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Tashkent Acts to Cut Cross-Border Trade

Closing border checkpoint to cars reflects state’s hostility to small-time importers.
By IWPR Central Asia
Uzbekistan has stopped vehicles using a border crossing to Kyrgyzstan, apparently to stop a flood of consumer goods bought by traders at a giant market just across the frontier.

Initial indications, however, are that Uzbek traders have adjusted to the move by taking a longer route and combining orders for several people, or by crossing the border illegally as some have always done.

The official explanation for the partial closure of the crossing at Karasuv (Karasuu in Kyrgyz) is that there is not enough traffic to justify it.

Local residents and analysts view the unilateral move as a bid to stop an outflow of hard currency from Uzbekistan’s highly controlled economy. They believe Uzbekistan is planning to construct its own, similar trading post.

Economic crisis has exacerbated Uzbekistan’s shortage of foreign currency as demand for country’s main export commodity, cotton, has declined.

Traders are drawn to the Karasuu wholesale market just over the frontier in Kyrgyzstan where they can load up vehicles with cheap Chinese consumer goods. But with only pedestrians allowed to cross, the Karasuv route is now unattractive.

An entrepreneur who is a frequent visitor to the Karasuu market told IWPR that he had not seen a dramatic drop in trade volumes, “For the moment at least, I haven’t seen that. Goods are being smuggled as before. Citizens of both countries continue to cross the border illegally.”

A resident of the Kyrgyz city of Osh told IWPR, “Since the border crossing has been closed, trade between Karasuu market and the neighbouring Andijan region has fallen, as traders now have to make a detour through another crossing, Dustlik. The smuggling goes on…. People have started to put more planning into their trips – traders collect several orders and only then go on a trip.”

Unlike Kyrgyzstan, land-locked Uzbekistan does not have a border with China, so goods from that country come in via Kyrgyz territory. Many of them end up being resold at a market in the city of Andijan, just inside Uzbekistan.

The Uzbeks gave official notification that they were closing the Karasuv crossing at a meeting with Kyrgyz border officials on February 13. The deputy chairman of the Kyrgyz border service, Cholponbek Turusbekov, expressed hope that the problem could be resolved through negotiation, adding, “Every crossing is of strategic importance.”

Turusbekov said traffic heading for the border would be directed to another crossing-point, Dustlik. Uzbekistan earlier imposed restrictions on Kyrgyz citizens using Dustlik, allowing them a maximum of one trip every three months, but as a result of the meeting, the restrictions were cancelled.

Salkyn Abdukarieva from the press office of the Kyrgyz border service told RFE/RL radio on March 3 that the authorities in Uzbekistan had not given any indication whether the closure was temporary or permanent.

The 1,400 kilometre-long Uzbek-Kyrgyz frontier loops round and through the Fergana valley, and has 14 border crossings.

Local residents and analysts interviewed by IWPR believe the Uzbek authorities decided to close the Karasuv crossing to road traffic because they plan to build their own wholesale market for the direct import of Chinese goods, doing away with Kyrgyzstan’s role as a transit hub.

Kyrgyzstan’s Karasuu market is a 15-minute drive from the frontier and sprawls over 15 hectares. It has an estimated daily turnover of half a million US dollars and most of the goods sold are thought to be destined for Uzbekistan. With 27 million people, that country is a bigger market than Kyrgyzstan, which has just over five million.

On the busiest days, Tuesdays and Saturdays, up to 50,000 people are buying and selling at the market.

Sanobar Shermatova, a Moscow-based Central Asia analyst said Uzbekistan’s policy of restricting on imports had enriched traders at the Karasuu market by creating a shortage of basic consumer goods across the border.

“Tashkent has done its sums, albeit belatedly,” she said. “Day after day, Uzbek citizens living in the densely populated Fergana valley have been leaving huge sums of money in Kyrgyzstan.”

Uzbek traders had no alternative to the Kyrgyz market, Shermatova said. “Now with the construction of their own market... the financial flows will end up in the pockets of local [Uzbek] traders, the local administration and bureaucrats.”

Closing the border was central to plans for a new Uzbek market, she said.

Construction of the market was first mooted by Uzbek president Islam Karimov during a visit to Andijan region last year. State television quoted him as telling local border guards that the frequent traffic of Uzbek citizens into Kyrgyzstan needed to stop.

“Let us open a market for our own traders here. We have containers, vehicles, and everything needed to create such a market,” he was quoted as saying.

Shortly after his visit, Karimov signed a decree reducing the value of goods for personal consumption allowed to be brought undeclared into Uzbekistan from 25 to ten dollars; the limit had already been cut from 50 dollars the previous year.

A Kyrgyz source said the numbers using Karasuu had been declining since that restriction was imposed, and the trend had continued with the border closure.

A 23-year old resident of Andijan who gave his name as Bahodir agreed that the restrictions were linked to plans for a new market inside Uzbekistan.

“If we have a market on Uzbek territory, all the proceeds from sales and profits will stay in Uzbekistan,” he said.

A resident of Andijan who works at the central city market said construction had started at a new site outside town. The work seems to be on hold at the moment, probably because of funding difficulties, he added.

Professor Orozbek Moldaliev, a political analyst and regional security expert in Kyrgyzstan, said Uzbekistan wanted to reduce the amount of goods passing unchecked across the border, and to become a regional centre of wholesale trade itself.

But analysts and local residents argue that creating an Uzbek equivalent of the Karasuu market will not in itself stop smuggling across the border, and its success will depend on whether people think they are better off shopping there than in Kyrgyzstan.

“If, for whatever reason, the market cannot satisfy the demand, I assure you the buyers will find loopholes and ways to visit the Kyrgyz market,” said Shermatova. “In reality, the border between the two countries is not a barrier for smart people. If you have money, you can always cross over wherever you want and carry whatever you want.”

A 25-year-old resident of the Kyrgyz border village of Bazar Korgon, who gave his name as Bazarbek, frequently visits Karasuu market and Andijan. He agreed that people would have to be convinced that shopping at the new market was worth it, and would do so only if prices were attractive.

Economic expert Ayilchy Sarybaev said Uzbekistan would struggle to benefit from its move because Kyrgyzstan, as a member of the World Trade Organisation, WTO, was in a better position to import from China, also a member country.

“That’s obvious, because Uzbekistan is not a WTO member and the cost of importing any goods from China without going through Kyrgyzstan will be higher,” he said.

Sarybaev believes the Uzbek decision to restrict cross-border travel is short-sighted, “Any restrictions will lead to smuggling and increase the black economy, which is not desirable for either Kyrgyzstan or Uzbekistan.”

Ainagul Abdrakhmanova is an IWPR-trained contributor and Beksultan Sadyrkulov is a pseudonym for a journalist in Kyrgyzstan.

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