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: 272 - (29/08/03)
President ill and succession uncertain
The Uzbek regime is one of the harshest in the FSU. Torture is common and abuses of human rights are rife.
Under the Clinton Administration the country was in purdah - almost. Strobe Talbott, Clinton's roving ambassador for the region, was especially censorious about the brutal ways of the regime. Fortunately for Tashkent two events changed everything. Firstly the republicans came power in Washington, traditionally a lot more relaxed about such matters. Secondly of course came 9:11. Uzbek support became vital for the US to proceed with the war in Afghanistan.
Washington has 1,800 troops at an air base in the southern city of Karshi, right across the border from Afghanistan. The Uzbeks have come in from the cold in a big way. The US has extended aid and credit. The Bush Administration is keeping its eye on the long haul.
It may just possibly be vindicated now. The key question is can the Karimov clan survive the departure of the top man, Islam Karimov himself. He is evidently seriously ill. He always kept power firmly in his own hands, allowing no obvious successor to emerge. He was in the habit of rebuking his ministers publicly for their sins. Everything was always their fault, never his. He is not likely to be missed.
He took a leaf out of Yeltsin's book by having the rubber-stamp parliament pass a law recently giving himself and his family immunity from prosecution should he stand down. This event itself is highly indicative. His days in office seem to be numbered.
The daughter behind the throne
There is one key figure to what could happen, the president's daughter, Gulnora Karimova, someone as important as Tatiana was in the last years of Yeltsin. She is only 31, but has amassed a huge business empire. It includes property and trading interests, plus the largest mobile phone provider in the country and a large cement works.
She is adviser to the foreign minister, Sadiq Safayev, which is ironic right now because she is at the centre of a complex legal battle for the custody of her children, whose father, Mansur Maqsudi, married her in 1991 when she was 19. He has asked for divorce and is no longer persona grata on Tashkent. He lives in the US and is the scion of a prominent Uzbek-Afghan family that resides in New Jersey. A US court has issued an arrest warrant against him for defying a court order to return her children.
There was a big bust-up two years ago and members of the Maqsudi clan were arrested or expelled. The family had a 55% stake in Coca-Cola Bottlers Uzbekistan through its ownership of Roy Trading. But this was liquidated by the government and back taxes of US$12 million were demanded, a huge sum in the impoverished country.
The UK's Financial Times (FT) of August 19th has published a special investigation that throws new light on the story. Ms Karimova was not herself available for comment.
Ms Karimova has her own parent company Revi Holdings, set up in November 2001, which operates out of the Sharjah free economic zone in the United Arab Emirates. There is also an offshoot in London, Revi UK, located in New Bond Street. Revi acquired a controlling stake in the largest mobile telephone company in Uzbekistan, Uzdunrobita, with a clinching 31.4% from the Uzbek government to add to a 20% stake already owned by Revi. Then in an even more handsome deal another Sharjah-based offshore company in the Karimova stable, United International Group, acquired a 44.5% stake in Quvasay Cement Factory, one of Uzbekistan's prize business assets. The sum paid for this was a modest, US$172,853. It helps to have the right sort of father in Central Asia.
This makes the Uzbek situation an unusually interesting one right now. The Karimov clan busted the Maqsudi one two years ago. Is another clan about to topple the Karimovs?
Clearly the president's state of health is fundamental to what now ensues. The regime is so tight that FT readers are likely to be far better informed about "the commanding heights" of the Uzbek economy than the Uzbeks themselves. The leading figures in Tashkent, however, will know all about it. It will be intriguing to see what happens next.
DaimlerChrysler division to ship buses to Uzbekistan
DaimlerChrysler's bus unit EvoBus GmbH, announced it will carry out deliveries to Uzbekistan under a 37m Euro contract for 300 Mercedes Benz city buses and spare parts for them according to Interfax News Agency.
"One hundred and thirty Mercedes Benz Conecto buses have already been shipped," EvoBus Executive Director, Wolfganag Presinger, was quoted as saying. "The vehicles are assembled at the Mercedes Bens Turk AS facility in Turkey," he added.
Uzbekistan gives top priority to own gas export shipments
The trunk gas pipeline network in northern Uzbekistan will be primarily used to deliver the country's own gas exports and will not be able to carry the whole amount of the gas trader, Itera's, shipments, New Europe has reported. Interfax News Agency quoted Uzbek Prime Minister, Utkir Sultanov, as saying recently that "Uzbekistan has repeatedly stated that the trunk gas pipeline network in the north of Uzbekistan will chiefly serve to carry gas extracted domestically."
The prime minister noted that "the export of Uzbek gas under a contract with Russia's Gazexport started in 2003 and will be increased in the coming years. At the same time, Russian gas monopoly, Gazprom, is not only a consumer of Uzbek gas, but also an operator of natural gas transit via Uzbekistan."
He noted the Uzbekistan and Gazprom has signed a mid-term strategic partnership contract and are successfully implementing it. "Meanwhile, natural gas going to neighbouring countries to the north of Uzbekistan will only use the pipeline network's spare capacity. We have made this clear repeatedly," Sultanov said. As Itera will not be able to transit all its gas supplies via the country's gas pipelines, no contracts are envisioned with the company for 2004. "Countries such as Georgia, Armenia and Azerbaijan, which buy natural gas from Itera, should draw certain conclusions," the prime minister noted.
