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Closer Uzbekistan-Kazakhstan ties not enough to resolve broader regional woes

  • Written by George Voloshin

BISHKEK (TCA) — Although Uzbekistan has taken steps to improve bilateral relations with its Central Asia neighbors, some unresolved issues still remain in the region — from the use of water resources to cooperation within regional economic integration and security blocs, such as the Eurasian Economic Union and Collective Security Treaty Organization. We are republishing this article by George Voloshin on the issue, originally published by The Jamestown Foundation’s Eurasia Daily Monitor:

The president of Kazakhstan, Nursultan Nazarbayev, paid an official visit to Uzbekistan in mid-September, highlighting improving relations between Central Asia’s two largest states. There, he met with his Uzbekistani counterpart, Shavkat Mirziyaev, for the sixth time since the latter took office last December, following the death two months earlier of the incumbent (since 1990) Islam Karimov. Mirziyaev had previously chosen Kazakhstan as a second stop on his first foreign tour as head of state, visiting the country in late March, right after Turkmenistan but before going to either Russia or China (Mir24.tv, Tengrinews.kz, September 16; Sputniknews.kz, March 23).

Since the early 1990s, Kazakhstan and Uzbekistan have been locked in a bitter, yet unstated rivalry for regional leadership. Despite its population of nearly 33 million people, in contrast with Kazakhstan’s 18 million, Uzbekistan had largely failed under President Karimov to open up the economy to foreign investors. The 2005 uprising in Andijan and the crackdown that followed drove the country into years of isolation. The European Union opened its permanent mission to Tashkent only in 2011, while the US embassy has existed since 1992 (Uz.usembassy.gov, March 22, 2017; Fergananews.com, January 24, 2012; Lenta.ru, May 16, 2005).

Much of Nazarbayev’s time in Uzbekistan was dedicated to the discussion of bilateral economic cooperation, given both sides’ publicly acknowledged intention to strengthen trade and investment ties. Last year’s trade turnover amounted to $2 billion, but the leaders said it could increase to at least $5 billion by 2020, if all unexploited potential could be put to good use. Kazakhstan is now home to 130 Uzbekistani companies; meanwhile, 130 Kazakhstani firms are active in the neighboring market (Abctv.kz, September 16; Podrobno.uz, June 9; Sputniknews-uz.com, February 23).

Mirziyaev’s efforts to liberalize the economy and attract foreign investors seem to have already started paying off. Kazakhstani-Uzbekistani bilateral trade grew 35 percent year-on-year during the first seven months of 2017, largely due to the opening of additional border crossings at Mirziyaev’s direct orders. The two governments have successfully launched a new car assembly line this year and are currently jointly renovating a major highway. The national air carriers have further announced plans to open extra flights between provincial capitals (Repost.uz, Uza.uz, September 17; Kapital.kz, Kazpravda.kz, September 16).

Bilateral cooperation is also set to expand dramatically in the strategically important energy field. Following the discovery of several oil deposits in the 1990s, Uzbekistan almost stopped importing crude oil. However, those oil fields ultimately dried up. And now, with its refineries (capable of processing up to 11 million metric tons a year) running at only half capacity, the country regularly experiences shortages of gasoline and diesel. Earlier this year, the Mirziyaev administration negotiated a supply agreement with Russia’s Transneft to buy up to 500,000 tons of Russian oil. Total imports should rise to 1 million tons in 2018–2020 and gradually reach 5 million tons, beginning in 2021. Kazakhstan is keen to supply Uzbekistan with its own oil, but that would require the construction of a 100-kilometer-long pipeline, linking the Omsk–Pavlodar–Shymkent main pipe to Uzbekistani territory (Anhor.uz, September 18; Interfax, September 7; Zonakz.net, July 28).

The expected launch of up to three large-scale investment projects in transport and gas processing should contribute to solidifying the bilateral relationship. This stands in stark contrast to decades of mutual distrust during the late Karimov’s controversial presidency. Yet, Uzbekistan is unlikely to change its mind with regard to the broader issue of regional integration, especially if this integration is carried out under Russia’s leadership within the scope of the Eurasian Economic Union (EEU) or, as far as common defense is concerned, the Collective Security Treaty Organization (CSTO). Tashkent exited the CSTO in 2012 and has never agreed to join the Kazakhstan-Russia-Belarus Customs Union, let alone its successor, the EEU. Mirziyaev’s successful visits to Turkmenistan and Kazakhstan indicate his approach to regional politics, which will consist of intensifying bilateral cooperation on mutually advantageous terms (Regnum, July 5; Rg.ru, June 29, 2012).

