Framework agreements with Russia, China, South Korea, and Japan

Each of the road maps is composed of several appendixes to the decree of the president of Uzbekistan. Issuing decrees and attaching the agreements between the parties has an important legal meaning for Uzbekistan because it ensures that the agreements between Uzbekistan and its partners are placed within its legal framework.

The road maps are rather diverse and depend on the shared perspectives of the partners of Uzbekistan. For instance, the road map with Russia based on the agreements made during the visit of the president of Uzbekistan to Russia on October 18-19,2018, consists of hundreds of documents and contracts in a number of diverse fields. Structurally, these projects are grouped into various appendixes classified according to the nature of the documents. For instance, in appendix 3, out of 85 investment projects, ten projects are in the fields of energy and resource management, eight projects are in the field of infrastructure development, and the rest are multiple contracts and trade agreements. Moreover, most of the 91 total projects focusing on investments in areas other than energy, transportation, and resources (appendix 4) concern the fields of agriculture, education, and humanitarian cooperation. The same appendix includes more than 400 trade contracts concluded by various state and nonstate enterprises. These contracts are included in the road maps because they relate to the developmental role of the Uzbek government, which again illustrates the government’s active engagement in developmental rather than regulatory functions. Finally, appendix 5 consists of 73 major intergovernmental framework agreements that are of political and policy- related nature. These are not meant to produce immediate economic impact but rather focus on preparing the political environment for cooperation.

The road maps with China are based on the cooperation agreements made during the visit of the president of Uzbekistan to the second international One Belt One Road forum in Beijing on April 24-27,2019. These road maps do not present comprehensive coverage but focus specifically on the goals to be achieved and budgets to be allocated. In this sense, they demonstrate the economic focus of bilateral cooperation for both China and Uzbekistan, while in the case of Russian-Uzbek cooperation, humanitarian and cultural components are also present, illustrating the common Soviet past and the cultural connections between the two states. The Chinese road maps consist of 14 documents devoted to establishing a common understanding of the need for cooperation, seven documents developing political cooperation, 21 documents outlining investment in the fields of energy and transportation, four agreements regarding the military and security, and tluee humanitarian projects.

The Japanese road maps are based on the documents signed during the visit of the president of Uzbekistan to Japan on December 17-20, 2019 and include the presidential decree of cooperation between Uzbekistan and Japan. There are ten political/framework agreements, 17 trade/economic cooperation documents, 27 education-related documents, and five interregional documents in appendix 1 of the road maps. Appendix 2 is more relevant to the needs of the Uzbek economy and consists of 15 intergovernmental agreements and 48 investment-related agreements (Islamov, 2019:

80-82). One feature that significantly differentiates the road maps of cooperation between Uzbekistan and Japan from the road maps with Russia and China is the part regarding the main actors on the Japanese side, which are mainly governmental institutions, the Japan International Cooperation Agency (JICA) and very few private enterprises. This, to a great extent, reflects the challenges that Uzbekistan faces in positioning itself as an important country for Japanese private investments.

Finally, the road maps with South Korea are based on the agreements achieved during the visit of president of the Republic of Korea, Moon Jae- in, to Uzbekistan on April 29, 2019, and consist of 17 intergovernmental agreements, 22 framework agreements of cooperation between various state agencies, 21 agreements related to investments and technology transfer, and 11 agreements of humanitarian nature. In terms of investments, the road maps define 26 mam projects in the fields of energy resource development and processing. The field of manufacturing, which is not covered in this book but remains one of the most important areas of cooperation between Uzbekistan and South Korea, receives wide coverage, with 43 projects established and included in the road maps. The package of investment documents indicates an overall amount of approximately USD 12 bln to be invested. In contrast to the Japanese projects, South Korean projects heavily build on the presence of Korean businesses in Uzbekistan and, to a great extent, aim to maintain and support that presence in the country.

