Uzbekistan: Boosting Economic Ties with Brazil

S E C R E T TASHKENT 001441 SIPDIS NOFORN DEPARTMENT FOR SCA/CEN AMEMBASSY ASTANA PASS TO USOFFICE ALMATY AMEMBASSY HELSINKI PASS TO AMCONSUL ST PETERSBURG AMEMBASSY MOSCOW PASS TO AMCONSUL VLADIVOSTOK AMEMBASSY MOSCOW PASS TO AMCONSUL YEKATERINBURG E.O. 12958: DECL: 2019/08/14 TAGS: EAGR ECON ECIN PREL PGOV UZ SUBJECT: Uzbekistan: Boosting Economic Ties with Brazil CLASSIFIED BY: Steven Prohaska, Second Secretary, State, Pol-Econ; REASON: 1.4(B),(D) ¶1. (S/NF) On July 28, an official in Uzbekistan's Oliy Majlis provided Embassy's FSN Political Assistant with a readout of President Karimov's May trip to Brazil. (Note: The Uzbekistan National News Agency Online reported on May 28 that both sides signed agreements on technical cooperation; on economic and trade cooperation; on cultural cooperation; on the visa-free travel of diplomats; on cooperation in agriculture; and a memorandum of understanding on tourism cooperation. End note.) The Embassy contact indicated that Karimov had promised that Uzbekistan would purchase soybeans from Brazil during the period from 2009 to 2013. While Uzbekistan was capable of purchasing soybeans at low prices from the United States, Karimov wished to balance Uzbekistan's relations in the Americas by strengthening ties with another country there. He also believed that further ties with Brazil would be desirable because of its strong economy. Uzbekistan was interested in purchasing additional soybeans to compensate for its current poor cottonseed oil yield. Due to the year's unusually rainy spring, many of Uzbekistan's cotton seeds had been damaged and thus contained less cottonseed oil than was typical. (Note: Many Uzbeks use cottonseed oil in their cooking. End note.) ¶2. (S/NF) The Embassy contact also provided Post with a Russian-language copy of a document entitled "On the Organization of Soybean Purchase from Brazil and Their Processing," which is dated July 22, 2009 and bears an official GOU seal. The document provides additional details regarding bilateral agricultural cooperation. In order to improve the provision of vegetable oil and animal feed to the population, the Cabinet of Ministers decrees first that there will be a delivery of 50,000 tons of soybeans from Brazil, in accordance with a proposal from the Ministry of Foreign Economic Relations, Investment and Trade (MFERIT),the Ministry of Finance, the Ministry of Economics, and the Association of Vegetable Oil and Food Industries. ¶3. (S/NF) Secondly, the purchasing of soybeans will take place mainly in the spring-summer period. MFERIT external trade companies will select on a competitive basis among Brazilian soybean suppliers and will consider the best routes for their transportation; soybeans delivered during the 2009-2013 timeframe will be exempt from customs duties; and financing of the purchase of soybeans will be conducted using the credit of commercial banks in national currency provided by vegetable oil enterprises at an eight percent annual interest rate, with subsequent conversion. ¶4. (S/NF) Third, the Cabinet of Ministers determines that annually the delivered volume of soybeans from Brazil will be processed in strong, financially stable vegetable oil enterprises as noted in the attachment. (Note: An attachment to the document indicates the volume of soybean processing-in thousands of tons-that each of seven Uzbek enterprises will be responsible for, per the following: OAO Asaka Eg - 7; OAO Fargona Yog Moy - 10; SP OAO Toshkent Eg Moy Kombinati - 5; OAO Guliston Extract Eg - 7; OAO Kattakurgon Eg Moy - 6; AOOT Koson Eg Extraksiya - 5; OAO Urgench Yog - 10. End note.) Rules for extracting soybean oil are established by the Association of Vegetable Oil and Food Industries with the consent of Uzbekistan's Ministry of Economics and the Agency "UzStandart," taking into account oil-bearing and other quality indicators of each batch of soybeans delivered from Brazil. Responsibility for executing the decree lies with First Deputy Prime Minister R. Azimov. ¶5. (S/NF) Comment: This account from our contact in the Oliy Majlis fleshes out some of the vague reports on Karimov's visit to Brazil that appeared in Uzbekistan's official press. Economic motives are particularly important to Uzbekistan's growing relationship with Brazil, just as these figure prominently in Uzbekistan's recent foreign policy toward many other states. Uzbekistan's quest for stronger relations with Brazil is just another indicator of a foreign policy that is giving significant attention to strengthening ties with middle-tier countries. In so doing, the Uzbeks lessen their economic dependence on countries that they perceive may pose a threat or that may pressure them on human rights and democracy issues. NORLAND