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uzbekistan

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  UZBEKISTAN

REPUBLICAN REFERENCE

Area (sq.km)
447,400

Population
25,155,064

Principal
ethnic groups

Uzbeks 71.4%
Russians 8.3%
Tajiks 4.7%
Kazaks 4.1%

Capital
Tashkent

Currency
Uzbek Sum

President
Islam Karimov

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Background:
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: 257 - (30/05/02)

The great beneficiary of 9:11 in former Soviet Central Asia may well be Islam Karimov, president of Uzbekistan. He and his regime have come in from the cold.

The Clinton years
Long isolated by the Clinton Administration as a repressive dictatorship, Strobe Talbott, its roving ambassador to the region and the CIS, refused to visit Tashkent in protest at abuses of civil rights. Aid was minimal and the IMF kept its distance, the economy remaining under a tight network of controls.
As a result Uzbekistan fared better during the rouble crisis of 1998-99, its currency the som, being protected by exchange controls, unlike the Kazak tenge.

The US makes itself felt
The events of last September have changed all that suddenly; the West in the shape of the US is now a major player.
In fact, even in the last Clinton years a new rapprochement with Uzbekistan was under way, as Washington realised the strength of the common foe, Islamic fundamentalism in general and al-Qaeda and the Independence Movement of Uzbekistan (IMU) in particular. US intelligence operatives and special forces were already liaising with their Uzbek equivalents.
The main enemy was the leader of IMU, a close al-Qaeda ally, Juma Namanganu, a nom de guerre taken from his home town Namangan, in the Ferghana Valley east of Tashkent.
The policy has paid great dividends for the regime. He is believed to be dead and his 2,000-3,000 fighters dispersed or are dead themselves. IMU is as likely as not a finished force. 
But Karimov has brought his country other dividends as well. He made a five-day visit to the US recently where he forged a "strategic partnership" with Washington, being cordially welcomed as an ally by Bush.
The US is agreeing to a wide-ranging four-tier level of cooperation with Uzbekistan. Firstly, there will now be permanent military bases of the US in the country, the main one at Khanabad, with airfields from which sorties and surveillance can be made in Afghanistan. The US have come to stay. If Turkey is the great US ally at one end of Turkic Asia, Uzbekistan is now at the other.
Secondly, there will be wide-ranging cooperation in technology and science. Thirdly, there will be an energy accord, energy being the great long run prize for the US in the region. Uzbekistan is no great producer as yet, but has proven oil reserves of one billion barrels of oil and a possible two billion, while it has one trillion cubic metres of proven gas reserves and a possible two billion (exactly one half of Turkmenistan's proven and possible reserves, the fourth or fifth largest in the world). Uzbekistan remains a vital link in the Central Asian energy picture by reason of its large consumption and transit role, participating in a new gas distribution consortium with Russia, Turkmenistan and Kazakstan.
Lastly, the US Export-Import Agency is extending the republic US$55m credit to buy American goods and improve the small-to-medium business climate in the republic.
All this should greatly enhance the republic's importance in regional and so world affairs. Uzbekistan has arrived. 

Economy benefits
GDP has grown in fits and starts in Uzbekistan, by 4% in 2002 and 4.5% in 2001, but probably by only 2% this year.
The projections by the relevant government body is that growth will double by 2010, rising by six to eight per cent average, industry by 10-11%, agriculture by six per cent and services by eight. Time will tell.

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AGRICULTURE

IBRD credit to Tashkent agro projects


According to the Agency for Restructuring Agricultural Enterprises of the Ministry of Agriculture and Water Resources of the Republic of Uzbekistan, a US$36.14m credit by the International Bank for Reconstruction and Development (IBRD), granted for a term of 20 years, will be used to set up agricultural servicing centres in various parts of the republic, rehabilitate the irrigation and drainage network, organise a consultative agricultural business agency and grant hard-currency credit to farm producers. 
Under a government decision, the agricultural producers taking part in the project are exempted from the payment of customs duties on equipment imported while the project is being implemented. Citing relevant reports posted by Uzreport.com, the Cabinet of Ministers has chosen the joint-stock commercial Pakhtabank to carry out the financial operations on the foreign credit project, granting all necessary powers to it. All profitable enterprises belonging to the agricultural sector of the economy and located in five Districts Karakalpakstan, Marhamat, Nishon Kashkadarya, Sherobod and Ohangaron, are entitled to take part in implementing the project and to use the credit to improve their material and technical basis. These are the regions that are targeted by the project.

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BANKING

Kazak-Uzbek strategic banking cooperation

The commercial People's Bank of Kazakstan and the state and commercial People's Bank of Uzbekistan recently signed a framework agreement on cooperation. The two sides believe, as was pointed out in a press release circulated by the People's Bank of Kazakstan on this occasion, that "against the background of liberalisation in Uzbekistan's banking system, this mutually beneficial cooperation will have a beneficial effect on the two banks' activities."
Specifically, the heads of the Kazak and Uzbek banks, Kayrat Satylganov and Jamshed Sayfiddinov, respectively, emphasised during the talks that mutual cooperation would make it possible to optimise settlements between the countries and to improve the quality of the services offered by the banks, Uzreported.com reported.
Indeed, the press release by the People's Bank of Kazakstan notes, under the agreement the sides intend to provide mutual support in providing retail banking services and in carrying out activities on the two countries' financial markets.
The document also provides for cooperation between the two major banks in providing joint credits for certain projects, and also in the spheres of information technology, personnel training, exchange of information and conducting market research.

