Uzbekistan Features - The Times Of Central Asia

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Caspian Sea

As Two Wars Reach the Caspian, Central Asia’s Middle Corridor Holds

On July 25, two wars met in waters that Central Asian governments had tried to keep apart. Ukraine reported successful long-range strikes in the Caspian Sea. President Volodymyr Zelenskyy said the targets included vessels involved in carrying military cargo from Iran and a warship. Tehran said an Iranian commercial vessel had been struck, killing one sailor and injuring another, and accused Kyiv of trying to widen the war. It remains unclear whether the vessel identified by Iran was among the targets described by Zelenskyy. Diplomacy produced a limited off-ramp. On July 28, Ukrainian Foreign Minister Andrii Sybiha told his Iranian counterpart, Abbas Araqchi, that the strike on the Iranian ship was unintended. Both governments said they wanted to avoid further escalation. The call reduced the immediate risk of retaliation, but it did not remove the new danger. The Caspian is now one of the places where Russia’s war against Ukraine and the war involving Iran, Israel, and the United States intersect. Central Asia is exposed through the infrastructure and trade routes linking them. A “Sea of Peace” Under Pressure Turkmenistan responded to the incident with unusually direct language. Its Foreign Ministry called attacks on vessels in the Caspian “inadmissible” and described the waterway as a “sea of peace, harmony and good-neighborliness.” Ashgabat did not name Ukraine or endorse Iran’s account. Its restraint was characteristic, but the public criticism was unusual. Turkmenistan’s permanent neutrality normally produces guarded statements during external conflicts. The intervention showed that Ashgabat viewed the attack as a challenge to the regional order. Turkmenistan faces Iran across a 1,148-kilometer land border and the southern Caspian. Turkmenbashi port is also central to its plans for a larger role in Eurasian trade. The principle is set out in the Convention on the Legal Status of the Caspian Sea, signed in Aktau in 2018. Its text calls for the peaceful use of the sea, prohibits the use or threat of force, and bars armed forces belonging to non-Caspian states. The convention has not entered into force because Iran has not ratified it. Its provisions were designed to govern relations among the five littoral states. They do not address a long-range strike carried out by a non-littoral state. But modern drones can cross distances that once provided strategic shelter. A landlocked sea can no longer be assumed to sit beyond the reach of surrounding wars. The Iran-Russia Link Ukraine has clear military reasons to look toward the Caspian. Iran has supplied Russia with drone technology used against Ukrainian cities and infrastructure. The sea also provides a direct commercial route between Iranian ports and Russia’s Volga region. Kyiv now treats vessels on that route carrying military cargo as part of Russia’s military logistics. Iran described the vessel struck on July 25 as civilian. The dispute over the ship’s cargo is central because commercial and military supply chains can overlap. A vessel may be civilian by flag and registration while carrying goods that Ukraine considers part of Russia’s war effort. That uncertainty reaches beyond...

Global Business Services

GBSF 2026 Highlights Uzbekistan’s Push for Global Business Services and AI

More than 450 participants from business and government, representing over 45 countries, gathered in Tashkent on July 24–25 for the Global Business Services Forum 2026. The event centered on Uzbekistan’s effort to become a regional center for global business services and business process outsourcing (BPO), with artificial intelligence (AI) also a major focus. Organizers described it as Central Asia’s largest international forum devoted to global business services and the digital economy. The forum follows May’s Global Tech Weekend in Tashkent, which brought more than 2,500 technology and investment professionals to the capital. Opening the forum, Uzbekistan’s Minister of Digital Technologies Sherzod Shermatov said recent reforms had improved conditions for international technology companies considering investment or expansion in the country. Shermatov said companies could draw on qualified specialists and modern digital infrastructure while reaching a fast-growing regional market. He also invited international firms to invest and develop long-term partnerships. Azamat Karamatov, CEO of IT Park Uzbekistan, said the organization now has more than 3,800 resident companies, including over 1,000 international businesses. Exports of technology services have surpassed $1 billion. He said IT Park gives foreign companies a route into Uzbekistan’s technology sector while helping develop local talent. Sessions examined AI and talent development. Other discussions covered international investment and outsourcing. Speakers also outlined tax incentives and support available to foreign companies entering the Uzbek market. The Soft Landing program and Zero Risk initiative are among the available schemes. Key Account Management services provide additional assistance. One speaker was Arseny Kucheryuk, an expert at Antal Uzbekistan, part of the British recruitment company Antal International. He drew on the firm’s recruitment work and salary surveys to describe changes in the labor market. Kucheryuk, who moved to Uzbekistan nearly five years ago, said employers once struggled to find highly qualified candidates. The market has since become more balanced, although strong candidates can still receive several offers within weeks. He said companies seeking experienced professionals often need to offer salaries well above candidates’ current income. Antal research found that more than 60% of candidates expect an increase of at least 20% when changing jobs. Kucheryuk added that pay alone does not determine retention. Career prospects and management quality also influence whether skilled staff remain with an employer. He said workplace culture is especially important when addressing religion or family. Speaking to The Times of Central Asia after his presentation, Kucheryuk said foreign investment was creating career opportunities in Tashkent and elsewhere in Uzbekistan. He attributed Uzbekistan’s appeal to cooperation between the government and private sector, which he said helps international companies enter the market and supports local businesses. Kucheryuk advised foreign investors to understand local business culture before entering the market. Although companies may bring senior executives from abroad, he said operational roles requiring knowledge of local law and business practice should generally be filled in Uzbekistan. Iyad Hafez, CEO and managing partner of Staff Arabia, said his first visit to Uzbekistan exceeded expectations. “I’m positively surprised,” he told The Times of Central Asia. “Very...

