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Uzbekistan
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Ten years ago, even the worst student knew that sunny Uzbekistan was the world’s largest producer of embroidered skullcaps, Bukhara robes, Uzbek melon, and pilau. The best students had heard on TV about the triumphs of Uzbek cotton growers, who had made the USSR one of the world’s largest cotton producers. Correspondents for the magazine Kommersant-Dengi (Money) and the NTV program Namedni (The Other Day) found out about other Uzbek brands formerly restricted to the USSR, although they were known around the world.
Tashkent – A Difficult City
Without knowing anything about the Republic of Uzbekistan’s economic policy, you can guess by a number of signs that it involves a smooth transition to a market economy. This “smoothness” was observed in Russia in the first few years of the republic’s independence, for example, in restrictions on currency operations (foreigners can exchange sums [the currency of Uzbekistan] for dollars or rubles only if they have a certificate from a bank, obtained by presenting a customs declaration) with a simultaneously flourishing currency black market, high import duties (a bottle of Russian beer costs a dollar or more in stores), and specific local restrictions (casinos and billiards are prohibited in the country, and entertainment establishments are open only until midnight). As you might expect, these restrictions result in a thriving underground economy of forbidden businesses, and the local market resembles a typical eastern bazaar where the concept of price is basically nonexistent—the cost of an item is determined by personal interaction between the buyer and seller. The experience of Dengi correspondents shows that in Uzbekistan, you can haggle even with stores, hotels, and airlines.
For example, when we arrived at the airport taxi drivers pounced on us with cries of “Tell me what you need!” But it was not an assault, they were just trying to solve all your problems at once. We immediately fell victim to two taxi drivers, each one of whom was offering the most favorable exchange rate, the best teahouse, and the most expensive hotel. We asked for the cheapest hotel (they promptly suggested an excellent choice for $120 a night) and chose the driver who lowered the hotel price to $60. To our surprise, the second driver jumped into our car, leaving his own behind.
-- “One of my neighbors works in the Ministry of the Auto Industry, and I can arrange deliveries of Daewoo cars to Moscow,” said the first driver. “Open a car dealership, you’ll get rich!”
We Replied that We Didn’t Deal in Cars.
-- “Ah, then maybe you want to buy tomato paste, “ said the second driver. “I can arrange for a whole planeload of tomato paste!”
-- “A planeload is a lot,“ I answered. “One can is enough.”
-- “Eh-h, who would sell to you, think about it,” both drivers chorused.
However, the main attraction began at the hotel. While we unloaded our luggage, the second taxi driver rushed to the reception desk to give instructions. When we appeared with our suitcases, the manager and other hotel employees stood by stone-faced and driver #2 conducted negotiations on their behalf.
-- “Eighty dollars. An excellent price. No, you don’t understand: this is an elite hotel, and for only $80!”
We said “thank you” and bent down to pick up our things.
-- “Wait! All right, $70. But this is a special price just for you.”
We put our bags down again and said:
-- “Sixty.”
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| Uzbekistan is rightly considered the world’s largest producer of Bukhara robes and embroidered skullcaps |
-- “There aren’t any such prices in Tashkent. I’m offering you the best choice.”
We said “goodbye” and picked up our suitcases. Then the manager said:
-- “OK, $60.”
We put down our suitcases. Driver #2 clutched his head and ran outside: his hopes for an extra $20 had vanished.
It got worse. We wanted to book airline tickets to Bukhara. The manager named a price of $155. We informed her that a ticket from Moscow to Tashkent cost $170. She hesitated:
--- “Wel-l-l-l, if you want a one-way ticket, it will cost $90. You don’t like that? Wait, let’s recount your rubles in dollars and then convert them to sums… There, you get $70. Too expensive? All right, then let’s convert your rubles to sums at the market rate and convert to dollars at the official rate. Now you get $60. An excellent price.”
We thanked her and contacted a person we used to call a speculator in Soviet times. He looked at our reference from “respected people,” contacted a “person at the airline ticket counter,” and told us to leave our passports and money with him. “I don’t know how much it’ll be, maybe $50 each, but I’ll find out there.” In the evening, we received tickets for $22 each plus change.
