The Korea Visit

Someone doesn’t look too thrilled there. A little moreso here

The Uzbek National News Agency has a list of the documents signed during Karimov’s visit to South Korea. There are heaps of academic cooperation agreements and agreements on cooperation between Korean and Uzbek government ministries. There’s also a strategic partnership agreement, but few details about it. It seems to perhaps simply be the entire package of partnership agreements. Also, the South Koreans have agreed to provide aid and loans to the Uzbek government. By far the most significant agreement is one to jointly explore and develop energy and mineral resources in Uzbekistan.

Uzbekistan and South Korea today signed an agreement allowing South Korean companies to explore and develop Uzbekistan’s oil and gas fields, and other natural resources, including zinc, gold, and uranium.

Stratfor notes that South Korea, the world’s fourth largest energy importer, signed a similar deal with Nigeria recently.

Chosun Ilbo has further details on the exploration and aid deals.

Korea Gas (KOGAS), National Oil (KNOC) and Uzbekistan’s state gas company Uzbeknefgaz signed a set of protocols and a memorandum of understanding. The oil field the two countries agreed to explore and develop is believed to hold 820 million barrels of oil, while the gas field holds 275 million tons of liquid natural gas.

RFE/RL has a superb story on Karimov’s trip to South Korea (via Brian) saying that the visit is of extreme importance for the Uzbek side.

South Korea is the biggest investor in the Uzbek economy. But in recent years several South Korean companies have left Uzbekistan due to an unfavorable investment climate. Experts see Karimov’s visit to Seoul as an attempt to restore economic cooperation and stop investment outflow as well as to find political support — a crucial necessity amid Uzbekistan’s isolation from the West.

Perhaps creating a better investment climate might do the trick better. Surely South Korean businessmen realize that even with new agreements, any benefits will be short-lived and uncertain given past experience and the treatment of other foreign investors.

Don Kang, the former head of Kabool Textiles Uzbek Ltd., says South Koreans decided to leave Uzbekistan because of the perpetual interference of Uzbek authorities in their business and due to high corruption. He says the overall investment risks remain high and thus impedes foreign investment.

“The Uzbek government changes the tax matters or some of the foreign investment laws too often,” Kang said. “They must keep [them] in the [coming] 10 years, in the [coming] 5 years without change. But [the] incentives to foreign investors were changed regularly. The risk of the investments, the reputation of the country, and credibility — this is what matters. Because of that business risk, no one is ready to invest in Uzbekistan.”

While in Seoul, Karimov met with South Korean businessmen. It would be quite interesting to have been a fly on the wall in that meeting. An economist interviewed by RFE/RL is not optimistic about the possibility for significant investment coming out of Karimov’s trip.

And perhaps there is a very good reason for Karimov looking unhappy above. Glowing press notwithstanding, it seems quite probable that Karimov may have received an earful businessmen and government officials, neither of which can be the least bit happy with such things as the seizure of major Korean investments by the Uzbek government. And what UzA calls discussions over “international and regional problems representing mutual interest” may have at least in part been criticism of the Uzbek government’s human rights record.