remote and the political risks are too high for it to serve as the keystone of a trade and transit strategy for Eurasia. And we think instead the United States should seek to leverage its comparative advantages to promote the reconnection taking place throughout the region without necessarily focusing its impact on Afghanistan. And those comparative advantages lie in particular in developing the so-called soft infrastructure to simplify border crossing, customs clearance and the like as well as the operations of private companies. And to the extent possible, we think that the U.S. should also look to concrete, to excuse me, to cooperate in concrete ways on these initiatives, not only with the Central Asian States themselves, but also with other major regional powers. China's Silk Road economic belt which includes substantial resources for infrastructure and other investment in particular creates opportunities to develop more collaborative initiatives, helping to ensure that Central Asia does not become a playing field for the competing ambitions of Washington and Beijing. And I think as Assistant Secretary Biswal noted of the Eurasian Economic Union, we would say the same thing. The fourth point is to elevate and diversify high level visits to Central Asia. Central Asian elites and officials have long lamented the paucity of high level U.S. government visits to the region. Given the importance of high level involvement for moving forward initiatives in this part of the world, U.S. diplomacy, economic and otherwise, would benefit from greater involvement on the part of high level officials. Ideally, this of course would mean a POTUS visit, a presidential visit to Central Asia, something that has never happened during the more than two decades of Central Asian independence. But while visits from the Secretary of Defense were more frequent at the height of the Afghanistan war, the emphasis today should be on visits from diverse institutions, including the Departments of State, Commerce, Energy, USTR and others. And I think the trip of diverse government representatives that Assistant Secretary Biswal just spoke of that took place a couple of weeks ago, somehow I am amazed they logistically managed to visit five countries in seven days that is using commercial carriers. That is no mean feat. And also in this context, I think it would be really important for more frequent congressional delegations here. I think there's an underappreciation in many respects and a lack of understanding of the important role that the U.S. Congress plays in U.S. foreign and security policy. And so more public education on that front would be very useful. The fifth point, and this is a really important one for our colleagues from Central Asia, is to engage with Central Asia on its own terms. They're worried that the United States sees the region primarily or solely through the prism of its relations with other major regional powers like Russia and China. And while relations with these powers provide an important rationale for continued U.S. engagement, Washington needs to calibrate its relations with the Central Asian states to reflect their interest in a wider range of issues. Above all, the Central Asians do not want to find themselves in a position of being forced to choose between relations with the United States on the one hand and relations with Russia and China on the other. Now, of course, we were visiting the region in the spring and summer of 2014 in the wake of the events in Ukraine. And so that colored to a great extent much of what people were telling us and also to some extent the way we were thinking about it. So we have to really avoid approaching Central Asia in zero-sum terms, as the Assistant Secretary said. Search for policies that facilitate the Central Asians' preference for multi-vector engagement. And I think, again, to help overcome this, it's important that we don't just preach that we believe in a positive sum approach to the region that we're not taking a zero-sum approach. And the best way to do that is actually to cooperate concretely with other major players in the region to do things. There's no substitute for that. The sixth point, encourage inter-regional cooperation. And this has always been kind of a bugaboo for Central Asia, but we see some degree of hope because of the expansion of inter-regional trade ties that has taken place in the course of the last decade in Central Asia itself. And it suggests that those states are perhaps to some extent starting to move away from a post-colonial of emphasis on sovereignty and to focus more on pragmatic economic cooperation. And there are a number of different areas that one could try to urge this. And this is one of the nuts that we're trying to, we'll be trying to resolve in the future as the initiative develops. I think Martha Alcott will be talking to some extent about some possibilities in the area of food security, water sharing, new technologies, et cetera. Certainly the issue of disaster management that came up earlier this morning is important. Another possibility is health cooperation, monitoring, et cetera. Finally, the last point, and this is, I think, just to build upon some of the success that we've had, and that's to expand university-based research and exchange and business training programs. Expanded academic engagement across a range of fields is one of the most important ways the U.S. can support development and inter-regional cooperation. On March 31st of this year, U.S. Principal Deputy Assistant Secretary of State for South and Central Asia, Richard Hoagland, pointed out that over the last 20 years, 23 years, over 24,000 citizens of Central Asia have come to the United States on State Department-funded exchange programs. These programs are relatively low-cost, high-impact way to encourage the development of human capital in Central Asia, while leveraging one of the United States' key comparative advantages to create long-lasting connections between current and future Central Asian elites and the United States. And as someone who participated on a program like this 35 years ago to the then Soviet Union, and many of us in this room who have participated on such programs, we understand that it is the networking that goes on and the kind of unquantifiable aspect of the relationships that are developed and the knowledge, the understanding of the country itself that is so important. So with that, let me thank you for coming here today. The crowd suggests that Central Asia is a significant interest here in Washington and turn the floor over to Michael Lally. Andy, thank you very much. And Jeff, thank you very much for your kind introduction as well as the invitation to speak today. I also want to thank Ajahn as well for a great organization this morning. I've been asked to kind of give a sense of the commercial engagement and how we in the United States government, U.S. Department of Commerce, look at the Central Asia region. And it's great to come back again, as I think Andy knows and many of you might as well. I'm pleased to see a number of my panelists here as well where we had a chance to work in Central Asia in the 90s where I spent about three years in Kazakhstan also throughout Ukraine, Azerbaijan. So I'm very associated with the region and the chance to kind of understand the opportunities and the challenges. And I think as Jeff pointed out very well early on how over 20 years the region has emerged at different levels with different priorities and different ways of advancing their national objectives. And it kind of, as I was thinking about this morning, I was thinking about where I'm from, which is the Bronx, New York, for those of you