Republic of Uzbekistan
LOCATION AND SIZE.
Uzbekistan is located in central Asia, bounded on the north and west by Kazakhstan (2,203 kilometers/1,369 miles), on the east by Kyrgyzstan (1,099 kilometers/683 miles) and Tajikistan (1,161 kilometers/721 miles), on the south by Afghanistan (137 kilometers/85 miles), and on the southwest by Turkmenistan (1,621 kilometers/1,007 miles). Uzbekistan has an area of 447,400 square kilometers (172,741 square miles), which is slightly smaller than California. Uzbekistan's area includes 22,000 square kilometers (8,494 square miles) of inland water, mainly the Aral Sea. It is one of only two countries in the world bounded only by other landlocked countries. The capital, Tashkent, is located in the eastern arm of the country, near the Kazakhstan border.
The population of Uzbekistan was estimated at 25.1 million in July 2001 and it was youthful, with 36.3 percent aged 14 years or younger, and only 4.6 percent 65 or older. The birth rate was 26.1 births per 1,000 and the death rate was 8 per 1,000 people. The population growth rate was 1.6 percent in 2001, and the fertility rate was approximately 3 children per woman. Life expectancy was lower than in industrialized countries, 63.81 years total; 60.24 for men, and 67.56 for women. The average population density was 51.2 people per square kilometer (132.6 per square mile), but 1995 figures show that most of the population was concentrated in the fertile Fergana Valley at 474.5 persons per square kilometer (1,229 per square mile). The central and western desert areas were sparsely populated, at only 6.6 persons per square kilometer in the region of Navoi, and 8.5 in the region of Karakalpakstan in 1995. In Tashkent, the largest city in central Asia with a population of 2.1 million in 2000, the population density reached higher than 7,000 persons per square kilometer (18,130 per square mile). About 35 percent of the population in 2000 was urban, down from 41 percent in 1995.
Uzbeks, a Turkic people, comprised 80 percent of the population in 1996, while Russians (5.5 percent), Tajiks (5 percent), Kazakhs (3 percent), Karakalpaks (2.5 percent), Tatars (1.5 percent), and Koreans (1 percent) made up the rest. Religious groups include mostly Muslims (88 percent, mostly Sunni), and Orthodox Christians (9 percent). The official language is Uzbek, spoken by 74.3 percent of the population. Russian is spoken by 14.2 percent and is still predominant in business and science, while Tajik is spoken by 4.4 percent of the population.
OIL AND GAS.
Uzbekistan has failed so far to promote oil and gas exports due to its isolationist economic policy. The prices that Uzbekistan gets for its oil and gas exports in post-Soviet markets are low, and payments are insecure. Approximately 41.5 billion cubic meters of gas was produced in the first 9 months of 2000, up by 1 percent from 1999. Most gas is consumed locally by enterprises at prices above the cost of production, and by households at subsidized prices. Officially recorded crude oil production fell in the first 9 months of 2000 to 5.7 million tons, down by 6.2 percent from 1999. Refined oil production was rising though. It is likely that oil is illicitly exported to Kazakhstan. Fuel oil production, at 1.3 million tons, increased slightly during 2000, and the kerosene output of 300,000 tons rose by 17.1 percent in 2000. The government intended to increase investment in the state-owned oil and gas giant Uzbekneftegaz by taking on further external debts, expanding exploration and production in 2001. Free-market domestic prices were seen as a more efficient method to generate the capital for industrial investment domestically, without increasing the large external debt burden. The government also planned to sell 49 percent of Uzbekneftegaz to foreign investors in 2001. The subsidiaries of Uzbekneftegaz also were scheduled for partial sale to foreign investors, including 44 percent in Uzneftegazdobycha (exploration and development), and 39 percent in each of Uzneftepererabotka (oil refineries), Uzburneftegaz (drilling), and Uzneftegazstroi (oil and gas construction).
Uzbekistan is the world's eighth largest producer of gold. The gold mine is owned by the Navoi Mining and Metallurgical Combine (NGMK), a Soviet-era, state-owned firm that the government refuses to privatize or reform. The estimated output in 1999 was 80 tons but there was no independent confirmation. Gold accounts for 10 to 20 percent of export earnings and the drop in its price since 1997 has discouraged foreign companies from investing. Yet, Newmont Mining of the United States has entered a joint venture with NGMK to extract gold from a 242 million-ton pile of tailings left beside the mine from the Soviet era. The project, with European Bank for Reconstruction and Development (EBRD) funding, should produce almost 143 million grams (5 million ounces) over 17 years.
