A recent report on Economic Diplomacy and Connectivity by the Institute for Conflict, Co-operation and Security of the University of Birmingham highlights how economic connectivity is a significant feature of current globalized societies. The report was launched at the OSCE Ministerial Council in Milan on 6 December 2018 at a special side event with Guglielmo Picchi, the Deputy Minister of Foreign Affairs of Italy.
Infrastructure Channel captures the analysis by professor Stefan Wolff, author of the report, advocating a central role for the OSCE, the Organization for Security and Cooperation in Europe, to facilitate economic diplomacy and enhance economic connectivity.
IC – PROFESSOR WOLFF, WHY DO YOU THINK THE OSCE IS WELL PLACED TO PROMOTE ECONOMIC CONNECTIVITY?
SW- Increasing economic connectivity by promoting trade and reducing trade barriers has been an established goal of the OSCE since the Helsinki Final Act (the founding document of the Conference on Security and Cooperation in Europe signed in 1975). In recent years, there have been several initiatives aimed at averting the breakdown of connectivity due to conflicts and security issues and highlighting the benefits of interconnected economies. While OSCE participating States have no yet put forward a consensus definition of economic connectivity, they did agree in a decision at the Hamburg Ministerial Council in 2016 that connectivity is primarily a matter of transport and trade facilitation.
IC – THE OSCE IS NOT THE ONLY ORGANISATION PROMOTING ECONOMIC CONNECTIVITY IN ITS REGION. THERE ARE DIFFERENT ORGANISATIONS WORKING TOWARDS THE SAME GOAL…
SW – This is certainly true, and I would see it as an opportunity for the OSCE rather than as a challenge. Among others, there are free trade organisations, multilateral initiatives and development organisations. The first promote economic connectivity through free trade agreements. Their focus is mainly regional, for example on Central Europe, but may foresee cooperation with other free trade initiatives elsewhere in the OSCE region. Multilateral organisations play a fundamental role at both regional and global levels in enhancing connectivity across areas from political dialogue and security, to the environment and sustainable development, and to transport, trade and digitalization. Development organisations enhance connectivity by promoting regional cooperation in specific areas such as sustainable development, good governance and democratization. In other words, there is quite some overlap among the agendas of these other actors, as well as between them and the OSCE—and this creates opportunities for coordination and cooperation.
IC - IF WE LOOK AT THE OSCE REGION, WE CAN FIND EXAMPLES OF ECONOMIC DIPLOMACY AND CONNECTIVITY IN CENTRAL ASIA, THE SOUTH CAUCASUS AND THE BALKANS… WHAT ROLE DOES THE OSCE PLAY IN THIS AREA?
SW- Trade facilitation is a major aspect of OSCE economic activities in Central Asia. Through a combination of support for the management of free economic zones, harmonization of customs regulations, and training for entrepreneurs, both on a national and regional level, the OSCE has played an important role in enhancing economic development in individual countries in the region and promoting higher levels of connectivity between them. This has also included projects to promote organic agriculture, improved transportation infrastructure, and sustainable water management. By contrast, in the South Caucasus, there are political and financial constraints for enhanced economic connectivity and the OSCE has no longer any field of operations there. In the Western Balkans, the OSCE has been engaged for more than two decades and here the organization cooperates very closed with the European Union who is by far the most influential economic and political actor and pursues as well-defined and well-funded connectivity agenda aimed at both enhanced connectivity between the countries of the region and progress towards EU accession for the current non-members.
IC – WHEN IT COMES TO ECONOMIC DIPLOMACY AND CONNECTIVITY IN CASES OF PROTRACTED CONFLICTS, THE INTERNATIONAL EFFORTS TO PROMOTE CONFIDENCE BUILDING IN THE DIVIDED ISLAND OF CYPRUS ARE PARTICULARLY INTERESTING…
SW – The OSCE has supported conflict settlement efforts on the island with a number of initiatives. There is little doubt that increasing economic connectivity between the two communities in Cyprus will enhance economic growth and development. While there has been no breakthrough to date in the efforts to reunite the island, progress has been made in relation to higher levels of economic connectivity. Similar to the Western Balkans, this has been driven primarily by EU initiatives and particularly since 2004 when the Republic of Cyprus became a member of the EU. What is really interesting in the case of Cyprus is how closely connected the issues of transport links and trade facilitation are and how significant the role of private sector actors can be in promoting connectivity when there are political deadlocks.