who have been in it. And I remember asking a lot of my friends, have you ever been in the Bronx? And they said, no, I've been through it many times though. And I say, well, how does that relate to Central Asia this morning? And I think that as has been pointed out that this is not and should not be considered just a logistics hub and moving rail and pipelines and other things through it. It's what happens within the region, commercially, economically as others, not just the pipe and roads overlay, which are critical and essential. That's, it's not an either or situation, it's both. So what I'd like to do today is kind of lay out maybe a couple of challenges and then address I think some of the recommendations in the report and how we're trying to address it as well. You know, I would say that, you know, when we, having been in the region in the 90s and looking at where things have developed with regard to energy and infrastructure, things that many people in this room have talked about, certainly our panelists have literally worked on and developed, we see the opportunity, we see the infrastructure, the agribusiness, the IT, the healthcare play, all of the things that matter. And so the issue there is not the need for American equipment, American offer, however it might be, but it's really as much about creating the environment for that to happen. And I'm gonna go into some numbers and some ideas very, very quickly. But I think, you know, as I'm looking ahead at it, you know, I think there's two challenges that I would lay out as we look forward. We've talked about the opportunity very briefly, but I wanna dig in a little bit on this as well, on the challenges. And I think as Jeff has pointed out and others with regard to looking at the region and understanding more about the opportunity. One of the things that's been pointed out by a number of studies obviously is the fact that in this region is some of the lowest levels of cross-border trade in the world. I think, as is pointed out very well in the report, Andy, by the way, that doesn't capture a lot of the informal trade that happens, a lot of that baggage trade that goes on that I've seen, that I've looked at as well. But how do we, you know, how do you create an environment that brings out that shadow economy and then grows it so that to make it even more attractive, not only to American firms but throughout the region as well. This is not a zero sum game, has been pointed out. But I think what I really, when I looked at the report I saw the really the emphasis that is being put by Jeff and Andy and CSIS on this is how to turn the corner. How we look at this third dimension, this third era of relations with Central Asia focusing on the economic development and the trade investment aspect. And I think that's a very much, it's a very important direction. It's much needed and it's mutually beneficial. So that's the first challenge. How do we grow the market? How do we develop? The second part of it I think is, the second challenge is the private sector engagement. I see a number of different chambers of commerce in the audience today. We've worked very closely, our deputy secretary of commerce, Bruce Andrews, just met with several of the chambers here present today, the business councils to talk about how we can look at broad base efforts to grow the economy, how we can look at the engagement part of that. And I think it's very critical because I think has been pointed out by deputy secretary Blinken, by Dick Holglund who is a great Central Asia hand, of course by assistant secretary Biswall. The part of building a broad based growth and development is it's in the details. It's in the things that we often talk about in civil society, but it's in contracts. It's in corporate governance. It's in minority shareholder rights. And these might seem very far right now for Central Asia, but I think it's very important because these are the DNA of a broad based economic engagement. They're often overlooked, but they're very important. I'm gonna give some key examples later on. So I would just say that as we look ahead, we say, well, where are the next major projects of the region? Not only the rail and the road and the infrastructure were there, but I mean, many of you will remember 20 years ago the Caspian Pipeline Consortium, which was a groundbreaking effort to move energy resources in the East to markets in the West. That's a different time now. Now we're looking ahead into the 20s, 2020s. What are the new kind of projects? Not pipeline, not oil and gas, just per se, but broad based. What are the new larger healthcare initiatives? What are the things that will provide the growth in the economy, in the economies of the region? So with that, I would say, well, how are we trying to address them? What are the efforts that we're trying to bear working throughout the U.S. government interagency closely with our State Department colleagues with our embassies in the region? Obviously what we're trying to do is to enhance and bring American competitiveness into the region. Not only I would say selling, you know, widget X to country Y, that's not just the goal. That is part of what happens, but it's also what happens within that. What our Secretary of Commerce, Penny Pritzker, calls the commercial diplomacy element. For those of you who may have seen the foreign policy article that was written in October of 2014, our Secretary talked very specifically about commercial diplomacy in all of our interactions as part of the U.S. government, where commercial diplomacy should be part of the DNA of all of our international engagements. And I think this is what you'll see as well in Central Asia, where, again, it's not just talking about making the sale, which is important for American companies and something that we do every day. But it's part of a multi-level engagement on trade and investment policy, building the better business climate which will attract American firms, which will increase joint ventures with local firms in Central Asia. And you say, well, that sounds all good and that's nice. Well, what does that really mean? Well, obviously, it's a matter of creating the jobs which will create the taxes, which will create the wealth in the countries. I think that Andy has talked to the demographic challenge that the region faces with a significant portion of the population below the age of 30. How is this region gonna develop the jobs? How is that gonna develop a tax base that is gonna provide for schools and healthcare and all the things that are part of a modern society? It's only gonna do that through trade and investment. And that's where I think we come in. I think everybody agrees on the, no, I don't never heard in my career that anybody doesn't want more trade and investment. I've certainly heard it in Central Asia and others. The question is how to get it done and to ensure that you have broad-based growth and not get into a trap of a rent-seeking or sort of difficult business environment where you can't do that. So let me talk about some of the specific ways. And I have to say, I think we've had a bit of a Vulcan mind-meld on this even before the CSIS report was issued because a number of the three of the key recommendations is something that we're working on and we'll be working on over the next several months and years. Specifically, we have a number of bilateral dialogues throughout the U.S. government, which I think Assistant Secretary Beeswoll has spoken to very specifically throughout the region. All five countries in Central Asia have our annual bilateral consultations and I'll just tease out a few, given the short amount of time I have to speak to. Just earlier