From 17-20 October 2007, Herat in western Afghanistan is hosting the Regional Trade Conference of the Economic Cooperation Organisation (ECO). The conference will be attended by the ten members of the ECO, which comprises of Afghanistan, Pakistan, Iran, Turkey, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Azerbaijan. It will be attended by the respective heads of state, including President Karzai.

The ECO is a follow-up of the multi-governmental initiative, the Regional Cooperation for Development (RCD) set up in 1962 by Iran, Pakistan and Turkey. The RCD was dissolved in 1979 and replaced by the ECO, set up in 1985 to facilitate inter-regional trade and investment amongst member countries. This is the first time Afghanistan is hosting the ECO's annual regional conference or indeed, any other major conference since the war began on its territory. The symbolic value of the ECO's support for Afghanistan's reconstruction is evident in its choice of venue for the RTC. The items on the agenda for discussion are transit facilities, energy pipeline projects, trade, exploration of oil and gas and the facilitation of investment in the member countries.

The two major successes of the ECO have come in the form of the Economic Cooperation Organisation Trade and Development Bank (ECO Bank) and the Economic Cooperation Organisation Trade Agreement (ECOTA).

The ECO Bank looks into the promotion of the economic development of ECO member countries and provides infrastructural facilities for expansion of intra-regional trade among these countries. The charter of the ECO emphasizes the need for member countries to meet the challenges of globalisation through promotion of free trade. Trade liberalisation is being achieved by the reduction of tariffs and the removal of non-tariff barriers in the region. Trade facilitation was achieved through the ECOTA that was signed in 1993 in Pakistan to promulgate the principles of reciprocity and mutuality of advantages amongst member nations of the ECO who had ratified the ECOTA, taking into account their respective levels of economic and industrial development.

The ECO also engages with international agencies on a wide scale, such as UN agencies and the International Trade Centre (ITC) to expand intra-regional trade. The vision of the ECO is to promote the ten member nations as a region, thus giving them more economic leverage. The ECO acquired observer status with the UN in 1993, thus helping the consolidation of its ties with other regional and international organisations.

Membership of the ECO has substantial import for Afghanistan's reconstruction and the resurrection of its faltering economy, which is mostly donor-supported and aid-based.

Afghanistan's GDP is estimated at approximately USD 3 billion and the economy relies heavily on agriculture, light industry and trade. The war-torn country has suffered tremendous losses in its agriculture sector and the reconstruction efforts have been setback by destruction of facilities in the ongoing lawlessness. Of the USD 2 billion pledged to Afghanistan as assistance by the international community at the Tokyo Conference of 2002, approximately 70 per cent has been directed towards reconstruction and development already. The agricultural economy is also heavily dependent on opium production and with the eradication of the crop, the displacement will affect one third of Afghanistan's GDP. Illicit trade and untracked finance has been a large part of the Afghan economy and to regulate that presents a challenge in itself.

However, there are opportunities in terms of the low cost production facilities and the market potential in the country. Foreign investment can supplement the reconstruction efforts in Afghanistan. The security situation will also improve with the establishment of industry and the availability of employment. Indigenous businesses are also striving in the post-conflict environment. The main hurdle for domestic investment is the absence of skilled labour. Afghanistan's rate of unemployment stands at about 40 per cent and more than 50 per cent of the people live below the poverty line. Training is of utmost importance in Afghanistan and donor nations could do well to provide human resource training. In that respect, the ECO has tremendous potential, for a regional framework is preferable to an imposed economy based on unsustainable initiatives.

Certain roadblocks to progress in the nation can only be cleared with the help of a regional economic edifice. For instance, lack of access to electricity and limited access to many parts of the country, some still under Taliban control, limit the options of a potential investor. Small businesses have thrived traditionally in an indigenous system, from which governmental control is nearly absent. In the new presence of foreign players and extensive governmental control, the role of a regional player would be to facilitate industrial growth on Afghan territory and trade from the country through a regional system that already enjoys the sanction of the government and the international community. This could establish a structure of economy that doesn't rely on the government's already thinly spread resource base.

Hopefully, hosting the Economic Cooperation Organisation will open up new avenues for cooperation between Afghanistan and the other members of the regional organisation.