The Silk Road Economic Belt, also known as the Shanghai Cooperation Organization (SCO) and the Russian Federation of Central Asia, is a vast economic belt stretching from central Asia to the Pacific Ocean. The SCO includes all of the countries that are members of the organization in some shape or form. The SCO’s reach extends far beyond China into countries such as Kazakhstan, Tajikistan, and Uzbekistan. However, the SCO does have one very important corner to work with: Russia.
Russia is an important energy supplier, and its economy relies heavily upon foreign trade and investment. Additionally, the country has an abundance of natural resources and raw materials. These resources, however, are coveted by many countries because they can be used for both military and civilian purposes. This includes oil, gas, and natural gas.
For years, Russia has been hesitant to open up its economic borders. However, after the United States and other major players started cooperating with each other, Russia began to feel its oats. After all, it was exporting far more oil than it was importing. Thus, when the United States and European Union made a deal to increase exports and to reduce import tariffs on goods, Russia saw an opportunity to take advantage.
In response, it quickly developed its own economic development agenda, which included high-level political talks with the western world. This gave rise to the Eurasian Customs and Trade Agreement (ECTA). The ECTA is designed to unite all of the previously independent countries in the area, and is designed to eliminate trade tariffs and to promote cooperation on trade between the nations involved. Recently, the United States and European Union reached an agreement to finalize the implementation of the ECTA. The United States has also joined the North American Agreement for Trans-Regional Access (NAALA), which aims to increase trade and cooperation among its regions Silk Road economic belt.
The benefits of the Silk Road Economic Belt will become clear if we look at the reality of global economics. As oil prices continue to soar, many of the Middle Eastern countries have no choice but to increase their exports and employment to make up for the lost sales from oil-producing countries. Additionally, China, India, and Pakistan are investing massive amounts in roads, railways, and other infrastructure projects in order to become more competitive in the global market. All these efforts are aimed at creating more economic opportunities for the people of these nations.
However, the high oil prices will affect all countries in the region, even those that have not yet signed up to the ECTA. The more rapidly the oil prices spiral, the more difficult it will be for the Middle Eastern countries trading with the west to balance their books. Ultimately, the result will be more inflation and a resultant collapse of the global economy.
The problem is already brewing. Inflation is high in the Middle East, and there is an obvious battle brewing between the United States and Iran over oil. Iran is trying to develop nuclear weapons capabilities, and the United States and its allies are concerned that it may proxy terrorist attacks against the U.S. If Iran goes too far, the United States will go after them, using any means available. The resulting regional war could break the back of the fragile global economy.
Silk Road Economic Belt, including China, India, and Pakistan, is a potential competitor for the U.S. and its allies, and it’s a threat to the future of the World Wide Web and global currencies. In other words, the current slowdown in global trade may be a preview of what’s to come in the future. If you’re thinking about participating in the current slowdown in global trade, now is the time to invest in your future. Before you know it, the “New Economy” will be here.