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