Energy infrastructure development through cooperation road maps

In all four cases of Russia, China, South Korea, and Japan, there is a profound interest in cooperation with Uzbekistan in the field of energy infrastructure development (Dadabaev, 2019a). This is a natural field of interest given Uzbekistan’s large reserves of natural gas and uranium and the significant untapped potential of hydropower and renewables. However, the process of cooperation and the targeted areas vary by country depending on the expertise/teclmology possessed and the corporate or governmental interest.

Historically, Russia has been a dominant power with respect to traditional resource development for several reasons. First, the transportation infrastructure that delivers these resources to the end users runs across Russia, and Uzbekistan had no other route for exporting its natural resources prior to the construction of the China-bound transportation networks. Second, Russia has been and remains the main source of technology, especially with regard to the excavation of mineral resources. Third, Russia is interested in preserving its dominant position in the export of Uzbek resources, although China-bound alternative channels have been constructed. To a great extent,

Russia’s sustained interest in preserving its monopoly of the Uzbek market is reflected in the newest road maps of cooperation. However, what distinguishes these recent energy-related plans from the previous plans is the bold, controversial decision of the Uzbek government under President Mirziyoyev to turn to nuclear technology and construct the first nuclear plant in the CA region using Russian technology (see Table 1.5). This is potentially a breakthrough development for Uzbekistan, which for a long time has experienced shortages in electricity and natural gas supply because of the preference of the previous government to export natural gas and the outdated power supply infrastructure in the country. Therefore, among the projects Uzbekistan develops with Russia, nuclear plant construction projects stand out in comparison to the project portfolios on cooperation with other countries. While Russia hopes to use Uzbekistan to export its nuclear technology and set a precedent for other CA countries seeking nuclear technology, such as Kazakhstan, Uzbekistan regards cooperation with Russia on nuclear plant construction as a way to diversify and increase its electricity- generation capacity, which is crucial for its dynamic economic development. Therefore, Uzbekistan does not regard nuclear plants as just a way to meet its current electricity needs but rather as a way to expand its industrial potential.

As shown earlier, Uzbekistan employs Russian companies in the construction of nuclear power plants and in the much-needed modernization of existing electricity and hydropower facilities. Many of these facilities were constructed during the time of the Soviet Union, and thus, Russia believed to be in the most favorable position to modernize them. The construction of new hydropower generation plants is also to be conducted by Russian companies because of the expertise and experience Russian companies possess in working in Uzbekistan. Additionally, they have a common understanding of technical language between Russian and local specialists, which represents an advantage of Russian companies compared to Chinese, South Korean, and Japanese companies. Again, for Uzbekistan, the modernization of these facilities means not only to meet the current needs of the country but also to prepare the country for intensified industrialization, which would require a significant increase in its power-generating capacity.

The China-related projects of road maps of cooperation to some extent resemble those of Russia (see Table 1.6). They also focus on the excavation and development of new reserves of various energy sources (Dadabaev, 2018c; Resolution of the President PP-2982, 2017). However, the greatest difference is that many of these projects are conceptualized as a part of the Silk Road projects and are meant to coimect Chinese end users with Uzbek suppliers. This is currently a very important task for Uzbekistan given its aim to decolonize its access to the world markets and avoid overreliance

Table 1.5 Examples of projects to be implemented in line with the Uzbek-Russian cooperation road map

Source: Comprled by the author. Based on the agreements achieved during the visit of October 18-19,2018, of the president of Russia to Uzbekistan and the presidential decree on November

2018.PP-3997.

Table 1.6 Examples of projects to be implemented in line with the Uzbek-Chinese cooperation road map

Source: Compiled by the author. Based on the agreements achieved during the visit of April 24-27, 2019, by the president of Uzbekistan to China and the presidential decree on May 4, 2019, PP-4308.

on the Russian route. The second difference between Chinese projects and Russian projects is that Chinese projects are almost hilly paid for by loans from China-established financial institutions, such as the Asian Infrastructure Investment Bank and the Silk Road Fund. In this sense, these projects do not necessarily put a financial burden on Uzbekistan in the short run and thus look attractive. However, the long-term perspectives of repaying these loans have not yet been properly discussed and considered. The loan repayment is especially uncertain because Uzbekistan announced in 2019 that it aims to stop supplying natural gas to foreign markets by approximately 2025 and use it instead for domestic consumption and the production of value-added products. In addition, Uzbekistan indicated that it aims to establish a hub for natural gas supplies to CA states, thus favoring regional consumers over Russian and Chinese consumers. Third, the new technology that China offers to Uzbekistan relates to the construction of solar and wind power electricity generation capacity that Uzbekistan does not have on its own at present. Given Uzbekistan’s abundant solar and wind power resources but lack of technological development in this sector, China-related projects offer a unique technology that can potentially revolutionize Uzbekistan’s energy sector.

