This week, the media across the region extensively covered the first EU-Central Asia summit held in Samarkand. They reported on several significant investment pledges, such as the EU’s pledge to invest €12 billion in the region’s infrastructure. In other news, they reported on Kazakhstan’s discovery of a significant new rare earth metals deposit and the country’s National Fund reporting a severe loss in the first quarter of the year. Several outlets highlighted the historic border agreement signed by Uzbekistan, Tajikistan, and Kyrgyzstan and the commissioning of a new power transmission line between Kyrgyzstan and Tajikistan. Many Uzbekistani sources reported on the country’s recent tax and inflation statistics, as well as the establishment of a new National Energy Efficiency Agency.
The first EU-Central Asia summit was held in Samarkand from April 3-4. Source: Europa.eu
The EU-Central Asia Summit:
The first EU-Central Asia summit took place in Samarkand from April 3-4 (Daryo). On the summit’s first day, Uzbekistani President Shavkat Mirziyoyev met the President of the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso. They explored expanding their partnership and underlined the importance of supporting medium-sized businesses, women’s and youth entrepreneurship, the green transition, and digitalisation. President Mirziyoyev held talks with the President of the European Commission, Ursula von der Leyen, and the President of the European Council, António Costa. They discussed enlarging economic, trade, and investment cooperation and a proposed strategic partnership treaty. They also noted the opening of the European Investment Bank’s (EIB) regional office in Tashkent. Lastly, President Mirziyoyev held bilateral meetings with the other Central Asian heads of state.
The first EU-Central Asia summit was held in Samarkand from April 3-4. Source: Europa.eu
During the plenary session on April 4, President von der Leyen, highlighting the growing strategic significance of Central Asia, announced a $12 billion investment package to expand cooperation in transport, green energy, critical raw materials, and digitalisation (Daryo). She continued that they would allocate $3 billion to several transport projects, $2.5 billion to develop critical raw materials, $6.4 billion for hydropower and other climate initiatives, and $100 million for internet connectivity. She emphasised the importance of the Trans-Caspian International Transport Route (TITR) and highlighted the EU’s commitment to invest $10 billion into the corridor. She also noted several investments by European companies and financial institutions, such as the $1.6 billion investment in Uzbekistan's Almalyk copper mine. The Joint Declaration of Intent on Critical Raw Materials seeks to increase the amount of private investment in the sector. Meanwhile, the EBRD is preparing a $7-8 billion investment package for renewable energy and critical raw materials through 2027. The EIB signed four memoranda of understanding with Uzbekistan, Tajikistan, and Kyrgyzstan, pledging $365 million for transport, water management, and climate projects.
Central Asian leaders concurred on the need to strengthen cooperation and increase political interactions and consultations. President Mirziyoyev proposed the creation of an EU-Central Asia Interparliamentary Forum, an EU-Central Asia Chamber of Commerce, and regular ministerial meetings (Daryo). He advanced an EU-Central Asia Clean Energy Partnership, highlighting the agreement between Uzbekistan, Kazakhstan, and Azerbaijan to supply green electricity from Central Asia to Europe. He also suggested they work together to increase cultural and educational collaboration by opening a Horizon Europe office in the region and creating quotas for Central Asian students under Erasmus+. President Tokayev emphasised Kazakhstan’s role as a reliable energy partner of the EU, noting that Kazakhstan provides 13% of the EU’s oil imports (Daryo). He stated that EU-Kazakhstan trade amounted to $50 billion in 2024, 80% of the EU’s total trade with Central Asia (Tengri News). He also said that Kazakhstan is ready to boost bilateral trade by $2 billion and underlined his country’s importance in the supply of critical raw materials. President Japarov acknowledged the increased trade between Kyrgyzstan and the EU in recent years and invited European companies to participate in critical raw materials and hydropower projects in Kyrgyzstan (The Caspian Post). Following their deliberations, the leaders adopted a declaration on strategic partnership (Kun). They pledged to hold regular economic discussions and an EU-Central Asia Economic Forum. They also committed to supporting the Coordinating Platform for the Trans-Caspian Transport Corridor and other key infrastructure projects to strengthen connectivity.
The leaders also attended the Samarkand Climate Forum (Daryo). Politicians and experts warned that Central Asia was warming at an alarming rate and experiencing increasing environmental degradation. In his contribution, President Mirziyoyev highlighted the increased frequency of natural disasters and the urgent need for action by global governments. He emphasised that 20% of land in Central Asia has been degraded, meaning agricultural yields may fall by one-third. In response, he proposed greater cooperation with the EU’s Horizon Europe initiative to strengthen food security, the Central Asia Green Belt tree-planting campaign to prevent desertification, establishing the Secretariat of the EU’s Water-Energy-Climate Change Initiative in Tashkent, and a Regional Program for Water-Saving Technologies to improve water management. He noted that a new Concept for Green Development in Central Asia will also be presented at the forum. U.N. Secretary-General Antonio Guterres addressed the conference remotely, urging action and regional solidarity in the face of the climate threat.
