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Statement by Prince Amyn Aga Khan at the 10th German World Bank Forum “The Asian Century: Challenges in the Economic Crisis” (Frankfurt am Main, Germany)

20 November 2008

 

Herr Ministerpraesident von Hessen
M Lars Thunell
Excellencies
Ladies and Gentlemen

I should like to begin by saying how honoured and grateful I am for the opportunity to participate in this important meeting and to share with so distinguished a gathering some thoughts about the future of Asia.

Unrepentant student that I am, I expect that this forum will constitute for me an extraordinary learning experience.

Germany has a long-standing and thoughtful commitment to approaching international concerns, and particularly internationally coordinated questions of development in the third world; and this commitment makes of this country a most fitting venue for this conference.

It seems to me that our ability to meet either the “Challenges” or the “Opportunities” of an “Asian Century” will depend on whether we are able to define, set in place and regulate approaches to both the challenges and the opportunities that lie ahead that are both more collaborative and more imaginative than heretofore.

As the current financial crisis has reminded many of us, our world in this 21st century is more complex than most of us had imagined, with an interdependence of people everywhere more profound than we had realised and with challenges, risks and reverberations that most of us cannot claim to be able either accurately to predict or adequately to understand. More than ever, rigid doctrines and dogmas are inadequate and counterproductive. Accurate observation, careful analysis and a basic, common commitment to good governance, at all levels, in all spheres, are required if we are to avoid upheavals, political, social and economic. Ways must be found to prevent, at the international, national or at the regional level, that the gap between the richer and the poorer nations continue to widen, that social divisions grow ever more evident. Social, cultural and economic factors are so intertwined in what we call “development” that it is at our own peril that we will emphasize one at the expense of the others. Indeed, globalisation itself now makes it mandatory, more than ever, for us to seek approaches and solutions that are holistic to the challenges and the opportunities of development. 

Is this truly “The Asian Century”?

The role of Asia in the history of politics, culture and economics in the world has of course been immense for now many centuries. Long before the Middle Ages, the West has looked to Asia for inspiration and for riches just as Asia, perhaps more recently, has looked to the West for technology and other inputs. In our present times, it can be no coincidence that two members of the famous BRIC are India and China and it seems platitudinous to say that the rise of the great Asian economies of today will be one of the central, shaping themes of this twenty-first century.

Simultaneously, it is increasingly evident that in this century, with the complexity that follows upon globalisation, it is unlikely that either economic or cultural dominance, in the sense that we knew these in the past, will exist in one area of the world alone. Interdependence would seem to be a more important phenomenon henceforth than independence. The upheavals in the financial markets these past months and the recessionary climate that prevails, are currently affecting not only the West but also both Asian members of the BRIC just as they do indeed Japan, Korea, Singapore and the other countries of Asia. Clearly, world financial markets are at present intertwined by a bewildering array of complex instruments and it must be illusory to assume that one national or even regional economy can be “decoupled” from others.

Likewise, Asia is as diverse, indeed possibly more diverse, than any other region of this globe. From one Asian country to another one encounters greatly different economic systems, cultures, religious and even philosophical orientations, not to mention the widest array of political frameworks that range from democracies to monarchies, to more authoritarian, autocratic or even theocratic regimes. There are also interesting new forms of city states that have emerged. Seen from the West, some of the Asian countries currently seem more closely linked to the global economy than others which appear relatively isolated. Some countries are seen as stable, others tend to be viewed as notoriously volatile. Within this broad Asian context, there are some countries that might be termed “heavy weights” (for instance those of the BRIC) and others which, at first glance, may seem less important on a global scale. Many of the countries of Central Asia are, it seems to me, often taken to lie in this second category and it is perhaps about them and the Aga Khan Development Network’s activities and experiences in these Central Asian countries that I should like to say a few words.

