Uzbekistan-Turkey: A New Stage of Strategic Partnership

The Uzbek and Turkish people have the similarity of customs, traditions and common values ​​that have developed over the centuries. This resemblance is reflected in the relations between two states. At present, time-tested relationship based on friendship and cooperation are consistently developing, relying on more than 60 treaties and agreements covering various areas. Of particular importance is the Treaty of Eternal Friendship and Collaboration signed in 1996.

Strong political dialogue

In recent years, due to the efforts of the leaders of two countries, a new page opened in relations between Tashkent and Ankara. Contacts between the countries raised a qualitatively new strategic level. High level of political dialogue actively developing between Uzbekistan and Turkey.
This is evidenced by a number of meetings of two countries presidents in the framework of international summits in particular during the forum of “One Belt, One Road”, in May 2017 in Beijing, in September – at the Summit of the Organization of Islamic Cooperation on Science and Technology in Astana, and at the 72- Session of the UN General Assembly.

Fruitful negotiations held at the highest level, during state visits of two presidents to Turkey, and in the spring of this year to Uzbekistan. Historical documents signed following their results, which laid a solid foundation and gave a new impetus for building a practical cooperation in various fields.   In this regard, the highest-level dialogue has already became regular, and cooperation between countries is building on a mutually beneficial and trustful basis.

The visits also marked by the fact that, firstly, a serious political trust established between the leaders of the countries. Secondly, parties reached mutual agreements on billions of US dollars in various sectors. Moreover, tourism bridges established on a tourist flow from Turkey to Uzbekistan and vise-versa. In 2018, the countries created the Supreme Council for Strategic Partnership, chaired by the heads of two states. In this regard, president of Uzbekistan Shavkat Mirziyoyev underlined, that “Tashkent considers Ankara as an important and long-term partner”. In turn, the head of Turkey Recep Erdogan declared that, “he looks to Uzbekistan as a priority partner in Central Asia”.

Inter-parliamentary ties also play an important role in the consistent development and strengthening of bilateral relations. There is an intensive exchange of delegations of legislative bodies of our countries. Successfully operating parliamentary friendship group between Parliaments of Uzbekistan and Republic of Turkey and Roadmap for the development of cooperation signed.

Moreover, Uzbekistan and Turkey fruitfully cooperate within the framework of such international structures as the UN, the Organization of Islamic Cooperation and etc. The parties have similar or close positions on issues of regional and international importance.

In particular, Tashkent and Ankara support the earliest launch of the comprehensive peace process in Afghanistan, which should be carried out under the leadership and efforts of the Afghans themselves, with strong support from regional and global partners.

The parties are in favour of the development of bilateral dialogue and interaction, as well as cooperation in multilateral forums dedicated to Afghanistan. The presidents of Uzbekistan and Turkey express their full readiness for a close partnership for the implementation of the Tashkent Declaration adopted following the International Conference on Afghanistan on the theme “Peace Process, Security Cooperation and Regional Cooperation” held on March 26-27 2018, as well as in the framework of the Forum “The Heart of Asia – the Istanbul Process”.

Ankara also supports the efforts of Uzbekistan to enhance political dialogue at the highest level in Central Asia, strengthen mutual understanding, good neighborliness and close regional cooperation in order to transform Central Asia to stable, economically developed and prosperous region.

Boosting economic cooperation

Turkey is one of the important trade partners of Uzbekistan. More precisely, it takes the fourth place after Russia, China and Kazakhstan. In 2017, the trade turnover between the two countries has increased by 30 percent and amounted to 1.5 billion US dollars. Since the past two years the volume of mutual trade is increasing in a very high amount, cooperation in various sectors are intensifying, interaction in the transport and communications sphere, partnerships between regions are strengthening.

Both sides are interested in cooperation. The increasing liberalization of the economy, a favorable investment climate, the market of Uzbekistan is of interest to Turkey. Developed industry, transport communications, sea routes, agriculture and tourism potential of this country are beneficial to Uzbekistan. Uzbekistan exports non-ferrous metals, fruits and vegetables, services, nitrogen fertilizers, refined products to Turkey.

