Uzbekistan: Tashkent Tidbits August 5, 2009

C O N F I D E N T I A L SECTION 01 OF 03 TASHKENT 001423

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E.O. 12958: DECL: 2019/08/05
TAGS: PREL PGOV ASEC MOPS ECON PBTS PINR KJUS UZ
SUBJECT: Uzbekistan: Tashkent Tidbits August 5, 2009

CLASSIFIED BY: Steven Prohaska, Second Secretary, State, Pol-Econ;
REASON: 1.4(B),(D)

GOU Officials Warn of Potential "Consequences" for NDN

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1. (C) On July 29, Center for Strategic and International Studies
representatives Andy Kuchins and Tom Sanderson met with us to give
us a read-out of their meetings with various Government of
Uzbekistan officials. Across the board, GOU officials appeared
very enthusiastic about improving relations with the United States
and many harbored concerns about Russia. Another consistent
message was that without significant improvements in the bilateral
economic relationship, there could be "consequences" for the
Northern Distribution Network. Institute for Strategic and
Inter-Regional Studies Director Mir-Akbar Rakhmankulov-who they
described as highly intelligent and engaging-was vehemently opposed
to Russian plans to establish a base in Osh, Kyrgyzstan. At the
Ministry of Defense, a tight-lipped Defense Minister Berdiev
stonewalled on most of their questions. Curiously, he also
repeatedly accused "other states" of causing problems for the USSR
during the war in Afghanistan. In contrast to Berdiev, the always
voluble Deputy Defense Minister Niyazov immediately and
enthusiastically greeted Kuchins and chatted with him before the
official meeting. The Foundation for Regional Policy and Ministry
of Foreign Economic Relations each stressed the importance of
NDN-related local purchase to Uzbekistan.



Economy: Exports Down, Imports Up for First Half of 2009

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2. (SBU) The State Statistics Committee has published the
macroeconomic indicators for the first half of 2009, according to
which Uzbekistan's GDP grew by 8.2 percent. A closer look at the
published numbers shows, however, that total exports in the first
half of 2009 decreased by approximately 1.6 percent (6.03 billion
USD vs. 6.13 billion USD in 2008),whereas imports grew by 21
percent (4.46 billion USD vs. 3.68 billion USD in 2008). They also
show that the export share of hydrocarbons more than doubled from
21.6 to 43.7 percent, and the share of cotton fiber decreased from
13.5 to 9.6 percent. The share of other non-energy exports also
decreased noticeably.




3. (SBU) Comment: The GOU has repeatedly claimed that Uzbekistan's
economy has been less affected by the global financial crisis
thanks to its export-oriented economic policy combined with import
substitution. The officially published indicators show clearly,
however, that the economy has become increasingly dependent on
exports of natural gas coupled with the fees that the GOU collects
for transit of oil and gas from Turkmenistan. This leaves open the
question of what will happen to the Uzbek economy in the second
half of 2009 if Russia's Gazprom lowers the volume of gas imports
or insists on lower prices due to the decreasing demand for gas in
Europe and the CIS. Uzbekistan's economy may have become more
dependent on Russia and Gazprom than the GOU would like to admit.



Japan Considering Provision of X-Ray Scanners to Uzbekistan

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4. (SBU) On July 10, Emboffs met with several representatives of
the Japan International Cooperation Agency (JICA) to discuss

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Japan's plans to provide Uzbekistan with X-ray scanning equipment
for its borders. (Note: JICA is an official agency that implements
Japan's grant aid. End note.) The Japanese representatives
indicated that in March 2007, the Government of Uzbekistan asked
the Government of Japan for this X-ray scanning equipment, and so
the GOJ tasked JICA with conducting a study of the issue. JICA is
interested in enhancing the capabilities of Uzbekistan's State
Customs Committee to reduce the transit of illegal goods such as
drugs, weapons, and explosives from neighboring countries across
Uzbekistan's borders as well as to improve the efficiency of
cross-border trade and transport in the region.




5. (SBU) The Japanese officials indicated that JICA and the
Government of Uzbekistan jointly evaluated seven possible border
crossing points for X-ray scanning equipment. In addition to X-ray
scanners, Japan would provide safety shields as well as basic
training for Customs personnel on operation and maintenance of the
equipment. They decided that scanning units would be desirable at
the following border crossing points: (1) a medium-sized X-ray
scanning unit at Alat Customs Complex (vehicle crossing point) in
Bukhara Province for contraband control; (2) a large-sized X-ray
scanning unit at Galaba rail crossing point in Surkhandarya
Province to target narcotics and weapons; (3) a large-sized mobile
X-ray scanning unit at Ayritom Customs Complex (vehicle crossing
point) in Surkhandarya Province to target narcotics and weapons;
(4) and a medium-sized X-ray scanning unit at the river port in
Surkhandarya Province to target contraband. JICA and the
Government of Uzbekistan also had considered delivering scanning
units to three other crossing points. Both sides had determined
that such equipment would not be necessary at Khojadavlat rail
crossing point in Bukhara Province or Ayritom rail crossing point
in Surkhandarya Province, and had not yet decided whether providing
a large-sized mobile X-ray scanning unit to the Oybek vehicle
crossing point in Tashkent Province was necessary.




6. (SBU) JICA also told us that discussions with Uzbekistan's State
Customs Committee are ongoing, and Japanese delegations probably
will visit the proposed border locations again. JICA plans to
submit a report to higher authorities in the Government of Japan,
which will decide whether to provide the scanning equipment. The
JICA representatives opined that the deliveries would take place in
2011, given the time necessary for bidding, transportation, and
other arrangements. They also indicated that they expect the
Government of Uzbekistan to take responsibility for the maintenance
of these scanners one year after their installation, and that
Uzbekistan's State Customs Committee should use its own funding to
maintain the equipment.



Conference on Judicial and Legal Reform

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7. (U) At a recent international conference on judicial and legal
reform, GOU officials spoke about several initiatives, both that
have already been put in place and that are being considered.
Significantly, a new arbitration procedure was instituted in
January, and more than 500 cases have been completed through this
time and money-saving process. In considering future changes,
officials for the first time are taking a real look at plea
bargaining systems, something they have not considered in the past
because of concerns over innocent people pleading guilty in order
to avoid the risk of a harsh sentence. More fundamental reforms
were also discussed, such as standardizing and professionalizing
court reporting to ensure that witness and defendant testimony is
accurately reported and safeguarded. This would improve
transparency and accuracy both at the trial stage and in the appeal

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process. This conference illustrated that while there are
significant areas in need of improvement in the realm of judicial
and legal reform, Uzbek officials are making a concerted effort to
address them.
BUTCHER