this year, we were part of the U.S. Uzbekistan annual bilateral consultations where we talk very specifically about project development within the region, within Uzbekistan, some of the projects we're looking to do, as well as we're developing a number of detailed actions with regard to engagement with Uzbekistan. We've done the same thing recently with Kyrgyzstan. I know some of our colleagues are here from the embassy in Kyrgyzstan as well and we'll be doing so with Uzbekistan, with Kazakhstan. When this is part of the CIS study, which talks about engagement to increase emphasized trade and investment, where we're talking very speaking about very specific projects, about trade and project finance, about the opportunity and the challenge there. The other part of it I'll mention is that having been in the region, part of our strategy is to draw on the 2000 American companies that are based both in Russia and Turkey to look at what the opportunities are within Central Asia. It's much easier to move American corporate thinking and American corporate engagement when you're closer to the action. So that's part of our work, working with our offices and our embassies through the U.S. Commercial Service in Moscow, in Angkor and other places where I've had a chance to move because it's in the territory. And I think obviously the representative who are there know the region and know the opportunity. So another point that I'll make is, I think, with regard to elevating and diversifying high-level contacts to Central Asia. Later next month I'll be joining our Assistant Secretary, Arun Kumar, who will be making the highest level visit to the region of one of our commercial department executives, commercial commerce department executives, in over 12 years. And this is part of our broader and direct engagement through the strategic partner dialogue with Kazakhstan, through our annual bilateral consultative mechanism with Uzbekistan, where we'll be doing broad-based engagement. We'll be anchoring it around our U.S. Kazakhstan Business Forum on June 2nd, where we've attracted two dozen American firms from Russia, from China, from other countries in the region as well to look at infrastructure, energy and agribusiness projects very specifically with private sector partners and also with governments as well. This is part of our engagement, our Deputy Secretary of Commerce, Bruce Andrews, met with Prime Minister Masimov just about a month ago, talked very specifically about this business forum, about Kazakhstan's WTO accession efforts and how we find that that's an important part of what goes hand in hand. Obviously policy reforms and moving towards WTO engagement and accession is part and parcel of creating the environment that will then attract the firms, U.S. firms. After that we'll be going to Uzbekistan, where we'll be, again, one of the highest, the highest level Commerce Department visit in over a decade, where we'll be having further engagements with American and Uzbek firms, talking specifically about the opportunities and the challenges, including in currency conversion and economic reforms, which will bring oxygen, I think, to a lot of the economic reform efforts that we're trying to engage. But now I'll just close with a couple of quick comments with regard to the details. Because, again, as I said before, nobody will disagree that trade and investment's not needed, but it's all about the details. Very specifically, I'll mention a few. Commercial law development program is something that's been engaged from our department for over a couple of decades in the region. And that means we're bringing lawyers with deep 10, 20, 30 years' experience in power purchase agreements, in tariff methodologies for gas pipelines, and like, two governments in the region who are trying to establish these areas to give them really a third party independent, logical advice on how to develop the DNA of creating a market economy. And I'll speak specifically to our work on our Afghanistan and Central Asia working groups on custom standards and phytosanitary measures. And for those of you who really love custom standards and cytosanitary measures, I'll say, yes, this can be kind of unsexy and boring and terribly not interesting, but it's extraordinarily important to how companies operate. And just take a look at previous experience when a country's wines or a country's milk or a country's dairy products could not get into another country, right? This is all SPS and this is all standards, okay? So how that happens, this is a frontline economic engagement matter that's important. I'll also mention how I think, as was pointed out, number seven on the great recommendations on expanding business training programs. This is something that we've been doing for years through our Special American Business Internship Training program that has worked throughout the former Soviet Union and in Central Asia with over 1200 entrepreneurs from throughout Central Asia who have been to the United States, visited with American companies, gone back, brought their ID, has become distributors and agents and the like. And guess what? $53 million worth of business came out of that for U.S. and Central Asian firms, okay? This is something we track and something we look at very closely. So I think when you get a sense of the engagement that we have, you see that there's ongoing work streams and there's things we'll have to modify and intensify as we go forward. Finally, I'll close with, I think, some points about projects and multilateral development banks, which are important. As part of my review for this presentation, I looked at our business book throughout Central Asia. What kind of projects do we have coming up and what kind of projects are we looking to develop? And these are based upon American companies coming to us saying, I have a government tender, I have a private sector engagement, I would really like U.S. government support to be able to get in front of decision makers and the like. And what I would say is this, is that when you look at the region, you see these large, big bang projects, $14 billion from country X to build X in Z country. Terrific. But I also wanna think we should also look not only at the number, but look at the quality of the projects and what's trying to be done. So what I would say is that right now, when we look at our business book in Central Asia, it's fairly modest, it's about a billion and a half dollars as of yesterday. And but I think the interesting part of it, when I looked at the actual projects, they're quite interesting. Obviously protecting confidentiality of American company engagement, you'll see a very diverse group of projects, aerospace, a national ID and passport project, which is very important for all the things that we're trying to do to accomplish and provide security in the region. Election technology, how to count votes, how do we bring our technology into that? Energy, forensics, how to do proper law enforcement investigations through using US technology. These are all part of what we do. And we'll be working on those projects to help American companies find a business in the region. I would just say as I come to close, couple of things. One of I think the challenges that we also face is that as American companies look at the region, they obviously are coming at it from a perspective of largely being large US multinationals, generally Fortune 400 and 500 companies. They're obviously publicly traded and they're mindful of the risks. And that's where, again, we come back to creating the good business environment. The calculus is different when you have quarterly earnings, when you have weekly or quarterly analyst