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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: 265 - (28/01/03)
The Uzbek republic is well-known abroad. The Uzbeks are the kings of Central Asia. Everyone has heard of the Silk Route between Asia and Europe and the fabled ruler, Tamurlaine, who established an empire across EurAsia to the Mediterranean. The leader today, Islam Karimov is a dictator in the Central Asian tradition. But he has taken the opportunity to re-orient his country's foreign policy towards the US, post- 9:11. The US and others are pouring in aid and credit to secure Uzbekistan for the anti-terrorist struggle.
The economy is picking up, if only slowly. The government is pursuing a belated policy of some liberalisation of the economy after years of tight central control.
The international community is right behind its efforts. The area of electric energy is one such affair. The Asian Development Bank (ADB) has committed US$90m for Uzbekistan and Tajikistan for the reform of the sector.
The US is the friend
The US is now hanging its Central Asian strategy largely on Uzbekistan. "The US places a great value on Uzbekistan as an economical and political partner," US Under Secretary of State of Economic, Business and Agricultural Affairs, Alan Larson told reporters at the end of his recent one-day visit to the Central Asian country.
Larson's visit to the Uzbek republic was one among many meetings of US representatives with the country's officials during the last six months of 2002. Larson met with Uzbek President Islam Karimov and Deputy Prime Minister, Minister for Macroeconomics and Statistics Rustam Azimov.
During his meeting with Karimov, Larson raised topics of broadening the areas of collaboration between Uzbekistan and the US and extending economic reforms in the country. Also the two discussed ways for reconstruction and establishment of political stability in Afghanistan.
"We appreciate the role of Uzbekistan in the war against terrorism," Larson said. "Karimov has offered some comments on the political situation in Afghanistan and I offered some comments on my role as a fundraiser for achieving economical stability in Afghanistan," he added.
The US official representative stressed the importance for Uzbekistan to broaden its collaboration ties with the International Monetary Fund as well as other international financial institutions, noting that it would help assure foreign investors concerning the country's reliability as a source of economic benefits. He also highlighted the possibility of American private investment corporations coming to Uzbekistan in the near future.
Larson offered his take on development of the agricultural sector in Uzbekistan and said that it was very important to develop private ownership of farms in order to increase productivity in the sector.
Emsas-Uzbektourism JV for Tashkent hotel reconstruction
Turkish company, Emsas Insaat Turizm Ticaret AS (Emsas) and the national company, Uzbektourism, have set up a joint venture to reconstruct the Chorsu Hotel at a cost of US$22m, Interfax News Agency reported.
The joint venture has been set up with a charter capital of US$10m with 70% participation by the Turkish side and 30% on the part of the Uzbek side. The project will be financed from the venture's capital and using a credit from Turkey's Ex-Im Bank for US$12.9m. Uzbektourism contributed the Chorsu hotel, located in Tashkent, to the charter capital joint venture, and the Turkish company - equipment and cash. Emsas promised to buy the share of the Uzbek side in the joint venture, worth US$3m, within five years after the completion of the reconstruction.
Electric energy market upgrade through ADB loans
The field of electrical energy traded in Central Asia is bound to be upgraded through Asian Development Bank's (ADB) recent decision to approve loans totalling US$90m for Uzbekistan and Tajikistan. According to an official press release by the bank, the money will be earmarked for the increase of the system's efficiency of electric-power transmission in Central Asia.
According to the ADB representative in Tashkent, the regional project on modernising electric-power transmission will contribute to the development of regional electrical energy trade and is considered as the first step in the establishment of a regional wholesale energy market, New Europe reported recently.
The Central Asian power supply includes high-voltage lines that connect southern Kazakstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The system controls 83 electric power stations with overall power of 25,000 megawatts.
"After the collapse of the Soviet Union the energy trade decreased by 80%, because each country focused their efforts on self-sufficiency in electrical energy," ADM main economist on infrastructure, Shean O'Sullivan, commented.
Both Uzbekistan and Tajikistan produce 65% of power of the Central Asian power grid.
The improvement of relations in sales of energy between these countries will help expand the economic cooperation in this sphere in the whole region. In the framework of the project 500 kilovolt substations and switches will be restored, dispatching and communication equipment will be modernised and new measuring devices on calculating the energy supplies will be installed between the countries.
The Uzbek component will be financed by the ADB loan of US$70m and European Bank for Reconstruction and Development (EBRD) will grant US$49m. The state energy company Uzbekenergo will give US$29m.
