Moscow Employs $860 Million Debt Forgiveness Sweetener to Recruit Uzbekistan into its ‘‘‘Eurasian Economic Union‘
On December 11, it was reported that in the wake of a recent meeting between Russian President Putin and Uzbekistan President Karimov, Moscow has agreed to write off over $860 million of Uzbekistan‘s $890 million debt owed to Russia. Not coincidentally, in the same announcement, it was noted that Tashkent and Moscow were to begin immediate consultations on the signing of a free trade zone between Uzbekistan and the Kremlin‘s Eurasian Economic Union (otherwise known as the Customs Union), presently comprised of Belarus, Kazakhstan and Russia. This multilateral organization, intended to compete directly with the European Union, will commence operations in January 2015. Armenia and Kyrgyzstan are slated to join the Eurasian Economic Union (EEU) sometime next year.
Over 20% of Uzbekistan‘s foreign trade is with Russia and more than half is with CIS countries. Uzbek-Russian trade exceeded $7 billion in 2013. This debt forgiveness ‘‘‘sweetener‘ appears designed to bolster the ranks of Moscow‘s Customs Union in light of the defections of Georgia, Moldova and Ukraine and represents another example of debt forgiveness being leveraged for strategic concessions. A similar correlation was on display earlier in 2014, when a $32 billion debt forgiveness scheme for Cuba was followed almost immediately by several follow-on agreements of strategic importance, including exploration rights for off-shore oil and gas deposits.