Uzbekistan Opinions - The Times Of Central Asia

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What Will Uzbekistan’s Role in Central Asia’s Connectivity Be?

By Robert M. Cutler A new World Bank report on Central Asian connectivity published in April 2024 highlights the importance of the Middle Corridor, a trade route spanning Central Asia, the Caspian Sea, and the Caucasus, connecting China and East Asia with Georgia, Turkey, and Europe. This corridor is seen as a critical alternative to Russian-controlled routes, especially in light of recent geopolitical tensions. The World Bank identifies ten steps to address bottlenecks in the Middle Corridor, aiming to increase trade volumes by tripling them by 2030. This would significantly reduce travel times and increase trade volumes to 11 million tons, with proper investment and efficiency measures in place. Uzbekistan and the Middle Corridor The report emphasizes the need for a "holistic" approach to improving transport connectivity in Central Asia. By this, it means a comprehensive and integrated strategy that combines improvements in infrastructure and logistics improvements with a reduction in border delays and tariffs, along with the harmonization of standards across countries. This includes improving both physical and digital infrastructure, enhancing governance and efficiency and addressing productivity issues amongst the state-owned enterprises that dominate the transport sectors in the region. The World Bank notes that Uzbekistan would profit from better rail connections with Kazakhstan; yet it does not identify any potentials for such projects. That is likely because a report by the Bank identified the Trans-Caspian International Trade Route (TITR) through southern Kazakhstan as the preferred program for international support. Uzbekistan's participation in the Middle Corridor is still in a developmental stage. Tashkent has an active interest and a strategic geographic location, but concrete actions and project details are still emerging. There have been no public announcements about specific infrastructure projects or investments that Uzbekistan is undertaking within the Middle Corridor framework. It can be foreseen, however, that railway modernization should be high on the list of programs. There is, however, a new railway project - the Darbaza–Maktaaral line - currently underway in Kazakhstan that could be extended to improve connectivity with Uzbekistan. It is projected for completion in 2025. A second phase including an extension to Kazakhstan's Syrdarya station could then facilitate a further branch line from Syrdarya to Zhetysai, on the border with Uzbekistan. This project would reduce congestion at the existing Saryagash border crossing between the two countries and thus increase the capacity for transporting goods between the two countries by as much as 10 million tons per year. The Middle Corridor and improvements to digital connectivity At present, the region has only limited connectivity. The Central Asian countries have heavily invested in infrastructure since the turn of the century, but the region still lags behind middle-income countries in both investment and maintenance. Most areas continue to suffer from insufficient infrastructure and expensive services. These in turn hinder the potential for internal and external trade. The World Bank's report also provides a comprehensive analysis of the challenges and opportunities for enhancing connectivity in Central Asia. For this purpose, it focuses on both physical and...

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Uzbekistan Seeks to Expand Trade Horizons with Europe

