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: 271 - (24/07/03)
IMF comes to town
Uzbekistan has had a difficult relationship with the IMF, which has refused it credit beforehand for various reasons, non-compliance with its policy prescriptions, such as to abolish exchange controls and controls on capital movements. The US under Clinton was decidedly lukewarm about the republic's civil rights record; his roving ambassador to the region, StRobe Talbot, refused to visit Tashkent on more than one occasion.
The events of 9:11 have changed all that. The Bush Administration is fully engaging with the republic. The use of its military bases in the Afghan war was of utmost help to the US forces waging it. US credits of over US$150m are being extended. Now the IMF is re-engaging.
An International Monetary Fund mission was due to arrive in Tashkent to examine potential cooperation with the Uzbek government. Headed by Eric de Vrayer, A member of the IMF's European II Department, the mission will look into the country's implementation of terms to resume the stand-by loan programme, which was deferred seven years ago.
In a special memorandum issued last year, Uzbekistan promised the Fund it would accelerate market reforms, coalesce the exchange rates and guarantee national currency convertibility in existing operations, with a view to starting talks on resuming the stand-by programme. IMF missions travelled to the Central Asian state twice last year. According to them, Uzbekistan succeeded somewhat in liberalising the currency regime, in monetary-financing and in tax and budget policies. What has yet to be solved is conversion in current activities. The government introduced restrictions on foreign and domestic trade last summer. After an IMF mission visit in mid-winter, de Vrayer said the fund had called on the government to cancel these restrictions and speed up economic reform.
The opponents of Islam Karimov, president of Uzbekistan, and everything he represents are on the warpath. That is in the first place the Islamic Movement for Uzbekistan (IMU). It was badly hit in the US campaign against al-Qaeda, but not irreparably. It has regrouped in the last 21 months in Pakistan, probably under the guidance of Tohir Yuldashev, their new leader after the death of their old one in the war.
The IMU has been enhanced as a menace by rumours that Gulbiddin Hekmatyar, the Afghan-Pashtun leader of the Hizb e-Islami, has shown an interest in joining forces with them. In February Hekmatyar was added to the hit list of the Americans. Hekmatyar has subsequently come out against the US as the main enemy in Central Asia. A combination of his forces and the IMU could prove to be a significant force in politics in Uzbekistan.
Karimov has made them the number one enemy of the state. He is in a way right to do so. They have several times tried to kill him.
A grim, but gamy, regime
The Uzbek regime is refusing to cooperate with the EBRD in reforms and correction of abuses of human rights, notably torture. President Islam Karimov insisted at an EBRD meeting in Tashkent in early May that his state reserved the right to use torture. He has in the past threatened to strangle religious dissidents with his own hands.
The grim and repressive regime feeds the conditions that bred such as IMU and its young, desperate militants. Actually they are an ideal foil for the regime, justifying its austere form of rule. Karimov and the IMU are bosom enemies that complement each other.
If Tashkent makes no moves towards reform and reserves its torture chambers intact, then it is highly likely that the EBRD and the IMF will withdraw from any financial role in the republic, as they have already done in Belarus and Turkmenistan next door. Karimov is not quite the pariah in the West as Niyazov is, the batty Turkmen president. Karimov has even done a deal with the US, whose emissary for the region, Elizabeth Jones, has already hauled the regime over the coals for its dismal record over human rights. Democracy and liberal ways are not for Uzbekistan so long as Karimov is in full charge.
Economy pulls through
The economy is curiously not doing so badly as all that. Officially it is the only one in the CIS (which leaves out the Baltic states) that is larger than twelve years back, being registered at 109 over 1991. Belarus and Turkmenistan, the other non-reformers, came in in the 90s. These are their own figures of course. But the IMF medicine that was accepted elsewhere has not been a wholly unmixed blessing.
The existence of firm exchange controls in Uzbekistan preserved it from the currency crash that afflicted Russia and Kazakstan in 1998, as also Ukraine and other CIS republics. The Ferghana Valley is a rich, fertile crescent of territory. Uzbekistan is not as wretchedly poor as several of its neighbours. It is the pivot of Central Asia; and the Karimov regime looks as secure as any in its region. As for Western criticism, Karimov gave his answer by quoting Kipling at the EBRD meeting. "East is East and West is West and never the twain shall meet." Not in his time at any rate!
Turkish Agriculture Minister, Uzbek envoy discuss cooperation
Turkish Agriculture and Rural Affairs Minister, Sami Guchlu, received Uzbek Ambassador to Turkey, Rustam Isaev, to consider relations and ways to further improve ties between Turkey and Uzbekistan.
