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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: 256 - (23/04/02)
The Uzbek regime has crossed the Rubicon. It has allowed the US to set up bases in the republic and become its main military protector.
Karimov in Washington
President Islam Karimov paid a five-day visit to the US recently that saw him seal a 'strategic partnership' with Washington. President Bush was very cordial
to him, a thing that he does not mind being with dictators who have uses. The vital defence agreement was full of references to democracy. Indeed the
Americans now want to consolidate their presence in Central Asia for manifest geopolitical reasons. They will worry about liberal democracy later.
The US has pledged cooperation across the board. Bush and Powell can see the large benefits of having a strong alliance with the Central Asians of the former
Soviet world, holding the key to Afghanistan and to enormous energy resources.
One agreement concerned defence, another energy, a third the extension of US Import-Export credit of US$55m to facilitate the purchase of US goods and the
improvement of the small-to-medium business climate, a fourth one science and technology. This across the board assistance should have profound consequences.
The Uzbek regime moved slowly on reform at first. But this left it less vulnerable in the 1998-00 Russia crisis, currency exchange controls preventing
devaluation. One advance, however, has been a thorough overhaul of the banking sector, which has opened up to international auditing and ownership. The
National Bank of Uzbekistan and the 38 commercial banks, the largest of which is the National Bank for Foreign Economic Activity, have been audited by Arthur
Andersen, Deloitte and Touche, KPMC, Ernst and Young and former Coopers and Lybrand.
Leading world banks, DuetscheBank, Commerzbank, Chase Manhattan Bank, Societe General, Credit Swiss First Boston, Sakura Bank and Russian Credit have branch
offices in Uzbekistan. Uzbeks cooperate with the leading international institutions, EBRD, ADF, IFL and the Credit Agency of Development of Germany, Central
Asian-American Enterprise Fund and Japanese Eximbank. The National Bank of Foreign Economic Activity, Pakhtabank and Bank Asaka have all received high ratings
from Thomson Bank Watch, which greatly enhances their international credibility.
All in all, Uzbekistan, whose GDP growth for 2002 is due to be 4.5%, is making steady progress.
Spanish BSCH chooses Asaka Bank for partnership deal
A cooperation agreement between Uzbekistan and Spain's Banco Santander Central Hispano (Santander Bank, BSCH) was recently signed at the Uzbekistan's Asaka
Bank, Uzreport reported. BSCH is planning to lend for the construction of the new factory that will manufacture medical cotton wool and other products
necessary for the pharmaceutical industry in the town of Karshi, in Kashkadarya Region, southern Uzbekistan. Initially, a Santander credit of 7.1m Euros was
used to build the factory in central Sydarya Region and the bank is to invest in building another plant.
According to Banco Santander Vice President, Louise Belga, it was for a good reason that BSCH chose Uzbekistan as a partner. Uzbekistan is the centre of
Central Asia and it has been developing in a comprehensive way. A Spanish diplomat also expressed his hope that cooperation between Uzbekistan and the
Spanish bank would be mutually advantageous.
Uzbek supplies 107m cu. m. of gas to Kyrgyzstan
Uzbekistan has supplied 107,143m cu. m. of gas to Kyrgyzstan since the beginning of 2002, KyrgyzGas Director General, Avtandil Sadykov, told a news briefing
in Bishkek, New Europe reported recently. Kyrgyzstan has paid about US$1.5m to Uzbekistan for these supplies, he said.
Kyrgyzstan still owes about US$500m for gas to Uzbekistan, Sadykov noted. This debt has accumulated because the population, budget-funded organisation, and
industrial enterprises have incurred an over 150m som debt to KyrgyzGas, he said. Kyrgyzstan pays 50 per cent of its payments for gas imports in foreign
currency and the other 50 per cent with consumer goods, primarily building materials Sadykov said.
Sadykov also noted that the gas pipelines being used in the country are over 25 years old, and they have in fact exhausted their service life. In this
connection, Kyrgyzstan is currently negotiating with Kazakstan on using another gas pipeline in the northern part of the country, 90 kilometres of which is
yet to be built. KyrgyzGas specialists are currently making estimates of the cost of this project. Uzbekistan exports gas to Kyrgyzstan through Kazak
territory. In 2002 Uzbekistan plans to supply 525m cu. m. of gas to Kyrgyzstan.
FOREIGN LOANS & AID
Uzbekistan continues to receive development aid from Japan
Japan has given Uzbekistan aid amounting to about US$100m, the Japanese Embassy in Tashkent told Interfax News Agency on 29th March. The aid was given as part
of the Official Development Assistance programme and the countries of Central Asia started receiving this assistance in 1991.