The Samarkand Climate Forum took place alongside the EU-Central Asia summit. Source: Uza.uz
President Tokayev met with EBRD President Odile Renaud-Basso on the sidelines of the summit (Daryo). During the meeting, President Renaud-Basso announced the EBRD’s plans to invest $2 billion in aiding Kazakhstan’s green transition. They also explored the progress of several projects. In 2024, the EBRD and Kazakhstan agreed to pursue 25 projects worth $935 million. The EBRD President also met with President Japarov and announced a new $100 million project to improve access to drinking water in 25 areas. She noted that in 2024, the EBRD invested $52 million in 11 projects.
Other Diplomatic Events:
On March 31, the Presidents of Uzbekistan, Tajikistan, and Kyrgyzstan signed a historic agreement on the confluence of their shared border (Gazeta.uz). Uzbekistani President Shavkat Mirziyoyev, Kyrgyzstani President Sadyr Japarov, and Tajikistani President Emomali Rahmon participated in the ceremony in Khujand, Tajikistan. The leaders discussed developing cross-border trade, such as creating a trilateral trade platform, logistics, water management, and cultural ties, such as friendship festivals and joint celebrations. Following the ceremony, the three presidents unveiled a friendship monument at the intersection of their borders. The trilateral summit comes after Tajikistan and Kyrgyzstan signed a border demarcation treaty on March 13. Since then, the two border checkpoints between the two countries, which were closed after the border conflict in 2021, have reopened. Flights from Bishkek to Dushanbe and Khujand have also resumed.
The Presidents of Uzbekistan, Kyrgyzstan, and Tajikistan met in Khujand to sign a historic border agreement. Source: Gazeta.uz
The President of Slovenia, Natasa Pirc Musar, visited Astana last week (Tengri News). She held talks with President Tokayev on a range of issues, including trade, investment, artificial intelligence, digitalisation, tourism, and humanitarian cooperation. Following their discussions, they signed a joint statement and three memoranda of understanding concerning education and science, tourism, and trade (Akorda.kz). President Pirc Musar also visited the Astana International Financial Centre during her visit. A Kazakhstani-Slovenian business forum took place on the sidelines of the visit.
Rare Earth Metals:
Kazakhstani geologists have discovered a significant rare earth metal deposit in the Kuirektykol area of the Karaganda region (Orda.kz). The geologists from Tsentrgeolsyomka estimate that the new Jana Kazakhstan deposit contains 20 million tons of rare earth metals. The deposit reportedly contains neodymium, cerium, lanthanum, and yttrium, and the rare earth metal content is 700 grams per ton (Reuters). If the discovery is confirmed, Kazakhstan would rank third globally in rare earth mineral reserves, behind only China and Brazil. Two other deposits, Irgiz and Dos 2, were recently discovered in 2022 and 2024, with the Irgiz deposit believed to contain 800000 tons of rare earth metals (Orda.kz). Overall, Kazakhstan possesses 15 known rare earth metals deposits, and some experts believe its subsoil may contain resources worth $46 trillion. Nevertheless, Kazakhstan lacks the technology required for processing rare earth metals. They would need to cooperate with investors from the U.S., China, Europe, and Canada to rival China, which currently accounts for 70% of global production.
Trade:
Since the start of 2025, trade between Kyrgyzstan and Uzbekistan has skyrocketed by 70% (Daryo). The announcement came as Kyrgyzstani President Sadyr Japarov and Uzbekistani President Shavkat Mirziyoyev met on the sidelines of the trilateral summit in Khujand, Tajikistan. During their deliberations, they emphasised the importance of recent progress in economic relations and discussed their Joint Investment Fund and its success in expanding industrial cooperation between their countries. They also explored recent strides in critical infrastructure projects, such as the China-Kyrgyzstan-Uzbekistan railway.
Government Finances and Inflation:
Uzbekistan’s tax committee reported that tax revenues in the first quarter of 2025 exceeded expectations, rising 20% to $3.7 billion, $207 million more than planned (Daryo). Income tax ($911.5 million), value-added tax ($757 million), and excise taxes ($347.6 million) were the most significant contributors. In 2024, budget revenues grew by 20%, rising by $2.6 billion to $15.4 billion. This figure was higher than the roughly $15.1 billion forecasted. Tax audits also revealed $37.6 million in uncollected taxes, of which $32.3 million was recovered. The growth in budget revenues in recent years can be attributed to the country’s steady economic growth, which reached 6.5% in 2024. Business formalisation and digitalisation efforts have also aided tax collection. In 2024, 129300 individual farms registered with the tax service. 8700 self-employed people also registered as entrepreneurs. In addition, the government introduced 74 digital tax management tools and a digital marking system to combat the shadow economy. They enlarged electronic data exchange between government entities to cover 60 ministries and other state bodies. Ride-hailing companies like YandexGo and Uklon have been integrated into the tax system. 497900 taxi drivers have registered as self-employed individuals, generating $12 million in tax revenue. By the end of 2024, 3500 businesses had registered with the tax service.
