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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: 267 - (27/03/03)
Mixed news on the economy
The Uzbek government is welcoming the recent record performance of the economy. GDP growth rose by 4.2% in 2002, industrial production by 8.5% and agriculture output by 6.1%. The foreign trade balance soared to US $276.4m from US$128m in 2001.
Inflation fell on a monthly basis from 1.9% to 1.6% last year. The public budget deficit was cut to 0.8% of GDP, under the 2% approved by parliament. It was covered by receipts from privatisation and Central Bank loans.
President Karimov addressed a cabinet session recently in which he dwelt on these achievements. But it was not all self-congratulation.
"Economic reforms in many branches of the economy - agriculture, construction, municipal services and the economy as a whole - have been half-hearted and not brought to a logical conclusion, reducing the effect of the implemented measures," Karimov noted, adding that privatisation has been largely formal. He also remarked that many companies were extremely slow in adapting to market conditions.
Karimov also expressed concern at continued efforts to smuggle huge quantities of Chinese manufactured consumer goods into the country, via Kyrgyzstan and Kazakstan, that were of dubious quality. He urged domestic producers of the same line of goods to boost output and pointed out that similar Uzbek goods of US$3m value had not yet been sold.
IMF presses for more reforms
Last year the IMF suspended a tranche of credit to Uzbekistan for failing to introduce more reforms. But it has acknowledged that macro-economic stabilisation was achieved last year. In almost an echo of Karimov's own strictures on the slow pace of reform, it advocated a genuine, wide-ranging privatisation programme and a more committed approach to creation of a market economy.
It is still too early to resume IMF tranches. But the government is to be encouraged for moving in the right direction. A fund mission stayed two weeks in Tashkent recently, which showed the seriousness of its own commitment to the country.
The US come to town
An even more serious commitment is that of the US now that it has bases in Uzbekistan. It is pushing more for political than economic reforms. Colin Powell's deputy, Elizabeth Jones, came to Tashkent in the New Year and called for more respect for human rights, political pluralism and democracy.
The regime, which is notorious for its ruthless violation of such principles, nevertheless, gave a pledge to mend its ways, doubtless with tongue in cheek. But Karimov may one day rue the day he let the Americans in. They could turn out to be a far more fundamental adversary than the Islamic Movement of Uzbekistan, which has been severely crippled with US help and is likely now to be contained. When dining with Washington in its present mood and inclination it is wise to do so with a very long spoon.
Uzbekistan to export six IL-76 tanker planes to India
Uzbekistan will begin deliveries of IL-78 tanker planes to India shortly, The Times of India said.
The planes are intended for the refuelling of the Indian air force's fighter jets. The newspaper said Indian Defence Minister, George Fernandes, would go the Central Asian republic to attend a ceremony of passing the first two of the warplanes to the Indian side. Terms of the contact were not divulged.
Fernandes' visit will be part of the Indian government's programme of developing relations with Central Asian republics that have substantial oil and gas resources.
The Indian Defence Ministry's plans include joint military exercises in Tajikistan in a near time
ADB grants US$600,000 to realise energy-saving programme
The Asian Development Bank will assist Uzbekistan to realise a comprehensive review of its energy-saving programme through a technical assistance (TA) grant approved for US$600,000, the official statement of the bank says, UzReport.com.
The TA, covering the power, natural gas, and district heating sectors, will help guide the Uzbek government's energy saving policy to 2010.
The Government has given high priority to improving energy efficiency, but it estimates that investments of up to US$2bn will be required to meet conservation targets by the end of the decade.
Natural gas is the most important source of primary energy in Uzbekistan, accounting for more than 80% of consumption, followed by oil and condensates (14%).
"Energy consumption in Uzbekistan is about 1.5 to 2 times higher than in other developing countries on a gross domestic product basis. Current levels of energy consumption could be cut by up to 40% through more efficient energy consumption without compromising either economic growth or the people's energy needs," says Edu Hassing, ADB Principal Project Officer.
"Although Uzbekistan generated enough power to satisfy demand in 2000, considerable losses have made the country a net electricity importer."
Power losses reached 12% because of overloading of transmission and distribution lines, system imbalances, and obsolete substations and transmission and distribution lines.
Meanwhile, district heating systems, which supply hot water and steam to urban areas, are antiquated and do not allow proper regulation of temperature by suppliers or consumers.
Inefficiencies are compounded by the absence of an institutional and regulatory framework for the production and distribution of commercial energy.
