Saudi Arabia and Uzbekistan continue strengthening investment cooperation and bilateral relations
Geopolitical Report ISSN 2785-2598 Volume 29 Issue 11
Author: Giuliano Bifolchi
Recent negotiations between Saudi Arabia and Uzbekistan on investment cooperation confirmed Riyadh’s strategy in Central Asia based on financial support to local governments’ infrastructural projects and humanitarian aid.
On March 26th, 2023, Uzbekistan’s Deputy Minister of Investment, Industry, and Trade, Oybek Khamraev, had an online negotiation with the Deputy Minister of Investment of Saudi Arabia, Muhammad al-Hassan, focused on the implementation of investment cooperation between the two countries.
The representative of Saudi Arabia highly appreciated the level of bilateral cooperation, emphasising the role of the leaders of both states in developing partnerships. The dynamic development of cooperation between Uzbekistan and Saudi Arabia reflects the large-scale joint work in all areas.
During the talks, the parties discussed preparation issues for the next round of the joint Intergovernmental Commission, which will be held in Jeddah on April 10-11 this year. The negotiators also exchanged views on the implementation of several joint projects, upcoming business meetings and round tables with the participation of representatives of the business circles of both countries.
The parties also agreed to establish a special joint working group to organise the upcoming meeting of the Intergovernmental Commission at a high level.
Previously, on March 13th, 2023, in Riyadh, the Minister of Foreign Affairs of the Kingdom of Saudi Arabia, Prince Faisal bin Farhan bin Abdullah, received Abdulaziz Kamilov, the special representative of the President of the Republic of Uzbekistan on foreign policy. During the meeting, the parties reviewed bilateral relations and ways to enhance and develop them in all fields and discussed regional and international developments. The two sides also discussed intensifying joint and multilateral coordination.
Saudi Arabia – Uzbekistan relations and economic cooperation
Saudi Arabia and Uzbekistan are two major countries in their respective regions. They share a long history of bilateral relations that have evolved. The relations between the two countries are characterised by mutual respect, cooperation, and close coordination on various issues. Economic cooperation is one of the main factors contributing to the growth of ties between the two countries.
During the visit of Uzbek President Shavkat Mirziyoyev to Saudi Arabia in August 2022, the two countries signed 13 agreements worth $12 billion. The deals were signed between the Saudi and Uzbek private sectors during the Saudi-Uzbek Business Council meeting. The investment deals covered various sectors, including agriculture, real estate, hospitality, human resources, telecommunications, healthcare, banking, chemical, and pharmaceutical industries.
The mutual trade between Saudi Arabia and Uzbekistan reached $95 million in the first half of 2022, a substantial increase considering that bilateral trade barely exceeded $17 million in 2019. About 40 enterprises with Saudi capital operate in Uzbekistan, and projects with leading Saudi companies such as ACWA Power, Al-Habib Medical Group, and others have been successfully implemented and are being implemented. Saudi Investment Minister Khalid Al-Falih emphasised the need for a direct import and export relationship between Saudi Arabia and Uzbekistan, as most of the trade between the two countries is happening through Turkey and the United Arab Emirates.
Previously, in 2018, the Saudi Fund for Development announced a $50 million investment in several projects, including the construction of a hospital in Tashkent. The two countries have also signed agricultural, tourism, and infrastructure development agreements. For instance, in 2018, they signed an agreement on constructing a $1 billion petrochemical plant in Uzbekistan.
Another factor that has strengthened bilateral relations is cultural and religious ties. Both countries practice Islam, which has provided a strong foundation for their relationship. Saudi Arabia has provided religious training and education to Uzbek students in the country’s universities and Islamic centres. Similarly, Uzbekistan has sent pilgrims to Saudi Arabia yearly to perform Hajj and Umrah. Moreover, the two countries have been active in restoring the Islamic holy sites in Central Asia, making the region a destination for Muslim tourists.
The political and strategic relations between the two countries have also improved over the years. Saudi Arabia has supported Uzbekistan’s efforts to counter terrorism and extremism. The Kingdom has also contributed to the development of the Uzbek military by providing training and technical assistance. Furthermore, the two countries have cooperated on regional issues, such as the conflict in Afghanistan, and have called for a peaceful resolution.
Uzbekistan’s geopolitical role in Central Asia
Uzbekistan, located in Central Asia, has a rich history and culture shaped by its geopolitical location. The country shares borders with Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, and Turkmenistan and is strategically located at the crossroads of the ancient Silk Road trade route. Uzbekistan’s population is over 34 million, and its economy is primarily based on natural resources such as gold, gas, and cotton.