calls with the Wall Street analysts and figuring out how do you manage risk versus opportunity versus how you look at a country if you're a state-owned enterprise, where you're able to make quick decisions with regard to board members who might not have the same pressures as a publicly traded company. Those are the sorts of trade-offs that I think have to be understood when you're looking at a purely commercial decision versus one that might be geo-economic. I would just mention a point about the multilateral development banks, Asian Development Bank, European Bank for Reconstruction and Development, which really play a hugely important role in the region because the project risks the relatively undeveloped legislative bases and the judiciary system create the risks that has to be managed. And I think the multidevelopment banks can be a real helping to create an even a more level playing field. And I've called it, I've got a big brother factor, which means that if you have an American company or for that matter, other companies coming in with the development bank, you are provided with, I would say, a support that's important when you're coming in, when you're trying to work out problems and issues that inevitably come up on any kind of large project. And I think where U.S. companies take advantage of these multilateral development banks is the opportunity well to come into the market. So I would just close by saying I saw a number of the recommendations. I think that there's great opportunity to work together on these. We see some of the ongoing work streams and what we want to develop as we go in the future. So, Andy, thank you very much. And we'll turn it back to you. Jeff. Okay, thanks a lot. That was great, very comprehensive and detailed, which is the exact combination that we're looking for. Let me give the floor now to Bill Courtney. Thank you. I too would like to thank Andy and Jeff for organizing this and Aijan, who shows real entrepreneurial skill in putting all this together. Leveraging its location in the Eurasian heartland and its vast natural resources, Central Asian economies are becoming more integrated within and beyond the region. To achieve their promise, however, these economies should deepen reforms and become more open. The West can play a helpful role, particularly with regard to energy investment and reform. The strategic economic environment in Central Asia is complex. The region is wedged between two great powers, China and Russia. Based on World Bank data using the purchasing power parity method for 2013, the gross domestic product of Central Asia is only 4% as large as China's and 18% of Russia's. This suggests that China and Russia will substantially influence future economic arrangements relevant to Central Asia. For example, Xi Jinping's visit in the last few days to Kazakhstan, Russia, and Belarus, the three main members of the new Eurasian Economic Union, emphasized China's interest in what it calls the Silk Road Economic Belt. Beijing wants to be sure that Chinese exports flow easily through the Eurasian Economic Union or the EEU, to Europe and the Middle East. The correlation of economic forces is rapidly changing around Central Asia. In the last two years, China has signed hundreds of billions of dollars in economic agreements with Central Asians. Beijing is creating an Asian Infrastructure Investment Bank which is likely to help finance implementation of some of those agreements. China's economic growth, while slowing, remains healthy. Russia, by comparison, is a declining economic power. The creation of the EEU is unlikely to change this. Thus, in the years ahead, Central Asians will look increasingly to China as their main external economic partner. In the economic realm, there are two Central Asians, Kazakhstan and the rest. Kazakhstan's GDP, $395 billion in 2013, is 50% larger than the combined GDP of the rest of Central Asia. Kazakhstan also has the highest per capita GDP, just over $23,000. Turkmenistan's is three-fifths as high and Uzbekistan's is less than one-fourth as high as Kazakhstan's per capita GDP. Kyrgyzstan and Tajikistan are poorer. Kazakhstan has reached a major milestone. It has become a middle-income country. Further investment in human capital and innovation will be key to achieving greater prosperity. All the countries of Central Asia are held back by the large share of the state and their economies. This breeds inefficiency and corruption and stifles entrepreneurship. According to World Bank data on foreign direct investment for 2010 to 2014, Kazakhstan attracted nearly twice as much as the rest of Central Asia. Turkmenistan attracted almost one-third as much and Uzbekistan only 11% relative to the amount of foreign direct investment that Kazakhstan attracted. These data suggest that large foreign energy investors are the prime movers. Tengizhevroyal in Kazakhstan is one of the largest and most successful energy investments anywhere in Eurasia. China will become a major investor in hydroelectric capacity in Central Asia and Kazakhstan may ship significant amounts of electricity to Western China. Increased development of shale and arctic energy resources will diminish the relative role of Caspian energy in the world market over time. Hence, Central Asian producers will be wise to accelerate the diversification of their economies. Kazakhstan is wealthier than other Central Asian countries not only because of energy, but because of more favorable business conditions. According to the World Bank's Ease of Doing Business Index for local firms, Kazakhstan ranks 77 on a scale from one, which is the best, to 189. Much further down the line are Kyrgyzstan at 102, Uzbekistan at 141, and Tajikistan at 166. Turkmenistan is not ranked. These rankings show that Central Asians have some distance to go to improve their regulatory environment for business. They should look to Georgia as a model. After substantial reforms, Georgia ranks 15th just behind Germany. The Eurasian Economic Union will have a major impact. Among Central Asians, Kazakhstan belongs and Kyrgyzstan joined last week. The EEU seeks to eliminate trade barriers of my members, establish a common external tariff, and value imported goods in a unified way. Members of the Union produce one-fifth of the world's natural gas, and one-seventh of the world's oil and gas condensate. The EEU has the world's second largest railway trackage. The EEU can benefit its Central Asian members if it facilitates transport and logistics across Eurasia. One troubling sign is the Union's high external tariff, on which Russia insists. This increases costs for both members and non-members. A second concern is Moscow's propensity to use trade barriers as political weapons. If a viable EEU is not created soon, growing Chinese economic power may prevent Russia from playing a dominant role in shaping future Eurasian economic arrangements. Just as there are two Central Asians, there are two Silk Roads. The northern one lies between China and Europe. It traverses Kazakhstan, Russia, and Belarus, the three main EEU members. As more Chinese industry moves to the interior, overland shipment to Europe and the Middle East through the EEU becomes increasingly attractive. For higher value goods produced closer to the Chinese coast, rail transport may cut transit times across the EEU by up to two-thirds as compared with shipping by sea. The market is fast validating the northern Silk Road. The southern Silk Road follows paths more akin to its ancient namesake. The southern route spans Central Asia and the South Caucasus and reaches into Afghanistan, Iran, and Turkey. Insecurity and an absence of infrastructure hold back Afghanistan. A nuclear