Uzbekistan, in turn, imports cosmetics, various mechanical and electronic equipment, plastic, textile, chemical, pharmaceutical products, tanning and dyeing products from Turkey. Uzbekistan is ready to expand the supply of light, chemical, metallurgical, machine-building, electrical engineering, leather, footwear and agricultural products to the Turkish market.

Nowadays joint investment projects are being implemented
in Uzbekistan with leading Turkish companies and banks in trade, innovation, energy, infrastructure, transport, tourism, textile and other fields. There are currently 500 companies in Uzbekistan with Turkish capital, 100 of which are representation offices. They carry out activities in the sectors of textile, commitment, food, hotel management, building materials, plastic, medication and service.

In the framework of the visit of president Shavkat Mirziyoyev to Turkey in October 2017, a business forum was organized in Istanbul with representatives of the financial and business circles of two countries. During this event agreements were signed on more than 30 projects worth 3.5 billion dollars aimed at building large energy facilities, road infrastructure, organizing modern industrial and logistics centers in food and agrosector, production of textile, electrical products and building materials.

President of Uzbekistan Shavkat Mirziyoyev noted, “the reached agreements will be able to bring the volume trade turnover between our countries up to 3-4 billion dollars in the coming years, as well as open wide opportunities for entrepreneurs of the two countries”.

In turn, President Erdogan emphasized that “the parties, firmly supporting the development way chosen by our countries, continue
to comprehensively deepen practical cooperation, expand trade and economic ties, and further intensify partnership in energy, production, agriculture,  and infrastructure development areas”.

During the visit of the President of Turkey to Uzbekistan in Tashkent, it was also organized Uzbek-Turkish business forum. Within framework of this event, agreements were signed on the implementation of more than 50 new investment projects worth
3 billion dollars.

In this case, practical evidence of the increasing interest of the Turkish business circles to work in the market of Uzbekistan is the creation of more than 230 joint Uzbek-Turkish enterprises since the beginning of 2018. Mutual trade during this period increased by more than 40 percent.

Tremendous economic reforms in Uzbekistan

Economic and structural reforms in carrying out in Uzbekistan over the past two years play a significant role in the development of economic cooperation. Today Uzbekistan has entered a new period of its development. Without any exaggeration, the country is undergoing profound changes, exciting reforms. Among them is the introduction of free conversion of Uzbek national currency and liberalization of currency regulations, the promotion of exports and export-oriented production, the creation of free economic zones with large tax encouragements for investors and business circles.

In order to further liberalizing foreign trade and the formation of an effective market economy, reduced the customs duty rates. In accordance with international standards, the government, ministries, the Central Bank and other organizations of Uzbekistan are publishing statistical and analytical information on the macroeconomic indicators of the economy, on the state budget spend, money turnover, the gold and currency reserves of the country transparently and on regular basis.

Reduced almost all barriers in foreign trade. In particular, introduced the procedure for export without advance payments and warranty. Simplified mechanisms for exporting agricultural products.

Moreover, by the initiative of the Head of State, created the Guarantee Fund for the Development of Small Business and Presidential Representative institute for the Protection of the rights and interests of Business Entities. Assessing these, experts state that Uzbekistan is changing its approach towards the implementation of economic policies aimed primarily at increasing the economic activity of the population and creating a favorable business environment. In this regard, the main focus is paid to attracting foreign partners, investment to the creation and enlargement of high-tech and innovative industries.

In order to create favorable conditions for the active inflow of foreign investments, to increase the production of export-oriented products free economic zones are launched in the regions of the country. For a short period of time 11 free economic zones were created in Karakalpakstan, Samarkand, Bukhara, Fergana, Khorezm, Jizzakh, Namangan, Syrdarya, Surkhandarya and Tashkent region, which indicates the expansion of the geography of using the production and resource potential of the regions.

It is well-known that the development of any society determines the set of intellectual abilities, health, knowledge, labor productivity and high quality of life, that is human capital.

In the modern world, human capital is the main locomotive of the creative economy, technical and technological progress. According to the United Nations Human Development Report of the countries, at the end of 2017, Uzbekistan entered the group of states with a high level of human development.

