• KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00212 0%
  • TJS/USD = 0.10456 0.19%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28490 0%

Uzbekistan Working on Economic Reforms, Wants U.S. to Get More Involved

Uzbekistan’s ambassador to the United States says the relationship between the two countries is on a roll.

“It’s a very promising time,” Ambassador Furqat Sidiqov said in Washington this week, adding that the two nations have a high level of “effective, open dialogue” as Uzbekistan seeks American investment and U.S. support for economic reforms and in other areas. Even difficult topics such as child labor and concerns about religious freedom in Uzbekistan are on the table, he said.

American businesses stand to benefit from Uzbekistan’s push into information technology and other industries, Sidiqov said on Wednesday at a meeting of the Caspian Policy Center, a research center based in Washington.

More than 100,000 Uzbeks are engaged in IT services; with most industry exports already go to the United States, a technology campus affiliated with Arizona State University will open this year in the Central Asian country, according to Sidiqov.

The ambassador acknowledged that Uzbekistan faces challenges such as water scarcity, and that the country’s leaders hope U.S. and international institutions can help implement “smart technologies” that save water. Only 20% of Uzbekistan’s water comes from within the country – the rest coming from neighboring states – and the vast majority of water is used in agriculture, often inefficiently, according to the press office of President Shavkat Mirziyoyev. 

Uzbekistan is privatizing most of its banking industry, there are plans to relax the tax burden on foreign investors, and an anti-corruption push is underway.

“Our main strategy is to minimize the role of the government in business,” said Sidiqov, a former deputy foreign minister who became ambassador to the U.S. last year. Sidiqov worked as a lower-ranking diplomat in the Washington embassy on two previous tours lasting a decade.

Uzbekistan’s state-owned banks have made progress toward “more commercially-driven business models” since the unveiling of a banking reform plan in 2020, according to Fitch Ratings, the credit ratings agency. But “further improvements may take longer due to the sector’s deep-seated structural weaknesses and new risks,” the agency said in March.

A U.S. congressional delegation recently returned from a trip that include a visit to Uzbekistan. The delegation, which included Adam Smith, the top Democrat on the House Armed Services Committee, met Mirziyoyev and his foreign and defense ministers.

The Uzbek ambassador said a key development in ties between Central Asia and the United States came last year when U.S. President Joe Biden met leaders from the region in New York. The summit, dubbed “C5+1,” included the presidents of Kazakhstan Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan.  They discussed security, economic development, climate change and efforts to promote peace.

“For the first time in our history, the United States is seeing us as a region. Before, we were part of American policy toward Afghanistan, something like that,” said Sidiqov, adding that Central Asia would welcome a Biden visit.

“We will be more than happy to organize that,” he said.

Central Asia Counts the Cost of Drug Trafficking

Speaking at the 67th session of the UN Commission on Narcotic Drugs in March, Zafar Samad – director of the Narcotics Control Agency under the President of Tajikistan – admitted that vast quantities of drugs are being smuggled to Europe and Russia through Tajikistan’s “northern route.” In other Central Asian nations, increased efforts are being made to curtail the problem. Kazakhstan, for example, is strengthening its legal systems and policies to effectively counter the laundering of proceeds from drug trafficking in cooperation with the United Nations Office on Drugs and Crime (UNODC). The Kazakh government also recently approved a Comprehensive Plan to Combat Drug Addiction and Trafficking. Given its long and porous border with Afghanistan, however, the problem in Tajikistan remains acute.

“The increase in the volume of drug seizures in Tajikistan indicates that there are large stocks of drugs in the northern provinces of Afghanistan intended for shipment along the northern route,” Samad stated. Smugglers are “assessing the situation and exploring the possibilities of transporting drugs into Tajikistan, taking into account the measures taken by the Tajik Government to strengthen the Tajik-Afghan border by creating new border facilities.”

This year will see the adoption of a CSTO program aimed at fortifying the border between Tajikistan and Afghanistan. However, the “northern route” – sometimes called the “Heroin Highway” – has a long and checkered history, which has not always led to interstate cooperation.

The village of Karakul, GBAO

 

The Pamir Highway route was established in the 1990s, opening up new avenues for suppliers following the collapse of the Soviet Union. Beginning in the Kyrgyz second city of Osh, the highway – the second highest international road in the world – traverses the length of Tajikistan and down through the south of Uzbekistan before terminating in Afghanistan. An estimated 15 tons of opium and 80 tons of heroin are trafficked through Tajikistan each year, the majority passing through the poverty-stricken, self-governing Gorno-Badakhshan Autonomous Oblast (GBAO) along a desolate mountainous route known locally as Bam-i-Dunya – the Roof of the World.