deal with Iran will lead to a surge in energy and other transport with Central Asia. Turkey and the South Caucasus are vital partners with Central Asia in road transport. The emergence of trans-Caspian gas or oil pipelines would boost the roles of the South Caucasus and Turkey with Central Asia. Central Asian countries ought to leverage best practices from the Northern Distribution Network, about which Andy has written quite a lot, and seek lower costs in order to make Silk Road routes more competitive. Trade transit agreements could speed border crossings for cargo, the major need in Central Asia. These issues have several policy implications for the West. In Central Asia, the West should persist in encouraging economic and rule of law reforms. Some Central Asians will resist this. They may say they want trade and investment from the West, but not advice on how to manage their affairs. But Western efforts to promote investment in Central Asia, absent reforms, can lead to unrealistic expectations and subsequent frustration. One need look no further than Greece to understand the importance of reforms to the development of a competitive economy. In 2012, then Secretary of State, Hillary Clinton, described Russian efforts to promote Eurasian integration as, quote, a move to resovietize the region, end quote. Referring then to the Eurasian Customs Union, the predecessor of the EU, she said, quote, we are trying to figure out effective ways to slow down or prevent it, end quote. Time has moved on. The EU is becoming real. Russia's use of force against Ukraine, which opted not to join the EU, is an ill omen. But if Russia were to allow a fair, rules-based EU that operated consistent with world trade organization obligations, the West would have no reason to oppose it. If Moscow were to expand aggression in Ukraine, the West would likely toughen economic sanctions on Russia. They would lead to more collateral damage to Russia's Central Asian neighbors. For example, cutting Russia off from the swift international payment system would do much damage to Central Asian economies. Western policymakers should take collateral risks into account, although they will not be the dominant factor in Western decision-making. Negotiations, as been mentioned, are in the final phase for Kazakhstan's long-awaited entry into the WTO. The West has long supported this step. At present, Kazakhstan has to comply with WTO obligations through its participation in the EU, but ostentat lacks the right to challenge inequities through WTO mechanisms. Kazakhstan is already a WTO member. As other Central Asian countries make progress on reforms, the West should help them move to WTO membership. For two decades, the West has backed a multiple pipelines policy to reduce monopoly rents in the export of Caspian energy to world markets. When the policy was initiated, the West was not thinking of Chinese pipelines, but they have emerged and they further lower the risk of monopoly rents. If and when an Iran nuclear accord enters into force, the West should not discourage the shipment of more Caspian energy to Northern Iran. This will reduce further the risk of monopoly rents and help expand and diversify world energy supplies a long-standing goal of Western policy. As the correlation of economic forces continues to change around Central Asia, the risks of conflicting pressures from regional powers may increase. Further, the NATO drawdown in Afghanistan, as Sandy has pointed out, will pose issues and perhaps increase the risk of a security vacuum in Central Asia. There could be tensions among regional powers which seek to fill it. For these reasons, it is vital that the West stay involved with Central Asia in the political and security realms. This will build essential confidence for investors in the region. An early visit there by Secretary Kerry ought to be a high priority. Thank you. Great, thank you, Bill. Now, Ed Chow. Thank you, Andy and Jeff, for allowing me to participate on this panel among old friends, I might add. I think Bill Courtney and I were both ordered to learn about Central Asia about the same time. And when he planted the flag, American flag and the new embassy in Almaty at the time, my then colleagues from Chevron were eagerly awaiting him at the Dusty Hotel, if memory serves. And I also had the pleasure of working together with Michael at Commerce in the 90s. And when all three of us needed to learn about Central Asia, we all learned at the feet of Martha Alcott, who already knew where it was. Unlike a simple oil man that I was and am. I think Andy and Jeff's report usefully divided our approach towards Central Asia into three separate periods, kind of an immediate post-Soviet period, a period where our policy were preoccupied by what was going on in Afghanistan and then in the period that we're currently in post-NATO's combat mission in Afghanistan. I think in the sector that I work in, which is oil and gas, I think similarly you can look at Central Asia in three different phases. There was the 1990s when it was really very exciting for all of us in the international industry at least to discover a new oil province that was very recently open to international investment. The Soviets had already made significant discoveries that they didn't manage to develop in a useful way. It was a nice match of industry interests with the local government's interests as well as American foreign policy interests. It's useful to remember that throughout that period of the 1990s oil was generally selling at below $20 per barrel. And the challenge beyond development of these fields was how to bring this new production to market in the landlocked areas. So you had the saga of CPC, the Caribbean Pipeline Consortium as well as the Baku Tbilisi J Han Pipeline. There were very instructive, but often Washington and other Western capitals learned the wrong lessons from those experiences. And we can get into that in the future if you like. But certainly conditions today are quite different from the 1990s. And then as investment matured and significant production started to flow, we all enjoyed a period of rising oil prices from 2000 up until actually June of last year. We've had by and large rising oil prices peaking at way above $100. And during that period of time, the indigenous capabilities as well as expectations on the part of the local population and the political lead have expanded during that period of time. I have to say that with rising prices in general among host countries as well as the industry, you also acquire a lot of bad habits having to do with excessive expenditure, both by, I would say, industry as well as by the governments involved. Of course, you all know that oil prices have dropped by more than half initially. And even though it's recovered, it's still in the low to mid sixties right now, which really for the industry requires a much more disciplined approach to capital investment and operation than the previous period. Transportation efficiency has become even more important than before. Before it was really a matter of how do you get product to market in the landlocked area? But if the transportation costs are too high, it will reduce your net back to well head and investments that otherwise could go forward may not be able to go forward at all. Pipeline projects that may be affordable at $100 oil won't be so affordable with a much lower price of oil. And the challenge for government policy is how do you encourage and facilitate investment in a much, much tougher environment? And how do you reap the broad societal benefits from that investment as well? So income distribution becomes even more important at a time when the bounty to