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Ring Road and Silk Road Revolutionize Afghanistan’s Economy

Until the Middle Ages, a network of trade routes known as the Silk Road was an important economic artery connecting China and Europe via Central Asia. Today, less than one percent of all trade between Asia and Europe goes overland through the countries of Central Asia. Now, China and seven Central Asian countries have agreed to build a modern-day equivalent of the historic Silk Road, in the hope of once again making Central Asia a vital transit route for trade between Asia and Europe.

This $18 billion project will improve the region's network of roads and railway lines within the next 10 years. While the project will not follow the exact China-to-Europe routes taken by the ancient Silk Road, it will develop six corridors connecting the Central Asian republics, Russia and China with South Asia and the Persian Gulf countries. The project’s financing will be shared among the eight countries involved and the Asian Development Bank.

Additionally, the Asian Development Bank (ADB) has signed an agreement with the Government of Afghanistan to provide a new $176 million grant to complete construction of the Ring Road highway, which loops the country and connects its cities. Resources for the 193 kilometer corridor in northwestern Afghanistan effectively complete the funding necessary for the 3000-kilometer Ring Road. Additional funding was provided by the Islamic Development Bank and the Saudi Fund. The agreement was signed in Kabul this month by Anwar-ul Haq Ahady, Minister of Finance of the Islamic Republic of Afghanistan, and Juan Miranda, Director General of ADB’s Central and West Asia Department, who was in Afghanistan on a three-day visit.

“Completion of the Ring Road will be a major achievement for the nation-building effort in Afghanistan,” Mr. Miranda said. “The Ring Road is the backbone of the country’s transport network. It will link key cities as well as other nations in the region. This is good for all people, trade and investment.”

 “Completion of the road network is essential for Afghanistan’s desperately needed economic growth,” Minister Ahady said after thanking ADB for funding the project. He said the highway will significantly improve accessibility around the country, therefore boosting trade and improving livelihoods. The new all-weather road will link northern Afghanistan with the country’s western region and cut travel times by three to five hours. This will lead to significantly lower transport costs, not only domestically but also between Central Asia and the Persian Gulf and Arabian Sea.

With the new grant, ADB will have contributed about $600 million to the road reconstruction effort in Afghanistan. Since resuming operations in Afghanistan in 2002, ADB has approved more than $1 billion in assistance, focusing not only on roads but also on building and rehabilitating power transmission lines, irrigation infrastructure, and on governance and capacity building.

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