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FOOD & DRINK

Nestle Uzbekistan accelerating production

Uzbek-Swiss joint venture, Nestle Uzbekistan, has announced the launch of its first consignment of production worth 686m soms, consisting of 253 tonnes of sterilised milk, 29 tonnes of infant milk formulas, 31 tonnes of milk cereals and 1.8m litre of drinking water, New Europe reports. Nestle Uzbekistan, the largest producer of infant nutrition in the Central Asian region, has already absorbed over US$20m of the US$30m invested in the project. Three processing lines for producing long-life milk in Tetra-Brick packaging, infant nutrition and Pure Life drinking water (aerated and not aerated) were put into operation. An additional sum of US$8.3m is to be used for expansion of the enterprise. Meanwhile, by the end of the year Nestle Uzbekistan will reach the company's production output of 6,200 tonnes per year whilst exports of infant nutrition are estimated to reach US$2m.

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FOREIGN INVESTMENT

Joint ventures blooming in Tashkent

Since the beginning of the year, 10 joint ventures have been set up and are operating in Uzbekistan, whilst well-established forecasts show that the number of enterprises with foreign investments will have grown to 81 by the end of the current year. These figures were announced at the regular session of the inter- departmental working group on co?ordination and creation of enterprises with foreign investments in the Uzbek regions recently held in Tashkent, UzReport.com reported.
The session, conducted by Deputy Prime Minister of Uzbekistan and Chairman of the working group, Rustam Azimov, was devoted to examining the implementation of the forecast parameters of the programme on creation of industrial joint ventures in the first quarter of 2002.
The working group noted that 11 out of 92 joint ventures created within the framework of the programme in 2001 currently do not function, including three in Jizakh region and one each in Sydarya, Bukhara, Namangan and Surkhandarya regions. Deputies of the regional Khokims (governors) - heads of the regional working groups - have been delegated to study the reasons behind such inactivity and take appropriate measures on ensuring the operation of the joint ventures.

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FOREIGN LOANS

EBRD increases SMEs financial backing

The European Bank for Reconstruction and Development intends to approve in the near future, the increase of US$40m for the back-up line for commercial banks of Uzbekistan aimed at credit for local small- and medium-sized business in the regions with high unemployment rate.
Late last year the bank expressed its intention to open a US$20m credit line for microcrediting of local small-sized business. The principal concept of the pilot programme of microcrediting, when credits do not exceed the equivalent of US$5,000 per borrower, involves support for small-sized plants and factories processing local raw materials and agricultural production, human services, creation of new jobs, including those of the out-work type for women in the job-scarce regions.
As posted by Uzreport.com, Andijan and Fergana are the assigned arenas for implementation in the near future. Currently the project is being extended so it has been decided to engage additionally the local Pakhtabank. Its staff has received appropriate training and has already gone into action in Kokand region.
Loan credits are issued without any preferential terms and are short-term, from four to six months.

Uzbekistan secures more projects under WB finance

President of Uzbekistan, Islam Karimov, recently received the President of the World Bank Group, James Wolfensohn. During the meeting at the presidential Oqsaroy residence, the two sides exchanged opinions on the issues of further expansion of cooperation, as well as the realisation and development of the current projects.
"We very much appreciate your visit," President, Islam Karimov, was quoted as saying during the meeting, reported Uzreport.com.
"We regard your visit as a desire to become thoroughly familiar with the situation in our region, since great changes have taken place in the whole world since the September 11th terrorist attacks. The pace of change is especially swift in our region," Karimov commented.
It is recalled that the foundation for cooperation between Uzbekistan and the World Bank was laid in 1992. In the recent years the bank allocated US$494m for the realisation of 10 projects in Uzbekistan, with two of them being currently completed.
The World Bank's CAS envisions two lending scenarios: a current Low Case of up to US$150m during the 2002-04 period; and, if the macroeconomic and structural reform process accelerates, a Base Case of up to US$350m during the same period.
Wolfensohn also met Deputy Prime Minister and Minister of Macroeconomics and Statistics, Rustam Azimov, as well as representatives of Uzbekistan's small and medium businesses.
The parties discussed expanding bilateral cooperation and the implementation of joint projects, as well as outlining future projects.
The same day the document was signed ceremonially by the president of the World Bank, and the Uzbek Minister of Finance, Mamarizo Normurdov, on provision by World Bank of a credit loan for a water supply project in the towns of Samarkand and Bukhara has just taken place. The total cost of the project is estimated at US$40m.

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MINERALS & METALS

Canadian Teck eyeing gold project in Tashkent

According to the Uzbeck State Geology Committee, Canada's Teck Corporation is considering implementing a project to develop the Adzhibugut gold mine in Central Kyzyl Kum near Visokovoltnoe under the terms of a production sharing agreement (PSA). 
Newly adopted Uzbek regulations on PSAs have triggered Teck to have another look to the Uzbek gold industry. The Uzbek Committee recently said, as reported by UzReport.com, that the Canadian company was currently completing work on the project's preliminary feasibility study.

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