Ukraine and Uzbekistan: a new phase
Sochi summit generates big hopes in both countries
The road of Ukrainian-Uzbek economic and political relations has often been bumpy. So it is all the more pleasant to note that significant progress has taken place in this sphere on the eve of Uzbekistan’s Independence Day, celebrated on Sept. 1. The breakthrough occurred after Prime Minister Viktor Yanukovych met with President Islam Karimov of Uzbekistan in Sochi on Aug. 16. The results of this top-level meeting are sparking hopes for a revival of economic cooperation, especially in the oil-and-gas domain.
Positive dynamics were registered in Ukrainian-Uzbek foreign trade relations in 2004. According to last year’s statistics, Ukraine placed 8th in Uzbekistan’s foreign trade turnover — and 5 th in terms of exports to Uzbekistan. Last year’s trade turnover between Ukraine and Uzbekistan reached 330.8 million dollars, including 246.8 and 84 million dollars’ worth of imports and exports, respectively.
Ukraine supplies Uzbekistan with oil, gas, chemical, mining, and railway equipment, to name a few. In 2005, metal products in Ukraine’s overall exports reached 25 percent, and total deliveries were in the tens of millions of dollars.
The Uzbek market looks very promising for Ukrainian pipe producers. Ukrainian Interpipe is effectively competing with its Russian counterparts in Uzbekistan (TMK, OMK, the ChTPZ Group). In 2004, this company’s share in the Uzbek pipe market was 9 percent, 15 percent in 2005, and this year it expects to reach 20 percent. Among the Ukrainian company’s partners are Ostashneftegaz, Uztransgaz, Uzulgurzhivasavto, Fergana Oil Refinery, Almalik and Akhagaran mining combines, Uzbekkhimmash, and the Tashkent Tractor Plant.
While there have been certain positive changes in Ukrainian-Uzbek trade relations, some tensions persist on the political level, stemming from unresolved issues, including Ukraine’s debt to Uzbekistan for 1992-1993 (49.7 million dollars). Planned visits by President Islam Karimov and Ukraine’s foreign minister Borys Tarasiuk have not taken place.
The top-level meeting in Sochi appears to have put an end to the cool period in Ukrainian-Uzbek relations and launched a new phase of cooperation. Prime Minister Yanukovych and President Karimov discussed bilateral trade relations and cooperation prospects. Yanukovych stressed the need to step up cooperation between our two countries. Ukraine is interested in implementing investment projects in Uzbekistan’s gas fields and would like to take part in revamping the Uzbek part of the gas transportation network to increase gas supplies from Turkmenistan and Uzbekistan, said our prime minister.
The two leaders also discussed the possibility of convening the seventh session of the intergovernmental Commission on Economic Cooperation, which has not functioned for some time. (The Protocol on the Joint Commission for the Development of Comprehensive Cooperation between Ukraine and Uzbekistan was signed by the prime ministers in March 1997.)
One of the issues on the agenda of the next meeting could be measures aimed at activating the free trade area between Ukraine and Uzbekistan. An agreement on the subject was signed in 2004 when the two countries were the first CIS members to institute a free trade regime without exceptions. However, this mechanism is now inactive.
It is important for Ukraine to resume a dialogue with Uzbekistan, a country that is opening up for investors. Uzbekistan plans to expand the scope of foreign investments in the nearest future by implementing a number of large-scale privatization projects. Cooperation in the oil-and- gas sphere may offer fresh opportunities for Ukrainian companies.
Andriy Honcharuk, Ukraine’s former Minister of External Relations and Trade, who is also Interpipe’s chief trade policy consultant, says that stepping up cooperation in the oil-and-gas sphere will open up new horizons for Ukrainian companies, including pipe exporters.
