Following the leadership transition in 2016, Uzbekistan’s foreign policy has undergone a significant shift towards increased regionalism, with a strong focus on enhancing economic cooperation with Central Asian countries. The new leadership has mended strained bilateral relations through a two-step process: firstly, by addressing sensitive issues such as water resource management and border delimitation and demarcation, which had previously strained relations, and secondly, by emphasising the deepening of economic cooperation in the spheres such as mutual trade, investment, tourism both regionally and bilaterally. This paper discusses Uzbekistan’s regional economic activity with Central Asian countries after the leadership transition.
Introduction
Subsequent to the leadership transition in 2016, the new Uzbek government initiated a rapid détente of inter-state relations to mend strained ties with neighbouring countries, pledging to prop up regional economic cooperation, social rapprochement, and political convergence. Mirziyoyev made the official proclamation of the new regional foreign policy shift during the 72nd session of the UN General Assembly, where he declared that Uzbekistan’s foremost foreign policy priority area is the Central Asia region, and he professed to build a good neighbourhood, peaceful and stable, and strategic partnership with neighbouring states.
The attention-grabbing phenomenon for scholars and experts in the academic mainstream was primarily centred on the key question: What was the raison d’être of Uzbekistan’s pivot towards a regional foreign policy following the leadership transition?
Notably, one of the stepping stones that surfaced in Uzbekistan’s foreign policy is that it has shifted from a policy-oriented approach to an economic-oriented one, in which a government promotes foreign economic activity in priority areas (Dadabaev, 2021, p.169), and the modus operandi of the “good neighbourliness” principle is a practical approach embedded in economic rationality (Silvan, 2020). The new government was cognisant that the primary dictum of prosperous economic development is through close regional cooperation with neighbouring states, a particularly critical factor for a country with a double-landlocked geographical location.
I conducted content analysis of the speeches of President Mirziyoyev in different international meetings and forums to shed light on this topic and comprehend the primary motivation of the new Uzbek government on this matter.
Reforms and reorientation of foreign policy
Uzbekistan’s regional economic foreign policy transformation following the leadership transition had three interlinked phases. Firstly, to ramp up active external economic policy, President Mirziyoyev initiated domestic reforms such as revising investment legislation and restructuring the judiciary, financial and trade liberalisation, activating privatisation processes, promoting public-private partnerships, curtailing bureaucracy, improving business and investment climate, and stimulating initiatives in the field of green economy.
The consequential and definitive step was the significant restructuring of the Ministry of Foreign Affairs. In 2018, Mirziyoyev convened a meeting with the Ministry of Foreign Affairs representatives and Uzbek diplomats stationed abroad to deliberate on the new trajectory of Uzbekistan’s foreign policy, the roles and responsibilities of diplomats, the primary facets of external relations, as well as structural and personnel reforms. He fiercely criticised the then ministry’s work and stressed three fundamental objectives for every diplomat serving abroad: firstly, to promote the export of national goods; secondly, to attract foreign investment, advanced technologies, and knowledge; and lastly, to engage in effective and systematic efforts to increase the influx of tourists to Uzbekistan. To enhance external economic activity, it was supposed to reform the structure of the Ministry and establish separate specialised subdivisions to address the following issues:
- expansion of foreign economic relations, promotion of exports and attraction of investments;
- coordination of activities, as a secretariat, of intergovernmental commissions on trade and economic cooperation;
- comprehensive development of tourism.
Along with Central Asian countries, it was suggested to introduce and expand the workforce responsible for economic, trade, and investment issues with key partners. Besides, it was decided to assign specific regions of the country, sectors of the economy and large enterprises to each embassy. This proactive economic foreign policy reflects the domestic policy. From the outset of his presidency, Shavkat Mirziyoyev emphasised the economic development of the country, which could only be achieved through an open and pragmatic foreign policy. The results were swiftly evident: in 2017, over 200 international treaties were concluded with foreign partners, and trade, economic, and investment agreements and contracts valued at approximately $60 billion were inked. Additionally, more than 40 roadmaps for advancing practical cooperation with foreign countries and international organisations were endorsed. By 2023, the foreign direct investments attracted had reached $10 billion, representing a threefold increase from the figures in 2017.
Lastly, enhancing bilateral relations with neighbouring Central Asian countries was crucial, involving the political will to engage in dialogue and practical problem-solving regarding contentious issues like water management, border disputes, and energy resources. These longstanding disputes had been a significant obstacle to deepening regional economic cooperation among Central Asian nations. President Mirziyoyev recognised that resolving these issues was imperative to elevate regional cooperation and foster a higher level of economic interaction.
Uzbekistan’s regional economic foreign policy
Taking into account the geopolitical and geostrategic realities of the country in the region and the new wave of regionalism trend, Uzbekistan had to become a regional player to ensure its economic development. The country’s external economic activities, transit and logistics, stability and security, energy resources and climate issues are interdependent and interconnected with its five neighbouring countries.