The cooperation road maps with South Korea build heavily on the long history of South Korean companies’ participation in the economy of Uzbekistan since the era of the first president of Uzbekistan (as in Table 1.7). Many of the projects included in the new roadmaps are implemented by companies that have long been established in Uzbekistan. In addition, many of these companies do not emphasize the extraction of energy resources for transport to South Korea, which is logistically very challenging. Rather, they attempt to use the abundant resources available in Uzbekistan for the production of value-added products, and this orientation is well received by the government of Uzbekistan, which aims to develop its own export-oriented production of value-added goods instead of exporting raw mineral resources. The majority of the projects mentioned have such a focus, as shown in the list of representative projects in Table 1.7.

Japan-related projects with respect to energy resource management mainly reflect the strength of Japanese companies in modernizing existing facilities using up-to-date Japanese know-how. In this sense, Japan tends to offer Uzbekistan newer and more sustainable technologies than Russia offers. The Japanese government has already participated in the modernization of the Navoi thermal power station by building the second gas combined cycle plant (JICA Navoi thermal power station) (for details of the Japanese engagements in Uzbekistan, see Dadabaev, 2016; JICA, 2020a, 2020b). The new road maps include the construction of a new gas combined cycle plant. The second area in which Japan has historically shown interest is the area of natural resource exploration, especially regarding resources Japan can use in its own market (JOGMEC, 2009). One such resource is uranium, which Japan utilizes in its nuclear plants. The road maps include two import contracts for uranium, one by Marubeni Corporation for USD 480 min and another Itochu Corporation for USD 600 min. Additionally, the Uzbek government formulated a project with the Japan Oil, Gas and Metals National Corporation (JOGMEC) for a joint geological study of gold and tungsten resources in the Navoi region with the possibility of exclusive mining rights for Japanese companies (Global Trade Alert, 2019). The third area that benefits Uzbekistan is the security of nuclear power plants. Japan has

Table 1.7 Examples of projects to be implemented in line with the Uzbek-ICorean cooperation road map

Source: Compiled by the author. Based on the agreements achieved during the visit of the president of the Republic of Korea, Moon Jae-in, to Uzbekistan on April 29, 2019.

both positive and negative experiences in this area as lessons to be learned by Uzbekistan. The positive experience relates to Japan’s use of a great number of nuclear plants and significant reliance on their secure functioning in providing sustainable energy supplies to its economy. The negative experience relates to several nuclear incidents in Japan, the largest of which occurred in March 2011 and provided a grave but yet indispensable experience for Japan regarding secure nuclear plant exploitation. The government of Uzbekistan, as reflected in the cooperation road maps, hopes to benefit from such expertise as it builds its own first nuclear plant.

The Uzbek governments’ energy-related road maps with Japan include 33 documents, with the following projects representing their essence (see Table 1.8).

As shown by the projects earlier, Uzbekistan’s partners attempt to capitalize on the expertise and experience they have in conducting various projects. In the case of Uzbekistan, however, the major concern of the government is

Table l.S Examples of projects to be implemented in line with the Uzbek-Japanese cooperation road map

Source: Compiled by the author. Based on the agreements achieved during the visit of December 17-20, 2019, by the president of Uzbekistan to Japan and the presidential decree on May 4, 2019, PP-4308.

to increase its energy-generating capacity in light of growing energy consumption associated with the intensified industrialization of the country. Meanwhile, exploration of the existing natural resources serves as the backbone for Uzbekistan’s exports and the foreign currency revenues urgently needed for purchasing equipment and modernization projects.