While improved relations between Kazakhstan and Uzbekistan can only be seen as a positive development for the whole of Central Asia, their renewed friendship could also result in unintended costs. Before Islam Karimov and Nursultan Nazarbayev launched their own strategic partnership in 2013, surprising many with their proclaimed willingness to turn the page and start anew, there had been much talk since 2012 about the need to ensure better water management in the region. The two presidents had spoken at length about the “irresponsible” actions of upstream states—that is, Tajikistan and Kyrgyzstan—whose extensive hydropower generation plans were said to pose a danger to regional water security. Both Kazakhstan and Uzbekistan are downstream countries and depend on their neighbors for water supply from the Amu Daria and Syr Daria rivers, which flow into the Aral Sea (Catoday.org, June 14, 2013; Avesta.tj, September 27, 2012; Azattyq.org, September 6, 2012).

Even as Uzbekistani-Kazakhstani ties strengthen, the emergence of new rifts among Central Asian states remains quite possible. In mid-September 2017, Tajikistan successfully placed $500 million worth of bonds with institutional investors in the United Kingdom and the United States. It plans to use the proceeds to pursue construction of the much-criticized Rogun Dam, in the works since the 1970s, which Uzbekistan and Kazakhstan claim could undermine the regional water ecosystem (Today.tj, September 23).

Meanwhile, unsettled tariff issues between Kazakhstan and Kyrgyzstan, both of whom are now members of the EEU, put pressure on their bilateral relationship. Following Nazarbayev’s meeting with an independent candidate in Kyrgyzstan’s upcoming presidential election, Bishkek issued a note of protest, on September 20, and accused its neighbor of seeking to influence the vote (see EDM, September 27). Even if these tensions drive Kazakhstan and Uzbekistan closer together, overall regional stability would still suffer: in a region historically dogged by the spillover effects of Afghan insecurity and intra-regional territorial disputes, a coordinated approach among all neighbors is what is most needed in Central Asia (Kloop.kg, September 20).

Afghanistan economy could annually grow 6.5% — World Bank

  • Written by TCA

KABUL (TCA) — If Afghanistan uses its resources properly, especially in mining and agriculture, the country’s economy could grow 6.5 percent a year between now and 2030, TOLOnews agency reports citing a World Bank report on Afghanistan’s economic situation.

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Next quadrilateral meeting on Afghanistan to be held in Oman on Oct 16

  • Written by TCA

KABUL (TCA) — The Afghan Ministry of Foreign Affairs says that the 6th quadrilateral meeting of representatives from Afghanistan, Pakistan, China, and the United States will be held in Oman on October 16, TOLOnews agency reported.

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Turkmenistan to hold first session of new People's Council in 2018

  • Written by TCA

ASHGABAT (TCA) — The President of Turkmenistan signed a resolution on convocation of the first session of the People's Council of Turkmenistan (Halk Maslahaty) in Ashgabat in 2018, state Turkmen media reported on October 10.

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OSCE Parliamentary Assembly observers to monitor Kyrgyzstan presidential election

  • Written by TCA

BISHKEK (TCA) — The OSCE Parliamentary Assembly says it is deploying a mission of 40 international observers, including 29 parliamentarians from 22 countries, to Kyrgyzstan for the 15 October presidential election. The observers arrive in Bishkek this week for several days of briefings before deploying to polling stations for election day observation.

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Kyrgyzstan’s former chief prosecutor convicted

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BISHKEK (TCA) — A court in Kyrgyzstan has handed a five-year prison term to former Prosecutor-General Aida Salyanova, who is now an opposition lawmaker, but postponed her imprisonment until her 2-year-old daughter reaches age 14, RFE/RL's Kyrgyz Service reported.

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Kazakhstan a key hub along Eurasian transport corridor — deputy FM

  • Written by TCA

ASTANA (TCA) — Thanks to projects like the New Silk Road and the Eurasian Economic Union, major transit routes between Europe and China now run through Kazakhstan, Kazakh Deputy Foreign Minister Roman Vassilenko said at the EU-Eurasia-China Business Summit that opened in Athens, Greece on October 9.

He said that Kazakhstan is the largest country on the planet that has no access to the open sea. But rather than accept this as a disadvantage, Kazakhstan has decided to use its location in the heart of Eurasia to unlock trade routes for the benefit of the country and the world, the Kazakh foreign ministry reported on its website.

“Our aim is to enhance our own transport and transit capabilities, stimulate the growth of trade flows across the country and ensure our competitiveness in the global services market. This will in turn make it easier and quicker to trade between east and west, to create employment and opportunity along the route and spread regional and global prosperity,” Vassilenko said, adding that this is why Kazakhstan has been actively implementing its Nurly Zhol program, which is aimed at modernizing the country’s transport infrastructure.

