Ambassador Komil Rashidov: Uzbekistan Buys Energy from Kyrgyzstan and Ready to Develop Cooperation
The new approach of Tashkent to the relations with neighbours has opened new opportunities for mutually beneficial cooperation between Uzbekistan and Kyrgyzstan on diverse issues, including hard-line issues, said Komil Rashidov, Ambassador Extraordinary and Plenipotentiary of the Republic of Uzbekistan to Kyrgyzstan, in the interview to CABAR.asia analytical platform.
CABAR.asia: How much have the sales increased between Kyrgyzstan and Uzbekistan in the last three years?Komil Rashidov: We are developing mutual trade. In 2016, it was as low as 169 million US dollars, whereas in 2017 it was 259 million dollars, and in January-August 2018 our mutual sales amounted to 243 million dollars. During various meetings, visits of presidents of Uzbekistan and Kyrgyzstan, speeches and declarations, the goal was set to reach the total annual trade turnover of 500 million dollars. We have vast resources and opportunities [to reach this goal]. We are ready to offer to the Kyrgyzstan market automotive, electric, agricultural, textile goods, mineral fertilisers; we also produce agricultural equipment.
In 2017, the governments signed the financial cooperation agreement, which laid the basis for the support of the Kyrgyzstan imports. The Uzbek government has allocated 100 million dollars to support the economy of Kyrgyzstan and the exports of Uzbek goods. This is a global practice, which we have never used in the history of independent Uzbekistan because we used to be recipients. Now we act as the beneficiary. This is the evidence of the changes in the economy and politics of Uzbekistan.
How does this mechanism work?
The Uzbek party has allocated 100 million dollars to the export of goods and services from Uzbekistan to Kyrgyzstan. The minimum transaction is 1 million dollars, i.e. it can be 100 transactions worth 100 million, or one transaction worth 100 million. Authorised banks of both parties should negotiate all these terms and conditions. Kyrgyz businessmen may borrow the goods, the money will be in Uzbekistan, and they are deemed as payers of this money. There is an available mechanism of repayment of such money – they can work, sell or produce things using such goods, and start repaying when the time is due.
How many millions is transactions’ worth?
I cannot cite the amounts, but hopefully this year will there will be an increase in the use of these funds. The Uzbek party, the Uzbek manufacturers are ready to provide assistance to support the economy of Kyrgyzstan.
Mutual trade is a two-way street. Today we buy electricity from Kyrgyzstan. In 2017, we signed a contract for over 1 billion kilowatt hours of electricity and we are gradually paying for it, our power system has no debts to Kyrgyzstan. We purchase building materials, agricultural products – potatoes, unique Kyrgyz pears, plums, which are also in our markets.
Our market is open and does not create a patronage or monopoly enabling only some manufacturers to have their products on the market. Any foreign manufacturer importing goods to pays customs duties. For some types of products we have zero rates; goods we produce domestically already include customs duties. From October 1, 2017 we have new import duty rates. For example, for potatoes we have 0 per cent rate, lamb and beef meat is also 0 per cent, for some goods the duty is 10 per cent.
For a foreign supplier, new import duty rates are not onerous. We produce fabrics, so in case of fabric imports [duty] is 30 per cent of its cost, we also produce carpets and their duty is 30 per cent, we do not produce railway cars – 0 per cent, we do not produce bulldozers – 0 per cent, we do not produce electrical goods – 0 per cent. Duty applies to similar electrical goods we produce. For household appliances we produce the rate is up to 10 per cent.
Joint economic projects
Following the visits of presidents in 2018, we implemented two projects only. One is a joint Uzbek-Kyrgyz production of plastic windows and doors in the Karasuu district of Osh region (1-million-dollar investment). The second one is the production of Artel washing machines, also 1-million-dollar worth. In both industries, we have over 150 workers.
Now our parties are negotiating the production of agricultural equipment, vehicles, building materials, but we have not reached any consensus so far. But I hope that joint visits to export exhibitions will create a favourable platform for meetings and discussions of business projects between Uzbek and Kyrgyz entrepreneurs.
Speaking of regional projects, one project has already been implemented – the international road corridor Uzbekistan-Kyrgyzstan-China. The pilot project was launched in 2017. This project creates conditions for the development of mutual trade. Another important project, which is expected to be implemented, is the China-Kyrgyzstan-Uzbekistan railway project. Uzbekistan has already built its part – 123 km of railway along the Fergana Valley and 19 km through the tunnel.
Uzbekistan has four railway connections with Kyrgyzstan and four road connection points. The preference depends on the decision of the China-Kyrgyzstan-Uzbekistan tripartite working group. Perhaps its format will expand because there are parties concerned who also want to take part in this project. [We’ll learn about the parties] when such decision is made. But the main countries are China, Kyrgyzstan and Uzbekistan.
Border delimitation and demarcation
By results of 2017, we have a legally defined border between Uzbekistan and Kyrgyzstan, which is 1,170 km long (the total border is around 1,378 km long). This is more than 80 per cent, and the remaining part is beyond the treaty. Negotiations of government working groups regarding delimitation and demarcation of the state border are very constructive and amicable. 1,170 km have been delimited. Demarcation will be over once we complete the delimitation. We should not hasten and expect speedy solutions in this matter.
Now there are 14 checkpoints between Kyrgyzstan and Uzbekistan: four road, four railway, and the rest are pedestrian checkpoints. They are all are functioning in their own mode.
Our vision is to increase the number of checkpoints between our countries, we have such a proposal. Only Dustlik-Dostuk checkpoint of all checkpoints has an international status. It is a multifunctional checkpoint and serves as a crossing for passenger vehicles and commercial vehicles, as well as passengers. It is uneconomical to its workers, and creates discomfort for people.