However, the macroeconomic picture in Uzbekistan is not entirely rosy as inflation continues to rise (Daryo). In March, annualised inflation grew by more than 2% compared to 2024 to 10.3%. Meanwhile, the monthly rise in consumer prices reached 0.9% in contrast to 0.7% in March 2024, indicating that inflation is worsening. Food, services, and utility prices demonstrated the most significant increase, rising by 1.5%, 0.7%, and 4% in March. However, annualised food inflation remains low at 3.2%, while the annualised price increase for industrial goods stands at 7.4%. Additionally, annualised service inflation reached 27% due to energy price increases. Overall, inflation continues to pose a persistent problem for the Uzbekistani economy.
Kazakhstan’s Ministry of Finance confirmed that the National Fund’s reserves have decreased by $1.6 billion since the start of 2025 (Kursiv). The fund held $65.8 billion in January, compared to $64 billion at the end of March. In the first quarter, it received $1.3 billion in revenues, including $500 million in corporation tax from oil companies, $470 million from production sharing agreements, and $500 million from various other sources. However, the National Fund spent $2.9 billion. They transferred $2.4 billion to the national budget to cover the deficit and $500 million to finance several national projects. In 2025, the National Fund plans to withdraw $4 billion as guaranteed transfers to cover the national deficit and $6.4 billion in targeted transfers to finance national projects. In March, they sold $748 million on the foreign exchange market to fund the Taldykorgan-Usharal gas pipeline. While in April, they expect to sell between $950 million and $1.05 billion to cover the national budget deficit. Overall, the decrease in the National Fund’s reserves demonstrates Kazakhstan’s precarious fiscal situation and the inability of the government to control spending.
Energy:
Uzbekistani President Shavkat Mirziyoyev signed a decree establishing a National Energy Efficiency Agency (Kun). The new agency will be responsible for enacting state policy regarding energy efficiency and developing regulatory and incentive mechanisms. From July 1 2025, the agency will also distribute 18.75 million UZS in subsidies to cover 20% of the cost of solar panels and helio collectors, 40% of the cost of heat pumps, and the cost of energy audits for residential buildings. By September, they plan on introducing a digital platform for energy efficiency. They will also establish a Special Energy Efficiency Fund to provide financial support. By October, they expect to launch the first energy efficiency standards for producers and importers of energy-efficient technology.
President Mirziyoyev recently signed a decree providing for the construction of nearly 3000 small HPPs in 2025 and 2026 (UZ Daily). The new HPPs will have a capacity of 164 MW, supplying electricity to 280000 people. They will also create 1200 temporary and 520 permanent jobs. By May 2025, the land designated for HPP construction will be allocated to the Ministry of Energy, which will lease it to the project contractors for 20 years. A special project group will be set up to oversee the construction of small HPPs.
On March 31, Kyrgyzstan and Tajikistan commissioned the new 500 kV Datka-Sogd electricity transmission line (Interfax). Kyrgyzstani President Sadyr Japarov and Tajikistani President Emomali Rahmon attended an online ceremony to inaugurate the new 480-kilometer transmission line connecting their national grids. The power line is part of the CASA-1000 project, which aims to transfer 1.3 GW of surplus electricity from Kyrgyzstan and Tajikistan to India and Pakistan. During the summer, HPPs in Kyrgyzstan and Tajikistan produce excess electricity, while Pakistan and India experience chronic power shortages. The project involves building 1387 kilometres of new transmission lines and two converter stations at a cost of $1.2 billion. Pakistan anticipates completing construction work by August 2025, while work in Afghanistan is expected to be completed by the end of 2026. The project is envisioned to become operational in 2027.
The new Datka - Sogd transmission line will connect the electricity grids of Kyrgyzstan and Tajikistan under the CASA-1000 project. Source: Caspian Policy
Manufacturing:
The American company Air Products and Chemicals is considering several new projects in Uzbekistan (Kun). These possible new projects include carbon capture and storage, aviation fuel production, and coal gasification. The company’s CEO, Eduardo Menezes, discussed these plans with the Uzbekistani Minister of Investments, Industry, and Trade, Laziz Kudratov, at a meeting on April 2. Since 2019, the company has carried out three significant projects worth $1.15 billion in Uzbekistan. These projects include producing hydrogen at the Fergana Oil Refinery, liquid carbon dioxide at Navoiazot JSC, and oxygen and nitrogen at Bukhara’s Methanol-to-Olefins (MTO) complex.
Water Management:
A report from the Eurasian Development Bank (EDB) and the United Nations Industrial Development Organisation (UNIDO) indicates that irrigation accounts for 79% of the region’s annual water use (Asia Plus). While irrigated land makes up only 24% of all agricultural land, it accounts for two-thirds of the region’s agricultural output. The report argues that if the countries of the region do not adopt more efficient irrigation practices, they could face an annual water deficit of between five and twelve cubic kilometres of water. The authors also advocate developing local production of irrigation equipment. They expect irrigated land to expand by 10.6 million hectares by 2040, creating annual demand for $426 million worth of irrigation equipment. The report proposes creating an industrial cluster to produce and maintain irrigation equipment.
