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ECONOMIC RELATIONS BETWEEN UZBEKISTAN AND KAZAKHSTAN
IN THE MODERN ERA
Nematullayeva Sevinchbonu, Second-year student University of
the World Economy and Diplomacy, Uzbekistan E-mail:
sevinchnemtullayeva424@gmail.com
Abstract.
Uzbekistan and Kazakhstan are the two largest economic
partners in Central Asia, and both countries have significant potential for
economic development and cooperation in various sectors. The purpose of this
scientific article is to examine economic relations between these two Central
Asian countries, the role of the Republic of Uzbekistan in this process. The
scientific and practical significance of the article is that, it reveals a brief
evolution of bilateral economic relations from the 2000s to the present.
Historical,event analyses, comparative,inductive, descriptive methods were
applied in this research work. The article explores innovative approaches to
economic relations between Kazakhstan and Uzbekistan, evaluates the current
state of bilateral economic ties, and examines the impact of President of
Uzbekistan ShavkatMirziyoyev’s foreign policy initiatives on bilateral economic
relations. By comparing the policies of former President of Uzbekistan Islam
Karimov and ShavkatMirziyoyev, the author assesses the level of Central Asian
integration at present. The author positively indicated not only the growth of
bilateral trade turnover but also the joint projects being implemented and
progress made in the transport and logistics sector. The scientific work is
distinguished by the fact, that it presents new views and empirical approaches
to the establishment of economic ties between the regions of Uzbekistan and
Kazakhstan, and it can be useful in the activities of specialists in the field of
international economic relations and representatives of foreign affairs.
Keywords:
Uzbekistan, Kazakhstan, bilateral economic relations,
bilateral trade turnover, innovative approaches, joint projects.
Introduction
Central Asia is gaining significant geopolitical importance, primarily due
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to its energy resources and the development of transportation corridors.
Uzbekistan and Kazakhstan are the main players in the region, with the
economic potential to strive for regional leadership. Kazakhstan, as the leading
strategic partner, has shown increasing interest in relations with Uzbekistan,
driven by geopolitical and geo-economic factors. The relationship between the
two republics is crucial for understanding the contemporary processes in
Central Asia and analyzing their international economic relations. This study
draws upon the works of various foreign and domestic authors, including
Gulnara Baikushikova, GulzadaAppsattarova, Murat Bakhadirov, AsadAlam,
Arup Banjeri. The research methodology relies on the analysis of the structure.
The research methodology used in this study involves analyzing the structure
of Kazakh-Uzbek relations as a system, identifying its elements, connections,
and main properties, with a particular focus on its structure. Through this
approach, the study was able to identify the most important elements of bilateral
economic relations and structural problems in the relationship, as well as the
foreign policy positions of I. Karimov and Sh. Mirziyoyev during their respective
presidencies.
Current state of economic relations between Uzbekistan and
Kazakhstan
These two countries are the biggest trading partners in Central Asia, and
their trade potential is enhanced by their close proximity, well- established
transportation infrastructure, and the existence of a free trade agreement
between them. In recent times, the economic cooperation between Uzbekistan
and Kazakhstan has experienced significant growth, with a notable increase in
the utilization of untapped potential for collaboration in foreign trade and mutual
investments.
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In 2020, Kazakhstan held the third position in Uzbekistan's foreign trade
turnover with other countries, accounting for 8.3% of the total trade volume.
Among the Commonwealth of Independent States (CIS) countries,
Kazakhstan ranked second, contributing to 25.5% of Uzbekistan's trade.
Additionally, Kazakhstan secured the first position in trade with Central Asian
countries, representing a significant share of 61.1%. As of the end of the first
10 months of 2021, the share of Kazakhstan in Uzbekistan's foreign trade has
further
expanded
to
reach
9.7
Ошибка!
Закладка
не
определена.
%.[
Ошибка! Закладка не определена.
] However, in 2020, the
trade turnover experienced a decline of approximately 10% due to the impact
of the COVID-19 pandemic, resulting in a total value of $3.01 billion, with
exports decreasing to $0.91 billion.[
Ошибка! Закладка не определена.
]
Dynamics of Turnover
Between Kazakhstan and Uzbekistan,
$ bln
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
10 мес.
