BACKGROUND: As the successor of the Regional Cooperation for Development (RCD) in the 1960s, Iran, Turkey and Pakistan founded the Tehran-based ECO in 1985. However, it became active as a large economic bloc only when the five Central Asian countries, Afghanistan and Azerbaijan joined it in 1992. Within a few months, the ECO members reached an agreement on a 10% tariff reduction among themselves. The July 1993 Istanbul conference set the grounds for the ECO\'s restructuring as a strong economic bloc as its members agreed on developing a transportation network, a telecommunication system and financial institutions. It has since taken other steps to consolidate itself and expand relations among its member states. In particular, it experienced a period of optimism and enthusiasm in the 1990s as its members viewed their organization as a vehicle through which they could address their various economic problems, including their underdevelopment, to a varying degree worsened by numerous transitional difficulties in the case of Azerbaijan and the Central Asian states. In this regard, a major event took place during its January 1995 conference in Ashgabad when its members agreed to facilitate visa procedures for ECO businesspeople and the transit of goods within the ECO community. They also agreed to create the ECO development bank in Turkey, the ECO insurance company and scientific centre in Pakistan and the ECO shipping and airline companies and its cultural centre in Iran. However, the initial momentum to make the ECO a success story gradually disappeared, although the ECO expanded its administrative structure. Consequently, by 2000, it was practically an inactive regional grouping with a little effect on its members, despite its contribution to the latter’s expanding economic ties.

IMPLICATIONS: Being unable to address their economic problems and having lost hope to receive significant economic assistance from major Western economies, the ECO members have since shown an interest to revitalize their organization. The conclusion of the ECOTA should be analyzed within this context. The ECO ministers of commerce and trade and their respective countries’ heads of delegations signed the ECOTA during their July 17 meeting in Islamabad. Seeking to boost trade and investment in the ECO region, the signing ceremony followed the conclusion of the second ECO ministerial meeting on commerce and trade. By virtue of the signed trade document, the ECO states agreed to bring down tariffs to the level of 15 percent of the existing rates within an eight-year period. In the aftermath of the meeting, the statements made by high-ranking ECO leaders reflected a very optimistic mood among the ECO states. For example, Pakistani Commerce Minister Humayun Akhtar Khan during the meeting expressed the desire to bring down tariff and non-tariff barriers as a means to encourage regional trade and \"to move quickly towards a free trade regime [among] ECO member states\". ECO Secretary-General Syed Mojtaba Arastou, the Iranian rotational ECO leader, described the signing of the trade agreement as \"the beginning of a new era of economic cooperation amongst the member states.\" Apart from the prevalence of a reportedly positive mood in the meeting, he based his optimism on the establishment of a database at the ECO Secretariat in Tehran as a step towards removing some of the major non-political barriers to extensive trade. That database contains information on \"the composition and direction of regional trade, tariff structure, trade regulations and matters relating to insurance, banking, transport and business proposals.\" As Arastou announced, the ECO states\' agreement to vote \"more closely at international fora especially [on] WTO (World Trade Organization) -related issues\" further indicated a shared desire among them to turn the ECO into a more active organization to serve their interests also at the international level. The ECO has all the ingredients (e.g., rich mineral, energy and agricultural resources, large population, strategic location and access to international markets via land and open seas) to develop into a strong economic bloc. If this scenario is realized, it will make a sizeable contribution to the economic development of its members. However, over a decade after its revitalization, it is yet to establish itself as an economic bloc to reckon with at the regional and international levels, while its relevance to the economic growth and prosperity of its members is still marginal. Major factors responsible for this situation include political and economic conflicts among its members over a variety of issues such as their pursuit of opposite foreign policies especially towards the United States and Russia, two influential powers in the ECO region. The ECO members\' pursuit of different or opposite economic policies further creates barriers to their expanding trade and economic cooperation currently restricted because of the limited opportunities due to a shortage of financial means and/or the lack of required skills, technology and goods. Other barriers include disagreements over the Caspian Sea\'s division (Iran, Azerbaijan, Turkmenistan and Kazakhstan) and border disputes (Central Asian countries).

CONCLUSIONS: Undoubtedly, the ECO members are all interested in the success of their regional economic organization. Various political, economic, security and social factors make it difficult, if not impossible, for them to address their economic problems by employing their own resources. Added to this, expansion of trade and economic cooperation in non-trade areas are a necessity for the viability and the growth of all the ECO economies experiencing difficulties for one reason or another; they require a boost to revitalize. However, the existence of economic incentives, while an absolute prerequisite, are not enough for turning the ECO into an organization capable of satisfying its membership\'s needs. So long as the ECO members have not resolved their political differences or at least have not reached an understanding to minimize their impact on their relations, the conclusion of major agreements such as the ECOTA will likely fail to help the ECO establish itself as a strong economic grouping of relevance to its members\' economic development and prosperity.

AUTHOR BIO: Dr. Hooman Peimani works as an independent consultant with international organizations in Geneva and does research in International Relations.