Opinion

Uzbekistan’s Heritage Did Not Stop With the Silk Road

When people think of Uzbekistan’s architectural heritage, the images are familiar: the turquoise domes of Samarkand, the madrasas of Bukhara, Khiva’s walled city, and the monuments of Shakhrisabz. But Uzbekistan’s history did not stop with the Silk Road. At its 48th session in July, UNESCO inscribed “Tashkent Modernist Architecture. Modernity and Tradition in Central Asia” on the World Heritage List. The new site brings together ten buildings and urban complexes constructed between the 1960s and the early 1990s, during the period in which Tashkent was dramatically rebuilt following the 1966 earthquake. The inscription deserves to be celebrated. More importantly, it expands the definition of what Uzbek heritage can be. [caption id="attachment_52926" align="aligncenter" width="1774"] Kosmonavtlar Metro Station, Tashkent; photo: Mathieu Lemoine[/caption] These buildings do not belong to the world of caravanserais and Timurid courts. They represent another layer of the country’s history: the ambitious and highly creative transformation of Soviet-era Tashkent. For decades, Central Asian heritage has often been viewed through a chronological hierarchy. The older a monument, the easier it is to recognize as heritage. Timurid architecture is obviously precious. A concrete building from the 1970s can appear more expendable. Tashkent shows why that distinction is too simple. UNESCO notes that the architecture developed after the earthquake combined industrialized construction and seismic engineering with local climatic, cultural and material conditions. The result was not simply Soviet modernism transplanted to Central Asia, but a distinct architectural language adapted to Tashkent. This broader understanding of heritage comes at an important moment. Uzbekistan is modernizing rapidly. Its cities are growing, tourism is expanding, infrastructure is improving and redevelopment is transforming urban space. Much of this change is necessary and welcome. Historic neighborhoods cannot be expected to function as open-air museums. Residents need reliable drinking water, sewage systems, heating, electricity, internet access, waste collection, accessibility, safe streets and comfortable housing. A leaking pipe is not “authenticity.” The more difficult question is how modernization takes place. [caption id="attachment_52925" align="aligncenter" width="1774"] Tashkent Modernist State Museum of History; photo: Mathieu Lemoine[/caption] Uzbekistan has already experienced how delicate that balance can be. In Shakhrisabz, large-scale redevelopment substantially altered the historic urban fabric. The historic center was placed on UNESCO’s List of World Heritage in Danger in 2016 and remains there today. The experience offers an important lesson: preserving monuments is not necessarily the same as preserving a city. A city can retain its most famous madrasa, mosque or mausoleum while losing part of its heritage if the streets, neighborhoods, businesses and communities surrounding them disappear. The pressure is not only architectural. As tourism grows and historic centers become more desirable, economic incentives change. Houses can become hotels and restaurants. Businesses serving residents can give way to businesses serving visitors. Traditional workshops can struggle with higher costs. Redevelopment can create pressure on residents to relocate. Bukhara illustrates why this is important. Its identity rests not only on monumental architecture but on a living economy of craftsmanship. Gold embroidery, ceramics, jewelry, woodwork and other trades remain sources of employment as well as cultural identity....