2022
■
Exports to Uzbekistan
■
Imports from Uzbekistan
Д
Turnover
Source: Economy.kz Record Turnover between Kazakhstan and
Uzbekistan (
https://economy.kz/en/Novosti instituta/id=5593
)
Uzbekistan and Kazakhstan have been strengthening their economic
partnership by exploring the potential of joint foreign trade and investments.
They also benefit from a free trade agreement and numerous bilateral and
multilateral agreements. The growth of their economies and regional
integration processes are the main drivers of this dynamic foreign trade.
Kazakhstan exports food products, energy, metals, chemicals, and plastics to
Uzbekistan, while Uzbekistan supplies Kazakhstan with energy carriers,
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cotton fiber, metals, machinery, chemicals, plastics, and construction
materials. As per information provided by the Uzbek embassy in Kazakhstan,
there are currently 1000 enterprises in Uzbekistan that have Kazakh capital.
One notable example is the Kazakhstani company BI Group, which
specializes in constructing residential houses in Tashkent. Additionally,
Ecoton CO LTD is involved in the construction of a plant for manufacturing
aerated concrete and slabs within the free economic zone "Angren".
According to the State Statistics Committee, Uzbekistan exported 625.1
thousand tons of fruits and vegetables worth $250.4 million to Kazakhstan in
2020, accounting for nearly 25% of its fruit and vegetable exports. This made
Kazakhstan the second-largest destination for Uzbekistan's fruit and
vegetable products. In the period of January to November 2021, Uzbekistan
delivered products worth $175 million to Kazakhstan. Furthermore,
Kazakhstan is the primary buyer of passenger cars manufactured in
Uzbekistan. In 2020, Uzbekistan exported cars worth $167.9 million to
Kazakhstan, representing 80.4% of its total car exports. In the first 11 months
of 2021, this figure increased to $290 million, accounting for 83.8% of total car
exports[
Ouu6Ka! Закладка не определена.
].
The transportation and logistics sector is a key area of collaboration
between Uzbekistan and Kazakhstan. Both countries are strategically
positioned at the intersection of transportation routes connecting Europe and
Asia. In recent times, the establishment of the Uzbekistan-Kazakhstan- China
international highway has played a significant role in enhancing the region's
transportation infrastructure. Currently, there are ongoing efforts to construct a
high-speed railroad called "Turkestan - Shymkent - Tashkent," with a target
completion date set for 2024. Furthermore, Kazakhstan and Uzbekistan have
reached an agreement to commence the construction of the Kyzylorda-
Uchkuduk[
Ouu6Ka! Закладка не определена.
] highway and railroad starting
from 2025.[
Ошибка! Закладка не определена.
] A joint action plan has been
signed, and an economic analysis is planned to facilitate the development of a
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feasibility study for this project. The two countries maintain a strong level of
cooperation across various sectors, including trade, economy, culture and
humanitarian ties. Regular political engagements highlight the significance of
the bilateral relations between the two nations.
