Moscow Eyes Stronger Partnership with Tashkent

Despite some recent setbacks, the Kremlin has intensified efforts to expand its relations with Uzbekistan, Central Asia’s most populous nation.

Following talks in Tashkent, Uzbek President Islom Karimov praised the bilateral summit meetings on January 22 and 23, which served to clarify important issues of regional stability, especially the situation in and around Afghanistan and Pakistan. "Our relations reached a level of strategic partnership," Russian President Dmitry Medvedev reportedly commented. Medvedev and Karimov signed a joint statement and witnessed the signing by the two foreign ministries of a cooperation program for 2009 (Interfax, ITAR-Tass, RIA-Novosti, January 23).

After the bilateral summit meetings, Medvedev and Karimov reportedly supported efforts by the new administration of President Barack Obama to stabilize Afghanistan. Karimov hailed what he described as "new approaches" by the new administration but also recommended engaging the neighboring countries, India and China, in settling the situation in Afghanistan. Karimov also warned that the longer international forces stayed in Afghanistan, the more they would be viewed as occupiers by the local population (Interfax, ITAR-Tass, RIA-Novosti, January 23).

The Kremlin has been keen to build stronger ties with Uzbekistan. Bilateral relations are based on a partnership agreement, signed by then-Russian President Vladimir Putin and Karimov in Tashkent on June 16, 2004. On November 14, 2005, Putin and Karimov signed a strategic alliance treaty. Karimov traveled to Russia in early 2008 and attended an informal CIS summit in St. Petersburg in June 2008.

Uzbekistan’s trade with Russia reached $4 billion in 2007 or up 140 percent from the year, but in 2008 bilateral trade remained unchanged at $4 billion. Trade with Russia accounts for more than 20 percent of Uzbekistan’s foreign commerce. There are 786 companies with Russian investments in Uzbekistan, including 252 created in the past two years. Total Russian investments in Uzbekistan amount to $1 billion (Interfax, January 22).

Nonetheless, in November 2008 Uzbekistan suspended its membership in the Russia-led Eurasian Economic Commonwealth (EEC), citing economic considerations. Tashkent complained that the EEC had emerged from the customs union of Belarus, Kazakhstan, and Russia, while other EEC member states were supposed to adapt their own customs arrangements to those of the original group.

Tashkent’s decision to leave the EEC was seen as detrimental to Russian energy policies in Central Asia, including the joint pipeline project. In May 2007 the Russian, Kazakh, Turkmen, and Uzbek leaders agreed jointly to develop gas pipeline networks in Central Asia. Their agreement paved the way for reviving the Central Asia-Center pipeline network at its original capacity of about 100 billion cubic meters (bcm) per year, aimed at transporting increased gas volumes from Turkmenistan, Kazakhstan, and Uzbekistan. The May 2007 declaration said that the joint venture should be launched in the first half of 2008, but the project has been slow to materialize. As Tashkent moved to suspend its EEC membership, the viability of the Russian-backed Central Asia-Center gas pipeline network became a matter of debate, notably against the background of the global economic crisis and low energy prices.

Yet despite Tashkent’s withdrawal from the EEC, Moscow has remained keen to sustain its energy ties with Uzbekistan. After the bilateral summit meeting, Karimov said Uzbekistan would continue exporting its natural gas exclusively to Russia. Karimov also guaranteed that Turkmen gas would be transported to Russia and hailed an agreement with Gazprom to rely on the European price formula.

Karimov pledged to supply 16 bcm a year of gas to Russia in 2009 and offered to raise the amount to 31 bcm. Following the summit meeting, Gazprom said that it had agreed to make a feasibility study to expand the Central Asia-Center gas transportation system in Uzbekistan (Interfax, ITAR-Tass, RIA-Novosti, January 23).

Russia’s natural gas monopoly Gazprom has eyed Uzbek natural gas riches. In December 2002 the state-owned Uzbek oil and gas monopoly Uzbekneftegaz signed a strategic partnership agreement with Gazprom, and in April 2006 the companies started a $1 billion venture to explore and develop oil and gas deposits on the Ustyurt Plateau. In April 2004 Gazprom agreed to develop Uzbekistan’s Shakhpaty gas field.

In 2004 the two sides also signed a 35-year Production Sharing Agreement (PSA) to develop Uzbek natural gas deposits. Under the PSA, Russia’s oil producer LUKoil is to develop the Kandym, Khauzak, and Shady gas fields in the southern part of the country, which are estimated to have 280 bcm of reserves. LUKoil will have a 90 percent share in the project, with Uzbekneftegaz holding the remaining 10 percent. LUKoil reportedly started production there in late 2007.

In March 2008 LUKoil joined a project to develop South-Western Guissar hydrocarbon deposits. The Russian company pledged to invest $5 billion in the first seven years to develop the Kandym and Guissar projects.

On January 21 Karimov met LUKoil CEO Vagit Alekperov and reportedly described the Russian oil company as a "reliable" partner. In response, Alekperov pledged continued cooperation with Uzbekistan (Interfax, January 21).

Moscow’s relationship with Tashkent also involves security ties, including multilateral cooperation within the framework of the Russia-led Collective Security Treaty Organization (CSTO). In 1992 Uzbekistan joined the post-Soviet security organization, then known as the Tashkent Treaty group, but left it in 1998. In December 2006 Uzbekistan revived its CSTO membership.

When Tashkent’s withdrawal from the EEC sparked rumors that it would leave the CSTO as well, Moscow hinted at continued incentives to keep Uzbekistan in the organization. On January 22 Russian newswires quoted anonymous Russian military sources as saying that Uzbekistan was continuing to import Russian military hardware and train its military in Russian academies at preferential CSTO prices. Although Tashkent ratified the CSTO agreements on military supplies and training. Russia granted Uzbekistan preferential treatment as a goodwill gesture, the sources said (Interfax, January 22).

Therefore, despite Tashkent’s decision to abandon the EEC, Russia has remained eager to pursue its economic, energy, and security engagements with Uzbekistan.