Uzbekistan is currently going through one of the most remarkable periods of change ever experienced by a post-Soviet republic. Following the passing of the former president, Islam Karimov, in 2016, the new government led by President Shavkat Mirziyoyev embarked upon a series of reforms aiming to offset Soviet-style isolationist governance and to effectively integrate with the rest of the world. Two years later, having improved the governance structures, enhanced the rule of law and solved problems that used to plague the country’s economy such as the lack of currency convertibility and excessive state intervention, Uzbekistan is now increasingly drawing the world’s attention. This is a country that has abundant natural resources, a skilled labor pool, a strategic geographic location between Russia and China, and shares borders all the other Central Asian republics.
For Turkey, the change in Uzbekistan has offered a long-awaited opportunity to repair and improve relations that had deteriorated significantly during Karimov’s long reign. Turkey was one of the first countries to recognize Uzbekistan’s independence on September 1, 1991, as Ankara wanted to be close to the newly independent countries and their peoples with whom Turks share historical, cultural, ethnic, religious and linguistic roots.
The following years, however, brought much political disagreement between the two governments. In 1993, Turkey’s hosting of a presidential candidate challenging Karimov was criticized by Tashkent, and in 1999, allegations of a Turkish citizen’s involvement in the assassination attempt against Karimov further poisoned the relationship. The final blow came in 2005 when Turkey reacted strongly against the Uzbek government’s handling of the unrest in the province of Andijan, where Karimov’s troops opened fire on protesters, killing several hundred.
The change in Uzbekistan has now opened a new window of opportunity to mend the ties, and both sides appear willing to invest more in this relationship. In October last year, President Recep Tayyip Erdoğan became the first Turkish leader to visit Uzbekistan after a hiatus of 20 years, and this was reciprocated by Mirziyoyev in April. Political rhetoric was particularly strong at these meeting, especially when Mirziyoyev said when receiving Erdoğan in Tashkent, “This break of 20 years, we have missed each other a lot, you can see it in our eyes.”
However, it is evident that this new chapter in the Turkish-Uzbek relationship will be built on concrete projects rather than words of fraternity. During the two presidential summits, a total of 47 intergovernmental agreements were signed, covering areas such as economic cooperation, education exchange, science, combating terrorism and crime, judicial affairs, transportation, healthcare, and tourism. These agreements include deals inked for 50 joint investment projects with a total value of more than US$3 billion.
After two decades of not talking to each other, Ankara and Tashkent want to make up for lost time. In the near future, Turkish businesses are expected to be more active in the Uzbek market, benefiting not only from the improving overall business environment in this country and Uzbekistan’s increasing global engagement but also from the efforts made by the two governments to improve the business conditions at the bilateral level.
There are a number of major Turkish-Uzbek projects in the pipeline, which will involve various business patterns including public-private partnerships from both sides. For instance, the two countries’ state-owned mining enterprises will be exploring potential gold, tungsten and molybdenum sources in Uzbekistan. Moreover, public-private partnerships will be established for the joint establishment of coal and natural gas plants. A number of major civil building projects are also coming, including the new Tashkent airport and high-rise business centers.
Turkish companies are not newcomers to Uzbekistan. They established themselves in the Uzbek market as early as the 1990s; however, the politically fraught period between the two countries seriously undermined their fortunes there. Now, these companies are making a comeback. For instance, Demir Holding first came to Uzbekistan in 1992 and expanded fast in several areas including retail trade, textile, construction, and tourism. However, when things went sour between Ankara and Tashkent, they were first forced to change the name of their supermarket chain, faced arbitrary inspections and penalties, and finally had their assets confiscated by the Uzbek government.
Now, Demir Holding is planning to relaunch its business in this country. Another enterprise, Dal Holding, which has been building cement plants in Uzbekistan since 2011, is cautious yet optimistic, as one of its top managers argues, “Turkish companies are now entering a period where they won’t encounter problems that we had in the past.”
Being patient seems to have paid off for Turkish companies, as a manager of the textile company Turkeys argues, “We were waiting for the change and acted in a meticulous way so far. What we have waited for has now materialized and we took our position accordingly. The change will be lucrative in the mid and long term, not only for our company but for everyone.”
Another major advantage for Turkish businesses in Uzbekistan is the improving availably of finance channels. One of the largest Turkish banks, Ziraatbank, has a fully-owned subsidiary in Uzbekistan, which has at the moment around 1,000 institutional and 13,000 individual customers in this country. Turkish companies are able to use the same banking facilities and credit limits in Uzbekistan they use back home in Turkey. In the meantime, credit lines opened by Turkish banks for Uzbekistan have already reached a level of $350 million, including the recent Turkish Eximbank credit issued for the National Bank of Uzbekistan.
Uzbekistan is now open for business, and the Turks, having already accumulated a significant amount of experience in this country, are well positioned to increase their share of the market, as the market itself continues to grow with foreign contribution. This relationship is important for both sides.
Uzbeks working hard to reform and open up their economy aim to diversify their partnerships, so as not to remain excessively dependent on the two giants on either side of them, Russia and China, and their mammoth projects such as the Eurasian Economic Union and the Belt and Road Initiative. For them, the Turks, with whom they have not only a common heritage but also common experience of doing business, is a good choice.
On the other hand, for the Turks, given the war and violence in their country’s near neighborhood, and troubled relations with the West, new business directions are vital, and while Central Asia has always been important in this respect, Uzbekistan appears to be the best linkage through which relations with Central Asia can be reinvigorated. Everybody is interested in Uzbekistan; Turks feel that they can have the priority in this market.