Uzbekistan to shift to convertibility by 1 July 2002

Uzbek TV
December 21

Uzbekistan will move to currency convertibility by 1 July 2002, Uzbek President Islam Karimov has said. Addressing a news conference following a function commissioning the Shortangaz chemical plant in southern Uzbekistan on 20 December, Islam Karimov said that the recent memorandum between Uzbekistan and the IMF envisaged " unprecedented measures", including Uzbekistan's decision to sign Article 8 of the statute of IMF concerning the convertibility of the national currency, the som.

Karimov advocated a federal form of government in Afghanistan and said that stability in that country would make it feasible to lay pipelines to take Central Asian gas and oil to Pakistan and India and beyond. President Karimov: "I would like to repeat that natural gas should not be considered as a fuel for power stations, it should be considered as a technological raw material for manufacturing new products. In this light, the Shortan complex is an example for us and for many countries on post-Soviet territory. I have already mentioned that talks are under way with ABB [Lummus Global]. Our cooperation with this company started in 1996. On the example of the [Shortan] complex, we say that you can completely trust this company, that it is a reliable partner. So, talks are under way on building a plant to produce polyurethane and other chemicals from ethylene."

Question: "Mr President, given the existing pipelines, how do you assess Uzbekistan's potential for exporting natural gas? And another question. As far as I know, a number of independent foreign experts express the view that the stabilization of the situation in Afghanistan and the construction of a pipeline via Afghan territory will give Uzbekistan an opportunity to become a leading exporter of gas in the region. Do you support this view?"

President Karimov: "Our natural gas reserves, confirmed gas reserves, account to 2-2.5 trillion cubic metres. Uzbekistan produces an annual 50-52bn cubic metres, of which we export some 6bn. Of course Uzbekistan's potential for exporting gas, not only Uzbekistan's but also Turkmenistan's and other countries', will considerably increase, when stability is finally achieved in Afghanistan. This is about natural gas, but I would suggest looking at the issue more broadly, I mean oil in addition to gas. Such projects have already been worked out, you know about it.

"In our opinion, there is a neutral government in Afghanistan, a government which is legitimate, a government which is peaceful and a government which will live with its neighbours in peace. I think that there will be wonderful opportunities for creating not only railways and motor roads but also for laying gas and oil pipelines, which can easily cross the territory of Afghanistan to the territory of Pakistan and further to India. These projects are quite realistic.

"I would like to pre-empt actions by certain of our opponents and say that there are no politics involved in it [the Shortan plant]. It is not US aid to Uzbekistan. I would like to remind your colleague Mr. Chernogayev [a Kommersant correspondent] that the project started in 1997, when there was no Afghan campaign. There are no grounds for linking the project with the present-day events. I am telling you this just to be on the safe side, so that Russian media agencies should not excel themselves in spreading speculations."

Question: "Mr. President, according to the agreement between Uzbekistan and USA which was recently signed in Washington, Uzbekistan, in particular, will speed up reforms in exchange for US financial assistance. My question is: does this mean that Uzbekistan will speed up the liberalization of its currency market?"

President Karimov: "I respect all questions, but I think that it is not correct to formulate a question in this way, to the effect that the USA is helping Uzbekistan in exchange for liberal reforms or for deepening reforms in Uzbekistan.

"I would like to inform you that a mission from the International Monetary Fund was in Uzbekistan recently. A memorandum initialled by the IMF mission envisaged unprecedented measures, including our decision to sign Article 8 of the statute of IMF concerning the current convertibility of the national currency [the som] by 1 July 2002, on the basis of the first half-year results. As you know, we started this process some time ago, in 2000 and in 2001. We took unprecedented measures to unify the national currency rate, and we carried out devaluation of the national currency. You know this very well."

Question: "Islam Abduganiyevich [Karimov], the government in Kabul has been set up, and is starting its work. There are already various rumours about its work. How do you assess the composition of the government, from the point of view that we, I mean Uzbekistan, have been helping the north for many years and now the north, as some reports say, has not found its worthy representation in Kabul?"

President Karimov: "Uzbekistan supports the decisions taken in Bonn. The Uzbek government believes that this is the first step towards achieving compromise in Afghanistan between the various ethnic, religious and regional structures which have power in Afghanistan. Are individual religious, ethnic or regional groups content with the composition of the interim government? I would like to say that you can't please every ethnic group in Afghanistan, given the chaos that has been taking place there for over the last 20 years. It is naive to expect that. I am convinced that having acceded to the composition of the interim government led by Mr Karzai, every party has come to a compromise. We all should be content with, at least, this achievement.

"My opinion is that if we want to create a legitimate government there which is supported by all ethnic groups and regional groups, the regional factor has to be taken into account, that is every region in Afghanistan should develop autonomously as a part of Afghanistan. Maybe not autonomously, but as a separate region which has a degree of freedom in its actions. I am convinced, it is my personal opinion, that the federative factor, the establishment of power in Afghanistan on a federal basis, is the most wise and correct decision."