be divided is much smaller than it was before. And already in some of the oil producing countries in the Caspian, we have seen income disparity going through the roof. And that's something that governments need to be mindful about as we move forward. I have two suggestions that are already, I think both explicit and implicit in the report that I'd like to highlight. One for the countries in the region, which is the real poor state of intra-regional economic integration. When you don't have petroleum products that trade freely across borders, when you don't have gas and electricity trade freely across borders. Casa, whatever, how many thousand it is, have been around, seemed like 4,000 years. But maybe it's only been 10 or 15. But it hasn't gone anywhere real fast. But when you don't have intra-regional trade, how do you instill confidence for inter-regional trade? I mean, let's remember the historical lessons of why the old Silk Road broke down to begin with. It was instability in the region, rivalry within the region that broke down the old Silk Road, along with the maritime revolution starting with Henry the Navigator of Portugal. At least in the sector that I'm talking about, there's some real advantages to maritime trade that goes beyond the transit time of a train going from Eastern China to Western Europe. Maritime trade is a lot more flexible. You can do back hauls in a way that you can't with container cargo going one direction primarily. So in order to overcome some of the built-in advantages of maritime trade, land transportation needs to be made a lot more efficient than it has been up until now. And that's a real challenge that needs fixing. The Eurasian Economic Union is more likely to be a barrier to that trade than it is to facilitate that trade. If they were to facilitate that trade, then Kazakhstan ought to be able to move its crude oil freely through Russian pipelines to a refinery in Belarus and sell the product, resulting products to European markets. Well, we know that doesn't happen and that doesn't happen for a reason. So intra-regional economic integration is really a must-be, a fundamental building block for inter-regional trade if it is to expand. My second suggestion has to do with American policy in the region, which is beyond taking into account the interests of the countries of the region which the report rightly emphasizes. We also need to be mindful and align our interests, it seems to me, with the interests of the major regional trading partners, such as China, Iran, India. We have tended in the past to see other regional powers as rivals rather than partners in linking the region to the world. I think the American mismanagement of the Asian Infrastructure Investment Bank was a misstep that has a lot of lessons that should be in it. The Washington's rhetoric about the trans-Pacific partnership that we are going to set the rules may make sense for purely domestic political reasons. It makes no sense as a foreign policy and foreign trade matter. The countries in the region wants to be part of joining together to design the new rules of the game, not to have either China or the United States or Russia or someone else dictate what those rules are. And as the report says, the last thing the countries in the region wants to do is for us to push for them to pick sides. When their regional neighbors are not going anywhere and we're really far away. So it is in our interest to be working together with partners. Let's face it, if Manistat ever changes his onshore gas development investment policies, it's more likely to be because of China and India's efforts than because of American efforts. So if free trade and investment is what we're for, then we must work much closer to the region. And then I'll turn it over to Martha. Thank you very much. Like everybody else, I want to thank Andy and Jeff for including me in this. It's also a pleasure to be on a panel with so many old friends. It shows how long we've all been doing this. And a pleasure to meet Michael Alley the first time. I'd like to, my end comments, I'll try to make four points, will be a plea for small technology. I'd like to commend the report really for focusing on two things that I think are fairly often not given enough attention. The first, this need to look at the interests of the actors themselves and the interaction of their interests with each other and with the greater powers. The second is to try to focus us on regional, on the human dimension and what US policy has done that's effective and could do that's more effective. And I try to like to push both a little bit. I'd also like to introduce the notion that most of our discussion on integration or cooperation is top up and I'd top down and I'd like to focus again and I'll conclude with a need to think about it in bottom up terms. Okay, first just a comment on regional integration or cooperation. I think it's really a time that we find a new, it's 25 years since these places have become independent and our discussion of integration hasn't moved 25 years worth. I think there's kind of a tension between how and Andy and Jeff point this out in part, I think there's a real tension between how the internal actors of five countries themselves think about cooperation and integration and the external actors think about it and there's been much more change internally in how these five countries think about it than externally. Certainly, I mean I too could join the chorus of the problems with the EU and the customs union or Russia's policy more generally. Russia has been even more static in its understanding than the US and EU and China has been the most dynamic in its understanding. It really has changed India's becoming dynamic but it suffered from its staticness and so its role in the region is much less. Even internally there's been the most shift in thinking and constant redefinition and that's true even in the states that have had the least change at the top. So this will continue to change. I mean so Kazakhstan and Uzbekistan have both in their own ways shown a great and more flexibility and dynamism in their understanding than one would expect given how little leadership, how little change there's been at the top. Even in these two countries we see real elements of generational change and how that generational change affects thinking. We will see throughout the region this goes further and further when there's change at the top and before that. I think it's really important to note that we exaggerate the personal tensions between the leaders in these countries and the competition between them and what we really have to think about was these first phases of integration were phases of national identity assertion and national identity formation and internal goals were much more important than external. So when we criticized a lot of what we did it's not like they didn't know that they were making choices that we didn't like. They were often making these choices for what they understood as very sound reasons. Taking it to the second point, regional trade is very small, inter-regional trade and it's even smaller than the figures would even imply because some of the trade is still energy driven and when we take out the oil, gas and electricity it's like virtually nothing is being traded. But I think it's very, now I'm going down to small. I think it's very important for us to understand the need for cooperation and regional trade and integration not from the volume of trade but from how many jobs it creates or denies. And right now what the trade is doing is what the obstacles to trade are doing is denying opportunities for employment in these countries. When we talk about