ROK RELATIONS WITH UZBEKISTAN: BLOOD, GAS, GOLD

C O N F I D E N T I A L SEOUL 001435

SIPDIS

E.O. 12958: DECL: 09/08/2019
TAGS: PREL ETRD PINR PGOV ECON EINV KS UZ
SUBJECT: ROK RELATIONS WITH UZBEKISTAN: BLOOD, GAS, GOLD
AND OEF

Classified By: POL M/C James L. Wayman. Reasons 1.4(b/d)

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Summary
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1. (C) Uzbek Embassy DCM Alisher Okhunjonov gave us an upbeat
assessment of bilateral ties with South Korea, which is now
Uzbekistan's number one East Asian investor and one of its
top trade partners. Using Uzbekistan's large ethnic Korean
community as a bridge, the Korea Gas Corporation, the Korean
National Oil Corporation and the Korean Natural Resources
Corporation have all become major players. In addition,
Okhunjonov explained that Korean Airlines (KAL) and its
parent company, Hanjin, are helping expand Navoi airport into
a regional hub for, among other things, moving supplies to
coalition forces in Afghanistan. Though the Uzbek government
currently restricts all air freight to non-lethal cargo,
Hanjin and its local contractors now provide
"security-enhanced" ground and rail shipping into
Afghanistan. DCM Okhunjonov indicated that a Free Industrial
Economic Zone (FIEZ) near Navoi airport may, with increased
investment from ROK companies, also play an expanded role in
supplying light industrial products to coalition forces. End
summary.

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Blood Ties: Huge Ethnic Korean Community
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2. (SBU) Uzbek Embassy DCM Alisher Okhunjonov recently gave
us his take on the state of South Korea's rapidly expanding
economic relationship with Uzbekistan. A legacy of Stalin's
forced deportation of "unreliable" minorities to Soviet
Central Asia, Uzbekistan is home to nearly 200,000 ethnic
Koreans -- the largest such community in the CIS. Looking at
the big picture, Okhunjonov characterized the ROK-Uzbek
relationship as one flourishing because it is "complementary"
with "no historical or political baggage" to hinder it. The
DCM proudly noted that there have been 14 high-level
bilateral visits since 2006, including two trips to South
Korea by President Karimov and a trip to Tashkent in May by
ROK President Lee Myung-bak.

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It's the Gas...
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3. (SBU) ROK "resource diplomacy" is driving the expansion
of ties with Uzbekistan. Okhunjonov said South Korea is now
Uzbekistan's largest East Asian investor and one of its most
important trade partners, with nearly 1.3 billion USD in
total trade during 2008, up from 740 million in 2007; the DCM
predicted the figure for 2009 would match or slightly exceed
the 2008 total. Okhunjonov said South Korean firms bring to
the proverbial table the technical expertise needed to tap
Uzbekistan's natural resources, including its huge reserve --
10th largest in the world -- of natural gas. The DCM related
that the most active ROK corporate players are the Korean Gas
Corporation (KOGAS),the Korean National Oil Corporation
(KNOC) and the Korean Natural Resources Corporation, which
has signed an agreement to develop major Uzbek uranium, iron
and gold mines.

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...and the Airport
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4. (SBU) Okhunjonov emphasized that the ROK is also playing
a leading role in helping realize President Karimov's vision
of "reviving the Silk Road." The DCM explained that
President Karimov managed to persuade Korean Airlines (KAL)
and its parent company, Hanjin, to develop Navoi airport as a
hub for regional air passenger/cargo service.


5. (SBU) The General Manager of the KAL Navoi Project Team,
Bryan Yoo, told us separately that there are currently six
flights per week between Navoi and Seoul and, even though the
planes are only "30 to 40 percent full," Yoo asserted that
KAL is not planning to reduce the number of flights. KAL's
goal in maintaining the six flights, he claimed, is to
promote Uzbek-Korean cooperation and develop a solid customer
base in Central Asia.

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Supply Hub for OEF
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6. (C) Yoo explained that, in addition to handling civilian
airline passenger traffic, the Navoi hub is expanding into an
important transit route for U.S. military supplies going to
Afghanistan. Though the Uzbek government currently restricts
all air freight to non-lethal cargo and will not allow KAL to
fly from Navoi to Afghanistan, Hanjin (in conjunction with
local contractors) now provides "security-enhanced" ground
and rail shipping service into Afghanistan. Yoo said, for
example, that a recent test shipment of bunk beds was
successfully delivered across the Afghan border via the Navoi
terminal.


7. (SBU) According to DCM Okhunjonov, the Free Industrial
Economic Zone (FIEZ) near the airport will likely play an
expanded role in supplying goods to U.S. forces in
Afghanistan. He explained that the FIEZ, which is patterned
on the Kaesong Industrial Complex, provides foreign
businesses with a package of incentives and tax breaks to
establish, for example, pharmaceutical, textile, and food
processing plants. The majority of the FIEZ's current
tenants are South Korean companies; roughly 1,000 Uzbeks work
in the zone, the DCM said. He added, though, that 90
additional ROK companies are scheduled to tour the Navoi FIEZ
this fall.
TOKOLA