ECONOMIC RELATIONSHIP OF UZBEKISTAN WITH RUSSIA

Саипова К.Д.¹, Исламова С.²

¹ Кандидат исторических наук, ² Студент, Национальный университет Узбекистан

ЭКОНОМИЧЕСКИЕ СВЯЗИ УЗБЕКИСТАНА С РОССИЕЙ

Аннотация

Узбекистан на сегодняшний день установил более чем с 120 странами мира дипломатические отношения. Начиная с 1992 года между государствами Республика Узбекистан и Российской Федерацией были установлены дипломатические отношения. Сегодня ведутся активные связи в области экономики между двумя государствами.

Ключевые слова: экономика, сотрудничество, инвестиция, дипломатия, связи.

Saipova K.D.¹, Islamova S.²

¹ Ph.D. in history, ² Student, National University of Uzbekistan

ECONOMIC RELATIONSHIP OF UZBEKISTAN WITH RUSSIA

Abstract

Uzbekistan for present-day day has installed with more than 120 countries of the world diplomatic relations. As from 1992 between state Republic Uzbekistan and Russian Federation were installed diplomatic relations. Today active relationship are in the field of economy between two states.

Key words: economy, cooperation, investment, diplomacy, relationship.

Uzbekistan's location, bordering the volatile Middle East, as well as its rich natural resources and commercial potential, thrust it into the international arena almost immediately upon gaining independence. During the early 1990s, wariness of renewed Russian control led Uzbekistan increasingly to seek ties with other countries. Indeed, little over a year after independence, Uzbekistan had been recognized by 120 countries and had opened or planned to open thirty-nine foreign embassies. Experts believed that in this situation Uzbekistan would turn first to neighboring countries such as Iran and Turkey. Although the cultural kinship and proximity of those countries has encouraged closer relations, Uzbekistan also has shown eagerness to work with a range of partners to create a complex web of interrelationships that includes its immediate Central Asian neighbors, Russia and other nations of the CIS, and the immediate Middle Eastern world, with the goal of becoming an integral part of the international community on its own terms.

The significance of the Russian economy for Uzbek economic development is clear even after more than 23 years since the break-up of the U.S.S.R. The Russian-Central Asian trade was estimated at 7 billion dollars in 2000. This makes up only about 5% of Russia’s total foreign trade. However, Russia historically relies mainly on Uzbek cotton for its textile industry. Indeed, Uzbekistan supplies roughly 90% of Russia’s cotton imports. In addition to cotton, Uzbekistan exports cars, textiles, and food products to Russia and imports industrial equipment, timber, and other construction materials.

Russia remained Uzbekistan’s key trading partner as regards informal trade as well. Thousands of small “shuttle” traders deliver thousands of tons of Uzbek fruits and vegetables to Russia in lorries, trains, and planes. To expand its economic role in Uzbekistan Russia is also actively participating in privatization process and the development of the oil and gas extraction. There is a greater willingness to accomplish the expansion of economic ties on bilateral basis rather than within the CIS framework. For example, the Uzbek State Property Committee and the Russian Fund for Social Protection of Military Servants signed an agreement on the sale of 51% of shares of the Uzbek Joint Stock Company Photon.

The importance of the Russian import demand for Uzbek economic performance could be further illustrated in the example of the Russian economic crisis of 1998. According to Uzbekistan Economic Trends, an abrupt decrease in demand for Uzbek exports in Russia as a result of the crisis forced Uzbek exporters to direct part of their exports to non-CIS countries. However, such a sudden shift was not going to be without losses. As a consequence, Uzbekistan Economic Trends estimated that the commodities for the amount of over $100 million remained as “excess supply” that Russian demand/market could not absorb.

Because of an increase in transportation and insurance costs, Uzbekistan lost an additional 15-20 million dollars. Moreover, the crisis led to a decline of prices (in dollar terms) for Uzbek exports by 16.4%—the loss of export proceeds in hard currency equal to about 44 million dollars. It is estimated that in total the Russian crisis cost Uzbekistan about 150-160 million dollars in lost export revenue. As a matter of fact the Russian crisis had a contagious negative impact on the whole of the CIS. The crisis diminished import demand in not only Russia, but also in other CIS countries—economic partners of Uzbekistan. In the second half of 1998, Uzbek exports to the CIS (except Russia) decreased by 16.3% and imports by 16% year to year basis.

The signing of long-term trade agreements in 2000 further facilitated the bilateral trade. According to the Russian Center for International and Scientific Cooperation, Uzbek-Russian trade grew by 20% in 2001 annually to reach 1.2 billion dollars, which accounts for 18-20% of Uzbekistan’s total trade. The statistics for geographical composition of foreign trade in Uzbekistan indicate that Russia’s share in Uzbekistan’s foreign trade fell during the crisis and expanded after it. The reverse is true regarding the share of the rest of the world—it increased during the crisis and decreased after it. This could mean that Russia is a trading partner of choice for Uzbekistan and during the crisis Uzbekistan simply had to reorient its exports to other markets.

References

1. Kakharov J. Uzbek-Russian economic relations and the impact of the Russian economic performance on Uzbekistan’s growth and foreign trade. // Central Asia and the Caucasus. - №1(25), 2004
2. Ivanov E.M. The New Reality in Uzbekistan and the Economic Position of Russia. // Marco Polo Magazine. - No. 3, 1999.