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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: 262 - (22/10/02)
Karimov, the hinge
There is only one figure that matters in Uzbek politics, the president, Islam Karimov. His first name is something of an anomaly in his case, as he is anything but an Islamicist. Indeed, he is the sworn enemy of the fundamentalists and has declared his willingness to "throttle them with my own hands."
Karimov is a typical Central Asian despot, intransigent and obstreperous to the last. The one thing he does not like is opposition. His regime is the harshest in Central Asia, excepting that of President Niyazov in neighbouring Turkmenistan.
The government has revised its economic predictions downwards, GDP growth coming in at 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.
The US card
Karimov has committed himself and his regime to the US as Uzbekistan's main partner. The US were given free use of bases on the border during the war in Afghanistan last year. But more than this has happened.
US business has come to town in a big way. The US is providing US$160m in assistance for the economy with no strings attached, plus US$25m for procurement of military equipment. Uzbekistan is now a de facto member of NATO, a key ally at one end of the Turkic chain of states, with Turkey being so at the other.
Overture to Japan
But Karimov wants to open up his country to the West as a whole, meaning Europe and Japan as well as the US.
The government is hoping to attract Japan as a privileged investor. Uzbekistan plans to attract US$750m in credits from Japan over the next five years to implement social investment projects. The republic's government has confirmed a list of potential investment projects that will be carried out with the participation of Japanese companies and banks.
Four such projects are currently being implemented, at a total cost of US$372.9m. The Japanese Bank for International Cooperation (JBIC) has paid out loans of US$89.3m to develop telecommunications networks in the republic, US$58.8m to develop special middle education and US$221.1m to modernise Tashkent's State Regional Power Plant. Itochu Corporation has taken on a US$3.7m project to modernise and develop the radio and television complex of Tashkent TV tower. In addition, six other projects are currently being developed, including two in the oil and gas complex.
EBRD and Japan strike accord
The EBRD is already heavily committed to Uzbekistan, having directed loans amounting to US$3m to nearly 1,000 different small enterprises in the country. It is now to cooperate with Japan in a US$20m scheme to widen its presence to make small-business finance readily available.
The sum involved is not so far very large, indeed, is a drop in the ocean considering the size of the republic. But if all goes well, then it will doubtless be augmented.
The Japan-Europe Cooperation Fund will provide US$5m in technical assistance for training and institution-building in the banking sector. The German consultancy firm, LFS, Financial System GmbH, is to advise and train partner banks and its personnel.
The Germans are coming
The German company, DaimlerChrysler, is investigating Uzbekistan as the appropriate site for its operations in Central Asia, taking advantage of its central location there. One of its Board of Management, Dr. Klaus Mangold, is also acting Chairman of the German Economic Committee for Cooperation with Eastern European countries.
The company is considering investments not just in vehicle production, but in infrastructure, logistics centres and airports. Daimler and Chrysler merged in 1998. The firm is a true multinational and a Central Asian dimension to its operations is logical.
US military to finance renovation of Uzbek air base
The US military is planning to spend upwards of US$5m on refurbishing Khanabad air base in Uzbekistan. A few days after the US announcement, Uzbek President Islam Karimov suggested that he expects the international community to continue helping Uzbekistan with infrastructure development and other assistance as part of its reconstruction effort in neighbouring Afghanistan.
The UzReport.com web site reported July 30th that US and Uzbek contractors had been invited to submit bids to make improvements at Khanabad, which has served as a major US staging base for ongoing operations in Afghanistan. The US military intends to refurbish the runway at the air base and build additional facilities.
News of the renovation comes after a chemical contamination scare at the air base. News agencies reported in June that traces of nerve gas had been found in three locations at Khanabad. Some experts have suggested that biological weapons may have been stockpiled at the base during the late Soviet era, when the base served as logistics support facility for the Red Army's ill-fated 1979-89 occupation of Afghanistan.
In addition, sources told EurasiaNet that the high number of headaches and assorted illness among Uzbek military personnel at Khanabad had prompted concern about possible radiation dangers. Tests conducted by the Uzbek Ministry of Defence in mid July found the radiation levels at the base to be within normal standards.
Uzbekistan raises cotton price by 60 per cent in response to IMF demands
The Uzbek government has increased the purchase prices for cotton by 60 per cent to meet one of the key demands set by the International Monetary Fund, ITAR-TASS News Agency has reported. An Uzbek government spokesman emphasized that Uzbekistan was second in the world in terms of cotton exports. As from now, a tonne of Uzbek cotton will be sold at US$1,097 in the world markets.
Uzbekistan plans to collect 3.5m t of raw cotton and produce more than 1m t of cotton fibre this year. Cotton is a valuable raw material, which Uzbekistan exports to more than 20 countries in Europe, Asia and America. The Uzbek Ministry for Foreign Economic Relations reports that cotton exports will account for 25 per cent of all foreign currency revenues to the state budget this year.
TACIS programme finances Uzbek medical sector
Two projects in the Kashkadarya region are to be implemented within the next two or three years under the TACIS programme of the European Union. Uzbekistan National Agency reported that the first project is aimed at improving services of early clinical diagnostics and emergency medical aid, and will be carried out by a consortium formed by French Konsei Sante and German GTZ. Apart from expert and counselling aid, the consortium will provide 200,000 Euros for the purchase of diagnostic lab-ware.
According to Vyacheslav Lebedev, who is the project leader, in addition to system upgrades at regional laboratory and emergency medical services, an information management system will be developed and introduced. The programme envisages attracting funds from foreign and international humanitarian organisations. In contrast to other EU projects in Uzbekistan, this programme will be coordinated on the spot, which ensures direct cooperation between European and local experts.
The second project is designed for three years and will be realised by a consortium formed by Belgian consulting company Agrer, German GFA - terrasystems and the British Commission for local and regional development. The objective of the three million Euro project is to assist farmers, dehkhan farms and individual landowners in Kashkadarya and Surkhandarlya to increase their profits. The project also considers the creation of exemplary sites, local and regional marketing structures, as well as training and improvement of professional skills of rural chiefs and experts on economic issues.
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