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AIIB Approves $250 Million to Support Uzbekistan’s Climate Transition

The Asian Infrastructure Investment Bank (AIIB) has approved a $250 million program to support Uzbekistan’s transition to a green and sustainable economy. The funding will help Uzbekistan achieve its goal of reducing greenhouse gas emissions per unit of GDP by 35% by 2030, compared to 2010 levels, and foster sustainable economic growth. The program focuses on three key areas. First, it aims to strengthen governance by improving climate policies and integrating climate goals into national decision-making processes. Second, it addresses better management of water and land resources, reduces climate risks, and supports economic development. Finally, the program promotes low-carbon solutions in energy, transportation, and e-mobility, with a strong emphasis on energy efficiency and sustainable practices. The initiative encourages state-owned enterprises to adopt climate risk disclosure practices and expand renewable energy projects. AIIB Vice President Konstantin Limitovskiy emphasized the importance of the collaboration between AIIB, the Asian Development Bank (ADB), and Uzbekistan. “By integrating climate priorities into economic planning, enhancing adaptation measures, and driving decarbonization in critical sectors like energy and transport, this program plays a key role in supporting Uzbekistan’s efforts to implement its 2030 national strategy and fulfill its Nationally Determined Contribution under the Paris Agreement,” he said. Kanokpan Lao-Araya, the ADB Country Director for Uzbekistan, highlighted that climate change presents a substantial challenge to the country’s long-term economic stability. She emphasized that the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) are collaborating to support Uzbekistan in achieving resilient, inclusive, and low-carbon economic growth. Uzbekistan’s Ministry of Economy and Finance will lead the program, with support from other government agencies. AIIB and ADB will oversee its implementation to ensure it aligns with Uzbekistan’s broader development goals.

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How Kazakhstan and Uzbekistan Anchor a Strategic Middle-Power Hub in Central Asia

Kazakhstan and Uzbekistan are driving Central Asia’s global significance. Together, they are turning Central Asia into a strategic middle-power hub. The two countries increasingly act as central nodes in a region key to global supply chains and, inevitably, geopolitical competition. However, they are not merely reactive to changes around them, but are highly dynamic. What does it mean to say that the region is emerging as a strategic middle-power "hub"? The notion of a hub extends beyond the national profiles of the two principals, Kazakhstan and Uzbekistan, to include the aggregation of collective influence. Central Asia is recognized as a cohesive entity in global forums. Kazakhstan’s energy wealth combines with Uzbekistan’s demographic strength, creating an influential synergy beneficial to the entire region. The interplay between their respective strengths allows them to amplify Central Asia’s voice in international institutions and negotiations collectively. By integrating their regional strategies within global frameworks — such as the Organization of Turkic States (OTS), the Shanghai Cooperation Organization (SCO), and the Conference on Interaction and Confidence Building Measures in Asia (CICA) — Kazakhstan and Uzbekistan enhance the region’s geopolitical relevance. Kazakhstan, for example, has successfully advocated for the Trans-Caspian International Transport Route (TITR, also called the "Middle Corridor"). This transcontinental trade route is emerging as a lynchpin in Eurasian logistics, connecting China to Europe via the Caspian Sea. Uzbekistan, for its part, has emphasized the integration of transport and energy infrastructure. These initiatives align with the broader vision of a unified Central Asia. The leadership of Kazakhstan and Uzbekistan has reinforced the region's collective identity as the "C5" group, also including Kyrgyzstan, Tajikistan, and Turkmenistan. This regional bloc has become a diplomatic focal point for major powers like the United States, China, Germany, and Japan. All of them engage with Central Asia through structured consultations within the C5 framework. These meetings have given the region traction in international diplomacy. The elevation of the C5 group reflects the region's new prominence. The United States engages with the C5 on issues ranging from regional security to sustainable development, emphasizing its commitment to a secure and prosperous Central Asia. China’s cooperation under the C5+1 mechanism complements its transcontinental infrastructure initiatives. Germany focuses on sustainable energy and governance, while Japan prioritizes infrastructure and technology transfers. Kazakhstan and Uzbekistan together have over two-thirds of the region's gross domestic product and two-thirds of its population. Kazakhstan's vast natural resources undergird its economic influence, while its geographic expanse (as the ninth-largest country in the world) makes it central to major connectivity initiatives. Through President Kassym-Jomart Tokayev's nuanced foreign policy, Kazakhstan has adeptly balanced relationships with major powers, ensuring that it remains a key partner for Russia, China, and the European Union. Uzbekistan has surged to prominence through its ambitious domestic reforms and proactive engagement for regional cooperation under the leadership of President Shavkat Mirziyoyev, who has implemented market liberalization measures attracting foreign investment and reinvigorating its economy. As the most populous country in Central Asia, Uzbekistan is an indispensable actor in regional affairs....