The Tajik component of the project will be financed by the ADB loan in the amount of US$20m, the OPEC fund will provide US$2.4m, and the state energy company Barki Tajik will provide US$4.6m.
German consortium wins tender to upgrade Uzbek Angren coal mine
A consortium consisting of German companies ThyssenKrupp Foerdertechnik and MAN Tankraf [specialists in equipment, products and services for the mining industry] won a tender to carry out the second stage in the upgrade of Uzbekistan's Angren surface mine, an official with the investment projects department of Uzbek coal-producing monopoly Ugol told Prime-TASS News Agency on 14th January.
The mine is located in Uzbekistan's largest coal field, Angren, near the capital city Tashkent.
The US$49.8m second phase is expected to begin in June and to be completed by the end of 2003, he added.
The official noted that the project would be financed by a US$41.9m loan from a German bank, guaranteed by the Uzbek government, as well as by funds provided by Ugol and by the Uzbek government. The consortium plans to complete the US$19.7m first stage of the upgrade in March.
The project's first stage was financed by a US$16.6m loan from the German Bank Gesellschaft Berlin, guaranteed by the Uzbek government, and by the funds provided by Ugol and by the Uzbek government.
As a result of the first-stage upgrade, coal production at the mine should increase from 2.38m tonnes in 2001 to an annual capacity of 3.03m tonnes. After the completion of the second stage, capacity should rise to 3.39m tonnes a year.
Before 2001, no upgrades had been undertaken at the mine...
The plan stipulates the investment of US$254.2m in Uzbekistan's coal industry, US$215.7m of which is to be spent on the Angren mine, including US$156.1m in foreign investment. By 2010, the project envisages the Angren mine's output at 7.8m tonnes. Uzbekistan's coal reserves are estimated at 4.4bn tonnes, half of which are located in the Angren field, which contains 2bn tonnes of brown coal. The Angren surface mine produces about 90 per cent of Uzbekistan's coal.
EBRD, IFC open credit line for Uzbek SMEs
The European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC) have opened credit facilities worth €2m and €2.5m, respectively, for equipment and transport leasing to small businesses in Uzbekistan.
The leasing company Uzbek Leasing International (ULI) will receive the funds, according to statements made by ULI Director general, Zafar Mustafayev, reported Interfax News Agency. Uzbek Leasing International is a joint venture between Uzbekistan, Malaysia, the Asian Development Bank, IFC and EBRD.
The credit deals follow amendments to legislation that the Uzbek parliament approved at the end of the previous year to lift a ban on leasing companies drawing additional investments for leasing operations. Leasing companies had been required to rely on their own capital.
In addition, the Uzbek president has ruled that leasing operations qualify for tax breaks. It is recalled that Uzbek Leasing International was set up in 1996 with equity of US$4m, which has since risen to US$6.9m. The owners are ADB, IFC and EBRD, holding a share of 13.04% each. Meybank of Malaysia and Uzbekistan's National bank for Foreign Economic Activity own 30.44% each. The company has financed 30 leasing projects costing a total of US$8m since 1996.
MINERALS & METALS
Kyzylkum gold projects attract foreign consortium
An international consortium headed by Societe Generale of France may help finance the construction of a gold recovery complex in Central Kyzylkum, Uzbekistan, reports New Europe. A source from the Navoi Mining and Metals plant, the project operator, said the proposed investment is US$250m. The consortium's members will be announced in the near future.
Preliminary details show it will include one Israeli bank and various South African banks, he said. The loan will be allocated under government guarantee. A loan agreement may be signed before the middle of the year, enabling construction to begin in the second half
Russia set to reclaim spent nuclear fuel from Uzbek reactor
Spent nuclear fuel from a research reactor in Uzbekistan will be delivered to Russia for storage and reprocessing.
"We are considering the return of spent nuclear fuel from the reactor in Uzbekistan to Russia for technological storage and reprocessing. This is our fuel and we must take it back," Russian Atomic Energy Minister Aleksandr Rumyantsev told Interfax-Military News Agency on 15th January. He said that similar work is under way with Ukraine.
According to the minister, Russia imported spent nuclear fuel from Bulgaria and Ukraine last year. It imported a total of about US$50m worth of fuel. Rumyantsev stressed that there are research nuclear reactors and reactors of nuclear power plants in CIS and Eastern European nations, including Bulgaria, Hungary, Slovakia and the Czech Republic, as well as in Finland. "Ukraine has the highest number of such reactors, and our ministry is engaged in research and technical cooperation with all those installations," Rumyantsev noted.
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