Said by locals to be older than Rome, Osh is a dusty spread of Soviet-era buildings adorned with satellite dishes and murals of MIG fighter jets and Misha the Bear. Having long been dubbed one of the drug capitals of Central Asia, Kalashnikov-wielding soldiers guarded cafés after dark.

An ancient Silk Road route in use for millennia, the modern Pamirsky Trakt was completed in 1937. From Osh, the red soil highway ascends to the windswept mud-brick hamlet of Sary Tash, a major stopover on the smuggling route where the roads to Kashgar in China and the border with Tajikistan converge.

Despite covering 45% of its landmass, the self-governing Gorno-Badakhshan Autonomous Oblast (GBAO) is home to just 3% of the population of Tajikistan.

The only Central Asian country to have descended into civil war following the collapse of the USSR, the Pamiris chose the losing side, with the five-year-long conflict leaving approximately 100,000 dead and 1.2 million displaced. The inhabitants of the GBAO have faced privation and persecution ever since, only surviving mass starvation during the 1990s because of humanitarian aid. The region still suffers from crippling poverty, an unemployment rate of around 30%, and an economic exodus of those in search of gainful employment.

One of the most remittance-based economies in the world, in 2023 official figures released by the Ministry of Labor, Migration and Employment of Tajikistan – often underestimated – stated that 652,014 people left the country to work abroad, largely to Russia. According to the World Bank, in 2022 remittances made by migrants accounted for 51% of the country’s GDP.

“The circumstance in the long term can be catastrophic, because you’ve connected the local economy with the Russian economy, so if there is a downtown in Russia, that will impact in a disastrous way,” Dr. Luca Anceschi, a Professor of Eurasian Studies at the University of Glasgow told TCA. “Another problem, he fact that these people tend to settle leads to wider issues. This is something which could prove detrimental in the longer term, a brain-drain if you will, or a loss of manpower.”

Whilst many of these economic migrants are housed in appalling conditions overseen by gang-masters and live in fear – especially in the wake of the recent terrorist attack on the outskirts of Moscow – others, as Dr. Alexander Kupatadze, a Senior Lecturer at King’s College, London, told TCA, are “heavily involved [in smuggling]. According to Kyrgyz Drug Control Agency officials I interviewed, at the time the leader of the Tajik diaspora had been laundering money by purchasing real estate and restaurants in Egypt and Dubai, as well as investing in agriculture in Austria.”

Tajikistan and Afghanistan separated by the Pyanj River, near Qal’a-i-Khum, Tajikistan

 

Skirting the border with China’s troubled Xinjiang province, the highway runs adjacent to a barbed wire fence for hundreds of miles. Parts of the fence sagging or missing altogether where wooden struts have been stolen, tire tracks speak to illegal entries and exits. The ground smattered with the skulls of ibex, a ghostly air of desolation permeates settlements here, which are cut adrift by snow for up to nine months a year, with winter temperatures falling to-45°C.

Circumnavigating landslides, a twenty-hour drive brings one from the long-troubled border with Kyrgyzstan to the regional capital of Khorog, population 30,000. In July 2012, fighting broke out here after the Regional Security Chief was dragged from his limousine and stabbed to death. Helicopter gunships whizzing overhead, the authorities severed phone and road links, locals responding by building barricades and calling the government’s actions an invasion. Over a hundred said to have been killed. Riots erupted again in November 2021, following the “mysterious murder” of a local representative. Many here believe that the government’s obsession with regaining control of the GBAO is intrinsically linked with smuggling routes.

Khorog Bazaar, GBAO

 

Around town, all signs of these conflicts had been plastered over, except for where the bullet holes were too high to reach. On the outskirts, new mansions hugged the hillsides, springing from the scree with manicured lawns and offering easy access to the porous Afghan border. Ostentatious vehicles abounded, the proliferation of flash cars leading to a local saying; it was no longer “How much did it cost?” but “How many kilos did it cost?” TCA asked Kupatadze about government collusion in trafficking. “All large-scale smuggling features some involvement of officials,” he observed, “either in the form of protection, large bribes, or direct participation.”