Nurly Zhol is designed to turn Kazakhstan into a key Eurasian transport and logistics hub, connecting the North, South, West and East.

Another major project that shares similar goals and ambitions to the Nurly Zhol program is China's Belt and Road initiative, Vassilenko said, as both projects are aimed at facilitating trade, eliminating barriers, ensuring transit and developing a reliable transport and logistics infrastructure.

He said that over 2,500 kilometres of new railways and 4,000 kilometres of new roads, including the Western China – Western Europe highway, which will be completed this year, have been or are being built across Kazakhstan.

This has been coupled with the new logistics infrastructure needed for a massive increase in freight. Container traffic across Kazakhstan from China westwards and from Europe eastwards has increased by 100 times in five years, to 2016. Around 25 massive freight trains every week now pass through Kazakhstan from China to Europe.

Rail container traffic from China to Europe and backwards across Kazakhstan has already doubled between 2015 and 2016 but is expected to increase almost eight fold again by 2020. Kazakhstan already accounts for 70 percent of transit traffic passing from China to Europe and vice versa, Vassilenko said.

An important element of the Eurasian transcontinental corridor is the Kazakh-Chinese terminal in the Chinese seaport of Lianyungang. The port is the main point of consolidation of cargo flows to and from Kazakhstan and the key transit port for shipment of goods to and from East and South-East Asia.

In addition, special economic zone Khorgos in the east of Kazakhstan on the border with China and Aktau seaport in the west on the Caspian Sea are important logistic gates for the new Silk Road. From Aktau, raw materials and goods flow not just to Europe but also Russia in the north and Iran to the south.

The Kazakh Deputy Foreign Minister concluded that the New Silk Road complements the objectives of the Eurasian Economic Union and other regional organizations, such as the Shanghai Cooperation Organization, which is to create a region of prosperity.

Kazakhstan PM comments on Kyrgyzstan president remarks, reiterates ‘strategic partnership’

  • Written by TCA

ASTANA (TCA) — Kazakhstan’s Prime Minister Bakytzhan Sagintayev has made a statement in connection with the recent remarks of Kyrgyzstan President Almazbek Atambayev concerning Kazakhstan.

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Turkmenistan president presents country’s development program for 2018–2024

  • Written by TCA

ASHGABAT (TCA) — Speaking at a meeting of the Council of Elders on October 9, Turkmenistan President Gurbanguly Berdymukhammedov outlined the main directions of the country’s investment and industrial policy for 2018–2024, state Turkmen media reported.

The Council of Elders is an unelected body that offers no real check on the powers of the authoritarian Turkmen leader.

Presenting the Program of the country’s development, the President said that some economic and political events in the country had made some negative impact on economic growth of Turkmenistan. First of all, the growth rate of global economy has decreased. It is related to the geopolitical situation, a drop of the prices for hydrocarbon resources in the world markets, insufficiently stable development of the economies of the states that are trade and economic partners of Turkmenistan, fluctuations of foreign currency exchange rates, and instability of securities at stock markets.

According to the Program, Turkmenistan plans to keep a high annual growth rate of GDP at 6.2–8.2 percent.

The share of the industry in the structure of national economy will make 33 percent on average, construction – 14 percent, and agriculture – 10.9 percent.

The president said that the total volume of electricity produced in the country will be brought up to 33 billion kilowatt-hours by 2024, 27.2 percent more comparing with 2018.

The volume of mineral fertilizers produced in the country in 2024 will increase 1.6-fold and will make 3 825 000 tons. 74.5 percent of that amount will be exported.

The president also said that the average salary in Turkmenistan will be increased annually by 10 percent in 2018–2024.

At the same time, Berdymukhamedov said the government would boost state revenues by cutting state subsidies that had been introduced by his predecessor Saparmurat Niyazov. "The time has come to save and use state funds effectively," he said.

The subsidies introduced in the 1990s granted Turkmenistan citizens free gas, water and electricity.

EU to launch negotiations on new agreement with Kyrgyzstan after election

  • Written by TCA

BISHKEK (TCA) — On October 9, European Union member states adopted a mandate for the European Commission and the EU High Representative for Foreign Affairs and Security Policy Federica Mogherini to negotiate a comprehensive agreement with Kyrgyzstan.

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Kyrgyzstan president cancels visit to Russia for CIS summit amid tensions with Kazakhstan

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BISHKEK (TCA) — Kyrgyzstan President Almazbek Atambayev has canceled his trip to Russia for a Commonwealth of Independent States (CIS) summit this week, citing what he said were fears of violent unrest during Kyrgyzstan's October 15 presidential election, RFE/RL's Kyrgyz Service reports.

