The Silk Road Economic Belt (also known as the South Stream Economic Belt) is a massive trade area encompassing the countries of Turkey, Russia, Kazakhstan, Uzbekistan, Tajikistan, Georgia, and Iran. It was created in 2021 with the creation of the European Union. The Belt is one of the most powerful economic zones in the world, and many heads of government have taken a keen interest in this emerging global trading zone. In fact, President George W. Bush visited Russia in August of that year and talked about the possibility of a free trade zone along the former border. With its immense political and geo-economic influence, it has become a popular topic for discussion around the world. However, many people are not aware of the benefits that come along with being part of the Silk Road Economic Belt.
The Association of Russian Small Businesses (ARSB), which is the country’s main chamber of commerce, portrays the Silk Road as a free trade zone that will help boost the economies of its members. This is possible because of the country’s low costs of production relative to other countries. Moreover, the low price of goods produced by members of the Belt can be very encouraging to Russian manufacturers and traders. Additionally, it allows members from various countries the freedom to set their own trade policies, standards, and rules – something that many developing countries struggle with. Finally, it encourages greater trade openness, which means that goods can freely cross borders without hindrance.
Members of the Customs and Regimens Committee of the Eurasian Economic Development Association (EAEA) predict that the Belt will boost cooperation among its members. Customs cooperation is particularly important between Turkey, Russia, and Kazakhstan, as all three countries rely on the country’s transport infrastructure to function. Customs duties and taxes are paid by both the exporting country and the importing country, and both sides gain in terms of revenue. Many EEA members also import a significant amount of goods, which further strengthens the Belt’s usefulness as a trade and investment tool.
Although the Silk Road is only a proposed route, it has the potential to affect all of Central Asia, the Middle East, Northern China, and South Asia. Because of this, a closer relationship between the region and the rest of the world is inevitable. However, there are some concerns that come along with closer trading relations. The most notable is the possibility of political and security threats posed by unstable governments and unrest in the surrounding areas Silk Road economic belt.
Political stability is already a concern for many parts of the Middle East, which is why trade through the Middle East remains a delicate balance. Iraq and Iran, both politically unstable countries, are not conducive to stable business relations. Likewise, conflicts in Nigeria, Darfur, Yemen, and Iraq present serious security concerns to EEA nations. These conflicts could cause negative effects on exports, reducing their competitive advantage, and therefore hurting the economy of the Belt.
Trade flows through the Middle East normally depend on political relationships. When one country seizes control of another, the trade will be affected. The recent events in Egypt, however, illustrate how even a seemingly friendly neighbor can suddenly fall out of love. The political unrest in Syria and the growing mistrust between neighboring countries could cause major barriers to cross. Similarly, when one or more countries seize control of another, it can be difficult for goods to leave or enter the country.
In addition to this, transportation means have become a vital part of trade. Goods can only be shipped to certain destinations if rail or road networks are available. The current situation in Venezuela highlights this issue. If the South American country were to collapse due to political unrest, then South American oil supplies would be cut off.
These issues may arise, but the benefits of the Silk Road Economic Belt are well worth the difficulties that it will experience. The ancient trading routes and the massive ocean trade will continue to serve as a force for stability and prosperity. This means that countries along the route will benefit from increased prosperity and international commerce for decades to come.