Uzbekistan’s active regional foreign policy and economic cooperation with the Central Asian states possess a top-down approach that started from the inter-governmental level. At the higher level of the governmental structures, it was proposed to initiate Inter-Parliamentary collaboration and organising Forums, where the sides can discuss the spheres of political and economic interactions on the regional issues. Particularly, the Council of Inter-Parliamentary Cooperation between the Legislative Chamber of the Oliy Majlis of the Republic of Uzbekistan and the Majilis of the Parliament of the Republic of Kazakhstan was instituted, and its inaugural meeting took place in October 2023. Another issue raised at the Institutional level of the collaboration was the regular meeting of the countries’ ministers of transport, agriculture, and trade.
Uzbekistan possesses distinctive characteristics, as it shares borders not only with all the Central Asian countries but also because all its 13 political entities (comprising twelve regions and one Autonomous Republic) have common frontiers with all five neighbouring countries. Therefore, President Mirziyoyev proposed to create the Association of Heads (Khokims) of Regions and Business Communities of Central Asian States to facilitate and promote economic cooperation at the provincial levels, where local heads can collaborate based on specific features of the territory and needs of the citizens.
To fully implement the manifold possibilities of the region, the Uzbek government paid particular attention to the regional trade and business agreements and facilities that governments can provide through regional and bilateral efforts. For instance, it was emphasised the importance of the digitalisation of the economy, which will reduce production costs and ensure product competitiveness, to adopt an Agreement on General Directions of Regional Trade and Economic Cooperation, creating a system of border trade zones with unified rules and procedures for the supply of goods.
The inevitable cooperation was needed in the following spheres: creating trade and logistics chains in the region, opening and expansion of trade and cooperation centres in border areas, harmonisation legislation on mutual trade, eliminating the stumbling blocks and creation of unified electronic platforms for customs administration, sanitary and phytosanitary control, certification of where goods are imported from, regional we propose to adopt a comprehensive regional program, which envisages the launch of an electronic trade area.
The current unstable international political and economic environment caused disruptions in the commodity to the region, export, and import, and, consequently, increased prices. Considering this sensitive issue, it was proposed to strengthen industrial and agricultural cooperation based on the principle of “complementarity” of the region’s economies. This industrial collaboration will facilitate the supply of the raw materials required for production in their respective industrial sectors and reduce the region’s reliance on external suppliers.
In elucidating the Uzbek government’s regional initiatives, President Mirziyoyev pointed out that trade and economic cooperation are the main driving forces of the regional partnership and integration. New government has created all the conditions in Uzbekistan for developing practical cooperation with the region’s countries in this direction. For instance, President Mirziyoyev felt called upon to boost dynamic interactions among people and citizens of Central Asia to elevate the relations of friendship and mutually beneficial cooperation to a new level. It was proposed to establish direct business contacts between entrepreneurs, regular investment and economic forums and industrial exhibitions, to promote joint industrial cooperation projects, full-fledged free trade zones, and provide the platforms for organising Regional Economic Forum.
The common fiscal and monetary policy is an indispensable component of economic integration. In the Council of the Framework Agreement on Trade and Investment between the governments of the United States and the Central Asian countries (TIFA), the Minister of Investment, Industry and Trade of the Republic of Uzbekistan, Laziz Kudratov, proposed the creation of a single payment system in the region. The implementation of this single payment system is intended to streamline not only inter-governmental trade but also to promote commercial cooperation among business people.
However, it should be noted that Uzbekistan’s regional economic policy does not intend to mean the creation of supranational institutions or a new regional organisation. President Mirziyoyev is in favour of institutional cooperation without institutional integration and supranational bodies. He noted that the main regional foreign policy goal is to turn Central Asia into a stable, economically developed, prosperous region through joint efforts.
In light of recent joint actions of the Central Asian countries, there is a steady increase in the volume of trade between the countries of Central Asia. For example, the turnover increased more than 2.5 times, the volume of mutual investments rose almost six times, and the direct foreign and the flow of investments grew by 45 percent.
In addition, internal regional tourism indicators have doubled. Only with Kazakhstan over the past six years, the indicator of mutual trade has grown almost 2.5 times and amounted to $4.6 billion. In recent years, the volume of mutual trade with Kyrgyzstan has increased five times, and the number of joint ventures has grown eight times. The Kygyz-Uzbek sides have launched large-scale joint projects in textiles, automobile production, geology, chemical industry, agriculture and water management, and animal farming.
The statistical data lends credence to the fact that despite such enhanced and accelerated economic cooperation during recent years, the percentage of Central Asian countries in mutual trade with Uzbekistan remains relatively low in 2023. Among the four other countries in the region, only Kazakhstan ranks among Uzbekistan's top five trade partners in export and import, while Kyrgyzstan is the fifth top export partner.
Remarks on further deepening regional cooperation
In fact, regional cooperation does not mean regional integration, it is about close economic cooperation without any subnational institutions and organisations. Economic integration requires the deepened and enhanced interaction between governments and people's collaboration. Nevertheless, even at the economic cooperation level, there is still room to boost economic cooperation in the region, and countries can cooperate in specific areas while maintaining their separate economic systems and domestic regulatory frameworks.
