Depressed Uzbekistan still an alluring draw for S Korea

Tashkent Letter: If you take a taxi in Tashkent, chances are you'll be riding in a Daewoo.

Tashkent Letter: If you take a taxi in Tashkent, chances are you'll be riding in a Daewoo.

Saloons and hatchbacks produced by a local plant established by the Korean conglomerate are outselling Ladas and Volgas in local markets. And if use public transport in the Uzbek capital you'll be reminded that Korea has arrived in Central Asia.

Futuristic, sleek new signs pointing down to the depths of the city's Soviet-ornate subway stations were donated by LG. The Korean conglomerate's simple two-letter logo hogs most of the billboard space across town.

Carved into a republic whose messy borders made it easier to control neighbouring republics, Uzbekistan supplied Russia with cotton and oil until the break-up of the Soviet Union. Boasting gas and oil in generous quantities, an independent Uzbekistan hasn't wanted for suitors after separating from Russia.

READ MORE

Given the large population of ethnic Koreans, deported here by Stalin from Russia's far east, it is not surprising that Korea was one of the first to open an embassy in Tashkent, in 1992.

Those were heady, hopeful days for Uzbeks, and Korea was one of a wave of democracies keen to do business with resource-rich Uzbekistan.

Korea built factories and cars and sunk gas pipelines. More efficient than local state-owned monoliths that characterise Uzbekistan's economy, Korean conglomerates such as Daewoo seemed like the kind of jolt needed by slow-moving factories in the region. UzDaewooAuto became the first automobile- building company in central Asia. Daewoo Unitel was fast into the local telecommunications market, while Kabool Textiles Uzbek Ltd easily became a leader in the country's massive but inefficient cotton-processing industry.

While the rest of the world talked up a new Great Game for central Asia among the world's great powers, Korea has quietly appeared as an unlikely leading player, signing deals with Tashkent to develop oil and gas fields which would feed its appetite for fuel. Uzbek president Islam Karimov even appointed Korean citizen Kim Tae Bong a deputy minister of light industry in 2003, despite a law prohibiting foreigners from serving as public officials.

Fine Korean restaurants such as Chen Son in downtown Tashkent never had it so good.

That was then. Today Uzbekistan is a sullen, depressed place, ruled over by an increasingly authoritarian regime that has done little to live up to earlier promises of democratisation and economic reform. The large state farms have remained collectivised and primary school teachers struggle on salaries of $50 a month. After a decade of overtures to the West, the dour-looking Karimov has reverted to Moscow, which put him in power in Soviet days, after hundreds of civilians were killed in a popular uprising to complain about unemployment and poverty in the easterly city of Andijan in May 2005.

Karimov also found comfort in Beijing, which rolled out a red carpet when the blood was barely dry on the streets of Andijan. But oddly, the Uzbek government jet was also welcome in nearby Seoul, an Asian democracy and American ally. With Washington leaning on the World Bank to cut off loans to Tashkent, citing the country's human rights violations, Seoul - and neighbours China and Japan - have given economic assistance to Uzbekistan with no demands on human rights reform.

For other reasons, however, Karimov is finding it harder to entice investment from Seoul. Frustrated by a dearth of market-economy reforms, rampant corruption and government interference in their companies, South Korean companies have left Uzbekistan.

Daewoo sold UzDaewooAuto and Kabool Textiles. Daewoo Unitel is now an Uzbek-Russian venture. When Uzbek authorities took over Kabool Textiles Uzbek citing its large debts, the company's former head, Don Kang, excoriated Tashkent for corruption and unpredictable changes in investment laws.

Waiting for better days perhaps, Seoul claims reasons other than economic for remaining; like the schools and Korean-language courses it funds for the 230,000-strong Korean community in Uzbekistan. Keeping Tashkent talking, South Korea accepts some 15,000 Uzbek migrant workers every year, and tolerates hundreds of thousands who travel illegally.

And yet despite invitations to return to their ancestral homeland, Korean Uzbeks stay put. They integrated well after being sent here by Stalin, who suspected them of spying for Japan. They learnt Russian and did well for themselves in a curious Soviet version of the Asian-American success story.

South Korea is today the biggest investor in the Uzbek economy and there are still enough expense accounts around to keep a few Korean restaurants going across Tashkent. Even while the EU imposed sanctions after the Andijan massacre, state-owned Korea Resources Corporation signed deals to develop uranium, iron and gold mines in central Uzbekistan.