- Opinion by Robert Cutler Uzbekistan's economic landscape has been evolving, with announcements of major reforms and international cooperation aimed at economic modernization and increasing its profile in global markets. Its partnership with the European Union (EU) has focused on critical raw materials. At the same time, Tashkent plans to reduce gas exports in favour of expanding petrochemical production and inviting foreign investment into its mining sector. In October 2023, the European Parliament (EP) had endorsed this policy direction by adopting a resolution on Uzbekistan based on a series of broad programmatic documents regarding Central Asia, including a previous Memorandum of Understanding (MoU) with Uzbekistan on energy cooperation. The EP also favorably mentioned the Enhanced Partnership and Cooperation Agreement (EPCA) concluded in July 2022 to "modernize" the EU's Partnership and Cooperation Agreement signed with Uzbekistan in 1999. A new MoU signed earlier this month by the European Commission’s Executive Vice-President Valdis Dombrovskis and Uzbekistan's Minister of Investment, Industry and Trade Laziz Kudratov foresees an ambitious intensification of the partnership. The agreement is touted as a step towards diversifying supply chains to Europe for critical raw materials (CRMs) required for the energy transition. The EU's strategic economic partnership with Uzbekistan The new MoU follows on the EU's 25 October 2023 agreement with Uzbekistan during the Global Gateway Forum. That agreement had confirmed that Uzbekistan, with its reserves of metals such as silver, titanium, and lithium, would join the so-called Critical Raw Materials Forum. However, a critical evaluation of the MoU shows that a lot of hard work will be necessary to realize its plans and promises. In fact, the MoU represents a list of possibilities for cooperation without a guarantee of follow-through. The new partnership focuses on a number of areas of potential collaboration. These may be grouped under three general categories: (1) integrating CRM value and supply chains and their resilience; (2) mobilization of funding; and (3) cooperation on production, research, innovation and capacity building. The MoU itself admits that further specific cooperation is required to establish an operational roadmap that would specify particular joint actions for implementation. This partnership is in line with the EU's Global Gateway Initiative, which seeks to mobilize up to €300 billion in investments by 2027, although the initiative has been criticized for largely being a re-packaging of previously established programs without significant new funding. As far as Uzbekistan is concerned, the big unspoken problem is the need to enhance the country's economic competitiveness in global markets. Uzbekistan's mineral resources exploration Only about 20 percent of Uzbekistan’s territory has been explored. Potential mineral resources are evaluated at US$5.7 billion, with the country’s explored reserves representing about US$1 billion of this amount. This unexplored potential represents a significant opportunity for further enhancing Uzbekistan's potential global competitiveness in the mineral resources sector, but only if transportation logistics can be economically put into place. According to the U.S. Geological Service, Uzbekistan also has reserves of other minerals - such as calcium, kaolin, rhenium and vermiculite...

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Uzbekistan: From Silk Roads to New Horizons

Cradled by the embrace of the Syr Darya and Amu Darya Rivers, Uzbekistan boasts a rich tapestry woven from the threads of history. Being home to trade hubs like Samarkand and Bukhara, this land has been at the center of cultural exchange for over a millennia. From the Turkic-Mongol tribes creating the foundation of Uzbek civilization to the fall of the Soviet Union giving birth to the nation we know now, the history of Uzbekistan consists of a captivating blend of conquests and resilience. In 2016, following the demise of Islam Karimov, who ruled the country for 25 years, Shavkat Mirziyoyev came to power promising to lead Uzbekistan into a new and more progressive era. With a focus on modernization and reforms, Mirziyoyev envisioned bringing the nation out of his predecessor's repressive tenure and propelling it forward while honoring the country’s cherished traditions. With Uzbekistan trying to find its place in the modern world, the President has a significant duty to realize the nation’s potential found in its youthful population and strategic location. Mirziyoyev’s time in office has allowed the country to witness the beginning of a new chapter, with a special focus on economic and social reforms. The economy is on its way to becoming a modern market economy as reforms have opened the doors for foreign investors to direct their money into the country. Uzbekistan’s per capita income tells the story of a rising nation, reaching $1,705 in 2023, an increase of $100 compared to the previous year and a testament to the government's commitment to transforming towards a market-oriented economy. To create a conducive environment for businesses and especially foreign investors, the foreign exchange market was liberalized, and exchange rates were unified, bringing down tax rates for people and firms. The country has also allowed visa-free entry to attract tourists from around the world to their turquoise-domed cities and promote business and tourism. Coupled with all this, the country is also moving towards more relaxed trade policies, where it has opened previously closed borders with neighboring nations, including Kazakhstan, which is currently one of Uzbekistan’s top export destinations. With this modified attitude, the country’s role in international trade has dramatically evolved, making it a significant player in the Central Asian market. Over the past few years, the nation has shown great interest in joining the World Trade Organization (WTO), which will further improve its access to the global landscape. However, until Uzbekistan gains member status, the government hopes to boost their export capabilities by attracting foreign capital and technology through liberalizing trade and investment. Along with this, export permit and licensing requirements were also abolished for wholesale traders. While these measures have allowed the country to take a decisive step towards progression and development, several areas still necessitate immediate action, such as transportation networks and communication infrastructure, which are required to facilitate international trade. Previously, the country primarily focused on the export of cotton but is now expanding into other areas, including oil, gas, and gold. Another...