Incidentally, the airport taxi driver proudly refused to take money from us; he was interested in private services. Other drivers charged $0.50 to $1.50 for a trip within the city, although one charged $20 for a half-hour trip. This lack of any notion of fair prices is precisely what is called “made in the USSR.” However, the tradition of haggling here dates back to the days of the Great Silk Road, which passed through Samarkand and Bukhara.
White Gold
As before, cotton brings in nearly half of the country’s revenues. This amazing crop provides foreign currency, textiles, oil, cattle feed, home heating fuel, and even explosives equally well.
In Soviet times, a special ministry of the cotton-ginning industry was responsible for cotton. Today, it has been replaced by the Uzbek raw-cotton processing association known as Uzpakhtasanoatsotish (Uzbek Cotton Industry), which includes 130 cotton-ginning mills and 500 purchasing centers. The association’s founders are territorial joint-stock unions of cotton mills in which the state owns 51% of the shares, 7% are owned by the employees, and the remaining 42% are set aside for sale on the stock market (priority is given to foreign investors).
The purchasing centers receive raw cotton from cotton farms (former collective farms), shirkats (farmers’ associations), and peasants. The farms receive advance payments for seed purchases and credits; and after the cotton is sold, foreign trade organizations receive a final payment less debts.
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| Picking cotton is a rare opportunity for peasants to earn cash |
According to Viktor Dyachkov, first deputy chairman of Uzpakhtasanoatsotish, in the past, the proportion of mechanized cotton picking was much higher, but today, human resources allow it to be picked by hand. “The quality of the raw cotton is higher, and people have work.” It should be mentioned that growing and picking cotton are among the few means for peasants to earn cash. Currency goods are always in demand; they pay right away for a five-day week, and so whole families go out to the fields.
However, Uzbekistan is trying to get away from monoculture farming. In order to eliminate dependence on neighboring Kazakhstan for grain, the area under cotton was reduced from 2 million hectares in 1991 to no more than 1.5 million hectares today, leaving the rest for grain growing. The cotton harvest has fallen from 5.5 million tonnes per year to 3.25–3.6 million tonnes.
On the other hand, the situation on the world cotton market is not the most favorable: in recent years, the price of cotton has fallen from nearly $2000 per tonne in the best years to $1150 per tonne today. The problem is that the leading cotton producers, i.e., the United States, China, and India, subsidize their production (in the US, the subsidies are as much as $166 per hectare) and at present there is already a surplus of about 1.4 million tonnes of cotton on the world market. Uzbekistan, which is the world’s second-largest cotton exporter, was left with two options: either switch to new high-tech varieties or increase domestic cotton processing. Either option requires large investments, but the republic has already set a goal of increasing domestic processing 2.5 times before 2005.
Golden Gold
In addition to cotton, Uzbekistan produces both oil (“black gold”) and gas (“blue gold”), but its main gold is real gold. The overwhelming share of gold production is controlled by the Navoi Mining and Smelting Company (NGMK), whose main production is concentrated in the city of Zarafshan, where the world’s largest open-pit gold mine, the Muruntau, is located.
Mine-M [Rudnik-M (Muruntau)] marks its 35th year of operation this year. The mine covers an area of 3.5 X 3 km and is 460 m deep; the total area of the mine plus slag heaps is 20 sq. km. Output is 40 million cu. m of rock per year. Each shift, 300 people and 50 Caterpillar and Euklid dump trucks with load capacities of 136 and 173 tonnes work in the mine pit. Within the pit, there are 70 km of roads 21 m wide. The mine has produced a total of 1500 tonnes of gold, or about 25% of all production in the USSR.
We were lucky: they carry out blasting at Muruntau on Saturdays, like a kind of Saturday seam-ripping. Our blast, which used only 250 tonnes of explosives, was pretty weak, whereas on average 600–700 tonnes are used and a good blast requires 1000 tonnes and up. However, we blocked our ears tightly.