The vicissitudes of history have meant that in Central Asia, perhaps more than elsewhere in Asia, ethnic groups have been divided between different countries, as have traditional cultural ties and social fabrics, with the result that we now see rivalries emerging that are tribal, elsewhere instincts toward unity and integration, or yet again fear and distrust across borders. Indeed, one might say that virtually all the countries of Central Asia could appear to be in some state of flux. Perhaps more than in any other part of the world, Central Asia will need to discover how to transform diversity from being a source of hate and conflict into a source of positive and creative pluralism, how to transform local, tribal structures into national democratic structures embracing and reconciling traditional differences.

Many of these Central Asian countries have common characteristics: high mountain areas with limited fertile, arable land and equally limited infra-structure, climates frequently inhospitable and a particular vulnerability to natural disasters. Some are rich in natural resources with substantial reserves of oil and gas, aluminium and uranium; few are as industrialised as the major players either to the west or further to the east. Good governance is all too often occasional, be that at the political or the economic level, or even at the agricultural level where agricultural policies, and above all the concentration on a limited agricultural produce, appears to be more a reflection of the potential for personal gain than it is of an effort to ensure national benefit. And the same applies all too frequently in those countries where mining is a primary natural resource. Across most of Central Asia, the level of industrialisation seems to lag and the connection with the global webs of communication and commerce varies widely from one country to the other and is facilitated by neither the geography nor the remoteness of these countries. Indeed the slow pace of economic reforms aimed at attracting foreign investors is delaying integration with global markets in many countries of Central Asia. Water is already a problem in most of these countries and is a challenge growing faster than it can be met or resolved. In parallel, the production of energy is insufficient, and increasingly so. Measures need urgently to be taken, solutions found, to prevent that water and energy both become sources of local conflict. Dependence on imports is substantial and self-sufficiency, on any plane, be it industrial or agricultural, is not as yet the norm. Food security remains a problem and is exacerbated by rising inflation and climatic changes. Many of these countries have educational systems that were excellent but now need to be modernised and expanded, and which suffer from severe teacher attrition, less qualified teachers and dilapidated facilities. Many have health systems that do not meet the requirements of the local population and those requirements themselves have evolved with the drug trade and migration. Quality of life remains sub-standard and does not appear to be growing rapidly enough, with all the popular frustration and discontent that stem from such a perceived, ongoing stasis. The situation is aggravated by the drug trade and the distortions which that trade brings to the local economies, as also to the impairment it brings directly or indirectly to national and international security. And yet road, rail and other systems of communication, of infrastructure, need to be greatly increased and improved if the economics of the essentially land-locked countries of the region are to grow. The frontiers of Central Asia, like Sub-Saharan Africa, are all too often artificial. They constitute a significant impediment to both social and economic growth. It seems unlikely that the potential of these countries can be released unless and until a means is found to make regionalisation a practical reality. It cannot be a coincidence that those countries of Central Asia that currently have the weakest economies are also those that have the most sensitive frontiers.

Simultaneously, climate change is affecting these areas severely, with their particularly fragile soils and shrinking glaciers. Recent food shortages and the fate of the Aral Sea are glaring examples of how close tragedy can lurk.

I view the widespread volatility of Central Asia, and the continuing economic and social challenges of the area with grave concern. It is essential that the international community pay sufficient attention to this part of Asia: a failure to do so will almost certainly destabilise the growth and limit the overall development of the seemingly more fortunate countries that surround Central Asia.

As I imagine you know, the Aga Khan Development Network has been deeply involved in Central Asia for the past several decades.

AKDN itself is a non-denominational network whose aim is to bring benefit to all people, irrespective of race, religion or gender. Our principle objective is to enable people trapped in poverty to break the vicious circle of helplessness and dependence, to take charge of their own lives without depending on philanthropic hand-outs exclusively, and to see, year after year, sufficient improvements in the quality of their daily lives for a degree of optimism and of an entrepreneurial spirit to arise. AKDN unlike many other development agencies, gives equal weight to both the for-profit and the not-for-profit sides of our work, seeking to create models, set benchmarks and standards and develop local human resources. I think it is not a coincidence that AKDN is probably now the largest private employer in both Afghanistan and Tajikistan. AKDN projects in Central Asia range from infrastructure to industry, from insurance and microfinance to banking, from tourism to telecommunications and from cultural development to educational and medical initiatives. Sustainability is central to our mission, whether it be in microfinance institutions or in medical and educational institutions or in restored historical sites, monuments and urban parks; and we believe that discipline, both financial and operational, cost-effective budgets, all the necessary control systems, appropriate planning and strategic positioning, transparency and good governance are all essential. All our initiatives, be they economic, social or cultural, aim to generate new income for the residents of the areas in which we work and to improve the quality of life of the population where we work. When we withdraw from our projects or programmes we seek to leave behind institutions and a civil society that are, or have become stable, competent and self-reliant.