With monthly salaries averaging just shy of $193 as of November 2023, from the mid-1990s onwards, Tajikistan has seen an explosion of heroin, becoming known as a “narco-state.” In 1997, researchers estimated that half of 18–24- year-olds in the country were employed in the drug trade. As to how high up the criminality goes, in 2000 the Tajik Ambassador to Kazakhstan was arrested in Almaty with 86 kilos of heroin in his car. The next year, the Deputy Minister of the Interior was murdered, the prosecution in the case arguing he’d been assassinated for refusing to pay for a shipment of 50 kilos. In 2014, it was estimated that drug money accounts for as much as 30% of the country’s GDP.

In 2005, when Tajikistan assumed control of its border with Afghanistan from the Russians, heroin seizures decreased by 50%. Piqued by the critical international response, President Rahmon aimed a rare barb at Moscow, alleging Russian complicity in the drug trade. “Why do you think the generals lined up in Moscow all the way across Red Square and paid enormous bribes to be assigned here,” he complained to U.S. officials, ‘just so they could do their patriotic duty?’

In the absence of a legitimate economy though, perversely the flow of narcotics seems to have kept the country from falling apart. “The state is really at the intersection of the benefits and detriment which come from corruption,” Anceschi told TCA. “On the one hand, having the local administration connected with corruption has its benefits, because it’s added a new layer of patronage. So, not only do you have money flowing to the center, but you have another local level, which benefits anyone operating at that level.”

Tajik Government billboard featuring President Rahmon: “Come on let’s join together and raise our heads from the Tajik soil to the Tajik Sky.”

 

For two decades, the status quo has also served the international community and the U.S. in particular, which needed a stable Tajikistan to ensure uninterrupted flight paths for the so-called “War on terror” in Afghanistan. Infrequent efforts to curb trafficking have also had unintended consequences, with an increase in checkpoints inadvertently disadvantaging smaller operators while allowing cartels to consolidate their control. As Peter Reuter points out, “there are economies of scale in corruption.”

As the highway weaves out of Khorog, dried poppy husks sprout from the roadside. Overturned tanks and buses lay marooned in the Pyanj River, the shores of the 843-mile-long border with Afghanistan just twenty meters away.

Turkmenistan Poised to Supply Energy Resources to Tajikistan

Energy-rich Turkmenistan is now ready to increase its supply of oil products, as well as electricity and natural gas to Tajikistan through the territory of Uzbekistan.

The announcement was made by Gurbanguly Berdimuhamedov, chairman of Turkmenistan’s People’s Council, during negotiations with Tajikistan President Emomali Rahmon in Dushanbe on April 4th.

With an emphasis on the need to increase bilateral trade, the meeting focused on the expansion of Tajik-Turkmen cooperation in oil and gas, chemistry, industry, and agriculture.

Berdimuhamedov identified transport as a priority vector in the two countries’ partnership stating, “Today there is every opportunity to intensify cooperation to create a transport route from Tajikistan to Turkmenistan’s Caspian coast, with further access to Iran and on to the Persian Gulf and Turkey. This is the shortest route from China to Europe and the Middle East.”

The two leaders also addressed environmental issues and in particular, strengthening the International Fund for Saving the Aral Sea (IFAS); a key structure aimed at ensuring cooperation in improving the environmental and socio-economic situation in the Aral Sea region.

UK Concrete Canvas Ltd. Set to Solve Kazakhstan’s Irrigation Issues

British company Concrete Canvas Ltd. has established an office in Kazakhstan with the intention of building a plant to produce geosynthetic cement composite mats that eliminate water loss during filtration.

The decision, which comes in the wake the company’s abandonment of plans to localize production in Russia due to the geopolitical situation, was embraced by Kazakhstan’s national investment promotion company Kazakh Invest.

During a meeting on April 4 in Astana, chairman Yerzhan Yelekeyev assured UK representatives of the Kazakh company’s comprehensive support in realizing the project.

According to Concrete Canvas Ltd. the employment of their innovative technology will solve Kazakhstan’s recurring problems regarding the construction and renovation of irrigation systems. Once implemented, the project will significantly improve operational reliability, eliminate water loss in the country’s agro-industrial sector, and cut expenditure on the renovation of canals, protective dams, and other civil infrastructure facilities.

In Fear of Sanctions, Kyrgyz Banks Shun Russian Cards

Kyrgyzstan’s Interbank Processing Center (IPC) reports that on April 5 it will stop servicing the Russian payment system ‘MIR’. The decision was made “to minimize the risk of secondary sanctions.”