Islamic Finance

Uzbekistan Establishes Islamic Finance Council as New Banking Law Takes Effect

The Central Bank of Uzbekistan has established an Islamic Finance Council to coordinate the work of banks, microfinance organizations, the Deposit Guarantee Agency and other institutions operating under Islamic financial principles. The council was created weeks after Uzbekistan’s new Islamic banking law took effect on June 29. It will prepare national standards, issue regulatory and supervisory recommendations, advise financial institutions and represent the Central Bank in its work with international standard-setters. Building an Islamic Finance Framework Islamic finance prohibits interest and generally requires financing to be linked to assets, trade, leasing or risk-sharing. Common structures include murabaha, in which a bank buys and resells an asset at an agreed markup, and ijara, which operates broadly like leasing. Sharia Specialists Form Council Majority The council has five members: four specialists from the Fatwa Center under the Muslim Board of Uzbekistan and one financial-sector expert. Saidjamol Masayitov, a chief specialist at the Fatwa Center, will chair the council. Muhammadyubkhon Khomidov, also a chief specialist at the center, will serve as deputy chairman. The other members are Fatwa Center specialists Hikmatilla Toshtemirov and Abdullatif Tursunov, along with Akhrorjon Sadullayev, managing partner of Orient Audit Group. Sadullayev has more than 20 years of experience in banking, finance and auditing. The council is intended to combine Sharia expertise with financial regulation. It will report annually to the Central Bank’s board. From Legislation to Implementation Uzbekistan has been developing an Islamic finance framework for several years. Legislation adopted in 2022 allowed microfinance organizations to provide services based on Islamic principles, while detailed regulations introduced in 2024 covered instruments including mudaraba, murabaha, musharaka, ijara and salam. The Central Bank is also preparing a national Islamic finance roadmap for 2026-2030 with assistance from the Islamic Financial Services Board. The work covers banking, capital markets, insurance, professional training and the wider legislative framework. Law No. O’RQ-1126, signed on March 27, established a dual banking model. Stand-alone Islamic banks can operate alongside Islamic “windows” within conventional commercial banks. The law also created a special licensing system and defined permitted Islamic financial operations. Uzbekistan had previously planned to introduce its first Islamic finance services through a commercial bank in 2027, with at least three banks expected to offer them by 2030. Licensing Rules Approved The Central Bank has now amended its licensing regulations for Islamic banks and Islamic windows. The changes were registered by the Ministry of Justice on July 17 and took effect upon official publication. Applicants must submit Sharia-compliance policies, information about their institution-level Islamic finance council, evidence of dedicated internal oversight and audit systems, and a three-year business plan. Existing conventional banks will require a separate license to open an Islamic window. Council candidates must receive Central Bank approval and meet education and professional-experience requirements. At least one member must hold a certificate from the Accounting and Auditing Organization for Islamic Financial Institutions, or AAOIFI. Certification will become mandatory for all council members from July 1, 2027. Adopting International Standards The Central Bank joined AAOIFI as a regulatory...