For example, our restoration work on the Bagh-e-Babur in Kabul, or Humayun’s Tomb in India, or in upgrading the city park in Khorog aims to bring renewed pride to the local citizens and a revived sense of their identity, but it also allows us to install or upgrade educational and medical facilities in the immediate vicinity, to stimulate handicrafts, commerce and SMEs through microfinance, to upgrade - and to persuade local residents to upgrade - infrastructure in the area as also to maintain their properties with a renewed sense of purpose. In so doing we aim to revive the spirit of creativity and entrepreneurship amongst the local citizens.

A similar approach characterises what I would call the “social outreach” of our work in the economic sector: industries that we launch, or in which we invest, give part of their profits to improving the living conditions not only of their workers but of the residents of the area surrounding those industries, for instance through medical and educational programmes. Our tourism initiatives assist local populations, for example in building and furnishing their schools and in providing training for those local entrepreneurs who wish to start up their own leisure facilities. Even our Afghan telecommunications company, Roshan, has not only developed a substantial mobile phone network but has also funded a variety of social and cultural projects. We encourage in both our industrial and leisure initiatives environmentally-friendly actions too. Guests in our hotels are invited to plant trees, for instance. In one small lodge in Kenya, over 200,000 trees were thus planted in the first year of this initiative. Environmental Impact Assessment studies are an integral and essential part of all our new projects be they cultural, industrial, touristic or infrastructural.

Experience shows that the development of an active, organised and effective civil society is the strongest assurance not only of continued economic development at the grass roots level, but also of social stability. It is now some 30 years since we started our rural development programmes in Pakistan which initially depended, in the first instance, on the creation by us of village organisations where the villagers themselves analysed their needs with us, set their priorities, learned with our assistance how to fulfil those needs and ultimately set up and implemented entire programmes, largely self-help, ranging from the construction of new water channels to new small hydro plants, to improved schools and medical facilities and to a broadened agricultural production several hundred times what it was when we started the rural support programme. Since 1983, in the Northern areas of Pakistan, with our help villagers have planted nearly 4 million fruit trees, bred over 700,000 poultry birds and raised nearly 7,000 head of cattle, sheep and goats. Simultaneously women’s associations and activities were launched and substantial improvements have been achieved in infant mortality, illiteracy and traditional diseases. Microfinance has enabled the economic base of these village populations to be broadened and infrastructural improvements have begun to decrease the isolation in which these communities formerly existed.

Civil society can advance the public good through the creation of private institutions, including not-for-profit but self-sustaining institutions, and it counter-balances habits all too frequent in such areas of looking primarily to government to address the full range of local social needs.

AKDN is also increasingly conscious of the capacity for public service within the private sector. In recent years, the phrase “Public Private Partnerships”, otherwise known as PPP’s, has become means for different sectors of society to work together in a spirit of mutual trust and to the national benefit. For example, local communities can donate land for the construction of new health centres, while government largely finances the construction of these centres and AKDN provides training for professionals who work in these centres.

AKDN has entered into partnerships with government for the training of teachers who work in educational institutions that are governmental, for curriculum development, and generally for the management of such educational facilities. The same is true with medical facilities. In a national health network, constituted by one or more major medical facilities that one might call hubs, backed-up by smaller outlying health centres and minor medical facilities in the rural areas, the opportunities for a PPP to expand, upgrade and modernise the national health system are as considerable as they are exciting, and are reinforced by new methods of tele-medicine and distance-learning.

