Economic Cooperation Organization (ECO): Significance for Pakistan
Regional economic cooperation has emerged as an important instrument for promoting trade, connectivity, investment, and shared prosperity. Successful regional models such as the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) demonstrate how economic complementarities and cooperation can facilitate the movement of goods and strengthen regional economies.
Against this backdrop, Pakistan, Iran, and Turkey established the Economic Cooperation Organization (ECO) in 1985 to promote economic development and cooperation among member states.
From RCD to ECO: Evolution of Regional Cooperation
Before ECO, Pakistan, Iran, and Turkey were members of the Regional Cooperation for Development (RCD). The organization sought to utilize the three countries’ historical ties and friendly relations to promote socioeconomic development, trade, connectivity, and cultural cooperation.
However, RCD failed to achieve its desired objectives. Many planned projects could not be implemented, while political developments, particularly the Iranian Revolution of 1979, further weakened the organization.
Recognizing the continuing importance of regional economic cooperation, Pakistan, Iran, and Turkey revived the concept by establishing ECO in 1985.
A major transformation occurred in 1992, when the newly independent Central Asian Republics, Azerbaijan, and Afghanistan joined the organization. This expansion significantly increased ECO’s geographical and economic importance.
The organization subsequently concentrated on several major areas:
Regional trade and economic integration
Transport and connectivity
Energy cooperation
Tourism
Cultural cooperation
Regional development
ECO is particularly important for the resource-rich but landlocked Central Asian states because it provides potential trade and transit links with regional and international markets.
ECO: Fostering Economic Growth and Regional Cooperation — Pakistan’s Perspective
For Pakistan, ECO provides an important platform for advancing economic diplomacy and regional connectivity.
Its importance became particularly visible when the SAARC process faced political difficulties. Following India’s refusal to participate in the scheduled SAARC Summit in Islamabad in 2016, Pakistan successfully hosted the ECO Summit in Islamabad in 2017.
The summit provided Pakistan with an opportunity to strengthen regional engagement and promote an agenda centered on trade, connectivity, and economic cooperation.
As a founding member, Pakistan remains committed to ECO’s objectives and supports initiatives concerning trade liberalization, infrastructure connectivity, energy cooperation, and economic integration.
Regional Trade
Despite its geographical size, population, and natural resources, intra-regional trade among ECO countries remains considerably below its potential.
According to the article’s figures, intra-regional trade accounts for approximately 8.2% of the total external trade of ECO member states, while Pakistan’s trade with ECO countries constitutes only around 3% of its total foreign trade.
To address this gap, the ECO Trade Agreement (ECOTA) was signed in 2003 with the objective of promoting trade liberalization and eventually establishing a Free Trade Area within the ECO region.
Pakistan, Iran, Turkey, Afghanistan, and Tajikistan ratified the agreement. Nevertheless, its effective implementation has faced difficulties.
Major barriers to greater regional trade include:
Non-tariff barriers
Lack of sufficient economic complementarities
Capital constraints
Weak industrial bases
High costs of doing business
Incomplete implementation of ECOTA
Pakistan supports the operationalization of ECOTA and considers greater regional trade integration an important component of ECO’s future development.
Energy Cooperation
Energy represents another major area of potential cooperation.
The ECO region possesses enormous reserves of oil, natural gas, minerals, and other energy resources. Development of regional gas and oil pipelines, electricity transmission networks, transport corridors, and supporting infrastructure could allow member states to meet domestic requirements while strengthening the region’s position in international energy markets.
Pakistan actively supports regional energy cooperation and the implementation of the ECO Energy Strategy 2030, particularly its objective of improving sustainable energy access across the region.
Reconstruction and Development of Afghanistan
A stable and economically connected Afghanistan is important for the broader ECO region.
Pakistan supports ECO initiatives aimed at Afghanistan’s reconstruction and development, including a Special Fund for Afghanistan and an advocacy programme.
These initiatives seek to:
Improve infrastructure
Develop institutional capacity
Promote trade and tourism
Strengthen customs cooperation
Facilitate Afghanistan’s regional economic integration
Afghanistan’s stability is therefore closely connected with ECO’s broader vision of regional connectivity and prosperity.