Guchlu said that agriculture had an important place in relations between Turkey and Uzbekistan, Anadolu Agency reported.
Uzbekistan is the cultural centre of Central Asia, Guchlu noted. He stated that Uzbekistan is one of the countries with the highest agricultural potential in the region.
There is an agreement covering agricultural relations between Turkey and Uzbekistan, Guchlu said and pointed out that there were some projects implemented within the scope of the agreement.
The sides wanted to review the projects and exchange views to advance efforts. Guclu stated that he attached importance to the visit of the ambassador, adding that the sides will search for ways and opportunities to further improve relations.
Isaev pointed out that there are many possibilities to achieve great projects in the field of agriculture between the two countries. The Uzbek envoy noted that it is necessary to provide support for projects implemented by the Turkish Cooperation Agency (TIKA) for Agriculture and Rural Affairs Ministry and the Uzbek Agriculture Ministry to achieve good results.
Uzbekistan chooses CNH agriculture equipment
Uzbekistan has decided to purchase US$22m worth of agriculture equipment from CNH Global NV. The deal was backed by a US$20m loan guarantee from the US-based Export-Import Bank. Under the terms of the deal, CNH is offering 100 Case IH combines and 50 Case IT tractors for use in the current season, New Europe reported. CNH's Case IH brand is based in Racine. The American company is also offering 100 grain headers, full parts and service support, and onsite operator and service engineer training.
Paolo Monferino, CEO of CNH, said the deal was signed between the two parties on May 6th, and was approved by the Board of Directors on May 22nd. "The government of Uzbekistan had an urgent need for modern farm equipment this season," Monferino was quoted as saying. "The bank's financing is being provided under its loan guarantee programme." CNH is an independent US government agency that helps subsidise the sale of US exports mainly to emerging markets throughout the world by providing loans, guarantees and insurance, the reports said.
Uzbekistan to collect World Bank loan for Amudarya River development
Uzbekistan will collect a US$60m loan from the World Bank following approval given by the bank's board, Interfax News Agency reported. The money will be used to subsidise the reconstruction of the Amudarya River delta's drainage and irrigation infrastructure, the World Bank office in Tashkent was quoted as saying. Phase 1 of the project has a price tag of US$74.55m. Focus will be to boost the quality of water in Amudarya and raise the productive irrigated farming area.
This project will help create new jobs and boost incomes in the Karakalpaskstan autonomous republic. The International Bank for Reconstruction and Development (IBRD) said it would grant US$30m for 20 years with a five-year grace period at the standard easy rate. The International Development Agency will offer the other US$30m for 25 years with a 10-year grace period.
Government guarantees to banks for foreign borrowing in exceptional cases
Uzbekistan announced it would offer government guarantees to banks for foreign borrowing, effective from July 1st, only in exceptional cases, Interfax News Agency reported. These cases are outlined in the government resolution on measures to guarantee sound repayment of foreign loans obtained under government guarantee or to guarantee financing of key strategic and socially-relevant programmes, to be repaid with budget funds, Interfax said. Failure of companies to pay back government guaranteed foreign loans on time will give banks the right to use the borrower's account to clear the debt.
Uzbek light industry's exports to reach US$ 85m a year
Uzbekyengilsanoat (Uzbek Light Industry) joint stock company drew up a development programme for 2003-2006, which envisages implementation of 117 projects of modernisation and creation of joint ventures, UzReport.com reported.
According to company chairman, Zikrilla Abdullaev, the majority of projects are aimed at increasing the production of consumer goods and raising the quality of production.
Abdullaev noted that in the first half of 2003 Uzbekyengilsanoat held negotiations with more than 150 foreign companies from Germany, Spain, Turkey, Poland and others on creation of joint ventures. He said the sides had signed agreements and developed programmes on foundation of the joint ventures.
MINERALS & METALS
Bateman examines Kyzylkum phosphorite complex expansion
Israeli company, Bateman, is drawing up a banking feasibility study to enlarge the Kyzylkum phosphorite complex, worth more than US$200m, a source from Kyzylkumredmetzzoloto said, Interfax News Agency reported.
The project aims to guarantee production of no less than 1.5m tonnes of phosphorite concentrate and 200,000 tonnes of phosphorous flour each year by 2006, compared with the existing 400,000 tonnes of concentrate and 300,000 tonnes of flour. Interfax reported quality of output would increase as phosphorous anhydride content grows. Foreign banks will subsidises the project through loans, which will be guaranteed by the Uzbek government. Bateman should also put together a financing scheme. The feasibility study will be ready between October and December 2003. Expanding the Kyzylkum phosphorite complex is part of a governmental program to increase phosphate fertiliser production.
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