IC – WHICH FACTORS YOU WOULD SAY ARE ESSENTIAL TO DRIVE CONNECTIVITY?
SW - Connectivity cannot exist in a vacuum and requires physical and virtual connections and interconnections. These are provided by roads and railways; airports and seaports; (integrated) border management structures; energy infrastructure; and ICT infrastructure, including cyber space. These assets, however, can only reach their full potential for enhancing economic connectivity in the context of a regulatory environment that facilitates cross-national harmonisation of standards and regulations. The opportunities created by the economic factors that drive connectivity are balanced by fundamental principles of good governance that include transparent, accountable, and efficient rules; develop in a context of regulations and standards that promote healthy competition and fair interoperability of economic networks; and where the values of inclusive economic growth and equitable development are promoted.
IC – WE HAVE SEEN THERE ARE OFTEN MANY ACTORS AT PLAY, SOMETIMES WITH CONFLICTING AGENDAS: HOW CAN THE OSCE ENHANCE ECONOMIC CONNECTIVITY IN THE PRESENCE OF COUNTRIES WITH DIFFERENT INTERESTS ?
SW – I think the OSCE is uniquely placed to facilitate economic diplomacy and enhance economic connectivity. With 57 participating States, as well as 11 Partners for Co-operation in Asia and in the Mediterranean, the Organisation also has a local presence across currently 16 sites and thus unrivalled opportunities to achieve local impact, including in co-operation with other regional and international partner organisations. On its own, the OSCE region accounts for more than half of all global trade. The OSCE, thus, provides a unique institutional setting to facilitate constructive discussions on economic connectivity issues and avoid their often needless politicization. It is very important to remember in this context that the organization has a sustained and positive track record of promoting economic diplomacy and enhancing economic connectivity at all levels and going back to the Cold War.
IC – HOW DO YOU SEE ITS ROLE DEVELOPING IN THE NEAR FUTURE?
SW - The OSCE has a demonstrated capacity to adapt to a challenging world. Today’s challenges lie across all three dimensions of the OSCE. Because of the multi-dimensional nature of economic connectivity and its links to political and legal frameworks, as well as to aspects of human security, the economic dimension offers an untapped potential to contribute to solutions to many of the problems that participating States face, including by providing a bridge across to the political-military and human dimensions, between different OSCE regions and the participating States there, between citizens and governments, and between the public, private and third sectors.
The OSCE can also play a critical role in generating and consolidating knowledge about connectivity and it should endeavour to become an even more comprehensive knowledge broker. The organisation could thus, among other things, act as an international platform for knowledge generation and exchange, mediation, and dialogue on economic connectivity matters and offer its good offices for horizontal and vertical co-ordination between participating States aimed at further promoting and enhancing economic connectivity within the OSCE region.
Within such an OSCE connectivity platform, so-called Track 2 initiatives, involving actors from the private sector, civil society, and academia, could provide a flexible and agile mechanism to explore and capitalise on connectivity opportunities as and when they arise. This could involve utilising peer-learning approaches drawing on the substantial existing track record across the OSCE region on how to tackle connectivity issues across sensitive borders. Such Track 2 initiatives would thus also provide safe spaces within which interested actors could gain a better understanding of technical solutions to similar challenges successfully addressed elsewhere. Such discussions could be conducted outside otherwise politicised contexts but remain connected to them within the broader OSCE context. Providing evidence on technically viable solutions to restore, strengthen, and enhance economic connectivity could then inform a reappreciation of the political feasibility of particular connectivity projects and give private-sector organisations a greater stake, and say, in their implementation.