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U.S., Uzbek Think Tanks Agree to Work Together

Two prominent research centers in Uzbekistan and the United States plan to collaborate on joint projects. The Washington-based Caspian Policy Center and Uzbekistan’s state-backed Institute for Strategic and Regional Studies signed a “strategic partnership agreement” and look forward to “fruitful joint work,” Caspian Policy Center CEO Efgan Nifti said on X. Furqat Sidiqov, Uzbekistan’s ambassador to the U.S., said the agreement would help to foster ties between the two countries through research and dialogue. Founded in 2016, the nonprofit Caspian Policy Center focuses on economic, political, energy and security issues in the Caspian region. The Uzbek institute started in 1992 under a presidential decree. Last week, Eldor Aripov, director of the Institute for Strategic and Regional Studies, met leaders of top research groups in Washington. Among the topics they discussed were economic and other reforms in Uzbekistan that open “great opportunities for expanding the presence of American business in the Uzbek market,” the institute said. The leaders also discussed U.S. foreign policy priorities, including in Central Asia, and noted “successful cooperation” in the so-called C5+1 talks format that includes Uzbekistan, Kyrgyzstan, Kazakhstan, Tajikistan, Turkmenistan and the United States, according to the institute. It said the format helped to coordinate efforts “to strengthen regional trade, develop transport and energy links, combat environmental challenges, and counter extremism.”

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Uzbekistan Welcomes 6.5 Million Tourists in 10 Months of 2024, With China Leading Growth Outside CIS

Uzbekistan’s tourism industry is thriving, with 6.5 million foreign visitors from January to October 2024, fueled by a 17.2% year-on-year increase, or 951,300 more visitors compared to the same period last year. Among these tourists, 57,700 were from China, marking a 63.1% rise and making China the leading source of visitors outside the Commonwealth of Independent States (CIS). China's interest in landlocked Uzbekistan comes as no surprise. Rich in natural resources and brimming with untapped potential, Uzbekistan stands as a promising opportunity for growth and prosperity when strategic investments are managed effectively. For instance, China continues to dominate Uzbekistan’s trade scene, accounting for 18.8% of the country's total foreign trade turnover as of October 2024. Bilateral trade between the two nations reached $10.2bn, with Uzbekistan exporting $1.7bn worth of goods to China and importing $8.5bn in return. While this was a slight dip from the $10.8bn in 2023, China has maintained its position as Uzbekistan’s largest trade partner since 2020, thanks in part to strategic agreements like the Bilateral Investment Treaty (BIT) and the Agreement on Avoidance of Double Taxation (DTA). Additionally, China’s investment footprint in Uzbekistan is hard to miss. By the end of 2022, China had invested a total of $4.5bn, with over 2,000 Chinese enterprises operating in the country as of January 1, 2024. These businesses span a wide range of sectors, from oil and gas exploration to infrastructure development, automotive assembly, agriculture, and textiles. Projects include the Pengsheng Industrial Park, which focuses on construction materials and modern agriculture with a $129mn investment, and the Anjiyan Textile Park, which specializes in textile production, backed by more than $64mn. The Luoyang-Bukhara Agricultural Cooperation Zone takes this partnership to the next level, blending agricultural cultivation with industrial activities for a dynamic collaboration. Agriculture has blossomed as a key area of collaboration between Uzbekistan and China in recent years. Uzbek exports, such as cherries, apricots, and dried fruits are hitting the sweet spot in China, while Chinese investments in agri-tech are giving Uzbekistan’s productivity and export game a major boost. When it comes to green energy, Uzbekistan’s renewable ambitions are getting a powerful push from Chinese know-how. A standout project, a 1 GW solar power plant under the Belt and Road Initiative, is a shining example of both nations’ dedication to a greener, more sustainable future. In addition, on December 5, Uzbekistan's Uzatom and China National Nuclear Corporation Overseas (CNOS) signed a cooperation agreement, setting the stage for small nuclear power plants and improved uranium processing in Uzbekistan. This follows earlier talks about tapping into China's expertise to enhance the country’s nuclear energy capabilities. The digital transformation of Uzbekistan is another exciting frontier of opportunity. With plans to expand its digital infrastructure, Chinese companies are stepping in with cutting-edge technologies like 5G networks and e-commerce platforms. These innovations are set to supercharge Uzbekistan’s digital economy, making it more efficient and connected than ever before. It’s a win-win that promises to drive growth and elevate the country’s technological landscape. Two major...

