Monday, October 26, 2015

Is infrastructure the solution to global peace?

It is often said that the development of vested interests and the economic interdependence among nations is the safest way towards regional and global peace. Cross-border investments in infrastructure (motorways; rail; pipelines; energy) are key in achieving this goal. The infrastructure financing needs of Central Asia alone amount to some 8 trillion USD. Cash-rich international donors, bilaterally or multilaterally, compete fiercely for a share in this market, but this engenders the risk of overlaps and of creating “cathedrals in desert”. After all, the success of any infrastructure project is in its ability to create growth and employment. On the side of recipient countries, the requirements are becoming increasingly stringent: co-financing through public-private-partnerships (PPP), budgeted state guarantees to attract private investors (something like the Juncker Plan in the EU) and, in general, sweeping economic reforms. HH