Central Asia in Focus: Uzbekistan's Role in the EU-China Strategic Dialogue

On November 6, 2024, the "European Economic Days - 2024" were held in Tashkent, organized by the European-Uzbek Association for Economic Cooperation (EUROUZ). The event gathered more than 300 representatives from the governmental and business sectors of Uzbekistan and the European Union, serving as a platform to strengthen partnerships, explore new business opportunities, and deepen economic cooperation. At the beginning of the forum, participants listened to an address by the President of the Republic of Uzbekistan, Shavkat Mirziyoyev. In his message, the head of state expressed confidence that the first-ever conference would significantly contribute to the development of trade, economic, investment, and cooperative ties with Europe. He emphasized that around 1,000 enterprises with European capital operate successfully in Uzbekistan, and the state actively creates favorable conditions for joint projects in industries such as electrical engineering, mechanical engineering, chemistry, metallurgy, energy, agriculture, textile production, tourism, and more. European Commission President Ursula von der Leyen, in her video address, highlighted Uzbekistan's strategic significance on the global economic map. "For centuries, Uzbekistan has been the 'beating heart' of global trade. European merchants traveled to Samarkand, Bukhara, and Khiva, returning with tales of your beautiful palaces, enchanting landscapes, and incredibly diverse culture," von der Leyen noted. She stressed that trade is a key aspect of current cooperation between Europe and Uzbekistan. Since 2021, Uzbek goods have gained access to the European market, significantly increasing exports, especially in sectors such as textiles and metallurgy. She emphasized the EU's readiness to expand cooperation in information technology, mineral extraction, and processing, which will create new jobs, enterprises, and transport-logistics corridors. "The European Union actively supports Uzbekistan in its aspiration to integrate into the global economic space, as confirmed by the 'Global Gateway' initiative." President von der Leyen announced plans for the EU, together with international partners, to invest up to €10 billion in the development of the Trans-Caspian Corridor. According to her, this project will establish transportation links between Europe and Central Asia, reducing cargo delivery times to 15 days. Ursula von der Leyen highlighted Uzbekistan's strategic position at the crossroads of continents and its key role in global trade relations. Von der Leyen also emphasized the EU's focus on Uzbekistan's digital transformation, including initiatives to connect the country to the EU's satellite network, ensuring high-quality communication even in remote regions. She also highlighted the importance of strategic cooperation in critical minerals. In April of this year, Europe and Uzbekistan signed an agreement on mineral supply chains. She noted that the EU is interested not only in raw material extraction but also in the creation of local production facilities, which will provide jobs for the Uzbek population and ensure high added value. "We want to support the creation of local production facilities with jobs for local residents and added value of the highest standards," von der Leyen emphasized, adding that this is the best path to a sustainable supply chain. In her speech, von der Leyen expressed hope that the forum held in Tashkent would serve as a starting point for new business connections between European and Uzbek companies and contribute to important agreements. She also announced the upcoming signing of a new Enhanced Partnership and Cooperation Agreement, which will boost investment and trade flows between the parties. Special attention was given to the upcoming "Central Asia - EU" summit, which will be held for the first time in Samarkand. According to von der Leyen, the event will be an important milestone in strengthening ties between the EU and countries in the region. In conclusion, she marked the 30th anniversary of the establishment of diplomatic relations between Uzbekistan and the European Union, expressing confidence that the best days of this partnership are yet to come.

Political Flexibility: Uzbekistan Balances Interests at the Intersection of the EU and China

The European Economic Days held in Tashkent in November 2024 vividly illustrated the European Union's (EU) ambition to strengthen its influence and deepen cooperation with Central Asia. This interaction extends beyond standard trade relations and encompasses strategically important initiatives in infrastructure, digital transformation, and natural resource extraction. European Commission President Ursula von der Leyen emphasized the importance of Uzbekistan as a key player in global trade and in the strategic transition from Europe to Central Asia. The integration of Uzbekistan into the global economic space, with its geographical position at the Eurasian crossroads, makes it an important center for transport and logistics projects. The EU proposes investments in the Trans-Caspian Corridor amounting to €10 billion, with the potential to reduce cargo delivery times to 15 days, which will not only strengthen economic ties but also increase political stability in the region. This will also impact the security and development of important transport routes, including the Caucasus, as part of the EU's broader strategy to strengthen its position in Eurasia.
One significant part of the EU strategy is infrastructure development, including the creation of new transport corridors, as well as infrastructure projects related to digital technologies. Initiatives to connect Uzbekistan to the EU satellite network as part of a broader strategy to expand digital transformation can significantly contribute to the modernization of the region. The EU is also actively developing cooperation with Uzbekistan in the field of critical minerals. The signing of mineral supply chain agreements demonstrates the EU's interest in long-term partnership in the extraction and processing of natural resources. The announced "Central Asia – EU" summit in Samarkand in 2025 will be a landmark event for strengthening diplomatic and economic relations not only for the Republic of Uzbekistan but for all Central Asian countries. This summit will provide an opportunity to discuss and make strategic decisions on key areas such as infrastructure development, digitalization, and mineral extraction, which will impact all countries in the region.