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Central Asia, a Possible Winner in Regional Reshuffle Over Syria

There has been talk about who’s up and who’s down since the Syrian rebel offensive that ousted President Bashar Assad this month. Central Asia might end up as a winner on the geopolitical scorecard, according to one theory. For Syrians, the future depends on whether the country can stabilize under a new government or is headed for fresh conflict. But here’s the international fallout so far: Russia, Iran and the Hezbollah group in Lebanon, key backers of Assad during years of civil war, lost power and influence in the region. Turkey, which supported some rebel groups, has more clout in Syria, where it opposes Syrian Kurdish forces. Israel has benefited because its enemy Hezbollah has lost a supply route through Syria from patron Iran, though it says it is striking Syrian military sites because threats remain. There could be economic gains for Central Asia, far from the maneuvers on the ground in Syria. Some analysts believe an ascendant Turkey will call in some favors from Russia, which along with Iran is on the backfoot. One thing that Turkey and Central Asian trading partners really want is the opening of a land route, the so-called Zanzegur corridor, in the South Caucasus, and Russia can possibly help to make that happen. The 43-kilometer corridor, which is expected to make land trade between East Asia and Europe more efficient, would connect Azerbaijan with its enclave of Nakhchivan, passing through Armenia before joining with Turkey and European markets beyond. The transport connection is supposed to open under a 2020 cease-fire agreement following Azerbaijan’s military success against Armenia, with Russia as a security guarantor. But Zanzegur remains contentious because of Armenian concerns over sovereignty and a final peace deal is yet to be signed. Now, the theory goes, Turkish President Recep Tayyip Erdogan could push Russian President Vladimir Putin for an assist on Zanzegur in exchange for apparently helping Russia evacuate troops from Syria, and for possibly helping Moscow form a relationship with the new Syrian leadership. “What will Turkey demand from Russia? Perhaps lighter terms for the supply of key energy supplies now at threat from US sanctions,” economist Timothy Ash wrote in an analysis. “Russian agreement also perhaps over Azeri and Turkish access to Nakhichevan [through] the Zangezur corridor and on to Central Asia? Putin now owes Erdogan. He will collect.” Ahmad Vakhshiteh, a senior lecturer at RUDN University in Moscow, made a similar argument, saying in an interview with German media outlet DW that Turkey could use Syria leverage to advance wider geopolitical goals such as the Zanzegur corridor. Under the 2020 cease-fire deal, Russian border guards would control transport on the corridor, whose opening could also benefit Russia´s trade connections. But Russian influence has decreased as Armenia has all but withdrawn from a regional, Russian-led security pact and increasingly looks for Western partnerships. There has also been some discussion of bypassing Armenia and building an adjacent land corridor through Iranian territory, though Iran’s own trade and security interests are big factors. ...

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U.S. Sanctions on Gazprombank Put Uzbekistan’s $4.8 Billion Copper Ambitions at Risk

Uzbekistan faces a significant economic challenge as U.S. sanctions on Russia’s Gazprombank disrupt the $4.8 billion Yoshlik mine expansion project. The project, managed by state-owned Almalyk Mining and Metallurgical Combine (MMC), is critical to Uzbekistan’s plan to nearly double its copper production by 2026, according to The Diplomat. However, with Gazprombank now excluded from the international payments system, the project’s financing is at risk. The Russian Government directly owns 36.44% of Gazprombank's capital. Financing Challenges The Yoshlik mine expansion aims to increase copper output by 78% and gold production by 50%, making it a cornerstone of Uzbekistan’s economic development strategy. However, Almalyk MMC’s reliance on Gazprombank leaves it vulnerable to delays and potential secondary sanctions. This situation exacerbated earlier difficulties after U.S. and EU sanctions in 2022 suspended an $800 million tranche from Russian development bank VEB.RF, another key financial backer. Almalyk MMC must now urgently secure alternative financing to keep the project on track. Russia’s Role in Uzbekistan’s Economy Russia remains Uzbekistan’s largest trading partner, and remittances from Uzbek workers in Russia account for 18% of Uzbekistan’s GDP. Russia’s involvement in the Yoshlik project began in 2021 when Gazprombank and VEB.RF pledged $2 billion to finance mining equipment purchases. Impact on European and British Partners The Yoshlik project also involves significant participation from European and British firms: Germany: Engineering firms such as Thyssenkrupp have supplied critical equipment. Germany’s KfW IPEX-Bank recently arranged $2.55 billion in financing for the project. However, U.S. sanctions on Gazprombank could create legal and logistical hurdles, putting pressure on Germany’s government to reassess its support for exports to Uzbekistan. United Kingdom: The UK has taken a complex position. While it sanctioned Gazprombank in 2014, British firms, including Weir Group, remain involved in the project. In 2024, the U.K.’s export credit agency guaranteed a refinancing deal through Spain’s Santander Bank, reflecting the mine’s importance to British exporters. As reported by TCA, earlier this week, the UK Export Finance (UKEF) guaranteed a €12.6 million ($13.25 million) loan to the Almalyk Mining and Metallurgical Complex to refinance the purchase of fully automated vehicles. Urgency for Alternative Financing For Uzbekistan, securing alternative sources of funding is critical. Almalyk MMC must navigate a challenging sanctions landscape while keeping the Yoshlik project on schedule. Failure to do so could not only isolate the company but also hinder Uzbekistan’s broader economic goals, particularly its ambitions to expand its mining sector and boost foreign investment.