Different presidents different strategies
The Central Asian region is experiencing significant challenges due to
the withdrawal of American troops from Afghanistan in 2021 and the recent
internal tensions in Kazakhstan. These events, along with geopolitical tensions
and resource struggles, are likely to impact the region. However, it is crucial to
maintain strong relations between Kazakhstan and Uzbekistan, as they are the
largest states in the region and play a vital role in promoting sustainable
development and regional cooperation. The close proximity of Kazakhstan and
Uzbekistan allows for close interaction, but until 2016, there were challenges in
developing a unified approach due to hidden leadership and lack of cooperation
between the first presidents of the two countries. Since gaining independence,
the first leaders of Kazakhstan and Uzbekistan, Nursultan Nazarbaev and Islam
Karimov, had engaged in numerous state and official visits and bilateral
meetings. Although they had different views on economic integration, they have
maintained a good relationship through regular high-level exchanges and
participation in international and regional events. Additionally, there was a
strong contractual foundation for their bilateral relations in political, economic,
cultural, and humanitarian spheres, including the 1998 treaty on eternal
friendship between Uzbekistan and Kazakhstan and the 2013 agreement on
strategic partnership. The CIS Free Trade Zone Treaty of 2011 remains the
foundation for their mutual trade relations. Among the obvious economic
calculations of the former leadership of Uzbekistan, we can point to the strict
control of the state over foreign trade and the currency market, quota production
of goods of strategic importance through state order, partial privatization of
agricultural land, all-round pressure on business and every possible restriction
of business activity, bureaucratic barriers to foreign investment. The change of
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leader in Uzbekistan in 2016 had a positive impact on the processes taking
place in the Central Asian region. First of all, the arrival of Sh. Mirziyoyev
changed relations with neighbors in the region for the better.Immediately after
coming to power in September 2016, Mirziyoyev announced sweeping changes
and made sure not to mess with the strict regime of former president Islam
Karimov . Liberal reforms began in Uzbekistan's economy, the first signs of
freedom of speech appeared, and the political elite began to rebuild ties with
society and other countries . The course on close cooperation in the region and
creation of a security belt around the Central Asian region was taken. "Central
Asia is a single organism", - this is how the President of Uzbekistan defined our
region in an interview with the Kazinform agency ahead of his 2017 state visit
to Nur-Sultan. The new realities of Uzbekistan's foreign policy were conditioned
by the fact that the country's development depends on the development of the
region. This is why, a course was set to address key regional security issues,
including facilitating the settlement of the situation in Afghanistan. Since Sh.
Mirziyoyev became a president of Uzbekistan, there has been a significant
increase in visits and meetings between Uzbekistan and Kazakhstan at the
highest levels. This growth in ties is reshaping interstate cooperation between
the two nations. Sh. Mirziyoyev's recent state visit to Nur-Sultan, Kazakhstan's
capital, on December 6, 2021, is a positive example of this trend. During the
visit, regional security issues were discussed, indicating that relations with
Kazakhstan remain a priority in Uzbekistan's foreign policy. The visit was also
focused on elevating the relationship between the neighboring countries to a
new level of quality. The signing of a declaration on allied relations was a
historic event that could strengthen the two nations' efforts to build a new type
of relationship. In addition to institutional norms, there was an emphasis on
deepening trade and economic relations, which are fundamental to mutual
relations between the two countries. The heads of state instructed their
respective governments to take measures to increase the volume of mutual
trade turnover to $5 billion in the coming years and up to $10 billion in the mid-
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term perspective.[
Ошибка!
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]
The partnership between Uzbekistan and Kazakhstan has the potential
to benefit both countries and the wider region by addressing common
challenges and promoting economic development, cultural exchange, and
regional stability through organizations like the SCO.[
Ошибка! Закладка не
определена.
] Additionally, both countries are members of the SCO and
Organization of Turkic Countries, indicating their shared international policy and
important political roles in the region. The SCO provides a forum for member
states to discuss and address regional issues, including terrorism, separatism,
and extremism. Additionally, the organization promotes economic development
and trade between member states. Overall, their recent state visit and ongoing
cooperation are positive developments for Central Asia.
Conclusion and future expectations
Generally speaking, the strong economic ties between Kazakhstan and
Uzbekistan have experienced significant growth in recent years, largely due to
the implementation of new approaches. The collaboration between Kazakhstan
and Uzbekistan has had a beneficial influence on the economic infrastructure
of both nations. President Mirziyoyev's strategy towards Central Asia has not
only intensified economic cooperation between the two countries but also
strengthened regional integration. For instance, a Kazakh-Uzbek business
forum in 2018 resulted in the signing of a $62 million contract, showcasing the
positive business environment. The number of joint Kazakh-Uzbek enterprises
is increasing, with 809 enterprises with Kazakhstani capital operating in
Uzbekistan. Additionally, Kazakhstan's BI Group has been involved in housing
construction in Tashkent. Both countries also engage in successful multilateral
cooperation through various organizations and initiatives such as CICA, SCO,
EurAsEC, TRACECA, and the North-South transport corridors.
In short, it is important to highlight that as the economies and
populations of Uzbekistan and Kazakhstan continue to grow, the overall
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potential of their domestic markets will also increase. This, in turn, will enhance
the attractiveness of investment and further stimulate the development of their
economies. Additionally, the expansion of cooperative ties and mutual trade
between the two countries will contribute to this positive momentum.
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