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bne October 2019 Eurasia I 59
to try and bump the country onto the path of sustainable development.
At the same time, cliché that it is, Uzbeki- stan’s remains a key way station on the ‘Silk Road’. That means China and Russia are also very interested in the country and are pumping in money. President Vladimir Putin was recently in Tashkent. During his visit he announced $30bn worth of deals – mostly in the energy sector, including in nuclear power. China, meanwhile, has been promoting its Belt and Road Initiative to the Uzbeks.
The administration of President Shavkat Mirziyoyev is in a delicate position. On the one hand it needs money and exper- tise to pick up the bucolic economy, but on the other hand the country wants to retain its independence. Being in hock to anybody is not an appealing picture.
$50bn economy
“The thing is that with a $50bn econ- omy, external debt of only $19bn and gross international reserves of $20bn, of which $15bn is in gold, the Uzbeks are in a very strong position and, unlike their neighbours, they are in a position to pick and choose their investments,” notes Osheroff.
While in no way as rich in hydrocarbons as its neighbours, Uzbekistan does have enough such resources to interest the great powers in its region. In fact, in Uzbekistan, after textiles, hydrocarbons are probably attracting the most interest from foreign investors.
“Russia is already invested in Uzbekistan, especially in the oil and gas industry: Lukoil is already very active here as well, as is Gazprombank, which is working at the national level,” says one banker based in Tashkent. “Gazprombank already has a lot of clout, especially with the president.”
Petrochemicals is another area where Tashkent sees a lot of value added upside and the government has been investing plenty of capital in the sector.
Finally, as with just about every other economy that has opted to open up to the rest of the world, the real estate sector has started to flourish.
A lot of money from international financial institutions (IFIs) has found its way into the Uzbek real estate sector via the banks. The state raised $1bn with a eurobond issue in February but rather than try to invest all of the money itself via state organs, the government chose to distribute three- quarters of it through state-owned banks.
The result has been a real estate boom. Borrowing in local currency costs over 20% on short-term loans, but the dol- lars the banks have on offer have rates in their mid-teens and longer maturi- ties. If you can get access to this money
then the best returns are in residential real estate.
Developers have been putting up resi- dential objects quickly before flipping them as fast as they can to cash in on
the rising prices. Currently, there is little interest in commercial and office developments, where the margins are higher, but the payback is much longer, says Srapionov. “No one is interested in a 20-year payback. The market is young and prices are rising. Yes, a bubble is starting to form, but there is another five years of growth in this market."
Azerbaijan launches massive military drill
Kanat Shaku in Almaty
Azerbaijan’s armed forces launched massive operational and tactical exercises involving up to 10,000 personnel on September 16, the defence ministry in Baku announced.
Azerbaijan is locked in a decades-long frozen conflict with Armenia over Nagorno Karabakh. Populated mainly by ethnic Armenians, Nagorno Karabakh broke away from Azerbaijan amid the collapse of the Soviet Union and has been de facto independent and increasingly integrated with Armenia since then, though it remains part of Azerbaijan under international law. While the conflict is largely frozen, tensions periodically flare up.
The latest show of strength by Baku will involve over 100 tanks and armoured vehicles, 120 missiles and artillery systems, multiple launch rocket systems, and unmanned aerial vehicles.
“The exercise provides for the development of issues of organising and conducting a counter-offensive operation in the mountains by delivering preventive strikes to defeat enemy groups and taking possession of advantageous frontiers in the liberated territories,” the defence ministry said.
“The main attention will be paid to improving the troops control skills, as well as issues of combat, moral-psychological and logistic support,” it added.
Azerbaijan launched 10,000 man strong military exercises in a show of strength
in its long running dispute with Armenia over the disputed Nagorno Karabakh region
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