As a result of the policy of import substitution, most industrial production supplies the domestic market and is not export-oriented. Even Uzdae-motors, a joint venture between Daewoo Motors and state-owned Uzavtosanaot that assembles motor vehicles, produces cars primarily for the Russian and domestic market. Production started in 1996 when investment was expected to reach US$658 million. Supplies were ordered from Russia and South Korea. Uzbekistan was to provide the labor; however, Russia's economic problems in 1998 damaged export prospects, and few locals could afford to buy Daewoo cars. As a result, production in 2000 was even less than the 1997 target of 125,000 units and the 1998 target of 80,000 units. Although Daewoo's stake reached 70 percent in 1998, the Uzbekistan government kept the venture operational after the bankruptcy of Daewoo in 2000, switching it from a foreign investment into another government asset backed with foreign debt.
In 1997 Jahn International of Denmark joined Intertrade from the United States and local Tashkent Sud to form Sun Juice, a fruit juice company. Nestle of Switzerland plans to invest US$30 million for the construction of a chocolate factory in Namangan, while British companies have invested in the Uzbek tobacco industry.
Due to excessive government restrictions and controls, financial services are poorly developed. The central bank is not independent and acts as a money printing press for the finance ministry. Banks do not act as financial intermediaries for their clients, rather they pay negative interest rates on deposits, confiscate savings, and funnel government credit and foreign loans to enterprises and sectors selected by the government. The government refuses to push insolvent state-owned enterprises into bankruptcy, allowing them to stay in business. Banks fund their operations by refusing to pay back creditors, suppliers, and workers, eroding the banking sector. Of the 31 banks in Uzbekistan in 2000, just 4 small ones were private. Most banks were considered insolvent by international lenders, relying on further foreign debt inflows for survival. The largest bank was the state-owned National Bank of Uzbekistan (NBU), with 70 percent of the total loan portfolio and around 66 percent of the foreign exchange turnover in the country. The NBU is 1 of 4 banks allowed to deal in foreign exchange and makes a good profit by borrowing from the EBRD, nearly doubling the interest rate when lending to Uzbekistan firms. The government planned—but failed—to sell a 40 percent stake in the NBU in 1999. The main foreign-owned bank is ABN-AMRO (Nether-lands), which operates in a joint venture with NBU.
Trading in domestically produced food and imported consumer goods in the vibrant traditional oriental bazaars is a major economic activity and important income source. Many government and other employees add to their income as small traders, and the vast majority of Uzbekistan people shop at the local bazaar. The largely unregulated bazaars have so far survived the govern-ment's restrictions, with illegal currency traders providing the dollars that fund the smuggling of consumer items into the country. Outside of the bazaars, Tashkent is the fourth most expensive city in the world, and its modern retail complexes are reserved for the rich and for foreigners. Levi Strauss (United States) and Benetton (Italy) have outlets in both, and Sony (Japan) and Daewoo have large consumer electronics stores. Several other international retailers entered the market in the late 1990s, including Jahn International, and Nestle. Uzbekistan may have a future in imported consumer goods trade since it shares a border with all central Asian states and has the largest domestic population, making it a natural distribution center. Yet in 2000, most consumer goods were flowing into Uzbekistan illegally from its neighbors.
Uzbekistan has many important historic and cultural monuments in the medieval capitals of Samarkand, Bukhoro, and elsewhere. The lack of adequate facilities and high prices for western goods have prevented the development of any significant international tourism. No particular government plans in the area have been revealed.
Uzbekistan has no territories or colonies.
Uzbekistani sum (UZS). One sum equals 100 tyyn. Notes come in denominations of 100, 50, 25, 5, and 1 sum. Coins include 1, 5, 10, 20, and 50 tyyn.
Cotton, gold, natural gas, mineral fertilizers, ferrous metals, textiles, food products, and automobiles.
Machinery and equipment, chemicals, metals, and foodstuffs.
GROSS DOMESTIC PRODUCT:
US$60 billion (purchasing power parity, 2000 est.).
BALANCE OF TRADE:
Exports: US$2.9 billion (f.o.b., 2000 est.). Imports: US$2.6 billion (f.o.b., 2000 est.).