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Volume: 42

Number: 8

August 2, 2010
www.csce.gov

THE FUTURE OF AN EFFICIENT EURASIAN TRANSIT SYSTEM STOPPED DEAD IN ITS TRACKS?

A Report on the 18th Economic and Environmental Forum and the Future of Central Asian Road and Rail Transport



By Josh Shapiro, Staff Associate

Executive Summary
The 18th Economic and Environmental Forum (EEF) was held this year on May 24-26, 2010, in Prague, Czech Republic with the theme of promoting good governance at border crossings, improving the security of land transportation, and facilitating international transport by road and rail in the OSCE region. The Forum brought together 42 of the 56 OSCE participating States, four Partners for Cooperation, multiple international organizations including the United Nations Economic Commission for Europe (UNECE) and the International Road Transport Union (IRU), and several business, academic, and non-governmental organizations.

The EEF is annually the central event of the Organization for Security and Cooperation in Europe’s economic and environmental activities. The Forum gives political impetus to dialogue in this area and provides recommendations for future follow-up activities. The EEF takes place in two parts, of which this meeting in Prague is the second; the first part was held on February 1-2, 2010 in Vienna, Austria. Two preparatory conferences for the Forum have also been held, the first in Astana, Kazakhstan on October 12-13, 2009 and the second in Minsk, Belarus on March 15-16, 2010.


The 18th Economic and Environmental Forum in Review

Transport is a crucial factor, not only between Asia and Europe, but around the world. The need for simplified systems, which can cut down transit times and costs for products, will enable countries to thrive from the revenue and job creation that it possesses to affected countries. Along with these positive factors comes the downside of such a new system. More corruption, environmental pollution, and the need for more security measures will all become new factors.

The road to implementation of a fully integrated Eurasian transit system will be long and tough. A slew of major bumps along the way will surely slow the progress of long-term execution, which includes, but is not limited to, revising visa and customs procedures, rule of law issues between neighboring countries, smuggling of weapons and drugs, human trafficking concerns, and private and public sector corruption.

Concerns about the increase of prices of goods due to delays from the aforementioned issues and improving customs systems have arisen, given that many neighboring countries have complex differences between them. Enhancement of cooperation between these participating States will be a critical test to the vitality of this proposed transit network and whether it will survive the many problems it faces.


Prospects for the further development of efficient and secure transit transportation between Asia and Europe

Improving Eurasian transport links can promote mutual economic growth and help overcome the current global economic recession. Further development will help facilitate positive partnerships between participating States, and will help stabilize the region. Additionally, landlocked countries will benefit greatly from the new trade routes built with their neighboring transit countries.

The current state of transport links is in dire need of improvement. According to Russian Railways, building a 1520 millimeter gauge railway in Slovakia from Bratislava to Vienna, as well as associated logistics infrastructure, may be a breakthrough in developing the transport link from Europe through Central Asia to China. This proposed railway will attract freight traffic from numerous countries including Austria, Slovakia, the Czech Republic, Hungary, Germany, Switzerland, Italy, Slovenia, Serbia and Croatia.

By building a new system, it will take approximately one-third of the transit time currently in place, helping move current maritime transport practices to more efficient and cost-effective road and rail transport. Rises in global economy are determined by transport, energy, climate, and water security. Building a new ground system will not, however, provide for a perfect method of transport, as an infrastructure without security is useless.


Review of the implementation of OSCE commitments in the economic and environmental dimension

The United Nations Economic Commission for Europe (UNECE) prepared a Review Report focused on the facilitation of international transport and the security of inland transport. In the report, there is discussion of the many challenges that an integrated Eurasian transport system faces. For example, road traffic safety, border crossing challenges, capacity and quality of road and rail infrastructure are just a few of the obstacles. There must be a shift from a national transit perspective to a regional perspective. Once integrated, there must be a shift from a regional to an inter-continental approach.

Additional challenges include a development gap between countries, as some do not have the resources to build such an infrastructure. Investment in transport is a question of priority within a country, as some give precedence to other issues, regardless of what a neighboring participating State might do. CO2 abatement, traffic safety, and trade and transport facilitation need to be compared to security concerns. The lack of a current unified rail law is a major issue, and land transport security is currently well underestimated.

According to the UNECE, road safety should be given priority when looking at security issues. In fact, more people have been killed since World War II on the roads than in the War itself. Currently, road and rail networks are not integrated fully, especially in Central Asia, and the need for an adequate and coherent system will be challenging. According to Ms. Eva Monár of UNECE, inland water transport is currently operable; however, efficient integration into the modern day system is lacking because not all countries border a body of water.

The environmental impact of an expansion is of major concern, as air pollution causes health hazards and harms our atmosphere. The need for more efficient ‘green’ vehicles is recommended in some UNECE countries, as well as proposed paths around urban areas, reducing noise nuisance and smog.


Promoting Good Governance in International Transportation and at Border Crossings

Many barriers are faced in international transportation, including issues at border crossings. Approximately 40% of transit time is lost at border crossings as a result of bad governance and the lack of a simplified visa and customs process. Based off of numerous presentations, the need for cooperation between countries is a must and a proactive approach must be made. Procedures need to be modified so that freight traffic can move in a secure and regulated manner, and contractual frameworks need to be in place for joint liability between carriers and its customers. According to the International Rail Transport Committee (CIT), the OSCE could also play a role in locating and identifying efficient trade routes and motivate participating States to conduct pilot projects to check for potential issues.

An example was given at the Forum of a demonstration train that the Economic Cooperation Organization (ECO) ran from Islamabad, Pakistan to Istanbul, Turkey in the fall of 2009. The run proved to potential private investors to take another look at its promise for faster and efficient trade, and this example particularly demonstrated the importance of political will from the States that took part.

