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UZBEKISTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 9,949 9,713 11,300 91
         
GNI per capita
 US $ 420 450 550 173
Ranking is given out of 208 nations - (date from the World Bank)

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Update No: 315 - (29/03/07)

The troubles of a tyrant 
The sudden death of President Saparmurat Niyazov of Turkmenistan in December last year has been a nasty jar for President Islam Karimov. It shows how fragile and fleeting is all human power, "Uneasy lies the head that wears the crown."

There is always a massive succession problem in dictatorships. Dictators do not like to groom a successor for obvious reasons. Even sons can oust fathers, as Akbar the Great, perhaps the greatest, certainly the most enlightened, of the Moghul emperors of India, discovered. But there is nothing of an enlightened despotism about the Karimov regime.

Actually, Karimov has no son, but a daughter, Karimova, who is scarcely in a position to evict him in what remains a very macho society. Moreover, she is deeply unpopular for doing the jejune thing for the offspring of despots - she has enriched herself enormously at the public's expense. She is not likely to succeed him, although that was the plan!.

The situation in Afghanistan, with its long and porous Uzbek border, is no more re-assuring for the Tyrant of Tashkent either. Civil war continues with the Taleban, the mortal foe of secular dictators everywhere, still fighting their corner.

If one looks east the outlook is hardly comforting two years on from the Tulip Revolution in Kyrgyzstan, where trouble is brewing again (see Kyrgyzstan). Only to the north is there a measure of stability in Kazakhstan and Russia. Hence the great loyalty of Uzbekistan to the Russia-led Collective Security Treaty Organization (CSTO), set up in 2002, the bulwark for stability for the region.

The CSTO moves quickly to bolster security in Central Asia 
The CSTO is moving assertively to expand its strategic influence in Central Asia, of which Uzbekistan is the hub. Recently, the CSTO has established a security relationship with Afghanistan, and has moved forward with plans to establish a regional air defence system, both of enormous importance to Tashkent now that it has severed ties with the US in the wake of the repression in Andijan in May, 2005. 

A CSTO working group visited the Afghan capital, Kabul, from March 9th-13th, according to the official Russian news agency RIA Novosti. The CSTO press office issued a statement March 14th expressing satisfaction with the visit, stating that the talks marked the opening of "direct contacts" between the Moscow-based organization and the Afghan government. According to the CSTO statement, representatives of Afghan President Hamid Karzai's administration expressed interest in developing contacts with the security grouping, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. 

Discussions in Kabul focused on the revival of Islamic radicalism and narcotics trafficking. CSTO officials reportedly feel an urgent need to develop strong security ties with Afghanistan because of what they feel is an inadequate response to these issues by the United States and NATO, which collectively maintain over 40,000 troops in the country. 

"The Afghan side is most interested in having their military and law enforcement officers trained in Russia and other CSTO member states, as well as in purchasing Russian weaponry," the CSTO statement said. "Afghanistan's army and law enforcement representatives specifically stressed [a request for] serious assistance in improving the border security of their state, in both technical and personnel training terms." 

The CSTO created a working group on Afghanistan in 2005 under the auspices of the organization's Foreign Ministers' Council. Its primary task was to develop recommendations on strengthening Afghan security institutions and improving anti-trafficking measures. The March 14th CSTO statement revealed that the group intends to transform the Channel 2006 anti-drug initiative, which is designed to curb trafficking out of Afghanistan, into a permanent regional program. 

If the intensified cooperation between Kabul and the security organization unfolds as envisioned by CSTO officials, it would mark a significant geopolitical setback for US interests in Central Asia. Since the US-led coalition forced the Taliban out of Kabul in late 2001, Washington has enjoyed unrivalled political influence in Afghanistan. But US inattention to Afghan reconstruction has played a role in the revival of the Taliban insurgency in the country. This, in turn, has created an opening for Russia to establish a security presence in the country, which was occupied by Soviet forces from 1979-89. 

In February, Sergei Ivanov, the Russian first deputy prime minister and former defence minister, reiterated a Moscow proposal on joint NATO-CSTO stabilization action in Afghanistan. CSTO officials have repeatedly criticized NATO's perceived reluctance to cooperate with the Moscow-based security organization. 

On the same day that the CSTO mission wrapped up its Kabul visit, a top Russian military official suggested that the grouping could be used as a vehicle for the expansion of an air-defence network that would cover CSTO member states. Russian Air Forces Commander Vladimir Mikhailov told RIA-Novosti on March 13th that the air-defence "would be of great benefit to all those states bordering Russia, as they have less military capability and funding than we have." The same is true for Uzbekistan. 

The CSTO also has moved rapidly to promote Uzbekistan's re-integration into the security organization. Semerikov indicated that Tashkent was prepared to have Uzbek forces participate in the CSTO Rapid Deployment Force. The extent of Uzbek participation remained under discussion, Semerikov said on March 14th. 

Russia and Uzbekistan were among original signatories of the Collective Security Treaty (CST) in 1992, also known as Tashkent Treaty. However, Uzbekistan withdrew from the pact in 1999, only to rejoin last August, following the collapse of US-Uzbek bilateral ties.