"Given possible restrictions and the wear and tear of the republic's trunk gas pipeline network, the amount of gas transit intended for Uzbek northern neighbours will not be more than 20-25 billion cubic metres," Sultanov said.
Uzbekistan is the Commonwealth of Independent States' third largest natural gas producer. Its annual as output stands at more than 50 billion cubic metre, of which about 40 billion cubic metres are consumed domestically, which the rest goes to Kazakstan, Kyrgyzstan, Tajikistan and Russia. The Uzbekneftegaz national holding company increased natural gas production in 2002 by 1.8 per cent year-on-year to 57.672 billion cubic
FOREIGN ECONOMIC RELATIONS
Pact on financial cooperation agreed with Germany
Marcus Lening, speaker of the German Free Democratic Party on development policy, led a delegation to Uzbekistan for a visit, according to UzR. The delegation met with Uzbek Oliy Majlis (parliament) Chairman, Erkin Halilov, in addition to officials at the foreign ministry, economy ministry and Tashkent city administration, New Europe has reported.
Discussions with the Chairman of the Agency for Foreign Economic Relations, Deputy Prime Minister Elyor Ganiyev, centred on a number of issues, including development of trade and economic relations between the two countries.
Following the talks, the two sides inked a pact on financial cooperation. Under the agreement, Germany will offer Uzbekistan a preferential credit valued at 1.6m Euro. The money will be used to subsidise the development of the Tashkent Airport terminal.
Putin instructs new appointee on relations with Uzbekistan
On returning from Samarkand, Russian President Vladimir Putin had a meeting with Deputy Prime Minister Boris Aleshin, Channel One TV has reported. Aleshin has been entrusted with co-heading the Russian-Uzbek intergovernmental commission on trade and economic cooperation. Putin told Aleshin about the results of his talks with Uzbek President Islam Karimov and outlined the main guidelines for the commission's work.
Putin speaking to Aleshin on 6th August on TV said: "A lot has to be done now to stop the unfavourable tendency towards a decrease in our [Russian-Uzbek] trade turnover. But we should not limit our relations with Uzbekistan only to trade, we should consider even distant perspectives and bring about good conditions for the development of our relations. Here we should first of all mention the creation of favourable investment conditions by both sides.
"We have good plans [for cooperation] in power generation and Gazprom has had talks with its Uzbek counterparts and there are good prospects there. But this is not all, the possibility of a wider production cooperation
is being considered as well."
Deputy Prime Minister Boris Aleshin responded: "Yes, everything that has been going on in the cotton industry, is not very proper, loopholes have been found."
Putin added: "Those loopholes still exist and are being used. The pattern is pretty clear there: those who make use of cotton need working capital. We have to think it over. We should not necessarily get rid of middlemen but we should devise a system that is acceptable to all participants in the process and the producer should be considered first of all."
MINERALS & METALS
Uzbek copper company secures US$35m foreign loan
An international syndicate of banks headed by ABN Amro Bank NB Uzbekistan AO, has signed a pre-export financing agreement for Almalyk Mining and Metals Combine worth US$35m, Interfax News Agency quoted company Director General, Gennady Prokherenko, as saying.
The loan is secured by a three-year commercial contract for the delivery of copper cathodes to Switzerland's Glencore. The loan is being extended without guarantees from Uzbekistan's government. The bank syndicate also includes Belgium's KVS, Germany's Commerzbank, France's Natexis Bankques Populaires and Japan's UFJ.
Almalyk plans to spend the money on new mining equipment and technology, including excavators, rail transport to take ore from the mine to the mill, equipment for the gold mine and other machinery. Prokhodenko said the equipment updates would boost production of copper, gold and silver. Production of cathode copper could increase by about 5,000 tonnes next year, according to preliminary estimates.
The company has drafted a refurbishment and modernisation programme for 2002-2010 that will cost US$347.5m. The programme is expected to increase refined copper output to 93,000 tonnes by 2006 and to 102,000 tonnes by 2010. Almalyk plans to increase production of refined copper from its own raw materials to 85,000 tonnes this year from 80,000 tonnes in 2002. It produced 44,309 tonnes of refined copper in the first half of 2003, 1.4 per cent less year-on-year. However, production from the company's own raw materials was up 3.4 per cent to 42,035 tonnes.
Zinc production in the half fell 28.6 per cent to 29,040 tonnes, including 2,379 tonnes from the company's own raw materials (up 91.8 per cent). Almalyk produced 78,900 tonnes of metallic zinc in 2002, down from 80,100 tonnes in 2001. This year, the company is having problems with imports of zinc concentrate. Last year's zinc was all produced from imported concentrate, primarily from Kazakstan and Russia. The company's exports in the half edged up 0.8 per cent to US$65.9m.
The Almalyk Mining and Metals Combine is one of the biggest nonferrous metals producers in the Central Asia region and Uzbekistan's only copper producer. It produces 90 per cent of the silver and 20 per cent of the gold in the country. The combine has two ore mining companies, two benefication plants and two metallurgical plans
Almalyk currently holds licences to the Kalmakyr and Sarycheku copper-porphyry ore deposits and the Uchkulach lead-zinc deposit. Output is estimated at over US$220m a year. The combine exports 68 per cent of production, including 5 per cent to the Commonwealth of Independent States countries. ABN Amro Bank NB Uzbekistan AO was established in 1996. It shareholders are ABN Amro Bank (58.5 per cant) the National Bank of Uzbekistan (17.6 per cent) MFK (11.8 per cent) and the EBRD (11.8 per cent).
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