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Russia conquered Uzbekistan in the late 19th century. Stiff resistance to the Red Army after World War I was eventually suppressed and a socialist republic set up in 1925. During the Soviet era, intensive production of "white gold" (cotton) and grain led to overuse of agrochemicals and the depletion of water supplies, which have left the land poisoned and the Aral Sea and certain rivers half dry. Independent since 1991, the country seeks to gradually lessen its dependence on agriculture while developing its mineral and petroleum reserves. Current concerns include insurgency by Islamic militants based in Tajikistan and Afghanistan, a non-convertible currency, and the curtailment of human rights and democratisation.
Update No: 263 - (26/11/02)
The Uzbek Republic is committed to US involvement as the primary foreign influence. This is of course a consequence of 9:11.
The UK option
But Uzbeks are also now opening up to the UK. Uzbekistan has been involved in promising discussions for trade cooperation with the United Kingdom. A working delegation of the London Chamber of Industry and Commerce recently visited the capital of Uzbekistan. The aim of the visit was to closely study economic opportunities in the country, meet the country's business circles and determine prospects for cooperation.
Thirteen British companies were represented in the delegation and they hail from the banking and financial sectors, chemical, oil and gas industries, tourism, aircraft development, and telecommunications.
They had talks with government officials, heads of ministries and departments, local entrepreneurs and businessmen and considered important aspects of further expanding cooperation.
The EBRD comes in heavily
The EBRD, based in London, is now backing Uzbekistan in a big way.
Uzbekistan expects to receive US$30m from the European Bank for Reconstruction and Development (EBRD) by the end of the year to modernise and rehabilitate the heating system in Tashkent city under a project that will cost US$40m, a government source was quoted as saying by Interfax News Agency.
The EBRD board could approve the loan in December. The money will be used to create a private sector company in Tashkent that would modernise the heating system in three districts of Tashkent in 2003-2006. The EBRD in late 2001 provided 17.5m Euro to reconstruct the heating and water system in the city of Andizhan under a US$27.5m project.
The economy is still sluggish
All these projects and the outcome of trading contacts are in the future. Today, the economy is still sluggish, GDP coming in 2.2% rather than the 2.7% officially proclaimed; and inflation at 22% rather than the official 18%.
The republic has the really central economy in the region and has a resilient agricultural sector, which is doing well, based on the fertile Ferghana Valley. It is certainly hampered by governmental practices inherited from communism. But the trend towards reform is decisive, however gradual in execution.
Non-ferrous metals producer in US$2.4m bonds issue
The International Issues Syndicate, Uzbekistan's corporate bond organiser, has approved an issue of two billion soms (US$2.4m) in local currency bonds by the Almalyk Mining and Metals Combine, one of central Asia's biggest non-ferrous metals producer, Interfax News Agency has reported.
Details of the issue have not yet been finalised, however, it is expected that the bonds will be one-year papers at 19 per cent annually. Uzprivatbank, the country's international bank for privatisation and investments, will be the issue underwriter. The primary placement is expected with the month, once the Centre for the Coordination and Control of Securities Market registers the issue. This will be Uzbekistan's biggest corporate bond issue to date. Since December 2001, the Issues Syndicate has organised bonds worth a total of 4.87 billion som by seven issuers. The syndicate, set up in September last year, has 14 members, among them Carthill Asset Management Company, IT solutions provider A&TM, and 12 commercial bank-underwriters.
With Aral Sea facing extinction, Central Asian leaders fall back on words rather than action
The shrinking Aral Sea, bordering Kazakstan and Uzbekistan, has developed into a symbol of Central Asian governments' inability to cooperate on vital regional issues. By 2020, according to United Nations experts, the symbol will likely no longer exist.
UN Environmental Programme specialists estimate the Aral's surface area is now just 25 per cent of that which existed before Soviet central planners began diverting the rivers that feed the sea for ill-conceived agricultural irrigation schemes. Thousands of tons of salt and sand from the dried up seabed are being scattered by winds every day across a 300-mile radius, according to an October 9th report on Kazak Commercial Television. There is little that can be done at this stage to save the sea from extinction, the UN experts say.
The announcement, which seems to confirm environmentalists' worst fears, overshadowed a meeting three days earlier of Central Asian heads of state in Dushanbe, Tajikistan. At that meeting, the presidents of Kazakstan, Kyrgyzstan, Uzbekistan and Tajikistan met under two rubrics, as the Central Asian Cooperation Organization and as the International Fund for Saving the Aral Sea. Though the meeting produced declarations and a call for a United Nations commission on the Sea, observers say the gathering did little to foster a cooperative spirit. Predictably, say experts, Central Asian leaders asserted their own geopolitical interests, rather than working towards a joint solution.
Kazakstani President Nursultan Nazarbayev and Tajik President Emomali Rahmonov both told reporters how keenly they want to rescue the sea from drying, but the conference produced only promises of further discussion and a call for a United Nations commission.
Tajik television declared that rehabilitating the depleted sea would be "practically impossible" without "the international community's support." Tajikistan chairs the Aral Sea fund for 2002 and 2003. Nazarbayev, for his part, called the sea's shrinkage a "global disaster," noting that salt and sand from the irrigated sea complicates the environment as far away as the Arctic Ocean. If four countries cannot develop a plan that other countries or lenders would fund for the sea's restoration, though, it is hard to see how a broader body of nations could implement such a plan.
Meanwhile, UN experts reportedly are urging the Kazakstani government to stop "spending money on the restoration of the Aral Sea and should spend it on evacuating people from ecological disaster area," the television report said.
The summit did produce some decisions that may prove important, say experts. All four presidents committed to preparing to develop a water and energy consortium for the transference of natural resources across country lines. If such a consortium develops, it would represent a big step forward in regional cooperation.
ADB backing Amu-Zang irrigation system
The Asian Development Bank will give Uzbekistan a US$250,000 grant for technical assistance in renewing the out-dated irrigation system. The aid, co-financed by a US$580,000 grant from the Italian government, is aimed at developing a project to improve the living conditions of thousands of rural residents.
The cost of the research will total US$1.2m, US$830,000 of which is external financing and the government of Uzbekistan will finance the rest. The target of the project is the Amu-Zang irrigation system in Surkhandarya Region, including three pumping stations lifting the Amu Darya waters. The agricultural sector in the region is facing falling efficiency, heavy economic losses and exhaustion of resources due to the slow process of reform, restrictions of the state budget, bad organisation and poor state of the irrigation infrastructure.
Due to low levels of rainfall and the semi-dry climate, farming in Uzbekistan heavily depends on irrigation, covering 86 per cent of the country's 4.3m ha of agricultural land. The implementation of the project will help the areas of priority for the stable management of water resources, the drawing up of an investment package for a possible ADB financing and an accord on liabilities of all parties concerned.
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