The recently concluded 13th ECO Summit 2017 is extremely relevant in the backdrop of ever growing importance of China-Pakistan Economic Corridor for its member countries. This passageway is a framework of regional connectivity as CPEC will not only benefit China and Pakistan but will have positive impact on Iran, Afghanistan, India, Central Asian Republic and the rest of the region. The enhancement of geographical linkages having improved road, rail and air transportation system with frequent and free exchanges of growth and people to people contact, enhancing understanding through academic, cultural and regional knowledge and culture, activity of higher volume of flow of trade and businesses, producing and moving energy to have more optimal businesses and enhancement of co-operation by win-win model will result in well connected, integrated region of shared destiny, harmony and development.
The 13th ECO Summit has adopted the topical theme of “Connectivity for Regional Prosperity” as its key focus. The economic integration and connectivity are the main pillars to galvanize economic growth, create job opportunities, expand trade, improve competitiveness and usher prosperity in the region.
Pakistan attaches great importance to its trade relations with the ECO countries and desires to significantly raise the volume of its trade with the member states. The country has always stressed the need of a world class logistics and financial infrastructure for the speedy movement of goods and people in the region of Economic Cooperation Organization (ECO). China-Pak Economic Corridor (CPEC) is a major initiative that would help achieve the core objectives of ECO. The CPEC is anticipated as a game-changer not only in Pakistan-China context but it would also complement the economies of the entire neighborhood, especially the ECO region.
ECO’s vision 2025 is an important document and its adoption will serve the purpose of increasing trade and economic relations among regional countries. The vision is aimed at infrastructure development and enhanced trade which will offer remedies for the socio economic development of the region.
If one analyzes the abovementioned developments in the light of recent geostrategic developments, it can be averred that a uniting factor between Turkey, Iran and Pakistan is the latter’s shift away from America towards China and Russia. Similarly, Turkey’s strained relationship with Russia has been mended by their sheer diplomatic efforts and Iran has historically been in the anti-American camp.
Therefore, a natural strategic and political alliance, coupled with economic cooperation could be materialized and implemented, with relative ease, given the congruence of political bend of the member states.
Currently, both Iran and Turkey engage in trade with China via the Central Asian Republics, which adds considerably to the cost of transportation and poses serious problems whilst trading in perishable items. Pertinently, Pakistan’s strategic location is such that offers a natural passage to Iran to supply its goods to China since Gwadar port is less than a hundred kilometers from the Iranian border. Similarly, China and Turkey’s trade can also be given a huge boost if this plan materializes as Turkey shares a border with Iran.
Moreover, since the lifting of sanctions on Iran, the country has seen considerable economic activity and a huge influx of foreign investments. This will lead to an increased purchasing power of the Iranian people and offer new markets for Pakistani and Chinese goods. Similarly, Iran can export its vegetables, fruits, and other perishable items with considerable ease to China through the roads constructed under the CPEC. China and Pakistan, on the other hand will yield the opportunity of an increased and fast-paced access to the Turkish markets.
Turkey and Pakistan have brotherly relation at governmental and public level and have supported each other in difficult times. Turkey is 18th largest country in terms of population and 4th major economy. Its joining of CPEC will have tremendous impacts on Pakistan’s economy. Turkey is situated at the confluence of Europe and Asia. It may give Pakistan access to European markets and especially to Balkan states. Its companies may invest in road, railways and pipeline projects under CPEC.
Importantly, Pakistan has the maximum to gain from this arrangement through reduction of trade and current account deficit. China and Iran can both help in the improvement of Pakistan’s economy by the means of increased energy supply, more effective construction of roads, railways dams and other such projects of infrastructural development. Likewise, Pakistan has always maintained cordial relations with Turkey and enjoyed preferential access to its markets. Therefore, Pakistan should exploit this cordiality and tap the emerging demand of textile goods in Turkey and supply its textile exports via Iranian roads in a cost-effective manner.
Linkage of different trade corridors to CPEC would benefit all in the region. The unique geo-strategic location of the region has put the ECO in an ideal position. Hence, this alliance has huge potential for all the member states if they decide to cooperate with dedication, honesty and fairness. This proposed cooperation will have far-reaching consequences for the region and will benefit the people of all these countries in innumerable ways. While trade and investment are the key elements for regional integration and development, other areas that call for better cooperation are banking and finance, risk reduction, emergency preparedness, political solidarity, food sciences and technology.
SIGNIFICANCE OF BANKING CHANNELS
Financial institutions in developing economies often rely on correspondent banking relationships to provide access to the global financial system and underpin trade finance.
Establishing and maintaining a correspondent bank network is expensive. However, financial institutions may extend the reach of their internal electronic proprietary payment systems to their overseas branches and couple that payment system with an account-to-account collection and delivery system. When the regulatory and technological conditions for more efficient trade services converge, the result can be a smoother and hopefully less expensive flow of funds between member countries.