Experts mull post-Karimov Uzbek economy, regional ties

By Zaki Shaikh

LONDON

The death of longtime Uzbek President Islam Karimov Friday has prompted analysts to speculate about the likely regional and external policies of his successor.

The lack of a clear mechanism for the transfer of executive authority in Uzbekistan reflects the secretive nature of the political system and its closed-door decision-making, commented the CentrAsia news agency Friday.

The most likely candidate for the top post is Shavkat Mirziyaev, the country’s prime minister for the last 13 years.

Mirziyaev, a former mechanical engineer, served as governor of both Jizzakh and Samarkand before being appointed premier in December 2003, the Asia-Plus Agency reported.

There is no doubt that Uzbekistan’s next leader will carry a heavy legacy as he has to demonstrate how deftly he can deal with domestic power dynamics.

He will inherit a set of socioeconomic challenges caused by factors both internal and external, Parviz Mullojanov, an observer from neighboring Tajikistan, commented. He told the Ferghana News Agency that there are no great expectations for significant reforms in the short term.

On Uzbekistan’s policy towards its immediate neighbors, including Tajikistan, Mullojanov said that while these states do not expect any sudden breakthrough, measures such as a softening of the present tight visa regime, the opening of border crossing points, and the resumption of direct commercial flights would serve as welcome goodwill gestures.

In the medium term, there is hope that the issue of border demarcation will see some progress, said Mullojanov.

On long-term issues, he said a complete revision of water and irrigation policies is needed as the existing infrastructure is aging and needs an overhaul to keep pace with the region’s growing population and falling water resources. Without addressing these issues, the hydro-electric power stations scheduled for construction in Kyrgyzstan and Tajikistan will continue to be clouded in controversy and conflict.

China and Russia

In Central Asia, Beijing is gradually capturing the market from Russia and is pursuing a bigger share of trade with Uzbekistan too, noted the Daily Russian Business Courier Wednesday, pointing out, “In 2015, bilateral trade between China and Uzbekistan reached $3.5 billion (compared to $2.84 billion trade between Uzbekistan and Russia). In June 2016, China became the largest source of foreign direct investment in the Uzbek economy. Beijing and Tashkent elevated the status of their bilateral relations to a ‘comprehensive strategic partnership’.”

Uzbek analyst Kamoliddin Rabimov said that the volume of trade between China and Uzbekistan is becoming huge and that we most likely will see it grow further.

In recent years, Russian exports to Uzbekistan have fallen, RBC noted Wednesday, pointing out that in 2014, Russia was the largest exporter in Uzbekistan (23 percent), but in 2015 dropped to second place (22 percent), behind China, leading Sergey Abashin, a Central Asian expert, to call this “an inescapable shift of priorities and interests in the region”.

Uzbekistan’s relation with Russia is pursued more out of geopolitical considerations and therefore with the change of leadership, no serious changes in Russian-Uzbek economic relations are expected.

Uzbek migrant workers in Russia serve as the principle factor in bilateral economic relations. If the domestic situation in Uzbekistan becomes unstable, the number of citizens leaving for Russia may rise sharply, said Marcel Salikhov of the Centre for Applied European and International Research.

Traditionally, Uzbekistan has been the largest exporter of manpower to the Russian labor market. Until 2013, Uzbek migrants sent remittances home from Russia amounting to 12 percent of Uzbekistan’s GDP, but since Russia fell into recession, that fell to 5 percent.

The European Bank for Reconstruction and Development forecasts that Uzbekistan’s 8 percent economic growth rate in 2015 will fall to 6.5 percent in 2016 largely due to the fall in remittances from Russia.

It is interesting to note how Russia has lately been switching its purchases of cheaper gas supplies from Turkmenistan to Uzbekistan in pursuit of even lower prices and better terms.

In December 2015, Russia’s Gazprom signed a contract with the Uzbek Oil and Gas Corporation to purchase 4 billion cubic meters of gas in 2016, the Russian Business Courier reported Wednesday, adding that Russia’s “Lukoil is developing oil fields in South West of Uzbekistan as well as along the Uzbek bank of the Aral Sea. Under the agreement, Lukoil plans to produce up to 18 billion cubic meters of gas from 2020 onwards. The agreement for deposits in the southwest will continue until 2039”.