Economic Diversification - The Times Of Central Asia

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Central Asia Rethinks Trade Routes Amid Middle East Crisis

The escalating conflict between Iran and Israel is threatening to disrupt Central Asia’s southern trade and transport corridors, prompting governments in the region to reassess their export strategies. According to the Russian outlet Nezavisimaya Gazeta, Kazakhstan and Uzbekistan are exploring alternative routes to mitigate risks associated with instability in the Persian Gulf. A major concern is the potential closure of the Strait of Hormuz, a critical chokepoint for global trade. This poses a significant challenge for Kazakhstan, which relies on Iran as its sole southern railway outlet. Kazakhstan Seeks Alternative Kazakhstan’s Minister of National Economy, Serik Zhumangarin, emphasized the importance of maintaining uninterrupted cargo movement. “If rail service through Iran is disrupted, and this is our only southern route, the state is prepared to redirect cargo through alternative paths,” he said. Though exports via Iran remain relatively limited, about $350 million in 2024 and $120 million from January to May 2025, Kazakhstan had planned to expand its use of the Iranian corridor. In early June, Astana and Tehran agreed to boost wheat and barley shipments to three million tons annually. Alternatives under consideration include multimodal routes incorporating rail and ferry links across the Caspian Sea via Turkmenistan and Azerbaijan, as well as the Trans-Caspian or “Middle Corridor” connecting China to Georgia via the Caspian. Air freight is also being considered for select goods. While these alternatives involve added logistical challenges, the government has pledged support to businesses should the conflict persist. Zhumangarin reassured that rerouting exports is unlikely to significantly affect prices, noting that most of Kazakhstan’s exports are globally traded commodities whose prices are shaped by international markets. As previously reported by The Times of Central Asia, Kazakh officials had already warned of risks to southern routes. Nonetheless, Zhumangarin emphasized that contingency plans are in place and that “it’s too early to say how the situation will evolve.” Uzbekistan Focuses on Diversification Uzbek President Shavkat Mirziyoyev has likewise responded swiftly, ordering an immediate assessment of the crisis's impact on trade and transportation, and calling for urgent diversification of export routes. According to the presidential press service, transport costs could rise by as much as 30%. “The need to redirect cargo flows to safer ports and negotiate alternative trade corridors with partner countries was emphasized,” the statement said. Authorities have been instructed to support export-oriented businesses and identify new markets to help stabilize domestic prices. Until recently, Uzbekistan had been expanding trade ties with Iran, aiming to increase bilateral trade to $2 billion annually. However, these plans are now under review due to the regional instability. Experts: Southern Routes Not Yet Critical Despite the growing concerns, experts say Uzbekistan is not heavily dependent on southern corridors. Grigory Mikhailov, editor-in-chief of the logistics portal LogiStan.info, noted that most of Uzbekistan’s trade continues through Russian ports (St. Petersburg, Vladivostok, Novorossiysk) and China. “These routes are well-established, reliable, and offer predictable delivery times. Sanctions have had little to no impact on cargo passing through Russia,” Mikhailov said. He added that the Iranian route...

