Today's Silk Road: The New Front Line for Transparency?

By Galib Efendiev, RWI Caucasus and Central Asia Regional Coordinator

At a meeting last week in Prague, leaders from the European Union and several post-Soviet countries laid the groundwork for a new era of policy cooperation and reform between the EU and Europe's "Eastern neighborhood." The milestone signing of the Southern Corridor Declaration could pave the way for new natural gas import routes from Central Asia that would reduce Europe's heavy energy dependence on Russia and realign the balance of power in the region's energy sector.

Thirty-three countries gathered on May 8 to inaugurate the Eastern Partnership Initiative (EaP), at a summit including the 27 governments of the European Union as well as those of six post-Soviet countries: Ukraine, Georgia, Moldova, Armenia, Azerbaijan and Belarus. The initiative involves several important steps to encourage these post-Soviet countries to build stable, productive relationships with the EU. During the initial period of the program, the EU will channel 600 Million Euros in financial support to its new Eastern partners, and will encourage liberalization of trade and customs procedures and fees. Longer-term goals include the signing of visa waiver agreements for the Eastern region's citizens.

Leaders at the summit signed the Southern Corridor Declaration: an agreement that may prove an important milestone in EU policy towards neighboring countries. The Southern Corridor Declaration will diversify Europe's energy sector through the so-called "Southern Corridor" oil and gas route which the declaration described as "a modern Silk Road, interconnecting countries and people from different regions and establishing the adequate framework necessary for encouraging trade, multidirectional exchange of know-how, technologies and experience."

At the heart of the declaration is an effort to smooth the path for eventual gas imports from Central Asia to help reduce Europe's heavy dependence on Russia. This hoped-for "modern Silk Road" is seen in the 3,300-kilometre (2,050-mile) Nabucco Pipeline (to be connected to the existing Baku-Tbilisi-Erzurum, or South Caucasian Pipeline) that would stretch from Turkey to Austria, and which is expect to begin carrying gas to Europe by 2014. "Energy is a traded commodity but energy issues have been making the headlines recently for all the wrong sorts of reasons," said EU Commission Chief Jose Manuel Barroso in his opening remarks to the summit. "We have seen volatile energy prices, commercial disputes and pipeline accidents disrupting energy flows." However, Barroso continued, the new Silk Road shows tremendous promise and could enable an "energy sector [that] offers real win-win opportunities."

Questions remain, however, as to whether or not the modern Silk Road will really be a win-win opportunity.  Kazakhstan, Uzbekistan and Turkmenistan refused to sign the Southern Corridor Declaration, hesitating in choosing allegiance between the EU and the Russian Federation. Additionally, civil society organizations in Azerbaijan, the only current gas-supplying country of the Eastern Partnership Initiative, have begun to criticize the initiative,  concerned that the EU's urgent desire to tap to Caspian energy resources will overshadow Azerbaijan’s need for rigorous democratic reforms and improved human rights protections. And in a broader sense, the push to establish a modern Silk Road once again underscores the necessity of widespread transparency and accountability reforms in the energy transit politics of the countries along the Silk Road. 

RWI and its partners in post-Soviet countries continue to advocate expanding the Extractive Industry Transparency Initiative (EITI) agenda to include transit revenues. This week, RWI is hosting a strategic roundtable discussion in Washington, D.C. on revenue transparency in the hydrocarbon transit and transportation sector. The discussion will include members of EITI Board and Secretariat as well as civil society experts from transit countries. RWI believes there is a clear connection between efforts at reforming EU gas markets and the EITI agenda, and this week's workshop will enable strategic discussion and planning for a pilot initiative modeled on the EITI, but broadening its reach to focus on revenue transparency in the hydrocarbon transit and transportation sector.

LEARN MORE

• Read more about the Southern Corridor Summit ...