In this vein, experts draw attention to the fact that the formation of a creative class has intensified in Uzbekistan, which in the future should become a pillar in the development of the country’s economy. In particular, innovative techno parks are being created that specialize in scientific research and development, pilot tests and transfer of innovative samples to the development in various fields. For example, in the area of chemical technology, pharmaceuticals and medical biotechnology, building materials, food industry; energy saving, production of alternative and renewable energy sources, mechanical engineering, electrical engineering, etc.

Due to the measures implemented in 2017, sustainable economic growth rates amounted to 5.5 percent, exports increased by 15 percent. At the same time, from the beginning of 2017 to the present, over 300 contracts have been signed between Uzbekistan and foreign countries, as well as contracts and agreements worth about 75 billion dollars.

Today, in the structure of Uzbekistan’s export, more than 78 percent of production falls on the processing industry. In particular, in exports, the share of high value-added products increased from 28.5 percent to 34.5 percent, exports of household electrical products increased 2.4 times, exports of cars increased 3 times, and textile products respectively increased 1.3 times, and exports of leather and footwear products grew by 14.2 percent.

In 2017-2021, it is planned to implement industrial programs and 649 investment projects worth 40 billion US dollars. In this case implementing investment projects, Uzbekistan attaches particular importance to attracting technology partners, primarily industrial leaders in their fields.

Creation of production in Uzbekistan not only provides access to the rapidly growing market of Central Asia with a population of 70 million people, but also to the CIS countries with a total population of 300 million people, with which Uzbekistan has a multilateral agreement on a free trade zone. In terms of stability, the cost of basic energy resources, the availability of the necessary raw materials, qualified and highly competitive labor force, Uzbekistan occupies an advantageous position among other countries in the region.

According to estimations, in the next 5 years, the production of industrial goods will increase by 1.5 times, its share in GDP from 33.6 percent to 36 percent, the share of the processing industry from 80 percent to 85 percent. These reforms in Uzbekistan are being positively evaluated and recognized by leading financial institutions, such as the International Monetary Fund, the World Bank and the Asian Development Bank.

According to a World Bank report, higher growth rates expected in Uzbekistan in the medium term – up to 6.3 percent in 2019.
The implementation of reforms in the second half of 2018 will become more sustainable, reducing uncertainty and supporting private investment and export-oriented growth.

In 2017, the World Bank included Uzbekistan to the top ten countries that significantly eased business conditions, noting reforms in the area of ​​registering enterprises, protecting the rights of investors, taxing and connecting to the power supply system. In the rating of the Financial Times, Uzbekistan ranked second, the country’s business climate improved by 23.59 points within a very short period of time. The Financial Times also recognized Uzbekistan as one of the leaders in improving the business climate in the post-Soviet space. In the ranking of the World Economic Forum, based on the latest edition of the World Bank’s Global Economic Prospects, Uzbekistan ranked second among the fastest growing in 2017.

Of course, they create the basis for creating a favorable investment climate in the country and attracting investments from Turkey, which also open new horizons for further deepening the long-term cooperation between Ankara and Tashkent. In turn, it should also be noted, that Turkey is among the G-20, can serve as a good example in terms of economic development. In Turkey, it is very developed such areas as industry, transport communications, agriculture and tourism.

Studying the achievements of Turkey in these sectors, using the best practices of this country in carrying out reforms, modernizing the economy, and involving Turkish entrepreneurs and companies in projects implemented in Uzbekistan fully meet the interests of Tashkent. In Turkish economy, the share of industry is 28 percent, agriculture – 15, construction – 6, services – 51 percent. In total volume of industrial production the processing industry has the highest share.

Today, small- business and private entrepreneurship make a significant contribution to industrial production. Well-developed industries such as textiles, food, mining, chemical, pharmaceutical, energy, metallurgy, automotive and electrical household goods. Currently, Tashkent and Ankara have concrete plans to bring the trade turnover up to 5 billion US dollars in the coming years.