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The following highlights the crucial danger area for Tashkent in the east of the republic, the Ferghana Valley:- 
Friday, March 23, 2007 

Political discontent simmers in the Ferghana valley 
Political discontent is brewing throughout the Kyrgyz, Tajik and Uzbek portions of the heavily populated Ferghana Valley, where all three republics meet in a maze of frontiers and complexity of ethnicities. Regional elites in all three states are clearly unhappy with the behaviour of central officials. Discontent is perhaps most acute in Southern Kyrgyzstan. Members of the region's political elite are publicly complaining that the long-running political confrontation in Bishkek, pitting President Kurmanbek Bakiyev against members of the Kyrgyz parliament, is threatening stability in the regions. 

Observers suggest that members of presidential administration may have played a role in organizing the protest. In Tajikistan and Uzbekistan, the source of local dissatisfaction is linked to a more common source - the heavy-handed behaviour of central officials. Following his re-election in late 2006, Tajik President Imomali Rahmonov carried out a far-reaching government reshuffle that included the removal of Kasim Kasymov as governor of the Sughd Region, which encompasses the Tajik portion of the Ferghana Valley. Local observers say the aim of the reshuffle was to strengthen Rahmonov's influence over the region's political apparatus. Tajik political analyst Daler Gufronov, writing for the Asia Inform news agency, characterized Kasymov's ouster as "thunder on a clear day." According to a report distributed by the Regnum news agency, Rahmonov offered the prime minister's portfolio to Kasymov, who "for unknown reasons" turned the offer down. The rebuff reportedly angered Rahmonov, and the ousted governor ended up with only a minor post within the ruling People's Democratic Party. Having been in charge of Sughd Province for seven years, Kasymov had forged powerful patronage networks. Thus, only weeks after Kasymov's departure from power, Rahmonov began a wide-ranging "cadre rotation" in municipal executive bodies throughout the region. In the Uzbek part of the valley, long-standing resentment toward the centre continues to grow. Human rights organizations documented that discontent with the central government's economic policies was a major factor in stoking the Andijan events of 2005. 

Tashkent has done little to address those complaints since then. Instead, President Islam Karimov's administration appears preoccupied with maintaining tight political control over the region, a desire underscored by the political purges carried out in 2006 in both Andijan and Ferghana provinces. 

An entrepreneur who spoke to EurasiaNet on condition of anonymity complained that the purges have stoked corruption and exacerbated local economic difficulties. Prior to the political changes, local entrepreneurs were already buckling under what some described as confiscatory tax policies. Starting in early 2006, Uzbek authorities imposed a monthly fee that is not connected to sales revenue, requiring all entrepreneurs to pay the state the equivalent of 7.5 minimum monthly wages, or roughly US$85. For the average small businessman, who generates about US$200 per month in income, the tax rate comes out to over 40 per cent, and serves as a disincentive to stay in business. Concurrently with imposition of the flat tax, the government expanded efforts to collect excise taxes on some imported goods. The heightened collection effort has hit Ferghana Valley residents especially hard, given that many local entrepreneurs rely on cross-border trade. Inter-state issues are also playing a role in the Ferghana Valley's rising discontent. In September 2006, for example, Karimov and Bakiyev signed an agreement easing visa requirements for Kyrgyz and Uzbek citizens. However, almost six months after the signing of the agreement, authorities have not fully implemented the visa-free travel regime. 

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AVIATION

Uzbekistan, Russia to set up UzRosAvia joint venture


Russia and Uzbekistan will establish a joint venture that will be initially involved in repairing Mi-8 and Mi-24 helicopters, Russian Federal Industry Agency (Rosprom) head Boris Alyoshin said in Tashkent on March 8. "This is the first such joint venture in the CIS," he said. Russian organisations will control no less than 51 per cent of UzRosAvia, which will be set up in 2007, Alyoshin said. An agreement on its establishment was signed during Russian Prime Minister, Mikhail Fradkov's, official visit to Uzbekistan on March 7th. The founders of the joint venture will be Russia's Rosoboronexport and united industrial corporation Oboronprom, as well as Uzbekistan's Chkalov aircraft manufacturing association in Tashkent and Uzmakh-susimpeks enterprise. The joint venture will be based on the premises of the Chirchik aircraft repair plant, New Europe reported.

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ENERGY

Naftogaz, Uzbekneftegaz to discuss boosting gas supplies

Delegates from the Ukrainian national joint-stock company, Naftogaz Ukrainy, are to come to Tashkent before March 10th to meet with top management from Uzbek national holding company Uzbekneftegaz to discuss opportunities to boost Uzbek gas supplies to Ukraine, Ukrainian First Deputy Fuel and Energy Minister, Vadym Chuprun, said in Kiev, Interfax News Agency reported on February 26th. 
He said the deputy chairmen of the Naftogaz Ukrainy and Uzbekneftegaz boards held a meeting during a recent visit to Kiev by Uzbek Prime Minister, Shavkat Mirziyayev. According to Chuprun, the Uzbek side said up to 10 billion cubic metres of natural gas might be supplied to Ukraine every year if free transit capacities are available. The Ukrainian-Uzbek intergovernmental commission for cooperation met in Kiev on February 19. Following the meeting, Ukrainian Premier, Viktor Yanukovich, said that Ukraine intends to reach an agreement with Uzbekistan to increase imports of Uzbek gas, which currently amount to about two billion cubic metres. Uzbek natural gas is supplied to Ukraine by RosUkrEnergo, which buys it from Gazprom Export.