First Secretary of the Japanese Embassy, Tadanori Kumano, told Interfax. This assistance includes technical cooperation and free financial aid, which is
divided into six programmes.
The programme for free assistance to small projects was launched in the republic in 1995. During the first four years, four to six projects were funded
annually. Recently, their number has sharply increased, from 14 grants in 2000 to 24 in 2001.
World Bank pledges more financial support
A meeting with World Bank (WB) officials was recently held with in the framework of President Islam Karimov's visit to the US with top items for discussion
focusing on distributing funds allocated for Uzbekistan and promising programmes. Commenting on the outcome of the meeting, reported by CNA, the bank's
representatives will pledge financial assistance to Uzbekistan the amount of US$350m over the next two years.
WB officials have also pointed out that the amount of such assistance could increase if Uzbekistan fully implemented conditions set forward by IMF earlier
this year. Multilateral lending agencies have been pointing to convertibility as a key issue in the further flow of financial assistance to Uzbekistan from
World Bank representative in Uzbekistan, David Pearce, described a recent Uzbek memorandum on economic and financial policy which should pave the way to
currency convertibility in the middle of 2002 as significant. In a recent interview with the Uzbek newspaper 'Biznes-Vestnik Vostoka,' Pearce outlined the
likely effect on agriculture, the financial sector and the general public. He said that 40% of the population engaged in agriculture stood to benefit, but
warned that measures would be needed to compensate for inflation.
MINERALS & METALS
Oxus gets US$37m backing for Uzbek gold mine
Oxus Mining, the Aim-traded miner, said on 3rd April that it had obtained commitments for US$37m of funding towards the development of its US$42.5m Amantaytau
Goldfields project in Uzbekistan, The Financial Times has reported.
The group, which floated last July, has agreed an underwritten loan of US$31m with Société Général, subject to legal and financial conditions including
raising the remainder of the build costs.
It has also obtained an insurance guarantee that will be used to underwrite a minimum of US$10m of credit-enhanced subordinated debt. The open-pit project
will be the first phase development of Amantaytau, which is a 50-50 joint venture with the Uzbek government.
Initial production is due to start in the first quarter of 2003 and the first full year's production is expected to be 170,000 ounces of gold. The news came
as the group increased its estimates of total measured and indicated gold reserves at Amantaytau from 3.36m ounces to 4.3m ounces.
An Oxus official said the group would aim to raise the remaining US$6.5m required to build phase one, plus a small amount of working capital, through an
equity offering later in April. The equity offer will be handled by broker Brown Shipley Securities.
The group hopes that cash flow from phase one production will allow it to finance a second phase underground development at the mine as well as further
exploration in central Asia. Oxus's interests are within 50km of the Muruntau mine, which has been operating for 30 years.
Newmont Mining, the US group that is the world's largest gold miner, has been in the region since 1995 and currently recovers 450,000 ounces of gold a
SCIENCE & TECHNOLOGY
Potential level to determine Uzbek R&D projects funding
Scientific research projects in Uzbekistan will in future be financed on the basis of their potential. And funding will be targeted. The first meeting of the
newly-established co-ordination council for scientific and technical progress, held on 29th March, called for "unbiased and independent" evaluation of
scientific programmes and technological developments and a move to a more market-oriented approach to funding, Uzreport recently reported.
The co-ordination council for scientific and technical progress of the Cabinet of Ministers, which was set up by a presidential decree on 20th February 2002,
held its first meeting chaired by Prime Minister, Otkir Sultonov.
The old methods of organising scientific and technical work that are still in use diminish the scientific potential. This can be seen in the ongoing attempts
at scientific planning and the inability to find mechanisms to harness the mutual interests of science and consumers which the present market relations
require, and in the fact that there is no unbiased and independent examination of scientific programmes and technological developments. The unfair practice
of financing scientific and research organisations at a basic level holds back the development of scientific potential.
An expert in the field though that a kind of polarisation had emerged, whereby certain scholars were making very big and lofty contributions and other
scholars were not doing anything at all, they could not even prepare their reports but copied them from books. The expert stressed that a need had therefore
arisen to stop financing all institutes with a blanket sum of between 1.5m and 2m soms, regardless of whether they are basic or mediocre. "We must stop
financing those who cannot do research work. On the contrary, we should support talented scientists. The financing should be targeted. We must give them
the opportunity to do their research work," the expert was quoted as saying.
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