There are many examples of differentiation. We can make separate corridors without involving, for example, private vehicles or passenger buses. And we can make separate corridor for private vehicles and passengers. But there are cases when there are no vehicles or trucks at the checkpoint but a pedestrian crossing point. We can provide relevant facilities there, necessary customs and border checkpoints so that both authorities could function properly. This will be convenient for the citizens, as well, because it will decrease violations committed when crossing the state border.
During the visit to Bishkek, Shavkat Mirziyoyev said that joint cooperation between the two countries was possible in hydraulic power projects of Kyrgyzstan. What will be the role of Uzbekistan in this issue?
In 2017, two energy providers of Uzbekistan and Kyrgyzstan signed a memorandum of cooperation regarding the Kambarata Dam. The purport of the document is to create a joint working group and to have all issues concerning hydraulic structures, construction, operation, using technologies, raising investments, possible consequences studied by the two working groups. The investments will be considered separately. This memorandum opens an opportunity for hydraulic power engineers to have a place for communication on this matter. One of the plants of Rogun Dam was launched last year, and our party took part in it. So we are ready to cooperate in this regard.
In 2017, the leaders of our states decided to create a joint water committee between Uzbekistan and Kyrgyzstan, to adopt all necessary documents enabling the committee to consider all water issues.
It is known that during the construction and commissioning of dams in Kyrgyzstan and Tajikistan, they accumulate water in summer and, accordingly, Uzbekistan receives less irrigation water. In this situation, what is the best solution for Uzbekistan?
I cannot make forecasts now. The point of this cooperation is to do no harm. For example, now we are buying electricity from Kyrgyzstan, thus contributing to the economy to some extent. There was a time when we didn’t buy electricity, our energy infrastructure was isolated, but now it is not. Moreover, it serves for effective cooperation, for a certain balance – we take water and buy electricity.
It seems that Uzbekistan considers a new formula of a compromise: on the one hand, Kyrgyzstan provides necessary volume of irrigation water in summer, on the other hand, Uzbekistan buys a certain amount of generated electricity from the Kyrgyz dams.
Yes. We have adopted the state programme on modernisation of active irrigation facilities and on construction of new ones. We have adopted the state programme on modernisation and construction of new power plants, and decided to construct one more nuclear power plant. And we make decision on rational use of water resources: we reduce cotton planting, increase farm crops, which consume less water.
For example, we prefer vegetables and fruit. We use more varieties of intensive orchards, drop irrigation. Now we reduce [cotton planting]; we used to grow cotton even in mountain areas. Now we have analysed and studied the situation. We are increasing the plantations of caper bush, malt, pepper, pistachio, walnut, namely the crops that are export-oriented.
How economically viable is it? Uzbekistan has established economic relations in cotton industry, it is known as one of the global leaders in the export of ‘white gold’…
We used to earn nearly 1 billion dollars from cotton, when we used to produce more cotton fibre. Now the production has decreased because we reduce the croplands and we don’t export raw cotton anymore. Now we have shifted to the cluster planting of cotton and other crop plants.
What does it mean?
It means that we are the producer that will grow cotton and be responsible for its growing, harvesting and processing. Namely, we will grow as much [cotton] as we need. The task is to not export raw cotton, but to export more end products. Last year, we increased the price of 1 kilogramme of hand-picked raw cotton up to 10-12 cents. The price used to be half as much before.
We are ready to share our experiences and to learn new things. In some areas – Fergana valley, border areas, other regions – this cluster planting programme is already paying off in various directions. This is a complex, interrelated production. [It involves everything] from agriculture to industrial production.
In 2018, the International Labour Organisation (ILO) had full access to monitor the use of forced labour. We are fully cooperating with international organisations, World Bank, human rights organisations. Not only the World Bank, but also other reliable organisations, foreign states, who are now assessing the reforms in the eradication of forced labour, acknowledged we didn’t practise forced labour. Even the US presidential administration has revised its approaches to the designation of this status in their documents.
See also: Is Uzbekistan Free from Forced Cotton-Picking?
It also gives evidence of the commitment of the government of Uzbekistan, led by its president, to eradicate forced labour. We have studied the recommendations of international organisations, human rights organisations that were too critical to us. However, the government of Uzbekistan has held constructive dialogues with them because the other party sees our shortcomings. Why shouldn’t we eliminate them? This is a rational approach meaning that cooperation enables advancement and eradication of shortcomings, which is the policy of the president of Uzbekistan.
Do these approaches help improve the country’s image?
Of course, they do. We live in Uzbekistan. People want changes not in some hypothetical future; they want to see this future now and in the short term, they want to see what changes will happen and how these changes will affect them personally.
After the adoption of the cluster planting programme, how will it make the quality of fabric competitive globally?
We don’t want to grow cotton using these old-fashioned methods and technologies and to lag behind the global trends. This is not beneficial to the producers or organisers of the cluster planting programme. This is not the objective of the government, as well. Why have we chosen the innovative path for ourselves? The cluster or innovative development involves a different approach compared to the previous one. It should contribute both to the economic development and to the technical progress or success.
We take part in international textile fairs; we hold textile fairs in our country. We hold other kinds of fairs involving many producers, also textile producers, including our traditional partners.
During such fairs, we create conditions for them to see our the whole process of production, including cluster production, so that they develop proper understanding or get true information about the compliance of our products with the world brands, global technologies. People see that we produce quality goods because we introduce various innovative solutions, technologies, equipment, which we bring from Germany, South Korea, for example.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway. The opinions expressed in the article do not reflect the position of the editorial or donor.
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