employment we tend to think about small, medium and large enterprises and I think we really have to think if we're concerned about security and stability about small enterprises and micro enterprises. And that's where the human direction that Andy and Jeff point to is really critical and that's where I think the US business approach has to take a second play, it shouldn't be diminished but we have to look at areas where pushing US technology may not be the right thing, where we really have to talk about developing technology in the region itself, increasing their capacity to not only develop technology which in many cases they're doing but to take this technology and make it marketable first within the region and then within a broader region because Central Asia, it is Central South Asia, the Middle East and going on and on. The barriers to intra-regional trade have really gone up and the EU is making them even more dramatic. Some of its technical regulations which I think are really important that Michael pointed out but that are really not being standardized with any speed across the EU and are serving as an increased barrier for small businesses. I think the trade, the Chilmiki, I mean the shuttle trade is really virtually destroyed, being virtually destroyed or has been destroyed without this shift to the next stage. I spent a lot of time crossing borders. I've had my sometimes faulty Russian criticize from saying that I walked into Turkmenistan or I walked into Tajikistan rather than Droh because there are two verbs of motion that Russia uses. But in reality, I do all the time walk into countries and by walking into countries, especially at second border, not the main border crossings but secondary and tertiary, you see how crippled the trade is and you see the delays of the trucks and how many new regulations have been put in to facilitate non-trade. I also think, and here's my penultimate point, I think that what the 25 years, we still think we especially in this town who are post-Soviet ourselves or Soviet, in terms of when we started this world, we think about the world views and integration in a Soviet and post-Soviet way. These countries, the people in these countries in the region, the post-Soviet world is dying off or being replaced by a generation that thinks in very, very different ways or in each country they think differently but they're driven by what I would call nationalist feelings and so regional integration and regional cooperation is gonna become harder and harder if there's not a push to improve the terms of getting technology shared across border trade very quickly. There's no, the we is changing. There used to be a we across borders and now there really isn't a we, it's a they when you cross the borders and there has been an exacerbation of some tension certainly across the Kyrgyz-Uzbek border, the Tajik-Kyrgyz borders and other, the Kazakhs and Uzbeks have some tensions. I'm talking about in these border communities, I'm not talking about at the national levels and so I think that if we can use inter-regional trade and now I'm going over to my fourth point as a way and these countries can as a way to increase tolerance across borders. I mean, part of what's reading the intolerance is the decreasing ties and we run the risk if we don't do this that if there are actions, security risks in these countries, we run the risk that Central Asia, which I have fought 25 years to argue is not necessarily an area of potential major inter-ethnic conflict could become like what we see in the Middle East, and I'm not saying this is gonna happen but the kind of breakdown you see between relations and inter-relationships of conflict in Syria, Iraq, Lebanon, Jordan could exist in this part of the world if we're not careful. This is the time to bolster cooperation to make this next generation have a better sense of tolerance and seeing neighbors as a market rather than a potential threat and this is my final point. This is really my plea for small technology and thinking about markets and energy in new ways and over the last several years I've done a lot of work on sustainable development and here I really think and some of this has been with the support of the State Department in creating a regional network on issues of sustainable development and sustainable energy. We've spent way too much time on the big energy questions without looking enough on the little energy questions, bringing technology, even bringing the big hydrogen dams into Kyrgyzstan or Tajikistan is gonna provide energy at the dam site. It does not ensure that energy is gonna go to new economic units in these countries that farmers will have access to energy. You have a collapse in grid system that was built for 40 to 50 years in the 60s and 70s. And so and reinventing that Soviet grid is not something people do in the 21st century. It's way too expensive. So what you really need is a combination of renewables and big technology and small technology both in irrigation, in irrigation, in food storage and all the things that you have in this overwhelmingly rural region to do in order to stimulate development. This requires stimulating technology development in the region and getting it shared cross-border. There is now a tremendous replication of technology development across Central Asia and non-comparability of projects so it's not easy to import technology even if you could deal with the barriers. There's repetition of what's being developed in Tajikistan with what's being developed in Uzbekistan and no synergies are being created. Kazakhstan's going in for big energy and bringing heavily Western technology. But again, I think what the region needs is small technology where Westerners can help train on how you share know-how more than just bringing in the technology that we have. So this really is my final comment. Again, I wanna thank everybody for the opportunity. Finally, my last word is to do all this financing and rethinking of financing really becomes critical. How you get collateral into communities that are dominated by women who don't have property rights in the same degree. How you deal with getting finance into places when the interbank system is still functioning poorly. I mean, so that's a piece of this as well. Again here, U.S. know-how can become really critical solutions that have worked in other parts of the world rather than U.S. investment. So I think there's a great deal as we focus in this third period or fourth period of policymaking that we're able to do. Thank you. Okay, great. Thank you, Martha, and actually thank you to all of the panelists. There's a lot on the table to chew over. We've got until 12, is that right, Oliver? Oh, it's like 11, okay, sorry. I'm sorry. So we're gonna have a very restrained discussion here. Because we only have a few minutes, I think what I'm gonna do is just open it up and I'm gonna take maybe three questions. Make them brief, please, and make them questions and then I'll give it over to the panelists. And if we have time, we'll do it again. How's that? Right here. Yeah, you in the, yeah. No, you in the second row right there. Yeah. Faro Gornazarov, Central Asian Development Institute. Thank you very much for this very exciting panel. I think we have to distinguish between policy recommendations which are kind of large scale and bulky and which are not efficient and those which are very efficient. And I think that improving the legal framework of course is a kind of nice ideal thing to do. But at the same time when we see resistance from the governments, it's very hard to implement. So the idea behind is to go from these large scale projects to small scale projects, like for example, not