One of the most significant aspects of Uzbekistan’s geopolitics is its relationship with Russia. Uzbekistan was a part of the Soviet Union until 1991; Russia has maintained a strong presence since then. Uzbekistan relies heavily on Russian natural gas, and many Uzbek migrants work in Russia. However, Tashkent has also recently sought to assert its independence from Moscow, particularly by diversifying its energy sources and looking for new foreign investors.
Another vital aspect of Uzbekistan’s geopolitics is its relationship with China. Beijing is Tashkent’s largest trading partner, and the two countries are connected by a railway that runs from Uzbekistan to China’s Xinjiang province. Uzbekistan is also a member of the Shanghai Cooperation Organization (SCO), a regional security alliance that includes China, Russia, and several other Central Asian countries.
Uzbekistan’s relationship with the United States has been somewhat strained, particularly in the aftermath of 9/11 and the beginning of the War on Terror. Between 2001 and 2005, the United States had military personnel in the Karshi-Khanabad Air Base in Uzbekistan to support the fight against the Taliban and al-Qaeda in Afghanistan. For years, Tashkent had alternating relations with Washington until 2021, when the United States reaffirmed its “strategic security partnership” with Uzbekistan and welcomed Uzbek efforts to facilitate intra-Afghan Peace Negotiations, supporting the country’s economic reconstruction and integration into the region. For instance, U.S. assistance to Uzbekistan in what the State Department called a “new era of strategic partnership” amounted to nearly $100 million in 2019, ten times what it was in 2016
In Central Asia, Uzbekistan’s relationship with its neighbours is crucial to its stability and security. The country has struggled with ethnic tensions in the past, particularly between the Uzbek majority and the Tajik minority. Uzbekistan has also been impacted by instability in Afghanistan, which has led to a rise in drug trafficking and increased tensions at the border.
Overall, Uzbekistan’s geopolitical position is complex and multifaceted. The country’s relationships with Russia, China, and the United States are all meaningful, but its relationships with its neighbours are perhaps even more crucial to its long-term stability. As Uzbekistan continues to navigate its position in the region, it must balance its foreign relationships with its internal challenges to maintain its role as a key player in Central Asia.
Saudi Interests in Central Asia
As one of the major Middle Eastern powers, Saudi Arabia has a strong interest in expanding its economic and strategic influence in the Central Asian region. Riyadh’s strategy in Central Asia primarily revolves around solidifying its political and economic ties with the Central Asian republics.
The Saudi government has initiated various programs and investments in Central Asia to establish stronger ties with the region. One of the most significant investments by Saudi Arabia was the establishment of a $2 billion Joint Investment Fund to finance local infrastructure and energy projects. This fund aims to enhance economic cooperation and secure Saudi Arabia’s regional interests.
In addition to economic investments, Saudi Arabia has focused on cultural and religious cooperation. Given the shared Islamic faith between the two regions, Riyadh has invested significantly in establishing educational and cultural centres in Central Asian countries. The Kingdom has also provided scholarships for Central Asian students to study in Saudi Arabia, strengthening people-to-people contacts.
Besides, Saudi Arabia has also engaged in various regional diplomatic initiatives. One of these is coordinating efforts among Muslim countries, which Riyadh has frequently pursued. The Kingdom has been a driving force behind the Organization of Islamic Cooperation (OIC), which aims to strengthen political and economic ties between Muslim countries. Saudi Arabia has also mobilised the efforts of the OIC in championing regional security and emphasising the importance of fighting terrorism and extremism.
Why does it matter?
The online negotiation between the Saudi and the Uzbek deputy ministers confirmed Riyadh and Tashkent’s desire to strengthen their investment and economic cooperation.
On the one hand, Uzbekistan needs to diversify its economy and attract foreign investors, and Saudi Arabia might support Tashkent’s strategy. On the other hand, the last negotiations emphasised Saudi attempt to promote its presence and strategy in Uzbekistan and, therefore, in Central Asia (i.e. Kyrgyzstan and Kazakhstan). Indeed, since the strategic role that Central Asia plays in the Eurasian chessboard because the region might become an interconnector and logistic hub between Europe and Asia, Riyadh has increased its cooperation with local governments.
In this context, the Saudi strategy in Central Asia is focused on expanding economic partnerships, promoting religious and cultural cooperation, and strengthening diplomatic ties. The Kingdom’s strategic investments in infrastructure and energy are essential in cementing its influence in the region. This approach and promoting cultural and religious solidarity will help build a strong relationship between Saudi Arabia and Central Asian countries. Through continued engagement, Saudi Arabia is poised to play an increasingly important role in shaping the future regional even though Riyadh might face competition from international players such as Russia and China and local actors such as Turkey, Iran, India and the United Arab Emirates.