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Books on Uzbekistan
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Update No: 318 - (28/06/07)
The waxing Moscow-Tashkent axis
Uzbekistan is a pariah state, as regards the West. But that is a positive
recommendation to the Kremlin. After all what the US now objects to about the
Uzbek regime is that it routinely tortures and boils alive radical Islamicists,
while perpetrating the odd massacre or two, such as at Andijan in the eastern
Ferghana Valley in May 2005. Putin has been massacring them from his inception
of office in Chechnya - and many more than Islam Karimov. This is a common bond.
President Karimov arrived in St Petersburg in early June to participate in an
informal summit of CIS countries. But beforehand, he met with Russian President
Vladimir Putin on 9th June at a private bilateral meeting at the Konstantin
Palace in Strelna outside St. Petersburg.
The leaders must have had strictly confidential discussions. But they allowed a
bland communiqué to appear afterwards, in which they noted the expanding
relations between two countries. "Cooperation between our countries
consistently develops and there is a strong legal basis for them," which is
the Agreement of Allied Relations signed by presidents Karimov and Putin in
November 2005.
The volume of trade turnover between the two countries in the past year has
increased and reached more than US$3 billion that testifies to a successful
continuation of cooperation. Over 450 joint ventures with the participation of
Russian investors have been established in Uzbekistan. Uzbek investors are
involved in 284 joint ventures functioning in the territories of Russia. Over 80
representations of Russian companies and firms have opened up in Uzbekistan.
Last year the Russian market received more than one million tons of various
agricultural products from Uzbekistan. Beyond that: "Our countries have
great opportunities to expand relations in the fuel and energy sector,
metallurgy, communications, tourism and other spheres, " the two leaders
averred.
During the meeting Karimov and Putin discussed the issues of further developing
the relations between two countries. "In several days the fundamental
document in our relations - the strategic partnership treaty will turn three
years," Putin said. "Probably something may develop more effectively,
but in general we are satisfied with how the document operates and how our
relations with Uzbekistan develop," he said. "I hope that in
short-term or mid-term we will be close partners, close friends and will step up
our relations in the future," Putin said.
He is fond of deeming dictators he consorts with as 'our scoundrel.' How much
better when his interlocutor can reciprocate the compliment, as Karimov can with
him.
But there are antagonistic undercurrents all the same; China beckons
No one could miss the fact that Russian companies were a major presence at the
Oil and Gas Uzbekistan Exhibition, held recently in Tashkent. But the high
profile of Russian firms at the trade fair does not mean that Moscow's
dominating role in Uzbekistan's energy sphere is especially welcomed by
President Karimov's administration.
On the surface, the energy partnership between Russia and Uzbekistan seems
stronger than ever, underscored by Tashkent's participation in Russian efforts
to expand and upgrade a pipeline supply network, known as Central Asia-Centre.
If the overhaul goes according to plan, Russia should be able to maintain its
stranglehold on Central Asian natural gas, and possibly be in position to
realize its long-held dream of creating an international gas cartel, akin to
OPEC.
Observers in Tashkent report that Uzbek officials are increasingly concerned
about Moscow's growing influence over Uzbekistan's energy sector. "The
Russians [the Russian companies] are not more welcome than the Western
companies, or the Chinese," said a Tashkent-based foreign businessman,
speaking on condition of anonymity.
Uzbek authorities are eager to diversify their energy options. The problem is
that politics is severely limiting their choices. Relations with the United
States and European Union plunged following the Andijan events of 2005, when
government security forces opened fire on unarmed protesters. Lingering tension
precludes any deals with US and EU firms at this time.
Tashkent has vigorously pursued closer energy ties with its only other viable
option - China. In late April, the state energy company, UzbekNefteGaz reached a
deal with the China National Petroleum Corp. to construct a 530-kilometer
pipeline with a projected capacity of 30 billion cubic meters (bcm) of gas per
year. Uzbek company officials said the project is intended to facilitate a 2006
deal between China and gas-rich Turkmenistan, under which Ashgabat pledged to
supply Beijing with 30 bcm of gas annually starting in 2009.
Uzbekistan itself produced 62.5 bcm in 2006, roughly 80 per cent of which was
used for domestic consumption. The remainder was exported to Russia and
neighbouring Central Asian states. Some experts believe Uzbekistan may possess
far larger reserves of gas than are presently known.
Privately, UzbekNefteGaz representatives hint that they want to use the Chinese
export route as leverage to get the Russian energy giant Gazprom to pay a higher
price for the gas it buys from Tashkent. The Russian company currently pays
US$100 per thousand cubic meters, piping it to Russia before re-exporting it to
Europe, where Uzbek gas fetches the going market rate of US$220/tcm or more.
Russian officials do not seem overly concerned about the Uzbek-Chinese pipeline
deal, believing that it will be years, if ever, before the planned export route
becomes operational.
Gazprom and LukOil, another Russian energy giant, have agreements in place to
explore Uzbek sites that possibly contain energy deposits, many of them located
on or near the rapidly shrinking Aral Sea. Theses projects have proceeded at a
snail's pace, however. For much of 2007, Uzbek and Russian officials have
haggled over the initiatives.
Earlier this year, Tashkent accused Gazprom of not living up to its investment
commitments, coming up with only about one-tenth of the US$300 million that it
had pledged to pump into exploration and development projects. Russian
officials, meanwhile, complained about Uzbek government obstructionism. An early
March visit to Tashkent by Russian Prime Minister Mikhail Fradkov failed to make
much headway in resolving lingering differences.