Extreme Heat

Extreme Heat Buckles Roads and Strains Power Grids Across Central Asia

Extreme heat across Central Asia in mid-July has buckled concrete highways, pushed electricity demand to record levels, and increased pressure on power grids and ambulance services. Kazakhstan reported road deformation and repeated failures in Almaty, Uzbekistan set consumption and generation records, Kyrgyzstan introduced temporary cuts to protect equipment, and residents in Tajikistan reported local disruptions. Temperatures above 40°C are common in parts of the region, but prolonged heat can strain several systems at once. Demand for cooling rises, road surfaces reach damaging temperatures, and health risks increase. The World Bank says much of Central Asia’s infrastructure was built in the mid-20th century and is overdue for renewal. Kazakhstan’s Roads and Power Networks Struggle Almaty recorded daily temperature highs on three consecutive days. The temperature reached 38°C on July 16, 39.2°C on July 17, and 40°C on July 18. The city’s July record remains 43.4°C, set in 1983. The heat also damaged Kazakhstan’s road network. KazAvtoZhol found temperature-related deformation on six highway sections in the Zhambyl, Pavlodar, and Turkestan regions. The national road operator said concrete surfaces can reach 60 to 70°C, and sometimes higher, during extreme weather. The resulting internal stress can deform concrete slabs. More than 50 workers repaired the affected sections, and traffic continued without restrictions. Road crews were monitoring more than 1,600 kilometers of concrete highway. Almaty’s ambulance service received more than 33,600 calls during the first two weeks of July. Medical officials said many involved sudden spikes in blood pressure and cardiovascular conditions, including coronary heart disease and acute heart attacks. Stroke patients were taken to hospital. Officials advised residents to avoid direct sunlight between 11 a.m. and 5 p.m., drink sufficient fluids, and seek medical help if their condition deteriorated. The city’s electricity network has faced record electricity demand between July 17 and 20 as residents increased their use of air conditioners and other appliances. The Alatau Zharyk Company said technical failures occurred in several districts, sometimes followed by faults on neighboring sections of the network. Thirty-five repair crews were deployed around the clock. The pressure extended beyond Almaty. Kazakhstan consumed 338.66 million kilowatt-hours of electricity on July 14, while domestic generation totaled 314.27 million kilowatt-hours, according to KOREM electricity data. Consumption also exceeded generation on each of the previous three days. Kazakhstan has historically covered such shortfalls through electricity imports, principally from Russia. Record Electricity Demand in Uzbekistan Uzbekistan’s Ministry of Energy warned on July 13 that daily electricity consumption could reach a summer record of 280 million kilowatt-hours, with peak demand rising to between 13 and 13.3 gigawatts. Demand subsequently exceeded that forecast. On July 18, consumption reached 294.4 million kilowatt-hours, 8% above the previous summer record. Peak evening demand rose to 13.7 gigawatts. Power plants produced a record 297.1 million kilowatt-hours on the same day. Despite the increase in production, technical faults caused temporary outages in several districts of Tashkent. At different times, the disruptions affected between several hundred and 2,700 consumers, according to the Ministry of Energy. Supplies were later restored....

Economic Growth

Uzbekistan Raises 2026 Growth Forecast to 8.1%

Uzbekistan has raised its 2026 economic growth forecast from 6.6% to 8.1%, after stronger-than-expected performance last year and in the first quarter of 2026. The Ministry of Economy and Finance’s updated Fiscal Strategy for 2027-2029 projects nominal GDP of 2.183 quadrillion soums this year (about $180 billion). The revision follows growth of 7.7% in 2025, above the original 6.6% forecast, and an 8.7% expansion in the first quarter of 2026. The ministry expects market services to grow by 16.6% in 2026, industrial production by 8%, construction by 12.4%, and agriculture by 5%. Inflation is forecast to slow to 6.5%, while unemployment falls from 4.8% in 2025 to 4.5%. The stronger projection rests partly on domestic demand. The strategy expects non-gold exports to rise by 20%, capital investment by 12.9%, and remittance growth to remain around 10%. Separate Central Bank figures show that remittances rose 13% to $3.8 billion in the first quarter, helping to support household spending even as Russia’s share of transfers declined. Growth is forecast to slow to 6.9% in 2027, before rising to 7.1% in 2028 and 7.4% in 2029. Inflation is projected at 5-6% in 2027 and 5% in 2028 and 2029. The government also intends to keep the fiscal deficit within its rules and public debt below 40% of GDP. The Ministry of Economy and Finance says meeting these targets will require stronger tax administration, fewer ineffective exemptions, tighter oversight of public-private partnerships, and further action against the shadow economy. It also plans more transparent medium-term budgeting and closer scrutiny of fiscal risks. The success of those reforms will determine whether rapid growth can be sustained without weakening public finances. The fiscal strategy uses the IMF’s April global outlook as part of its external assumptions. The government’s estimate is considerably more optimistic than the IMF’s 6.8% forecast. In its June assessment, the Fund said Uzbekistan’s outlook remained favorable but warned that the economy could be running above its potential. It identified weaker global conditions and domestic overheating as the principal risks. The revised figures also strengthen the government’s claim that the Uzbekistan-2030 Strategy target of an economy worth more than $240 billion remains achievable. The plan relies on private investment, export growth, higher productivity, and continued macroeconomic reforms. Economist Otabek Bakirov said the 8.1% projection would mark the strongest growth in Uzbekistan’s recent history. “According to the Fiscal Strategy forecasts, economic growth will accelerate to 8.1% in 2026. If this happens, it will become a new record for the country’s recent history,” he wrote in an analysis of the forecast. In a separate calculation, Bakirov put nominal GDP above $205 billion in 2027, $228 billion in 2028, and $257 billion in 2029. On that path, the $240 billion target would be surpassed a year early. However, he cautioned that the scenario depends on maintaining strong growth, low inflation, and exchange-rate stability, without a major domestic or external crisis. A weaker soum would reduce the dollar value of GDP even if output continued to rise quickly...