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International Red Cross ‘drastically’ reduces presence in Afghanistan

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KABUL (TCA) — The International Committee of the Red Cross (ICRC) said on October 9 that it will "drastically" reduce its operations in Afghanistan following the killing of seven of its staff in attacks this year, RFE/RL reports.

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Development of free economic and small industrial zones discussed in Uzbekistan

  • Written by TCA

TASHKENT (TCA) — President of Uzbekistan Shavkat Mirziyoyev on October 8 held a meeting to analyze the effectiveness of development of free economic and small industrial zones in the country, the president’s press service reported.

The meeting was attended by the Prime Minister of Uzbekistan, his deputies, state advisers to the President, heads of relevant ministries, and business entities.

The Strategy of actions on five priority areas of development of Uzbekistan in 2017-2021 outlines a number of tasks for strengthening macroeconomic stability, attracting investment in the economy, especially foreign ones, and creation of favorable conditions for development of private entrepreneurship on the basis of privatized state facilities. Important in this direction is the ongoing work on improving the efficiency of free economic zones, technoparks and small industrial zones, and creation of new ones.

Currently, there are 14 free economic zones in the country. 62 projects worth 486 million dollars are implemented in Navoi, Angren, Jizzakh, Urgut, Gijduvan, Kokand and Khazarasp FEZs, with more than 4.6 thousand workplaces created.

At the meeting, the unsatisfactory state of activities on establishment of new and improving the effectiveness of the existing FEZs, the need for simplifying organizational procedures, increasing the attraction of investors and entrepreneurs was noted.

By the President’s order, a separate credit line in foreign currency was opened at the expense of the Fund for Reconstruction and Development of Uzbekistan in the amount of 100 million dollars for accelerating the implementation of investment projects in free economic zones, and acquisition of imported high-tech equipment.

Active work is being also carried out on the development of 7 new free economic zones specializing in pharmaceuticals.

President Mirziyoyev during his visit to the districts of Tashkent, the Republic of Karakalpakstan and the regions, examined the buildings and structures that had been empty for many years and gave instructions on effectively using these facilities, organizing new enterprises, and establishment of small industrial zones on their basis. As a result, the number of small industrial zones in the country has reached 96.

During the meeting, President Mirziyoyev criticized the heads of relevant ministries, departments and business entities for red tape, noting the lack of initiative and organization of activities on the development of free economic zones and small industrial zones.

The head of state instructed to develop a set of measures on eliminating shortcomings in free economic and small industrial zones, creating more opportunities for investors and entrepreneurs.

The need was emphasized for revising the legal framework for the development of these zones, bringing it in line with modern requirements.

Special attention was also paid to the issue of simplifying the procedure for allocating land plots and vacant buildings. In particular, projects to be implemented in free economic zones will be considered by the Administrative Council under the Cabinet of Ministers. So far, this council has included 17 ministries and departments. According to the instruction of the President, their number has been reduced to 4.

The criteria for selection of investment projects for placement in free economic zones will be reviewed, and additional measures will be taken to improve lending conditions for participants of free economic zones and provide engineering communications.

Manufacturing industry the main driver of growth of Kazakhstan economy

  • Written by TCA

ASTANA (TCA) — During the implementation of the State Program for Accelerated Industrial and Innovative Development of Kazakhstan for 2010-2014 (SPAIID), the country’s manufacturing industry has become the main driver of economic growth, with a growth of 29% over the past seven years compared to 6.2% in the mining sector, the official website of the Prime Minister of Kazakhstan reported.

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Opportunities of Kazakhstan special economic zones presented to foreign investors

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ASTANA (TCA) — Kazakh Invest JSC, the national agency for attracting investments to Kazakhstan, on October 6 presented the opportunities of the special economic zones (SEZ) of Kazakhstan to foreign and domestic business community at a road show in the city of Aktau, the official website of the Prime Minister of Kazakhstan reported.

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Airport services badly need improvement in Kyrgyzstan

  • Written by Maria Levina

BISHKEK (TCA) — Prime Minister of Kyrgyzstan Sapar Isakov visited the Manas International Airport in Bishkek on October 4 following numerous complaints about the airport's work. Most of the complaints of Kyrgyz citizens and foreign visitors were about the conditions of arrival, departure and registration.

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Kyrgyzstan deputy prime minister dies in car accident

  • Written by TCA

BISHKEK (TCA) — A deputy prime minister of Kyrgyzstan was killed when a vehicle he was riding in collided with a KamAZ truck on a highway near the Kyrgyz capital city, Bishkek.