I am a firm believer in the creative forces that are released by inter-country cultural activities and relations. Not only goods plied up and down the ancient Silk Route, but also ideas, dreams and inventions and from this commerce, from this cultural dialogue sprang new dreams, ideas and inventions, a strengthened creativity. I pointed out earlier in this speech that strong cultural and linguistic, religious and historical links traditionally existed across the borders of the Central Asian countries and their re-emergence is ever more noticeable. AKDN is giving increasing emphasis to working on a regional basis, emphasising operations across local and national jurisdictions. An example of such a regional approach is in Tajikistan where the AKDN has been the prime mover as also a partner in the construction of several bridges across the Pyanj River dividing Tajikistan from Afghanistan, Tajik-Badakhshan from Afghan-Badakhshan, peoples on either side on the Pyanj River culturally and linguistically close for centuries. It is our hope that the drug trade and its related activities will be brought under control and that active retail market places will now grow up around each of these new bridges so that they quite literally will become bridges to the future. Another example is the delivery, to the mountainous Afghan area across the border, of seasonal surplus supplies of energy from our Pamir project in Tajikistan. We are looking with increasing closeness at air and other communications infrastructure, on a regional basis, to stimulate not only tourism on a regional basis but also commerce and trade. If these cross-border initiatives bloom, with them should emerge increased tolerance and pluralism which, in their turn, should foster further economic progress.

A third example of such regional cooperation could be the University of Central Asia which AKDN is in the process of creating, and which emanates from an international treaty between the countries of Kazakhstan, Kyrgyzstan and Tajikistan and the AKDN that I think is unique. The University will have a campus in the rural areas of each of Kazakhstan, Kyrgyzstan and Tajikistan and will concentrate on the particular requirements of, and challenges faced by, the high mountain populations of the Pamirs. It is my hope that this University will play a major role in the formation of skilled men and women who will become the basis for the long term, wide-ranging development of these countries, and that these young men and women will in due course move freely between the countries of Central Asia. It is essential that the human material be constituted in the region to carry on the perhaps unglamorous but nevertheless essential effort to improve the quality of life for the populations of these countries. Indeed, a characteristic of these past years has been the out-migration of young educated people from the region, and largely from the rural areas. This may have resulted in large foreign remittances that have been essential factors in propping up stuttering economies, but it has left these countries without the necessary depth of middle-management and, all too frequently, without the requisite quantum and level of potential entrepreneurs to form a solid base for the national economy.

The countries of Central Asia are already showing signs that they too will reflect the shocks and turbulences afflicting the rest of the world. It is not because they are less affluent that they will be any the less sensitive to erratic international pulsations. As inflation rises in these countries, as the all-important remittances start to taper off and as a genuine domestic consumer market continues in a state of infancy, the need for foreign investment to broaden the productive base, to increase agricultural output and to improve social services will become ever more urgent. And how will these countries, how will those of us involved in the development of these countries, deal with the return of large quantities of disabused, disgruntled citizens left jobless by growing unemployment in the countries to which they had emigrated? It seems essential that these less developed economies have a role in the forthcoming debate and a place in a global recovery process.

Democracy and democratic institutions alone are unlikely to bring long term stability to countries whose people grapple daily with poverty and a challenging quality of life, without access to appropriate education, adequate health care and decent housing, and for whom the very notion of good governance is often or has become, an alien concept. In-migration can only heighten tensions, exacerbate dissatisfactions and probably sectarianism. Central Asia with its enormous spectrum of different types of government is likely to become one of the world’s foremost testing grounds for new forms of constitutional government. How will failed examples of democratic constitutionality be avoided, new formulae identified and set up? How will or can constitutional government be ensured and how, once that is achieved, can one ensure that it translates into good government? Central Asia is one of the areas of the globe with the highest concentration of pluralist societies; but, as often as not we are seeing examples of this pluralism turning into a liability rather than an asset for peace and development. It is essential that current fear of pluralism be turned into a national aspiration in the psyche of these countries, into a shared cosmopolitan ethic, and that vested interest be transformed into national interest.

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