TEHRAN(Bazaar) – William O. Beeman, Professor Emeritus of University of Minnesota, says Inter-regional trade is very weak in the ECO, and there seems to be very few serious plans to increase this regional trade.
He adds that the ECO countries definitely have the potential to increase this trade.
Following is the text of the Bazaar interview with Professor William O. Beeman.
Bazaar: What is the importance of regional trade blocs for the economic and trade growth of member countries?
Beeman: These regional trade agreements are in their infancy. They still have very little substance beyond paper agreements and a lot of smiles and handshakes. In order for them to be effective, they must have a great deal of economic substance. One important factor is finding some way to circumvent the power of the U.S. Dollar as an exchange medium. This has not been possible thus far. It is something for these trade groups to consider seriously as a goal for the future.
Bazaar: The Economic Cooperation Organization(ECO) comprises a population of half a billion, owns one-third of the world's energy resources, has a unique connection between Europe, China and Russia, the Persian Gulf and the Indian Ocean, and a young and powerful workforce. What is the reason for the ineffectiveness of this organization despite such potential?
Beeman: Once again, the difficulty is that trade in natural resources, particularly petroleum resources, is denominated in U.S. dollars. Moreover, the United States and European markets constitute the bulk of all world trade. Moreover, a huge proportion of the labor in the ECO is committed to Western manufacturers and Western markets. The only way the ECO can become effective is to present a unified front to the United States and the West. An example is OPEC. The United States and other nations can do nothing regarding oil prices except to go on their knees and beg OPEC to increase production. They have no leverage. If the ECO could develop a similar monopoly control over labor, strategic resources, or transportation they might be more effective. But the ECO is not operating in a unified fashion vis-a-vis the West. The nations in the ECO may cooperate with each other, but until they present a serious unified negotiation position toward world markets, they will remain weak. Once again, a system to circumvent the U.S. Dollar would give the organization terrific strength.
Bazaar: The 15th Economic Cooperation Organization (ECO) Summit was hosted by Ashgabat, Turkmenistan. Considering Iran's membership in the Shanghai Cooperation Organization and Iran's important position in connecting China to Europe; Russia and Central Asia to the Persian Gulf, will we see a change in the ECO?
Beeman: Iran could gain a great deal of advantage and strength through these organizations. But Iran comes to these organizations from a position of weakness. Essentially at present Iran has only one resource to present to the ECO and that is petroleum products. There must be much more for Iran to contribute in order for it to actually affect the policies and actions of the ECO
Bazaar: Despite high trade potentials, trade within ECO’s intra-regional trade is still less than 10%. How can this amount be increased? Do the countries of this organization basically have the potential to increase intra-regional trade?
Beeman: That is correct. Inter-regional trade is very weak in the ECO, and there seems to be very few serious plans to increase this regional trade. These ECO countries definitely have the potential to increase this trade. They could privilege trade within the ECO through discounts. They could cooperate on development projects and transportation. There are hundreds of possible agreements that could be effectively pursued if the ECO members were serious about prioritizing inter-regional trade over trade with Europe and the United States, but at present they are, individually, still dependent on trade with the West. It will take some very bold, very dynamic leadership to break this economic stranglehold and truly realize the potential economic power of the ECO.
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