Another interesting area for the development of trade is the intensification of work in the field of transport communications and transit,
in particular, the use of the capabilities of the Baku-Tbilisi-Kars railway. Uzbekistan is considering participation in this corridor as an opportunity to access the ports of Chernomorsk, Poti and Batumi in the Black Sea, as well as to the Turkish port of Mersin in the Mediterranean, and further to the Middle East and North Africa.

In order to increase the competitiveness and attractiveness of international transport routes passing through the territories of the two countries, the parties express their readiness to continue systemic mutually beneficial cooperation aimed at further optimization of tariffs and the provision of preferential conditions for transit shipments of foreign trade cargoes. The Intergovernmental Commission on Trade and Economic Cooperation, as well as the Joint Commission on International Road Transport, established under the Agreement on Land Freight Transportation, make a significant contribution to strengthening cooperation in this area.

Strengthening cultural ties

Integral part of the Uzbek-Turkish relations is cultural and humanitarian contacts, which actively developing today. In June 2016, Days of Uzbek Culture held in Ankara. The participation of Turkish artists in the international music festival “Sharq Taronalari” in Samarkand, the broadcast of official state events held in Uzbekistan to foreign countries by the Turkish State Television and Radio Company has become traditional.

In the development of cultural and humanitarian relations tourism is a promising direction. On February 10, 2018, a visa-free regime introduced for Turkish citizens to Uzbekistan. Considering that since 2007 Turkey has applied a visa-free regime for the citizens of Uzbekistan, both countries have tremendous opportunities in the field of tourism, the full use of this potential, an increase in tourist exchange will give a high economic effect.

In this regard, it should be noted, that the Uzbek tourism sector really has every chance to become a strategic sector of the country’s economy, which has a huge unrealized potential in this area. Partnership of National airlines companies of two countries is a great importance in enhancing cooperation in this field. In this regard, since October last year, the National Airlines Company of Uzbekistan has established direct flights to Samarkand-Istanbul route, and since March of this year, Turkish Airlines has established direct flights on this route. Currently, in order to expand air travel, new plans and joint projects are being developed.

The signed Memorandum between the State Committee on Tourism of Uzbekistan and the Office for Religious Affairs of the Republic of Turkey will help enhance cooperation in the field of tourism. The document assumes a large-scale work to popularize tourist trips to make pilgrimages, to increase the number of religious and educational activities in tourism industry, as well as the organization of international forums designed to bring to the world community the true humanitarian essence of Islam.

In this context, Uzbekistan, being one of the cradles of world civilization, served as a bridge between East and West, uniting the cultural and scientific wealth of humanity. Uzbek land is the birthplace of the greatest scientists and thinkers, such as Al-Khorezmi, Al-Beruni, Ibn Sina, Mirzo Ulughbek and others, who made great contribution to the development of science and culture.

As president Erdogan emphasized, “Uzbekistan is the birthplace of the great Islamic theologians and monuments of Islamic culture”. Therefore, Turkish citizens show great interest in holy places, for example, the mausoleum of Imam Bukhari, Abu Mansur Moturudi and Bahouddin Naqshbandi.

In 2017, 75 million Turkish citizens visited to different countries of the world, and if 1% of this number come to Uzbekistan, it would serve to dramatic increase in the flow of tourists between Turkey and Uzbekistan.

At the same time, Turkey and tourism – today these names are in many respects synonymous. According to the most conservative estimates, Ankara annually earns only on the provision of travel services over 30 billion US dollars. Turkey has successful experience in creating from scratch all necessary infrastructure and promoting its own brand. Therefore, it is not by chance that several large Turkish companies have been invited to implement pillar projects in Uzbekistan. For example, Turkish investors are participating in projects to transform the so-called “Uzbek Switzerland” – Chimgan-Charvak zone into a fully-fledged modern resort. They will also be engaged in the construction of large entertainment centers in Tashkent.

In general, Turkey and Uzbekistan, possessing a very high level of political dialogue, have all the opportunities for prospective, mutually beneficial and fruitful cooperation in all spheres. Fraternal ties that have developed over the centuries are a solid foundation for strengthening and further deepening the strategic partnership between two countries.

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Head of Department, Institute for strategic and regional studies under the President of the Republic of Uzbekistan