Uzbekistan International Affairs - The Times Of Central Asia

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Leading UAE Hotel Chain Explores Options in Uzbekistan

A world-famous chain of hotels in the UAE is exploring entering the Uzbekistan market. The announcement follows talks between Uzbek diplomats and Phillip Crouse, vice president of the United Arab Emirates' Jumeirah Group, and an introduction of the company's team to the recent reforms implemented in Uzbekistan, as well as programs and regulations to increase the country's tourist attractiveness, existing tourist routes, flights between the two countries, and hotels. Representatives were also presented with options to privatize or reconstruct large hotel complexes in the country. The entry of the Jumeirah brand into the Uzbekistan market will further increase the country's number of luxury hotels and enhance its ever-expanding tourist market. Over the past seven years, the number of foreign tourists visiting Uzbekistan has tripled, the volume of tourism services has increased fivefold, and the number of hotels and accommodation facilities has increased tenfold. Last year, more than 6.6 million tourists visited the country, providing a revenue of some 2.1 billion dollars, and according to recent reports, Uzbekistan aims to increase the number of foreign tourists to 15 million by 2030. Jumeirah, part of Dubai Holding, is a global luxury hotel company with 26 properties, including resorts, city hotels, and serviced residences across the Middle East, Europe, and Asia.

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Drop in Uzbekistan’s Exports to Central Asia

Local media has reported that from January - August, Uzbekistan's exports to its four neighboring countries decreased, compared to the same period in 2023. According to data from the Statistical Agency data, exports to Kazakhstan dropped from 950 million USD to 872 million USD; to Kyrgyzstan, from 491 million USD to 365 million USD; to Tajikistan, from 389 million USD to 329 million USD, and to Turkmenistan, from 118 million USD to 78 million USD. The share of Central Asian countries in Uzbekistan's total foreign trade turnover (FTT) in the first nine months of 2023 was 11.5%. The total FTT was worth 40 billion 45 million USD, of which 4 billion 574.3 million USD were with Central Asian countries. This year, it has decreased to 10.3%, meaning 4 billion 400.6 million USD of FTT of 42 billion 703.3 million USD are with CA countries. The Ministry of Investments, Industry, and Trade attributed the drop to an increase Uzbekistan's exports to international markets with high purchasing power, especially Europe, Arab countries, Southeast Asia, and the Americas, and explained, " due to diversification, the volume of exports to neighboring countries, which are considered a traditional market, decreased. In particular, the volume of exports to Kazakhstan decreased by 8.3%, to Kyrgyzstan by 25.6%, to Tajikistan by 15.3%, and to Turkmenistan by 36.2%."

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Uzbekistan Aims to Attract 15 Million Foreign Tourists by 2030

In an article, “Uzbekistan Attracts More and More Foreign Tourists to the Country”, published on the popular online portal Tiger’s Media in Poland, Dunyo reports that Uzbekistan plans to increase the number of foreign tourists to 15 million by 2030. As stated by Tiger's Media, “this number is twice as much as the 6.6 million tourists who came to the country in 2023. In 2023, tourism brought about $2.1 billion to the economy and created about 70 thousand new jobs." The portal adds that “to attract the attention of young travelers, Uzbekistan is also attracting bloggers and social network activists with more than 10 million subscribers,” Uzbekistan is located on an important part of the ancient Silk Road. Cities of the republic, such as Samarkand, Bukhara, and Khiva, important trade centers in ancient times, are UNESCO World Heritage Sites, known for their architecture, including madrasahs, mosques, and bazaars. The Times of Central Asia previously reported that tourism revenue made up 2.35% of Uzbekistan’s GDP last year. Other countries in Central Asia are likewise looking to boost their tourism industry. In June, Kazakh President Kassym-Jomart Tokayev spoke bluntly about infrastructure weaknesses that must be fixed. Kyrgyzstan, meanwhile, is focusing on its rugged, mountainous landscape, citing riding and hiking and “hunting with eagles” among its main attractions.

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World Bank Allocates $800 Million to Support Uzbekistan’s Market Economy Transition

The World Bank has allocated $800 million to accelerate Uzbekistan's transition to an inclusive and stable market economy. The government’s reform program, supported by the World Bank, aims to improve Uzbekistan’s business environment, increase agriculture, railways, and energy efficiency, improve public finance management, expand social services, and enhance readiness for environmental risks. Finance provided by the World Bank through highly concessional loans, is reported to offer the government low-cost, long-term repayment options "more favorable than those available in international financial markets." The financial package aims to achieve concrete results in the social protection system, combating gender-based violence, land security for farmers, business environment, public finance management, tackling climate change, water resource management, and environmental and climate assessment. It also includes reforming climate-sensitive investment in the railway and energy sectors. Uzbekistan has received $100 million from the World Bank in May to develop social protections. On 21 June, it was announced that Uzbekistan is the first country worldwide to receive payment from the World Bank for reducing carbon emissions through a policy crediting program and to date, has been awarded a $7.5 million grant for cutting 500,000 tons of carbon emissions.