Economic Diversification EU Cooperation Russia China EU Relations

Opinion: In Central Asia, the EU Defies Its “Geopolitical Dwarf” Label

As the United States and Russia reportedly aim to create a new global security architecture, other major actors in the international arena are working to improve their positions in the redefined world order. Often underestimated in terms of its geopolitical influence, the European Union has actively focused its attention on the post-Soviet space, particularly the strategically important Central Asian region. The EU, despite Russia’s and the United States' attempts to undermine its role in the settlement of the Ukraine War and to portray it as a “geopolitical dwarf”, is seeking to increase its presence in global affairs. In Central Asia, the 27-nation bloc is often viewed as a key actor that Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan can rely on to balance China’s growing dominance, as well as their security and dependence on Moscow. The EU's desire to strengthen cooperation with Central Asia can be seen as Brussels’ attempt to reduce Russia's influence in the region. Indeed, bogged down in Ukraine, Moscow is slowly but surely being pushed out of Central Asia – a region that has traditionally been within the Kremlin’s geopolitical orbit. As a result, China has managed to significantly increase its economic presence in all five Central Asian nations. The EU is now attempting to do the same. The recent visit of the European Commissioner for International Partnerships Jozef Síkela to Central Asia, as well as the upcoming EU-Central Asia summit scheduled for April 3-4, 2025 in Samarkand, clearly indicates the intensifying geopolitical competition between the EU and China over the region. One of Síkela’s major goals was to expand the scope of the EU's investment strategy, Global Gateway, in Central Asia. The project, launched in 2021, is often viewed as the EU’s version of China’s Belt and Road Initiative (BRI). As part of its strategy to increase its economic presence in Central Asia, the European Union seems to have four priorities: the development of transport infrastructure (particularly the Trans-Caspian International Transport Route, also known as the Middle Corridor), cooperation in raw materials, digital connectivity, and the development of the water resources, energy, and climate sectors. The problem for Brussels is that China, due to its proximity to Central Asia and the lack of bureaucratic procedures, is ahead of the EU in most, if not all of these areas. Beijing has had 12 years to strengthen economic ties with the region through the BRI. As a result, in 2024, China’s overall turnover with Central Asia reached $94.8 billion, nearly double the EU's trade volume with the region in 2022, which stood at $47 billion. Last year, the world’s second-largest economy replaced Russia as Kazakhstan's biggest trade partner. In neighboring Uzbekistan, it remains the top trading partner, while in Tajikistan, over the past 18 years, China has become the major investor in the landlocked nation’s economy. The same applies to Tajikistan and China’s neighbor Kyrgyzstan. The European Union, however, is now intensifying its efforts to position itself as a major foreign power operating in Central Asia. According to...

Economic Diversification Economic Growth Government Economy

Kasymaliyev: Kyrgyzstan to Focus on Hydropower and Economic Growth

As a small, landlocked country in the heart of Central Asia, Kyrgyzstan is prioritizing the expansion of its hydropower potential, enhancing transit opportunities, and digitalizing public administration, Chairman of the Cabinet of Ministers Adylbek Kasymaliyev said at the World Governments Summit in Dubai, United Arab Emirates, on February 11. According to Kasymaliyev, Kyrgyzstan’s position as an "upstream country" in the region largely shapes its water policy. The country’s total hydropower potential is estimated to exceed 140 billion kilowatt-hours per year. While Kyrgyzstan’s abundant water resources meet domestic needs, they also supply irrigation water to large farmland areas in downstream Central Asian countries such as Kazakhstan and Uzbekistan. Hydropower and Regional Energy Cooperation Kyrgyzstan’s flagship project in the water and energy sector is the construction of the Kambarata-1 hydroelectric power plant on the Naryn River, in partnership with Kazakhstan and Uzbekistan. Once completed, the plant is expected to generate 5.6 billion kilowatt-hours of electricity annually, meeting domestic demand while also enabling the export of surplus clean energy to neighboring countries. Transport and Trade: China-Kyrgyzstan-Uzbekistan Railway Another major infrastructure initiative highlighted by Kasymaliyev is the China-Kyrgyzstan-Uzbekistan railway, which broke ground in December 2024. More than just a transport corridor, the railway is seen as a strategic link connecting East and West. The route will facilitate the movement of goods from China to Kyrgyzstan and onward to Central Asia, the Middle East - including Turkey - and the European Union. “The project will strengthen interregional ties, help diversify transport routes, and enhance the region’s competitiveness as an international transport and transit hub, benefiting all Central Asian countries,” Kasymaliyev said. Digital Transformation and AI in Governance Kyrgyzstan’s third priority is digital transformation, aimed at reducing bureaucracy and lowering the cost of public services for citizens and businesses. “We are on the threshold of a new era of public administration, where digital transformation, artificial intelligence, and big data are not just tools but the foundation for making balanced and strategically sound decisions,” Kasymaliyev stated. He emphasized that AI offers unprecedented opportunities to improve governance efficiency. “Today, decisions worldwide are based on objective analysis of vast amounts of data. If we can assess the impact of fiscal reforms, energy tariff changes, or investment programs in advance, we can minimize risks, enhance economic resilience, and make truly well-informed decisions,” he said, adding that Kyrgyzstan is eager to adopt best practices from international partners.