The impression that some foreigners in Tashkent get is that Karimov's
administration is playing for time. Tashkent needs Russia's political support at
this time, but does not want to grow economically dependent on Vladimir Putin's
Kremlin. Perhaps with the passage of time, circumstances will change, and Uzbek
authorities could find new partners for energy ventures, or at least create an
appearance of competition that enables them to drive harder bargains with
Russian firms, some observers believe. "It seems that the Uzbek
administration is purposely working very slowly, and in a very complicated
way," the foreign entrepreneur stated.
Other observers say Uzbek officials have a demonstrated ability to undermine
their own policy objectives. To back up their contention, they point to the
April decision of another Chinese firm, Sinopec, to withdraw from a
US$110-million deal that was inked in 2005. The Chinese entity reportedly backed
out due to exorbitantly high tax rates set by the Uzbek government.
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BANKING
Uzbek-Korean bank boosts assets to IAS 45.5%
Uzbek-Korean UzKDBbank saw assets to international accounting standards surge
45.5 per cent in 2006 to 84.701 billion som, the bank's balance sheet report
shows, Interfax News Agency reported.
The bank's loan portfolio expanded 20.7 per cent to 21.075 billion som.
Liabilities increased 47.9 per cent to 66.838 billion som and capital grew 37.3
per cent to 18.29 billion som. The bank obtained audited net profit of 4.967
billion som, up 120 per cent. UzKDBbank (UzDaewooBank until February 2006) was
established in 1997 to work with South Korean companies operating in Uzbekistan.
Uzbek fund inks agreement with Czech exports bank
The Reconstruction and Development Fund of Uzbekistan has signed an agreement
with the Czech Exports Bank aimed at the support and development the investment
and financial cooperation between the two countries, Pravda Vostoka newspaper
reported.
The new Czech partner of the Fund is a specialised state financial institution,
which renders to Czech and foreign companies the long-term financing with an aim
to support the Czech exports, firstly the products of machine engineering, oil,
electrical technology industry and transports and implementation of investment
projects. The Reconstruction and Development Fund of Uzbekistan was established
by the decree of the president of Uzbekistan in 2006.
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FOREIGN RELATIONS
Delegation to promote Uzbek-Thai relations
The visit of a Thailand delegation to Uzbekistan headed by the deputy minister
of the ministry of international affairs, Sovanita Kongsiri, will promote the
future strengthening of collaboration between countries, according to Uzbekistan
Today.
Uzbekistan and Thailand have the same views on many issues of modern
international relations. The two countries plan to develop cooperation in many
areas. Thailand actively supports strengthening of the international cooperation
in questions of a safety of Asia Pacific region (APR), and also fighting against
drugs and drug-dealing.
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MINING
Uzbek-British JV AGF plans to double gold production
The Uzbek-British joint venture, Amantaytau Goldfields (AGF), could double gold
production in 2010. A highly placed source at the Uzbek State Geology and
Mineral Resources Committee told Interfax that AGF, which produced 98,053 oz of
gold in 2006, could be producing 250,000 oz or 7.8 tonnes in 2010, Interfax News
Agency reported.
AGF will achieve growth of 180,000 oz annually with the launch of the
87.6-million Euro project to process sulphide ores mined at the Amantaytau
field, the source said. It is expected that the Uzbek government will in the
third quarter of this year give its consent to launch the project. The project
could get under way at the end of 2007 or early 2008.The source said the joint
venture produced 161,615 oz of gold in 2005. The drop in production last year
was attributable to tax problems encountered by the company. The source said
that those problems had been solved since Zeromax GmbH had become a shareholder
in Oxus Gold Plc., which owns 50 percent of AGF, and that the joint venture was
now working as normal. AGF processed 1,375,500 tonnes of ore graded at 3 g/t Au
in 2006. It also processed 1,465,500 tonnes graded at 4.5 g/t. Net profit fell
to 8.85 million Euro in 2006, from 13.26 million Euro in 2005.The State Geology
Committee owns 40percent and Uzbekistan's Navoi Mining and Metals Plant owns 10
percent of AGF, which is licensed to develop the Amantaytau filed with a
recoverable 3.2 million oz and more than three million oz in additional
estimates reserves. It is also licensed to four other deposits in the Central
Kyzyl Kum. The biggest of them, Uzunbulak and Vysokovoltnoye, hold a recoverable
230,000 oz and 600,000 oz, respectively. The Navoi Regional Economic Court in
October 2006 ordered AGF to pay more than 223.8 million Euro in back taxes for
the period 2003-2005. Switzerland's Zeromax in November 2006 signed an agreement
to acquire 16percent of Oxus Gold Plc. The influential Swiss company, which has
a substantial track record of business in Uzbekistan, helped to resolve the
joint venture's tax problems. Uzbekistan is the world's ninth biggest gold
producer. It mines around 80 tonnes of the metal per year.
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TOURISM
Uzbekturizm inaugurates tourism office in Pakistan
The national company of Uzbekistan in the area of promoting tourism into the
country, Uzbekturizm, has established its representation office in Pakistan's
capital of Islamabad. The representatives of political, business and public
circles of Pakistan, as well as the tourist industry of both countries took part
in the inauguration ceremony of the office. "The two countries have
profound opportunities to extend the trade and economic relations," Talha
Mahmood, the Pakistan senate interior affairs committee chairman, the president
of the Pakistan-Uzbekistan Friendship Society, has said, "at the moment,
the trade, exchange of technologies in leather, pharmaceutical and textile
spheres of industry are turning into the priority directions in the joint trade
and economic activity."
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