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How India is Becoming a Robust Soft Power in Central Asia

The middle-income trap, a pressing issue that has led to the stagnation of many successful developing economies, demands immediate attention. This trap, which occurs when a middle-income country can no longer compete internationally in standardized, labor-intensive goods due to relatively high wages, is a result of various factors, including countries most successful demographic characteristics. For instance, access to education has reduced birth rates due to an almost 100% literacy rate defined by 12 years of education. In the process, importing cheap manufacturing products has made local products uncompetitive. In such a situation, the country should have planned to upgrade current skill-based education to high-tech skills such as ICT, pharmaceuticals, etc. This shift to high-tech education holds immense potential for developing countries, offering a pathway out of the middle-income trap. Unfortunately, poor investment in developing high-tech education has led to an inadequate supply of a high-skilled workforce. Developed economies, such as the U.S. and a few European countries, are in an advantageous position to overcome such a trap due to their highly effective immigration policy. Developing countries, such as Brazil, Mexico, Argentina, the Philippines, and almost all Central Asian Republics, meanwhile, suffer. This will be further aggravated if the issue is not addressed urgently. Due to its geographic location and natural resource endowments, Central Asia, a diverse region with a mix of upper-middle and low-income countries, holds significant importance in the global economic landscape. Let's look at a specific case, such as Uzbekistan, a country whose population is growing at 1.3% per annum. Regarding age structure, the 0-14 age group makes up 30.1% of the population, the 15-64 age group 64.6%, and the 65-plus group constitutes just 5.3%. The country has achieved a high literacy rate, with 100% of the population completing 12 years of primary and higher secondary education. However, the country’s GDP per capita is relatively low, at US$ 3,209 (nominal term) and US$ 11,316 (PPP). The country's economy is dominated by the services sector, which contributes 48.4% to the GDP, followed by industry at 33.7%, and agriculture at 17.9%. The poverty line is set at less than US$ 3.2 per day, affecting 10% of the population. The country's labor force is distributed across sectors, with 25.9% in agriculture, 13.2% in industry, and 60.9% in services. The unemployment rate is 5.3%, and underemployment is a significant issue, affecting 20% of the population. The low supply of highly skilled workers challenges further increasing per capita income. The country will likely fall into this middle-income trap because it reaches a certain average income and cannot progress beyond that level. It seems helpful to mention some insights from this perspective. During Soviet times, the growth model of states was determined by their available resources, and Central Asia is rich in abundant resources. However, in most cases, primary resources were taken to other non-resource wealthy states for further value addition. So, the workforce was created in the respective states based on the concerned state's requirements. Workforce migration from one state to another was...

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Endangered Fish Species in the Amu Darya Basin May Disappear Due to Hydropower Plants

The 14th Conference of the Parties to the Convention on the Conservation of Migratory Species of Wild Animals is being held this week in Samarkand, Uzbekistan. The international environmental coalition Rivers Without Boundaries is calling on conference participants to pay serious attention to how the rampant construction of dams and reservoirs across Central Asia is leading to population declines and the complete extinction of endangered (red-listed) species. Rivers Without Boundaries experts point to the long-suffering Amu Darya river basin as an example: the alteration of its flow as a result of reservoirs and dams that change the hydrological regime and block fish migration routes was the most important reason for the Convention on Migratory Species to take under its protection the large Amu Darya sturgeon, a unique sturgeon adapted to live in the fast and turbid waters of the Vakhsh, Pyandj and Amu Darya. Its close relative, the Syr Darya sturgeon, is already considered extinct by most experts, due to the creation of numerous dams and reservoirs on the Syr Darya and its tributaries. Nevertheless, as experts from the Rivers Without Boundaries coalition emphasize, the recent World Bank assessment of the environmental impact of the construction of the Rogun hydropower plant in the Amu Darya basin does not consider the state of populations and the possible impact of changes in river flow on rare species of fish in the lower Vakhsh and the Amu Darya itself. Another example cited by ecologists is the Aral salmon (listed in the Red Book of Tajikistan), which once migrated along the Amu Darya and the Vakhsh, but since the creation of the Tuyamuyun hydro system and the Vakhsh group of hydropower plants has now completely disappeared from the area. Scientists found a last grouping of Aral salmon in the Nurek reservoir, but this too is likely to disappear as a result of the construction of the Rogun hydropower station upstream, as this will simply leave the salmon with no rivers in which to spawn. "Despite the requirements of national legislation regarding environmental impact assessment and protection of rare species, in all Central Asian countries, rivers - as well as their valleys, and the fauna and flora that depend on their ecological health - are massively sacrificed to the implementation of poorly justified hydraulic engineering projects," points out Evgeny Simonov, the international coordinator for Rivers Without Boundaries. "To date, when designing and building most dams throughout the region, no one is seriously trying to prevent damage to populations of rare migratory species." "Refusal to consider the potential impacts of hydropower plants on rare migratory species and natural ecosystems is not only a gross violation of international environmental conventions, but also often contradicts the environmental policy of those development banks that are going to lend money to build reservoirs," emphasizes Alexander Kolotov, Central Asia coordinator of the Rivers Without Boundaries environmental coalition. “We hope that the discussions during the conference in Samarkand will lead to the introduction of more responsible approaches to the selection of sites...