The Growth of the European Union's Role in Central Asia and Uzbekistan

The European Union is actively seeking opportunities to expand its economic presence in Central Asia, and Uzbekistan, as the largest country in the region, is at the center of these efforts. The EU demonstrates a desire to integrate Uzbekistan into global trade and logistics chains, which includes supporting projects such as the Trans-Caspian Corridor and digital transformation, including access to satellite communication. European investments, especially in infrastructure and digitalization, can give Uzbekistan access to advanced technologies and new markets, undoubtedly benefiting the country. However, significant dependence on European investments and technologies can lead to a number of risks. In particular, political pressure from the EU, democratic reforms, and adherence to international standards can hinder Uzbekistan's independent foreign and domestic policies. The EU, like other major international players, often uses economic leverage to promote its values, which can cause friction in relations with Uzbekistan if it perceives these measures as interference in its internal affairs.

The Role of China - An Economic Partner Avoiding Political Interference in Domestic Affairs

The EU promotes the "Global Gateway" initiative, which some experts view as a competing project to China's "Belt and Road Initiative". China remains an important strategic and economic partner for Uzbekistan, particularly in the context of the "Belt and Road Initiative" and the strengthening of infrastructural ties between Central Asian countries and China. China actively invests in transport and energy infrastructure in the region and provides financial resources for major projects. Unlike the EU, China generally avoids political interference in the affairs of partner countries, giving them more room to manoeuvre in terms of political independence. Some Eurocentric experts point out that dependence on Chinese investments and loans can pose risks. For example, projects financed by China can lead to increased debt burdens and certain dependencies on Chinese conditions, which may complicate foreign economic positions in the long term. However, according to these experts, Uzbekistan has experience in successfully managing external borrowings and builds a balanced financing policy by using Chinese loans for infrastructure development rather than covering current expenses. This reduces the risk of debt dependency. Most Chinese loans are provided on preferential terms, making them more favorable compared to commercial loans from other creditors. Cooperation with China is based on mutually beneficial terms. For example, Chinese investments in Uzbekistan are often aimed at creating jobs and developing local infrastructure, which contributes to economic growth. Uzbekistan also diversifies its partners, actively cooperating with other countries, including Russia, the European Union, Turkey, and India, which minimizes the risk of mono-dependence. Uzbekistan pursues a multi-vector policy aimed at maintaining constructive relations with both the West and China, reducing the likelihood of being caught in geopolitical struggles. Participation in international initiatives such as the Shanghai Cooperation Organization (SCO) and the Central Asia Regional Economic Cooperation (CAREC) program allows Uzbekistan to integrate into global processes while maintaining a neutral status. Chinese projects contribute to the modernization of infrastructure and the stimulation of exports, strengthening Uzbekistan's economic independence. The development of transport corridors, such as the Middle Corridor, expands access to international markets and reduces dependence on a single partner. Uzbekistan actively develops national industrial capacities and export opportunities, reducing the influence of external factors.

Multi-level strategic cooperation

Uzbekistan, trying to develop its foreign economic relations and attract a variety of investment sources, of course, intends to balance the interests of various large players. This requires flexibility from Tashkent in its foreign policy and economic strategy. Support from the EU, China and other countries (for example, Russia and Turkey) creates additional opportunities for diversifying foreign trade and improving the domestic economy. It should be noted that Uzbekistan carefully controls these relations in order to avoid excessive dependence on one source of investment. It should be noted that Uzbekistan has the opportunity to strengthen its economy at the expense of a multi -varector policy aimed at developing relations with various countries and regions. This will diversify economic and political risks, providing greater flexibility in international negotiations and ensuring national interests.

Geopolitical Interest and Long-term Strategy

Thanks to its strategic location, Uzbekistan is becoming a key player in the competition between the EU and China for positions in Uzbekistan and the Central Asian region as a whole. The EU is trying to offer an alternative to Chinese investments by focusing on digital infrastructure, technology, support for local production, and job creation. The EU aims to strengthen its presence in the region by bolstering diplomatic ties through formats such as the upcoming "Central Asia – EU" summit.
To prevent political turbulence caused by external players, Uzbekistan is already forming a long-term strategy aimed not only at attracting foreign investments but also at developing internal potential. Uzbekistan is actively creating conditions for the growth of domestic business, improving legislative conditions for foreign investors, and developing key sectors of the economy such as agriculture, textiles, mechanical engineering, and the chemical industry. This will enable the country to maintain the ability to make independent decisions in foreign policy despite external pressure. Developing strategic relationships with neighbouring Central Asian countries, as well as major players such as China, India, and Turkey, has already become an important part of this strategy.
Uzbekistan exercises caution in its external economic relations, especially in the context of increased competition for influence in the region. The EU and China can offer different models of cooperation, and the choice between them will determine not only economic but also political consequences for the Republic of Uzbekistan. Uzbekistan demonstrates pragmatism by striving to diversify its external economic ties and maintaining a balance between the interests of the EU, China, and other strategic partners. The effective use of foreign investments, the creation of a strong domestic economic base, and the maintenance of political independence are key factors for the successful development of Uzbekistan amid growing global competition and changing international political circumstances.

Gulnara Safarli

SR-CENTER.INFO