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Kyrgyzstan-Uzbekistan ties reach highest ever level

  • Written by Maria Levina

BISHKEK (TCA) — The official visit of President of Kyrgyzstan Almazbek Atambayev to Uzbekistan on October 5-6 resulted in the signing of documents vital for both countries.

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Weekly Digest of Central Asia

  • Written by TCA

BISHKEK (TCA) — The Publisher’s note: Central Asia is an important geopolitical area between Europe, Russia and China. It is in Central Asia that world powers have confronted each other for centuries; it is here that China needs to succeed with its new Silk Road Belt for direct access to the Western markets; and it is here that a large wealth of raw materials has its origin. Every week thousands of news appears all over the world in printed and online media and it is quite understandable that many of them may escape the attention of busy readers. At The Times of Central Asia, we strongly believe that more information can better contribute to peaceful development and better knowledge of the region, and for this reason we are presenting this Weekly Digest of Central Asia which compiles what other media have reported during the past week.

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South Korea looking for ways to boost Central Asian trade

  • Written by Gary Sands

BISHKEK (TCA) — As China has built strong economic ties and growing influence in Central Asia, another East Asian economic giant — South Korea — is taking steps to increase its economic presence and trade in the resource-rich region. We are republishing this article on the issue by Gary Sands*, originally published by EurasiaNet.org:

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Russia to host meeting on Afghanistan peace process

  • Written by TCA

KABUL (TCA) — Moscow will host the International Contact Group’s meeting on October 11, where representative from more than 50 countries and international organizations will discuss the Afghanistan peace process and peace talks with the Taliban, Russia’s foreign ministry has said.

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Turkmenistan to launch first natural gas to gasoline plant in December 2018

  • Written by TCA

ASHGABAT (TCA) — A large gas chemical plant for production of gasoline from natural gas is under construction in Ovadandepe in Turkmenistan, at the 32nd kilometer of Ashgabat–Dashoguz motor road, the Golden Age Newspaper reported.

According to the state gas concern Turkmengaz, the processing of natural gas into gasoline will be carried out at this unique high-technology facility for the first time in the world practice. This GTG (gas to gasoline) project, based on the technology of Danish company Haldor Topsoe, will allow processing of 1 billion 785 million cubic meters of natural gas and produce 600 thousand tons of A-92 gasoline meeting the requirements of Euro-5 standard. Synthetic fuel will not have neither sulfur nor nitrogen organic components that affect the environment.

The consortium of Kawasaki Heavy Industries, Ltd. (Japan) and Rönesans Endüstri Tesisleri Inşaat Sanaýi ve Tiçaret Anonim Şirketi (Turkey), which have a contract with Turkmengaz for the construction of the plant, has committed to start the production at the end of 2018.

The plant has received the reactors from the license holder, Haldor Topsоe, and Kawasaki Heavy Industries, Ltd. Large compressors were supplied by Mitsubishi, program software by Yokogawa, diesel power packs from German heavy engineering company MAN, and pumping equipment was delivered by American, Korean and French manufacturers. The latest equipment from Holland, Korea, India, Great Britain, and Sweden is installed at the plant.

More than 700 foreign specialists and 4,700 workers and engineers from different regions of Turkmenistan are working on the construction site.

Commissioning of the plant is planned in December 2018.

2.5 million foreign tourists expected to visit Uzbekistan by year-end

  • Written by TCA

TASHKENT (TCA) — Tourism is an important sector of Uzbekistan’s economy and it needs to be improved with the effective use of existing opportunities, President Shavkat Mirziyoyev said at a Government meeting on tourism development, the Jahon information agency reported on October 5.

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Gazprom, CNPC, Kazakhstan’s KazMunayGas to develop natural gas filling network on Europe–China route

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ASTANA (TCA) — Vitaly Markelov, Deputy Chairman of Russia’s Gazprom Management Committee, Huang Weihe, Vice President of PetroChina (on behalf of China’s state-owned oil and gas company CNPC), and Daniyar Berlibayev, Executive Vice President for Transportation, Processing and Marketing of Kazakhstan’s oil and gas company KazMunayGas, on October 5 signed a Memorandum of Understanding at the 7th St. Petersburg International Gas Forum.

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Kazakhstan to start natural gas export to China on October 15

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ASTANA (TCA) — JSC KazTransGas, Kazakhstan’s national gas transportation company, and PetroChina International Company Limited have signed a sales agreement on the supply of 5 billion cubic meters of Kazakh natural gas to China during one calendar year. The expected export revenue of KazTransGas should be about US $1 billion, the Kazakh company said.

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