"Energy tariff reforms that reflect the cost of supply would provide incentives for consumers to conserve energy," says Mr. Hassing.
"New technologies also offer great potential to Uzbekistan, including solar water heating and compressed natural gas."
The TA will identify the most suitable energy-saving activities and projects, and put forward options to strengthen the institutional and regulatory framework.
To promote close consultation with all stakeholders, three workshops will be held to explain targets and achievements of the TA, which is due for completion this October.
US$600,000 Sino grant goes to Tashkent
China will give Uzbekistan some US$600,000, the press service for the Uzbek Cabinet of Ministers told Interfax News Agency recently. The money will be used for projects agreed upon by the governments of the two countries. Uzbek Deputy Prime Minister, Elyer Ganiyev, and Chinese Deputy Minister of Foreign Trade ad Economic Ties, Zhou Kereng, signed the document to this effect.
The Chinese delegation previously attended the session of the intergovernmental commission on trade and economic cooperation. There are 100 enterprises with Chinese capital in Uzbekistan and 15 Chinese firms in Uzbekistan. Last year, the trade turnover between the two countries exceeded US$130m, a 20% increase from 2001. During 1998-2002, China enjoyed a trade surplus with Uzbekistan reaching some US$280m.
MINERALS & METALS
Tashkent announces ore mine renovation project tenders
Uzbekistan's government has called a tender among foreign investors for the right to deliver two gold projects. One of the projects, the Angren Gold Project, involves renovating mines at the Kyzylalma and Kochbulak deposits in the Tashkent region, and the Angren Gold Recovery Plant, a source at the government's Department for Foreign Economic relations and Foreign Investments was quoted as saying by Interfax News Agency. It is thought at this stage that the first project involves prospecting and exploring sites within the Dzjamansay property in the Sultan Uvais mountains of Karakalpakstan, which are thought to hold 50 tonnes of gold. The licence holder will have the right to mine any commercial deposits that it finds.
Bidders are free to choose between
Lobbying grows in Moscow for Siberia Uzbekistan water scheme
Water shortages would cripple Uzbekistan, which depends on irrigation and consumes up to 90 per cent of all water used in Central Asia. But without efforts to either improve resource management or tap into new sources, shortages are inevitable, Eurasianet has reported. With Uzbekistan's population growing rapidly and per-capita water reserves shrinking, Uzbek leaders are finding a once-forgotten project to divert Siberian rivers to Central Asia more appealing.
Ismail Jurabekov, counsellor to Uzbekistan's President Islam Karimov, told Uzbek and Russian experts in mid-2002 that diverting Siberian waters to Central Asia would be "a mutually beneficial project." The idea of diverting Siberian rivers was first proposed in the 1970s, when a project to build a 2,000-kilometre canal from Siberia was discussed. The canal was to "feed" the Amu-Darya and Syr-Darya Rivers into the dying Aral Sea, which the Soviet Union had been draining.
The project was suspended during the "perestroika" era. But today, some politicians in Russia believe the canal may provide a means by which Moscow can apply effective pressure on restive former Soviet republics. Many influential Russian politicians endorsed Jurabekov's speech, touching off a heated debate in the Russian and Central Asian press. Moscow Mayor Yuri Luzhkov wrote an open letter to Russia's President Vladimir Putin lobbying for the project. Putin responded by ordering a special committee to look into the project's feasibility.
Komsomolskaya Pravda, one of Russia's largest newspapers, ran a piece on January 5th, describing Luzhkov as the architect of the revived plan. The piece quoted a Luzhkov aide as promising that Russia would be able to sell its water "again and again," thereby creating jobs and enhancing its regional influence. According to hydrologist Oleg Vasiliyev, counsellor to the Russian Academy of Sciences and a veteran of the Siberia notion, diversion of 5-7 per cent of Siberian waters will not have any "global" effect. He also envisions a regional payoff, which he calls a "green bridge," via which Russia would exchange Siberian water for Central Asian fruit, vegetables and other food products.
Many scholars and environmentalists contend that a new diversion project would have disastrous effects on the ecological balance in Siberia and Central Asia. Academics worry that water will remain salinated when it reaches Uzbekistan, making it undesirable for irrigation; that leaks from the canal will swamp vast territories; and that species of fish and bacteria will mix in unhealthy ways. Many also worry that sending Siberian waters to Uzbekistan's warmer terrain will disrupt the climate in both places.
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