ECO Specialized Agencies and Regional Institutions
Pakistan participates actively in ECO’s specialized agencies and regional institutions.
ECO Trade and Development Bank
Pakistan is a shareholder in the ECO Trade and Development Bank (ECO-TDB), headquartered in Istanbul, with a representative office in Karachi.
According to the article, ECO-TDB has provided approximately $1 billion in investment to Pakistan, supporting sectors including:
Renewable energy
Trade
Manufacturing
Microfinance
The Bank has also provided trade-finance facilities for Pakistan’s oil and gas imports.
ECO Reinsurance Company
The ECO Reinsurance Company, established in December 2017, is headquartered in Karachi.
It is intended to strengthen regional expertise and capacity in insurance and reinsurance while supporting intra-regional trade and commercial activities.
Pakistan as Host of ECO Bodies
Pakistan’s significance within ECO is further reflected in the regional institutions and forums it hosts.
ECO Parliamentary Forum
The concept of establishing a parliamentary forum for ECO member states was advanced by former Speaker of Pakistan’s National Assembly Dr. Fehmida Mirza.
The initiative was designed to create a platform through which parliamentarians could facilitate the ratification and implementation of ECO agreements and initiatives.
A meeting held in Islamabad in September 2012 agreed that the Secretariat of the Parliamentary Assembly of ECO Countries should be based in Islamabad.
Pakistan subsequently hosted the first and second General Conferences of the Forum in February 2013 and June 2021, respectively.
The forum has strengthened parliamentary dialogue and diplomacy among ECO member states while also providing opportunities for discussion of issues important to Pakistan, including Jammu and Kashmir.
ECO Science Foundation (ECO-SF)
Pakistan also hosts the ECO Science Foundation (ECO-SF), an intergovernmental specialized agency promoting cooperation in science, technology, innovation, and research among ECO countries.
The ECO-SF Charter has been approved by Afghanistan, Iran, Pakistan, Tajikistan, and Turkmenistan.
The Foundation has also developed a joint Science and Technology Fund to support scientific initiatives. However, incomplete ratification of the ECO-SF Charter and inadequate financial contributions by some member states have constrained its effectiveness.
Challenges Confronting ECO
Despite its considerable potential, ECO has not achieved a level of regional economic integration comparable with organizations such as the EU or ASEAN.
Several internal and external constraints have affected its performance.
Internal challenges include weak political commitment, protectionist economic policies, inadequate infrastructure, limited economic complementarities, and insufficient implementation of regional agreements.
External factors have also created difficulties. Economic sanctions on Iran and prolonged instability in Afghanistan have particularly affected investment, connectivity, trade facilitation, and regional payment mechanisms.
These constraints explain the considerable gap between ECO’s geopolitical and economic potential and its actual level of regional integration.
Way Forward for ECO and Pakistan
ECO possesses many of the ingredients required for a successful regional economic bloc: strategic geography, abundant natural resources, a large population, important energy reserves, historical connections, and access to major regional markets.
Realizing this potential requires member states to move from declarations towards implementation. Greater emphasis is needed on operationalizing ECOTA, removing trade barriers, improving transport infrastructure, developing energy corridors, strengthening financial institutions, and promoting regional connectivity.
For Pakistan, an effective ECO can complement its national objective of becoming a regional hub connecting South Asia, Central Asia, West Asia, and adjoining markets.
Conclusion
The Economic Cooperation Organization remains an important platform for Pakistan’s regional economic diplomacy. Despite challenges in trade integration, connectivity, political commitment, and implementation, ECO has continued to promote cooperation in transport, energy, trade, science, tourism, and regional development.
As a founding member, Pakistan has a strong interest in transforming ECO into a more effective and result-oriented organization. The ECO region’s strategic geography and vast natural resources provide it with the potential to emerge as an important corridor for international trade and commercial activity, reminiscent of the historic Silk Route.
Ultimately, however, ECO’s success depends upon the willingness of all member states to subordinate narrow interests to the larger objective of collective regional development, connectivity, and prosperity.