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Kyrgyzstan Returns Four Resorts to Uzbekistan with Additional Conditions Imposed on Kazakhstan

Shavkat Mirziyoyev, President of the Republic of Uzbekistan, has approved an agreement between the governments of Uzbekistan and Kyrgyzstan, to regulate the ownership and continued operation of four spa and recreation centers in the Issyk-Kul region. Kyrgyzstan's transfer of ownership of the four resorts to Uzbekistan determines the authorization for implementing property rights but as cited by one Uzbek publication “The recreational facilities aren’t given, they are returned!” In April 2016, the “Golden Sands of Central Asia” (formerly “Bosteri”), “Rohat-NBU” (formerly “Rakhat”), “Dilorom” (formerly “Enesay”), and the unfinished construction of “Buston", were transferred to the jurisdiction of Kyrgyzstan. Although located on the territory of Kyrgyzstan, the resorts previously belonged to JSC “Tashkent Mechanics Plant,” JSC “National Bank of Foreign Economic Activity,” JSC “Asakabank” and JSC “Uzsanoatkurilishbanki” of Uzbekistan. Back in 2016, the government of the Kyrgyz Republic, under Prime Minister Temir Sariyev, decided to seize recreational facilities from the Republic of Uzbekistan. This led to litigation in international arbitration and the facilities were immediately renamed. In September 2016, the Uzbek owners of resorts applied to the International Center for Settlement of Investment Disputes (ICSID). Uzbekistan considered that the 1992 agreement between the countries of the former Soviet Union, regulating the use of facilities left on the territory of other republics as a result of the collapse of the Union, was violated. According to this document, property belonging to one state but located on the territory of other CIS countries remains the property of its owners. Thus began a long series of arbitration discussions and efforts to settle the matter amicably, leading to the announcement of an agreement between the Kyrgyz government and the Cabinet of Ministers of Uzbekistan in December 2017, whereby the land plots of the resorts would remain the property of Kyrgyzstan whilst other properties would be returned to the ownership of the Uzbek side. After formalizing property rights, Uzbekistan would undertake to upgrade boarding houses to a level of three or four stars and ensure their operation throughout the year. The agreement, however, was not signed, and discussions continued. The dispute resolution review was completed in May 2023 in ICSID. Details of the deal remained confidential until Kyrgyzstan's president Sadyr Japarov, announced that the international court had decided that Kyrgyzstan should pay Uzbekistan more than $40 million. Following negotiations, the parties agreed to lease the facilities for investors from Uzbekistan for 49 years. The president then warned," We cannot invest in their renovation in the next 15-20 years because we have many other critical issues. We cannot talk about recreational facilities until we solve them." Whilst Article 2 of the agreement clearly states that the Kyrgyz side transfers the ownership of buildings and structures to the Uzbek side, the recent agreement does not provide a fixed period for the rental of the recreational facilities. Kazakhstan and Kyrgyzstan have long-standing problems with boarding houses, including those in the former's “University”, “Olympus”, “Samal” and “Kazakhstan”sports and health resorts, in Issyk-Kul. At the end of the 1960s, the USSR declared Issyk-Kul...

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Uzbekistan Ends Forced Labor, But Cotton Industry Faces New Challenges

Global Voices reports that Uzbekistan has succeeded in phasing out forced labor in its cotton industry, but now faces new challenges. The country has made progress in ending forced labor and modernizing its cotton sector, driven by economic and political reasons. Forced labor hurts businesses and the nation’s international image, which the government has aimed to improve since 2016. Cotton production accounts for 12% of GDP. Since 2017, the government has introduced major reforms to modernize Uzbekistan’s cotton industry, led by President Shavkat Mirziyoyev after he took office in 2016. By 2018, labor control was strengthened, and the cotton cluster system, which controls the entire production process, began to take shape. Today, almost all cotton is grown through 142 clusters. Cotton quotas have been abolished by 2020, and the minimum wage will now be negotiated. The same year, the International Labor Organization reported that child labor was no longer a problem, and the international boycott was lifted in 2022. Eradicating forced labor has been hailed as “one of the most significant victories anywhere in the world in the battle against forced labor in the twenty-first century,” said Bennett Freeman, co-founder of the Cotton Campaign in 2022. This achievement was possible thanks to the diligence of organizations such as human rights defenders of Uzbekistan and the Uzbekistan Forum for Human Rights, which monitored the cotton fields and recorded violations, as well as the government's promptness in reviewing these reports. Global Voices writes that despite the progress achieved in Uzbekistan's cotton industry, there are still serious problems. The report states, “Despite abandoning forced labor, the government still continues to exert strong control over cotton production and prevents farmers from fully operating on their own terms.” Farmers receive resources and loans, but the system remains inefficient, with state-set cotton prices often differing from global rates. The government and industry need to address these ongoing issues while pursuing international standards and export opportunities to build trust and transparency.