EBRD Banking Economy Green economy Economic Diversification International Finance

Powering the Green and Economic Revolution: An Interview With Andi Aranitasi, Head of the EBRD in Uzbekistan

As the Head of the European Bank for Reconstruction and Development (EBRD) in Uzbekistan, Andi Aranitasi plays a key role in driving the country’s economic transformation. Under his leadership, the EBRD has expanded its investments in key sectors such as energy, infrastructure, and private enterprise, supporting Uzbekistan’s shift toward a more open and sustainable economy. With a focus on green energy, digitalization, and financial reforms, Aranitasi’s efforts contribute to the nation’s long-term development and integration into global markets. In 2024, the EBRD set an investment record in Uzbekistan by signing off on 34 projects worth €938 million (US $960 million). The country once again became the leading recipient of the Bank’s funding in Central Asia, with 55% of the Bank’s investments going towards green economy projects. The EBRD has supported Central Asia's first renewable hydrogen facility by providing a $65 million financing package to a joint venture of ACWA Power and Uzkimyosanoat, which will help to decarbonize the fertilizer production sector in Uzbekistan. The Bank also organized an A/B loan of US$ 226 million for developing, designing, constructing, and operating a 200MW solar photovoltaic power plant and a 501MWh battery energy storage system (BESS) in the Tashkent region. This is one of the most significant EBRD-supported BESS projects in the economies where the Bank operates. Its sovereign loan of $66.4 million to the National Electric Grid of Uzbekistan (NEGU) will support the construction of a 230 km 500 kV transmission line in the Navoi region. This project will help to eliminate bottlenecks in the grid, reduce electricity outages, and facilitate the integration of renewables. The EBRD’s sovereign loan of $238 million, meanwhile, will help rehabilitate a key road and build a bridge across the Amu Darya River in the Khorezm region, thus contributing to sustainable transport connections. The country’s financial sector attracted over €300 million from the EBRD through trade finance limits and loans to local financial institutions. It offered credit lines and risk-sharing agreements to such domestic lenders as Hamkorbank, Ipoteka Bank, TBC Bank Uzbekistan, and Uzbek Leasing International. Special attention was paid to the development and support of SMEs, including those needing energy efficiency improvements and owned and managed by youth and women. The EBRD also increased its equity investment in TBC Uzbekistan, the country’s first digital bank. Additionally, the EBRD and the government of Uzbekistan agreed to work jointly on the successful privatization of one of the country’s largest state-owned lenders, Asakabank. In 2024, the EBRD’s Advice for Small Business program in Uzbekistan launched 60 projects, increasing its outreach to domestic SMEs. Half of these were with women entrepreneurs, and over 40% were in rural areas. More than 80,000 entrepreneurs nationwide were reached through specialized training, networking, online outreach, and knowledge-sharing events. Throughout 2024, the EBRD was actively engaged in policy dialogue with the national authorities, which facilitated the approval of several key legal acts, such as laws on privatization, the electricity market, and subsoil use. TCA spoke with Andi Aranitasi. TCA: The EBRD has been involved...