Regarding customs issues, The Arusha Declaration, adopted by the World Customs Organization in 1993 and revised in 2003, outlines a way forward to enhance integrity in the Customs environment. The revised Kyoto Convention is also key to implement, which harmonizes the customs clearing process. The major concern is the lack of integrity within the customs community and the strong need for governments to be fully committed to reduce corruption. For example, according to a representative of Azerbaijan, modernization of its procedures is already taking place and the amount of waiting time during its customs process has decreased ten-fold. Simplifying the documentation system and implementing a single window structure is the key, as well as training border patrol agents correctly on following up-to-date procedures.

The United Nations Conference on Trade and Development suggests that the implementation of existing conventions should be given priority and that public-to-public and public-to-private sector relations are both very important. The Rotterdam Rules were brought up, which were the result multilateral negotiations that took place within the United Nations Commission on International Trade Law for seven years starting in 2002. The Convention, signed by 21 countries including the United States, describes who is responsible and liable for what, and brings clarity under a single contract of carriage.

Ireland, which will chair the OSCE in 2012, noted that the EU’s single window market took more than 40 years to implement and the longer term benefit of such a system far outweighs the potential loss of sifting through free trade agreements.


Transport facilitation and Security in Central Asia and with Afghanistan

Afghanistan currently faces numerous challenges when trading with its neighboring countries and the world. According to Mr. Ziauddin Zia, Adviser to the Minister of Commerce and Industry of Afghanistan, the obstacles include implementing second-generation policy reforms, the exorbitant cost of doing business, a weak-knowledge economy, and poor infrastructure. Tremendous progress has been made in Afghanistan, though, which has recently been torn with violence and corruption.

There was a mention by Mr. Zia of the ‘World Bank’s Doing Business’ report, which lists economies on their ease of doing business, of which Afghanistan is ranked last out of 183 countries for the ease of trading across its borders. Poor road conditions hinder efficient trade, and the lack of access to Central Asia by rail limits the possibility of trade with neighboring States. In the long term, if reform in Afghanistan can be achieved in such challenging conditions, other countries can certainly do it as well.

Mr. Thomas M. Sanderson, Deputy Director and Senior Fellow at the Center for Strategic and International Studies (CSIS), stressed the economic significance and geopolitical importance of Afghanistan due to its strategic location as the land bridge between the subcontinent, Central Asian states, and the Persian Gulf. Legal frameworks and capacity building through the OSCE could place an added value to the region as well.


The Impact of Transportation on Environment and Security

Many risks are associated with transcontinental transport, including shipping hazardous waste and dangerous goods. There was a focus on many instances where these materials are shipped through non-EU countries, which do not have to adhere to guidelines already in place. The need to adopt legislation for a single method system to then work with prior European legislation was a discussion topic, as well as the need for construction of secure railcars and subsequently a study of accident prevention.

International training of monitoring personnel and trainers were brought to light, and the idea of translating more training manuals was suggested. Unfortunately, security is a major factor that is holding up talks to build an intercontinental rail transport system. Air transport is now secure but rail is certainly not. There are countless access points to terrorize a rail system, as opposed to scanning cargo and passengers in a secure arena such as an airport. Initial costs may increase to prevent terrorism and provide a more secure system, but the long-term economic benefits will make the venture worthwhile.


Specific Transport Security Aspects and the Role of the OSCE

The importance of land versus maritime transportation is quite evident, as virtually all freight is carried on roads at some point throughout the shipping-to-receiving process. The security aspect of land transportation is much more complex than that of sea, as there is much more potential of terrorist acts being carried through over such a vast area. Some argue, though, that there is an unwillingness of governments to compromise sovereignty in favor of international frameworks and measures.

Enhancing inland transport security is key, though currently it appears to be under-protected, especially in the international law perspective. ‘Good practice’ sharing is an effective and inexpensive way to enhance transport security. The United Nations Economic Commission for Europe has organized an ‘Inland Transport Security Discussion Forum’ to provide dialogue on inland transport security issues.

The threat of weapons of mass destruction remains but the need to focus on those areas in which cargo is relatively harder to protect is crucial. Closed methods of transport, including aviation (100% passenger and luggage screening) and maritime transport (almost 100% container scanning), might currently be used for global transit, though more of a look into inland transit needs to take effect. Inland transit remains open and accessible to security threats, and design safety standards on railcars and cargo vehicles need to improve.

Current financial uncertainty will place greater scrutiny on the decision-making process, especially in the aspect of security. A look at history and past events, such as the Madrid, London, and Russian train bombings, will need to be integrated into the managerial process; however, there is no existing model that fully meets the need of a counter-terrorism security appraisal.


Follow-up to the 18th Economic and Environmental Forum

The Eighteenth Economic and Environmental Forum is a clear example that the OSCE is taking efforts to provide dialogue to facilitate and secure road and rail transportation, and an effective Eurasian transport system will be a long-term undertaking. Cooperation from neighboring countries and the perseverance of its people to one day be a part of a larger system than just their own will lead to lower overall priced goods and more security for its citizens.

The U.S. welcomes further discussion by Kazakhstan, the current Chair-in-Office of the OSCE, of trade and transport ideas at the upcoming OSCE summit, as Kazakhstan is a land-locked country and could reap significant benefits from freer regional trade. Subsequent peace and stability would have a profound effect in the region, especially in Afghanistan where trade is hindered by corruption and the lack of efficient infrastructure. Although many agreements between participating States exist, overcoming the political and economic hurdles to effective implementation will remain the key impediment to success.



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Senator Cardin and Estonian Defense Minister Jaak Aaviksoo discuss security issues at a meeting in Tallinn, Estonia on July 7, 2010.