Interbank is a Kyrgyz company that services the national payment system, called ElCard. In 2019 Interbank entered into a partnership with MIR, so that citizens of both countries could pay with their domestic bank cards while in either Russia or Kyrgyzstan.

On February 23 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), which is responsible for controlling foreign assets that involve U.S. dollars and/or the U.S. banking system, imposed sanctions on Russia’s MIR.

Earlier, the National Bank of the Kyrgyz Republic told The Times of Central Asia that it doesn’t interfere in the activities of commercial banks in Kyrgyzstan, but only monitors compliance with the country’s legislation on combating the financing of terrorist activities and laundering of criminal proceeds. Therefore, Kyrgyz banks can independently decide whether or not to work with the Russian payment system.

Kyrgyz banks that have accounts with western financial organizations ceased working with the MIR system in 2022, after Russia’s full-scale invasion of Ukraine. After ElCard severed its ties with the Russians, all financial organizations in Kyrgyzstan also stopped accepting MIR cards.

This decision has hit Kyrgyz citizens in Russia as well, because Russian ATMs and POS terminals have stopped accepting their ElCards. But, as the Kyrgyz National Bank has explained, this decision will not affect international transfers. “It should be noted that the possibility of money transfers from the Kyrgyz Republic to the Russian Federation and vice versa with the use of mobile applications of commercial banks in the presence of direct contractual relations between Kyrgyz and Russian commercial banks, as well as through money transfer systems without opening an account, will remain,” Kyrgyzstan’s financial regulator writes on its website.

Banks in several other Central Asian countries have refused to cooperate with MIR, also for fear of falling under U.S. sanctions. Since February 27 banks in Kazakhstan have stopped servicing MIR cards. At the same time, the Central Bank of Kazakhstan emphasizes that each Kazakh bank makes this decision independently. “Our position is as follows: we as a first-tier bank do not interfere in the operating system of second-tier banks… It is their commercial interests, economic expediency. They calculate their own risks and benefits by having compliance services,” said the Central Bank’s bank’s press service at the time.

Besides Kyrgyzstan and Kazakhstan, Armenia has refused to cooperate with the MIR system for the same reasons. And now Tajikistan — and even Moscow’s closest ally, Belarus — are distancing themselves from it. The national payment systems of these countries — Belarus’s Belkart and Tajikistan’s Korti Milli — had agreements with the Russians that are similar to MIR’s arrangement with the Kyrgyz.

Currently Uzbek banks do not accept the MIR payment system either, as the UZCARD processing center has suspended work with the Russian system.

In response, the Russian Central Bank has commented that it is now considering expanding its ATM network in the countries where MIR cards have been rejected.

Kyrgyz Businesses Make Play to Raise Profile in America

Kyrgyzstan’s ambassador to the United States and Canada, Baktybek Amanbaev, recently met with the U.S. Chamber of Commerce’s chief representative for Central Asia, Jennifer Miel, to discuss stepping up the nations’ trade and economic ties.

Kyrgyzstan’s foreign ministry reports that ambassador Amanbaev told Ms Miel about the country’s resource potential, as well as opportunities for private business development in Kyrgyzstan. According to Amanbaev, Kyrgyzstan is particularly keen to work with American investors on hydropower, mineral development, agriculture and textile projects.

American companies already working in Kyrgyzstan include General Electric, Visa, Coca-Cola, Valmont, Medtronic and Borusan.

According to Kyrgyzstan’s National Statistical Committee, in the first nine months of 2023 Kyrgyzstan imported from the U.S. goods worth more than $300,000, predominantly cars and car parts. Kyrgyzstan also buys spare parts for bulldozers, excavators and trucks from American suppliers. In turn, Kyrgyz businesses export textiles, antiques, wool and animal products to the U.S. Kyrgyz entrepreneurs sell most of their goods in the U.S. through Amazon, Walmart and Ebay.

The Kyrgyz Chamber of Commerce has told The Times of Central Asia that local businesses aiming to do more business in America have approached the Chamber to expand their contacts and find potential partners. The Chamber has already begun work on opening Kyrgyz trade missions in major U.S. cities, and negotiations with local authorities are underway. Soon Kyrgyz business will be represented in Los Angeles, Chicago and Miami.

A few weeks ago, Kyrgyzstan’s North American ambassador Amanbaev met with an executive of the satellite internet provider Starlink, to discuss providing the Kyrgyz public with high-speed internet via American Starlink satellites.