Foreign Investment Economic Diversification Energy Infrastructure Green economy

Uzbekistan Aims for 50% Green Energy by 2030 in Major Power Expansion

On January 28, President Shavkat Mirziyoyev held a meeting to outline Uzbekistan’s power sector development strategy for 2025-2035. In the past eight years, electricity production has increased by 38%, reaching 81.5 billion kilowatt-hours. Private sector participation has grown significantly, adding 11.2 gigawatts of new capacity. As a result, private power generation now accounts for 24% of the total, while renewable energy contributes 16%. Rising Demand and Infrastructure Expansion Household electricity consumption has doubled since 2016, surpassing 21 billion kilowatt-hours, driven by rising incomes and greater use of home appliances. By 2030, Uzbekistan’s population is expected to reach 41 million, and the economy is projected to grow 1.5 times, increasing electricity demand to 117 billion kilowatt-hours. By 2035, demand is expected to reach 135 billion kilowatt-hours - 1.7 times the current level. To meet this growing demand, the government plans to build new power plants and energy storage facilities. Infrastructure expansion will include 7,000 kilometers of new power lines and the introduction of digital management systems to ensure efficient distribution. If one region faces shortages, excess capacity from another will be redirected to balance supply. Over the next five years, $4 billion will be invested in modernizing the national power grid. Renewable Energy Targets and Efficiency Measures A key priority is reducing electricity costs by expanding renewable energy sources. Uzbekistan is considered to have strong solar, wind, and hydro potential, and by 2030, half of the country’s electricity is expected to come from these sources. Plans include constructing 3,000 small hydropower plants with a combined capacity of 164 megawatts and adding 750 megawatts from solar and wind power. The government had previously announced a goal to increase renewables’ share to 40% of total energy consumption by 2030, but the new target raises that figure to 50%. In addition to expanding clean energy, Uzbekistan is working to improve industrial energy efficiency. Some chemical and metallurgical plants consume twice as much energy as similar facilities worldwide, while cement production in the country requires 1.2 times more energy than global benchmarks. The goal is to reduce energy waste by 10 - 15% across all industries and cut electricity losses from 14% to 8 - 9% by 2030. Foreign Investment and Local Industry Opportunities International investors are already engaged in energy projects worth $26 billion, creating opportunities for local companies to supply equipment and materials. To guide these developments, the government has been tasked with preparing a long-term electricity strategy until 2035. The plan will focus on ensuring energy security, improving efficiency, and training skilled professionals to support Uzbekistan’s transition to a more sustainable power sector.

Investment China Economic Diversification Kazakh Invest Innovative technology

Chinese Company to Develop Low-Altitude Technologies and Intelligent Manufacturing in Kazakhstan

Kazakh Invest, Kazakhstan’s national investment company, has signed a memorandum of understanding (MoU) with China's Polyking New Horizons Technology Industry Co. Ltd. The agreement focuses on collaboration in the emerging field of low-altitude economy and intelligent manufacturing. As part of the partnership, the companies plan to establish an industrial park in Kazakhstan, which will integrate drone technologies, smart city solutions, and advanced manufacturing systems. The $200 million project is expected to create 1,000 new jobs, according to Kazakh Invest. Expanding High-Tech Opportunities The MoU also includes provisions for developing projects in the chemical industry and innovative technologies. These initiatives aim to strengthen Kazakhstan's position as a hub for high-tech production and innovation in Central Asia. Azamat Kozhanov, Managing Director of Kazakh Invest, highlighted the vast potential for low-altitude technologies in various sectors, including agriculture, energy, construction, and infrastructure management. “The advanced technologies and expertise of Polyking will bring new momentum to the development of this field in Kazakhstan,” Kozhanov stated. He also noted the significant economic opportunity tied to this sector, adding: “By 2050, the global low-altitude economy market is expected to reach $8.8 trillion. Therefore, we are actively creating platforms to develop new industries and providing comprehensive support.” Broader Trends in Low-Altitude Technology Kazakhstan has already taken steps to integrate drone production into its economy. The Times of Central Asia recently reported on a $12 million project by Yesil Technology Company, a subsidiary of China’s Shaanxi Kaizhuo Electronic Technology Co. Ltd., to establish an industrial drone manufacturing facility in the country. This collaboration underscores Kazakhstan’s strategic focus on becoming a leader in the low-altitude economy, a field that includes drones, unmanned aerial vehicles (UAVs), and other advanced technologies that operate at low altitudes. The partnership between Kazakh Invest and Polyking New Horizons Technology marks another milestone in Kazakhstan’s push to diversify its economy through high-tech industries. The planned industrial park, along with complementary projects like drone manufacturing, positions Kazakhstan to capitalize on the growing global market for low-altitude technologies and intelligent manufacturing. If successfully implemented, these initiatives could transform the country into a regional leader in cutting-edge technology and innovation.