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Mirziyoyev Fortifies China-Uzbekistan Relations for Economic and Green Transformation

Ahead of his trip to Beijing, in his article for the People's Daily, Uzbekistan’s President Shavkat Mirziyoyev poured lavish praise on China. Not only did Mirziyoyev say he admired Chinese President Xi Jinping's global development, security and civilization initiatives as efforts to significantly address global challenges and accelerate the transition to a more sustainable and inclusive future, he also aligned Tashkent's vision of regional and international security with Beijing. Mirziyoyev has paid several visits to China, underscoring Beijing's growing importance in his economic and development agenda. His objective to strengthen "multifaceted" relations with Beijing further expounds the fact that China will be a centerpiece of his foreign and regional policy and ambition for a green transition. During his October's trip to Beijing to attend the third Belt and Road Forum, Mirziyoyev struck a complimentary tone, expressing gratitude to Xi for the invitation, stressed that the number of Chinese companies investing in Uzbekistan had increased fivefold and said that he expected bilateral trade to exceed $10 billion by the end of 2023. Mirziyoyev’s campaign has worked, given that Chinese enterprises are the second-largest investors in the country, China accounts for more than one-fifth of Uzbekistan’s foreign trade (21.3%) and bilateral trade in 2023 has far exceeded expectations, reaching $14 billion. Once Mirziyoyev signaled that China as one of his top foreign policy priorities, it helped Tashkent sign several agreements with Beijing. In his latest visit, Mirziyoyev called for international unity on the "Green Silk Road," which was first proposed by Xi in Uzbekistan back in 2016, and fully supported the green initiative’s potential to shape the agenda for a “common green future.” Construction of a 400-megawatt solar photovoltaic power plant by PowerChina and Mirziyoyev's meetings with Chinese energy companies in October indicated that he was impressed by their ability to deploy modern engineering solutions in electricity transmission networks and to implement solar, wind and hybrid power projects. Just last month, Mirziyoyev praised his strategic partner for completing projects at an “astonishingly” fast pace, and he continues to hail China's progress on large scale joint investments projects which have helped Tashkent make important strides in developing green energy and their endeavor to create 27 gigawatts of renewable energy generation by 2030. While cooperation with the "undisputed global leader" in renewable energy would solidify Tashkent's energy security and environmental sustainability, the first hydrogen plant in the country and region will also save some 33 million cubic meters of gas every year, decarbonize heavy industries, and add a new engine of growth, raising Uzbekistan’s international profile. The two nations are promoting active cooperation on infrastructure, too. The Chinese-built Angren-Pap railway line, the China-Kyrgyzstan-Uzbekistan transport corridor, and the four routes of the China-Central Asia natural gas pipeline that pass through Uzbekistan denote a region-wide consensus on developing intra- and inter-regional infrastructure to push trade, enhance connectivity, and bring prosperity. Once finalized, the China-Kyrgyzstan-Uzbekistan railway project will give Central Asia the shortest and most accessible passage to global markets, bringing billions of dollars of investments into...