TRADE AND TRANSIT COOPERATION INCREASING BETWEEN UZBEKISTAN AND IRAN

In the midst of the evolving new “Great Game” between the U.S. and Russia for control of Central Asia and its energy and mineralogical riches, an interesting but largely overlooked collateral development is the deepening parallel bilateral relations between regional states. One of the most fascinating regional post-Soviet evolutionary elements is expansion of trade relations between Iran and Uzbekistan, both nations with awkward relations with the outside world. The countries share a number of affinities, both religious and cultural. Both Tehran and Tashkent are members of the Economic Cooperation Organization (ECO), formed in 1985 to promote regional socioeconomic development. The ECO also includes Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey and Turkmenistan. The relationship also has military overtones, as Iran has applied to join the Shanghai Cooperation Organization, of which Uzbekistan is a charter member.

According to Iran’s commercial attaché in Uzbekistan, Seyed Mohammad Beheshtian, bilateral Iranian-Uzbek trade is now worth $650 million annually, and will increase to $1 billion in the near future. Speaking in Tashkent, Beheshtian told journalists that “Iran is Uzbekistan’s sixth largest trading partner” (www.uzreport.com, June 17). The Uzbek government places the figure even higher, stating that in 2007 Uzbek-Iranian trade was worth $700 million and that Uzbekistan maintains a positive trade balance with Iran (Novosti, February 13, www.cagateway.org).

Following independence in 1991, Uzbekistan was hesitant about Iran’s potential religious influence and maintained a fairly cool but correct policy toward Tehran. While Uzbek President Islam Karimov paid official visits to Iran in 1993 and 2000, in the immediate aftermath of 9-11, Tashkent placed a higher priority on deepening its relationship with Washington. Shortly afterward Uzbekistan granted the United States the right to use its Karshi-Khanabad airbase in southern Uzbekistan to support its Operation Enduring Freedom military campaign in Afghanistan.

As the U.S.-Uzbek relationship blossomed, Tashkent was made aware of core U.S. regional policy initiatives, including Washington’s 1996 Iran-Libya Sanctions Act. ILSA was designed to isolate Iran and punish U.S. and foreign companies seeking entry into Iran’s hydrocarbon sector. Accordingly, Tashkent did not put its relations with Tehran on the “fast track” but instead proceeded cautiously. Seven months after the terrorist attacks Deputy Uzbek Chamber of Manufacturers Ravil Sirjanov said in Tashkent that while a lack of cooperation between the Uzbekistan’s Chamber of Manufacturers and Iran’s Chamber of Commerce, Industry and Mines (ICCIM) impeded the expansion of bilateral trade ties, the Uzbek government had recently sent a draft of a preliminary cooperation agreement to Iran for consideration (AsiaPulse News, May 7, 2002).

In May 2003 Deputy Minister of Commerce and Iran Export Promotion Center head Mojtaba Khosrotaj said during a session of the fifth Iran-Uzbekistan Economic Commission in Tashkent that during the period from 1992 to 2002 the two countries signed more than 36 cooperation documents “which is a token of the two countries’ official determination for closer ties” (Payvand, May 18, 2003).

Both countries have also suffered international isolation. The burgeoning U.S.-Uzbek relationship was severely strained in the aftermath of the tragic May 2005 turmoil in Andijan. The following October the EU imposed an arms embargo on Uzbekistan and an entry ban on top Uzbek security officials. In response, Tashkent considered its foreign policy options, and Iran was a beneficiary. At a meeting of the eighth Iran-Uzbekistan Economic Commission in Tehran in 2007, Uzbek Deputy Prime Minister Nodir Khanov noted that in 2006 bilateral trade increased 42 percent from its 2005 level, adding that that 89 firms with Iranian investment now operated in Uzbekistan, three of which were owned by Iranians (Iran Daily, February 21, 2007).

Despite improving trade, obstacles remain on the Uzbek side, particularly high tariffs on goods and services, high transportation costs, currency transfer and conversion restrictions and the issuing of visas for Iranian nationals.

In spite of such obstacles, geographical considerations are drawing the two countries closer together. Iran is Uzbekistan’s closest access to international waters for exporting its goods, while Uzbekistan serves as a transit corridor for Iranian trucks bound for Kazakhstan, Tajikistan and Kyrgyzstan. Iran has already upgraded its railway and port facilities in anticipation of becoming a transit corridor for the landlocked nations of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan. The Mashhad-Bafq-Bandar Abbas Railway, completed with ECO assistance in 2004, shortened the transportation route for Central Asian goods to the Persian Gulf by 500 miles. Besides ground and railway transportation, Tehran and Tashkent have weekly direct flights.

Predicting the future is hazardous, but it seems safe to predict that Iran and Uzbekistan will continue to broaden their trade contacts, especially within the context of the ECO, whose objective is to establish a single unified market for goods and services. The organization’s diversity is reflected in its organization: the ECO’s secretariat and cultural department are in Iran, its economic bureau in Turkey and its scientific bureau in Pakistan.

Iran is angling for increased Central Asian transit trade, and Central Asia is responding. While Washington might not like it, plans utilizing Iran as a transit corridor have been in the planning for years. In September 2000 in St. Petersburg, Iran, and India signed an inter-governmental agreement to construct an international “North-South Transport Corridor,” which would allow Indian goods shipped from Indian ports to use Iran’s Persian Gulf Bandar-e Abbas or Chahbahar ports. Last month the Chahbahar, Transit and Development of the East Axis’ International Conference was held in Tehran. Besides Uzbekistan, the neighboring former Soviet republics of Kazakhstan, Kyrgyzstan and Tajikistan attended, along with Syria, Oman, Afghanistan, Qatar, and Azerbaijan (IRNA, May 24). As the region increasingly prospers from the interweaving of its air, land and sea network, it seems likely that the new “Great Game” players will be increasingly relegated to the sidelines as a new Silk Road of steel and petroleum enriches those who live along it.