Uzbekistan in Transition: Things for Russia to Watch

Following the death of President Islam Karimov, alarmist scenarios for Uzbekistan are unrealistic. Early unofficial reports emerged on August 29, after which the situation was frozen for a week. An assortment of experts flooded the space with cautionary forecasts on the imminent clash of Uzbek clans, maidan and regional destabilization. In fact, the media report of Mr. Karimov's demise was followed by information on the arrest of Vice Premiere and Finance Minister Rustam Azimov. The news was soon refuted but one might believe that the power struggle was in full swing.

However, fears were premature. After August 29, the Uzbek elite have shown a readiness for transition. Strangely enough, the delayed confirmation of Mr. Karimov's death has not pointed to an inter-elite discord but rather to the presence of bureaucratic discipline. As a matter of fact, on September 1 Uzbekistan celebrated Independence Day and it would appear at least dubious to see the occasion replaced by the funeral of the 25-year-long leader who was tirelessly building the new Uzbekistan all these years. However, the outcome was somewhat surrealistic, since the de facto although dead leader received congratulations on the 25th independence anniversary from his global counterparts. However, both the tradition and the ritual were observed, after which the official death report swiftly came, the sorrowful event was covered by national television, days of morning were announced and on September 3 Islam Karimov was buried in Samarkand.

Sputnik/Kremlin/Alexei Druzhinin/via REUTERS

Russian President Vladimir Putin (L) speaks with Uzbek Prime Minister Shavkat Mirziyoyev after laying flowers at the grave of late Uzbek President Islam Karimov in Samarkand, Uzbekistan, September 6, 2016.

The story appears to signify that the Central Asian republics are no longer torn apart by feuds and kept afloat only by a strongman. We have already seen two examples of successful transitions there. When leader of Turkmenistan Saparmurat Niyazov, who had been even more powerful than his Uzbek neighbor, died in 2006, many predicted that the entire Turkmen power system would be reduced to dust. Nevertheless, Garbanguly Berdymukhamedov managed to rise up in the absence of any major upsets and maintain the political course, although with certain reservations.

Over the past 25 years, Uzbekistan has built a stable bureaucratic system able to ensure solid political progress and foolproof economic foundations. The system appears strong enough for a gradual transition of power, most likely to Shavkat Merzyev, who incidentally had been appointed to chair the Funeral Commission. Succession was also the focus of President Vladimir Putin who met with Mr. Merzyev on September 6 in Samarkand.

The Uzbek power transition mechanism is hardly formalized. The Constitution makes the premier a largely technical figure, with ministers subordinate directly to the president. At that, Senate Chairman Nigmattulla Yuldashev was constitutionally appointed as acting president. Hence, the transfer of the de facto successor functions to Mr. Merzyev is only to underscore his reputation within the Uzbek establishment. Hence, the succession was personified but hardly spontaneous, with the system quite operable and to be respected in forecasting the future of both Uzbekistan and Central Asia.

Within this environment, Russia should care more about economic cooperation rather than Uzbek political stability. And how is the situation as of now? Russia is among Uzbekistan's three main economic partners with 17.5 percent of its trade. Last year, Russian exports went as follows:  20.9 percent were mineral products, 18.8 percent metals and metal products, 17.6 percent timber and pulp and paper, 15.6 percent machines and equipment, and 12.4 percent foods and produce. Uzbekistan boasts almost 1,000 enterprises with Russian capital (over 100 fully Russian), as well as about 70 branches and offices of Russian firms.

According to the Uzbek Statistics Committee, in 2015 Russian investments reached USD 1,235.47 million, the average level of crisis-free years of the past decade. Inter-agency cooperation is on the rise, with the bilateral consultations held on mutually beneficial trade in summer 2015. In other words, the overall economic indicators offer quite a positive picture, which prompts the need for succession under the new Uzbek leader.

However, a detailed analysis shows that the Russian economic presence is diminishing, making the problem a strategic liability. In 2015, Russia lost the trade leadership to China with its share of 19.9 percent. Russian-Uzbek investment cooperation is traditionally focused on fuel and energy and telecoms. But power engineering and petrochemistry hardly dominate in Uzbekistan (USD 2,425.9 million and USD 1,667.9 million in 2015) and picturesquely lose out to food industry (USD 5,953.5 million) and machine-building (USD 5,362.5 million).

The fuel sector situation is somewhat different, its capacity in 2015 standing at USD 4,325.4 million, i.e. almost five percent more than in 2014. For example, beginning in 2003, LUKOIL invested over USD 5 billion in Uzbekistan and has been developing the Kandym-Hauzak-Shady-Kungrad gas condensate fields with a completion date of 2039. GAZPROM is in on the Shahpaty gas condensate field having invested about USD 400 million. However, similar strategic cooperation in other economic areas, save power engineering and telecoms, is barely existent.

Meanwhile, it will be important for Russia to concentrate on the transit field, bearing in mind the connection between the EEC and the Chinese OBOR that implies the development of transportation infrastructure in Central Asia. Uzbekistan's transit network is a dynamic area. In spring 2015 Tashkent adopted the 2015-2019 Program for Development and Modernization of the Engineering and Communications and Road Infrastructure, with over one thousand kilometers of railways built and 3.8 thousand kilometers upgraded (total length of railways makes about four thousand kilometers.) Russia is barely working on these projects.

Since Mr. Karimov has been succeeded by a proponent of China rapprochement, Russia's main challenges on the Uzbek track seem to be related to greater competition for strategic interaction, with the key lying in more economic cooperation.