ISLAMABAD, 9 February 2004 — Ten West and Central Asian countries have decide to establish a joint venture bank and speed up business cooperation. They are pushed by the compulsions — as well as the vast potential — of the region, and the challenges of the WTO regime that are less than 11 months away. Backed by political will of their leadership, they are moving faster toward greater regional cooperation. That’s why they have announced a number of projects that will cover the region.

Istanbul will be the home of the “ECO Bank,” that Economic Cooperation Organization (ECO) is about to establish. The bank will promote trade and fund development projects. It will have a seed money of SR60 million, but more equity will flow.

The have already decided to slash their mutual, regional tariff down to a maximum of 15 percent, under Ecota — Economic Cooperation Organization Trade Agreement. ECO region, at the moment, has a meager share of 1.3 percent in the global trade. The trade within the ECO, Pakistani Commerce Minister Humayun Akhtar estimates, is just around $1.0 billion a year.

The finance minister’s (FMs) meeting in Islamabad, also decided to expand investment, transportation, telecom and numerous businesses activities region-wise. The FMs have asked the sub-groups to finalize their recommendations by June 30, 2004. The FMs of Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan, and Uzbekistan, “The 10,” took these decisions at the just concluded conference in Islamabad.

This first ever ECO FMs’ conference was hosted by Pakistan Finance Minister Shaukat Aziz. Pakistan, Iran and Turkey, initially, will provide SR60 million equity for ECO Bank, according to the joint communique issued at the conclusion of FMs conference in Islamabad.

The seed money appears small as the bank has to finance trade among the member countries, and fund development projects, some of them of a regional scope. For instance, the FMs decision to create a common grid system of ECO region to pool together electricity surpluses, and overcome shortages, by itself will require large funding.

On the political level, FMs decided to form “a pressure group” at the international financial institutions (IFI’s) in order to influence their decisions in favor of ECO nations.

ECO will form its own reinsurance company that will be in operation “as soon as possible.” The conference requested the member countries to consider subscribing to the ECO bank and the proposed reinsurance company.

Afghanistan that stands devastated after remaining in the throws of war and turmoil for a quarter of a century, first as a result of the Soviet invasion in 1979, followed by domestic turmoil since 1986, was accorded a high priority. The conference agreed to establish a special Fund for Afghan Reconstruction. Financial experts from member countries will finalize the modalities to set up and operate the fund.

The FMs formed a high level experts group (HEG) “to study and suggest a framework for cooperation in the areas of macroeconomic management, international financial institutions (IFI’s), global capital markets, promotion of banking, investment, transit and trade from legal and financial aspects, strengthening of ECO Supreme Audit Institution (ECOSAI), tax policy and administration, security and capital market regulators and stock and commodity exchanges.

The group will also explore the possibility of multiple listing of stock and shares on each other’s stock exchanges, develop a database on ECO economic and social indicators, privatization of public sector enterprises, cost of economic adjustment, the need for fiscal safety nets, and the possibility of establishing a research center for ECO economies.

The FMs also agreed to share experience and impart training to each other’s nationals in the fields of economy and finance. Any member can provide technical assistance to the relevant experts from the member nations.

ECO members will share information on transit trade, and on the flows of trade within the region. The FMs decided to check “institutionalized smuggling under the transit trade facilities.”