Mainly, substantial improvement in economic performance on issues such as mutual trade, interregional investment and regional joint industrial cooperation among the Central Asian countries requires establishing a framework for practical steps. Central Asia, with more than 70 million population, still is not using its full economic, transport, and energy potential.
There is need for:
- Firstly, to reach bilateral and multilateral trade agreements that eliminate any obstacles to moving goods, services, and people. This agreement should involve addressing a range of issues, including trade in goods, trade in services, investment, intellectual property, rules of origin, dispute settlement mechanisms, and more.
- Secondly, to achieve regional investment agreements that increase the investment attractiveness of Central Asia for foreign entrepreneurs. Countries should adopt common investment conditions to eliminate domestic obstacles, reduce bureaucracy, and create tax-free zones and areas.
- Thirdly, to establish joint infrastructure projects that provide and facilitate people-to-people economic interaction within the region. To establish joint ventures and engage in producing goods and services with export potential beyond the region.
- Finally, to launch cross-border infrastructure projects for business communities and people that reduce the time of crossing borders and increase the efficiency of the border customs service.
The issues mentioned above were frequently addressed in President Mirziyoyev's speeches. However, as these questions cannot be organised unilaterally, it is essential at the governmental level to jointly work to advance these matters. Moreover, it is essential to remember that significant economic developments do not occur overnight, and attempting to establish all these economic conditions simultaneously can be quite challenging. Therefore, it is prudent for states to focus on addressing these issues incrementally, allowing sufficient time for their adoption at both the regional and national levels.
At the domestic level, it requires studying and assessing the potential benefits, costs, and challenges of the economic alliance. This phase may involve consultations with stakeholders, including businesses, government agencies, and civil society.
Then, states need to engage in preliminary consultations at the regional level to gauge interest, discuss priorities, and identify common areas of agreement.
Furthermore, regional trade agreements involve addressing a range of issues, including trade in goods, trade in services, investment, intellectual property, rules of origin, and dispute settlement mechanisms.
The final step is establishing mechanisms for compliance and monitoring to ensure that participating countries adhere to the terms of the agreement, which involve a dispute settlement mechanism to address disputes.
Regional cooperation involves multiple participants, and a single country cannot enhance it without the support of other countries, joint governmental efforts, and, most importantly, the political will of the leaders. The positive regional transformation in the region occurred following the leadership succession and power transition in Uzbekistan (2016), Kazakhstan (2019), Kyrgyzstan (2021), and Turkmenistan (2022). It should be noted that the overall trend of power transition has affected improving regional collaboration after a long-standing stagnation in bilateral and regional relations.
Reference:
- Kazakhstan and Uzbekistan establish Inter-Parliamentary Cooperation Council (asia-today.news).
- Dadabaev, T. (2018). Uzbekistan as Central Asian game changer? Uzbekistan’s foreign policy construction in the post-Karimov era, Asian Journal of Comparative Politics, Vol. 4(2) 162–175, DOI: 10.1177/2057891118775289.
- Silvan, K. (2020). Uzbekistan’s New Central Asia Policy: The Economic Rationale And Political Implications Of Good Neighbourliness, Finnish Institute of International Affairs Working Paper.
- Address of the President Mirziyoyev in the 5th Consultative Meetings of Heads of Central Asian countries, 14.09.2023.
- Speech by the President of the Republic of Uzbekistan Shavkat Mirziyoyev at the meeting dedicated to the activities of the Ministry of Foreign Affairs and embassies of our country abroad, 2018, https://president.uz/ru/lists/view/1423
- Address by the President of the Republic of Uzbekistan H.E. Shavkat Mirziyoyev to the participants of the Second Tashkent International Investment Forum, 2023, https://president.uz/en/lists/view/6221.
- Speech by the President of the Republic of Uzbekistan Shavkat Mirziyoyev at the Third Consultative Meeting of the Heads of States of Central Asia 07.08.2021 https://president.uz/en/lists/view/4534.
- https://miit.uz/en/news/a-meeting-of-the-tifa-council-was-held-in-samarkand
- Speech by the President of the Republic of Uzbekistan Shavkat Mirziyoyev at the international conference "Central Asia: One Past and a Common Future, Cooperation for Sustainable Development and Mutual Prosperity" in Samarkand 10.11.2017- https://president.uz/ru/lists/view/1227.
- Address of the President Mirziyoyev in the 5th Consultative Meetings of Heads of Central Asian countries, 14.09.2023.
- Address by the President of the Republic of Uzbekistan H.E. Shavkat Mirziyoyev to the participants of the Second Tashkent International Investment Forum, 2023, https://president.uz/en/lists/view/6221.
- https://miit.uz/en/news/uzbekistan-and-kazakhstan-are-increasing-the-dynamics-of-cooperation.
Main photo: freepik.