Gazprom to increase purchases of Uzbek gas by one-third 

Gazprom will export 13 billion cubic metres of natural gas from Uzbekistan in 2007, Maksut Anderzhanov, head of the Uzbek representation of Zarubezhneftegaz, a Gazprom subsidiary, said, Interfax News Agency reported on February 19th. 
"Uzbekneftegaz and Gazprom signed a contract in 2007 for the export of Uzbek natural gas totalling 13 billion cubic metres," Anderzhanov said. "In accordance with a strategic partnership agreement, more than seven billion cubic metres of gas was exported to Russian from Uzbekistan in 2004 and 8.15 billion cubic metres in 2005. Planned procurements of Uzbek gas were already nine billion cubic metres in 2006," he said. Thus, exports of Uzbek gas will grow 33.3 per cent this year. Gazprom signed a contract with Uzbekneftegaz for the supply of natural gas to Russia in 2007 at a price of US$100 per 1,000 cubic metres. Gas prices have increased more than 60 per cent from 2006.

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FOREIGN ECONOMIC COOPERATION

Pak-Uzbek JMC discusses economic cooperation 

Pak-Uzbek Joint Ministerial Conference (JMC) kicked off to explore new avenues of cooperation in the fields of economic and trade. Pakistani delegation was led by Minister for Water and Power, Liaquat Ali Jatoi, and Uzbekistan delegation was led by Uzbek Minister for Agriculture and Water Resources, S Ismailov, Interfax News Agency reported. 
Welcoming the Uzbek delegation Jatoi said Pakistan and Uzbekistan enjoy very cordial and brotherly relations as people of both the countries have the same religion and traditional values and heritage. He pointed out that there is tremendous scope of development in the field of economy and trade. Jatoi pointed out that there is tremendous scope of development in the field of economy and trade. He told that once the operation of Gwadar port starts on March 31, 2007, trade activity between both the countries would gain a new boost. He also stressed on increasing the frequency of visit by delegation of both the countries. He said, "We have proposed to the Uzbek government for establishing a National Bank branch to facilitate the businessmen to carry out business activities". He said Uzbek produced best quality of cotton and Pakistan is prepared to help set up textile mill in Uzbekistan to achieve maximum benefit. 
Pakistan is facing shortage of electricity and gas production so that Uzbekistan can also help in overcoming the shortages. He said Pakistan produces best quality of fruits particularly of citrus and it would be appreciated if Uzbek decides to import it. Speaking on the occasion, Ismailov said that during the visit of President Pervez Musharraf to his country it was decided to enhance cooperation between the two brotherly countries. He said we had created conducive environment for Pakistani businessmen to carry out business activities in Uzbekistan. He expressed keenness on expansion of joint economic activities in both the countries. "It is encouraging that Pakistan's economy was emerging as strong and gaining strength with the passage of time. Uzbek economy is also developing and its indicators are showing stability," said Ismailov. After the meeting, both leaders agreed that the two countries had fruitful results.

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FOREIGN INVESTMENT

Foreign investment jumps 20% in 2006

Foreign investment in Uzbekistan grew 20 per cent in 2006 compared with 2005 to 895.7 million Euro, the Economics Ministry said in materials published by the local media, New Europe reported.
Foreign investment under sovereign guarantee rose 5.4 per cent to 211.9 million Euro and direct investment was up 25.4 per cent to 683.8 million Euro. Investment with sovereign guarantees accounted for 23.7 per cent of the total investment, up from 22.7 per cent in 2005, and direct investment for 76.3 per cent, down from 77.3 per cent. Industry received 68.3 per cent of the overall investment, with around 50 per cent of the investment going into new technology and the acquisition of new equipment. The fuel and energy sector, chemicals industry, metallurgy and machine building sectors received 34.6 per cent of the investment, the agricultural sector and consumer goods manufacturing got 17.8 per cent and the info-com sector received 15.3 per cent. 

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TELECOMMUNICATIONS

Vimpelcom invests 60m in developing its cellular network

VimpelCom invested 60 million Euro in developing its cellular network in Uzbekistan in 2006, Yevgeny Ruban, general director of Unitel, a 100 per cent subsidiary of VimpelCom, told Interfax News Agency on February 2nd.
The number of base station operators increased 90 per cent to around 600 in Uzbekistan last year. The number of VimpelCom subscribers reached 766,000 in 2006. The company's market share was 28.2 per cent. "We expect to double the subscriber base in 2007, which will support the technical development of our company," Ruban said. The subscriber base continued to grow at a high rate in January 2007, he said. Ruban did not reveal the planned amount of investment for this year, however said, "the earlier announced investment of 150 million Euro for developing the network in Uzbekistan in 2006-2008 remains in force. 

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