Blasting is necessary because the rock here is hard and abrasive and you wouldn’t be able to get at the gold otherwise. Beneath the proven gold is another couple of thousand tonnes. Today, exploration under the pit is being carried out at 600 and 700 m, and the total depth will be at least a kilometer. The working conditions are especially difficult because of the dust and gas content. At one time, they tried to ventilate the pit using an engine from an Il-114 airplane, which blew air through two pipes, but without much success. The draft was only enough for 150 m, so they switched to individual Niva protective suits and special protection for the drivers’ cabs.
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| The legendary Kyzyl Kum gold is produced at the molecular level using uranium technologies |
The drivers’ work is at the level of space technology. In 2000, the company introduced an automated mining transport and quality control system and now each dump truck and excavator has a satellite antenna and a Global Positioning System (GPS) that shows each one where to go and where to dig. The result of introducing the system is an additional $10–15 million in yearly profits.
Interestingly enough, although the local gold-bearing ores, which contain only two grams of gold per tonne of rock, are considered poor, the local gold is considered to be some of the cheapest in the world. Zarafshan gold is shrouded in mystery. For centuries, there were legends of the secret gold veins of the Bukhara emirs (Zarafshan, the name of the river where to this day individual prospectors pan for gold, means “gold-bearing”). Right up to the1960s, scientists were convinced of the impossibility of commercial gold production in the Kyzyl Kum. Then one of the geological parties that had been digging exploration shafts on the slopes of the White Mountains and was getting ready to leave for winter quarters unexpectedly received stunning assay results. However, despite the high gold content, matters were complicated by the fine dispersion of the gold. No nuggets were ever found, and the gold has to be extracted at the molecular level from the crushed ore using special technology. At the smelter, the ore is ground down to 74 microns (0.074 mm), mixed with water and sodium cyanide, and the gold and associated silver are then extracted using ion-exchange resins. This method was derived from uranium technologies under the supervision of academician Boris Laskorin, the idol of Navoi miners.
In actual fact, NGMK did not initially produce gold. In 1952, an aerial radiometric survey in the Kyzyl Kum desert located uranium deposits under the sand dunes. The area was called Uchkuduk, which means “three wells.” Nomads had been using this bluish water for years without being at all surprised by its strange taste, since subsurface water in these regions is generally salty. However, in this case, it was uranium brine.
In the early 1960s, builders from Sredmash, the most powerful corporation of the Soviet military-industrial complex with control over all of the USSR’s nuclear technologies, landed here on orders from Moscow. Today, NGMK veterans recall the romance of those years: they remember the scorching desert where it was 50ºC in the shade and which turned into an icy wasteland in the winter. There was no water, no electricity, and no housing. In summer, they hung canvas bags of water on the trucks, and in winter, they put buckets of burning kerosene under the gas tanks. In spite of all that, Sredmash decided to build a garden city in this fierce desert. Thus were born the cities of Uchkuduk, Navoi, and Zarafshan, a unique technopolis with a population of 200 000 that hardly anyone in the USSR knew about and about which vague rumors reached the “green lands” only at the end of the 1980s.
The last uranium pit closed in 1994. Soviet scientists had developed a method of reagentless subsurface leaching of uranium that involved injecting a weak solution of sulfuric acid into the ground to wash the uranium out of the deposit and then precipitating the uranium in those very same ion-exchange resins. The system was fully automated, and production was carried out without the participation of a single person—nothing but a few kilometers of pipe amidst the desert.
Today, the Uzbek uranium that once fed the Russian military-industrial complex goes to other side, that is, mainly to the United States. Uranium technology has been transferred to gold production, which has increased 1.7 times since Uzbekistan became independent. There are other strange metamorphoses in Uzbekistan too. For example, the Chkalov Tashkent Aircraft Production Association (TAPOiCh), which once had a monopoly on the production of Il-76 military transport planes, is no longer able to sell its products and is barely surviving. On the other hand, the UzDaewoo auto manufacturing project started up successfully on the base of the Andizhan Tractor Plant (Andizhanskii traktornyi zavod), but then the parent company, Daewoo of South Korea, very inopportunely went bankrupt. But this is another story, one not made in the USSR.
by
Vladimir Gendlin and Dmitry Lebedev (photos)
All the Article in Russian as of Dec. 03, 2002
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