ADB president warns of risks of protracted Middle East conflict for Caucasus, Central Asia

Prolonged instability in the Middle East may significantly slow economic development, increasing threats to a number of regions, including the Caucasus, Central Asia, and West Asia, Asian Development Bank (ADB) President Masato Kanda said at a seminar on foreign direct investment in Central Asia, organized during the 59th Annual Meeting of the ADB Board of Governors, Report informs.

He emphasized that the armed conflict in the Middle East exacerbates geopolitical tensions, putting pressure on economic growth and inflation, and destabilizing supply chains for strategically important raw materials.

"The situation remains fragile. Prolonged disruptions may significantly weaken economic activity, increasing downside risks, including in the Caucasus, Central Asia, and West Asia. However, the region has entered this phase with a certain degree of resilience. In the current circumstances, foreign direct investment (FDI) should play a key role. It can help address infrastructure shortages, accelerate the transition to new energy sources, advance digital transformation, and create high-quality jobs," the bank's head stated.

Kanda pointed out that financial investment alone is not enough.

"High-quality and sustainable investments flow to countries where trust exists. Trust is built on transparent policies, strong institutions, and fair, predictable regulations. Foreign direct investment is ultimately based on trust. Trust that contractual obligations will be fulfilled, disputes will be resolved objectively, and decisions will be implemented. A predictable dispute resolution mechanism is not just a technicality, but a determining factor for long-term investment," the ADB president added.