to say that we have to improve that border security points or customs at all points in Central Asia, but go to some specific very important points and say, let's improve it here and there. And it would be much easier for the governments to do and have a like spillover effect after they improve like one particular border point and monitor that progress and see that it actually brings progress then actually to reform everything altogether at once. So what's your take on this? Thank you. Okay, so focusing on specific smaller scale border projects. Let's take another question here. Over here, the woman in the green jacket. Cathy Cosman, leaving aside human rights questions which I understand are outside the purview, I wanted to ask about the decline in public education standards as a focus for US efforts. Okay, and then right here. Alexander Melikishvili, thank you very much, IHS. I have two questions to the panel and thank you for your presentations. They were very informative. First, none of the panelists addressed the issue of succession, which is looming in two countries, Kazakhstan and Uzbekistan. I would be very curious and appreciate your comments on this. And the second, on 8th of May, as Ambassador Courtney mentioned, Russian leader and the Chinese leader signed a communique on the sort of preliminary interaction, outline preliminary parameters of the interaction between the Eurasian Economic Union and the New Silk Road Initiative. I think my question will be addressed to Michael Lally because he's the only representative of the administration. I was wondering if this administration has any plans to formally approach New Silk Road Initiative. Thank you very much. Okay, does anybody wanna take the question about border crossing? I would just make a very broad, and I'm informed by ignorance on the subject in general, but it seems to me that it's all well and good to say work in specific regions. But barriers are there not as an accident. Barriers are there because of a systemic problem. And this systemic problem is that there are vested interests who want to protect the fact that those barriers exist. So unless you address that point as well as work on demonstration projects or whatever, you're not really addressing the overall issue. And so how do you erode the influence of vested interests who have a stake in creating these barriers and protecting those barriers? Now if the state has an interest in that, then maybe you can do demonstration projects that would lead to greater success. But if it's just a one-off, I'm not sure how much good it does, but I defer to people who know more about the subject than I do. Okay, public education. Anybody? I agree, Kathleen. I mean, I think that the crisis in public education standards and the decline is the greatest human dimension crisis that the region faces. I think that, and I think each country in its own way is missing the boat, doing it in different ways. But there has been a reluctance in the US government to take this on as a policy issue. I mean, this is something the banks take on, but have not, I would argue, been terribly effective in the, but partly it goes back to the, I'm trying to think of how to put it. It's partly an issue of national identity. It's tied to the questions of national language use where enormous resources have gone in. And it's part of a culture of denial on certain basic questions. I mean, you've taken highly literate populations that had penetration of PhDs to the most remote rural areas and basically said, and I won't name the country, but a very high up advisor in one country fairly recently said to me, we just can't afford, we accept that we have a two-tier system coming in our country. We just can't afford to educate to the same level, our rural population or our underprivileged population. I think that that's one of the biggest tragedies of this region right now. On the border crossing issue, I wanted to add something quickly. Like I think the idea of smaller scale projects that where one can demonstrate success and then the success can possibly replicated is a smart strategy for a lot of areas. But I think on the issue of border crossing, I kind of agree with Ed in principle. And when we were working on this issue a lot with the Northern Distribution Network project and then thinking about the lessons that can be learned from that project as we thought about a regional economic cooperation strategy for Afghanistan, I remember meeting being called in by the USTR to meet with their annual, that time it was an annual meeting with the five, in the Tifa framework with representatives of all five Central Asian countries and they included Afghanistan. In my point about the regional connectivity or the continent, the new transit quarters that are being created is that look, these new transit quarters are being created as we speak here. And if you wanna be part of it, then that means you're gonna have to address issues within your own country to ensure that the transit through your country is as efficient and predictable as possible. And if you don't take those measures, then you're not gonna be included in the quarter and that's going to be to your detriment. The problem gets to the fundamental issue of who is thinking of acting in the national interest? Are people acting in the interest of a dozen people? Are they thinking in real national interest? And that is the biggest obstacle to the development of these corridors. It's very simple. Okay, anyone wanna take succession? That's what I thought. Okay, and Michael, do you wanna touch on the Silk Road Economic Belt in the EU? I think it's a very good question and I wanna make a very specific point to it as well. If you read Deputy Secretary Blinken's speeches and just one of the messages Secretary Biswell said as well, this is not viewed as a zero sum game in terms of how or what countries will take what projects in a certain region. That's been something that's been made very clear back since the late March when Deputy Secretary Blinken talked to it. But so I think that's the kind of the basic point but I think on the point that you make on the private sector point of view on this is that companies are gonna make decisions about who they're gonna partner with based on a whole bunch of considerations and I would say least of which is political. Actually, it's time, cost, mobilization, schedule, all the things that need to be done. So when I think back to some of the projects we worked on, whether it's in Turkey or others, they're looking at American firms who look to partner, for example, on engineering procurement and construction with different consortia, depending on who can mobilize quickly, price, the previous book of business that had been done. And so I think increasingly what you're gonna find is as we look at Central Asia is is that companies will be making those decisions and seeing, well, okay, well, I might be an American firm, I might have a very strong construction management component, I'm able to help bring in some of the banks but on the civil work side, for example, I might need to bring a company from a partner region from a partner country as well, simply because that's what makes sense for that specific project in order to deliver it within the 36 or 48 month timeframe. So I would say very specifically, engaging, I know we have ongoing talks with our partners in the region about how we look at New Silk Road and others and that's something that will continue. Okay, thanks. We're right at 11 o'clock so I'm afraid we're gonna have to cut it at this point. But I wanna thank all of you for coming and please let's give a round of applause to our panelists. Thank you.