Saudi Arabia and Uzbekistan Expand Ties As Riyadh Makes US$12 Billion Investment

By Emil Avdaliani

Expanding relations between Saudi Arabia and Uzbekistan Arabia are based on the two countries’ close cultural and religious ties. Saudi Arabia has offered educational support to Uzbek students and participated in restoring Islamic holy sites in Central Asia. Additionally, but perhaps more importantly, Tashkent and Riyadh also see each other as partners when it comes to understanding geopolitical threats and opportunities. The two countries have supported each other in counterterrorism efforts and military development, as well as regional diplomatic initiatives.

Over the past several years there have been an uptick in investments and trade ties. In 2021 the level of bilateral trade stood at US$17 million. The real progress has been achieved in 2022 when in the first six months US$95 million worth of commerce was recorded. Figures for the whole period of 2022 still have to be released but the growth is already significant, with 2023 likely to follow suit. Uzbekistan mostly exports agricultural products, while Saudi Arabia’s major exporting product is oil.

More recently, last week, (November 27 2023) , during the visit of the Saudi delegation to Uzbekistan, agreements were signed on projects in the field of chemistry, energy, agriculture, pharmaceuticals, IT and infrastructure development worth US$12 billion. Out of this figure US$11 billion with investments would be dedicated to new projects and programs in the field of transport infrastructure and utilities, geology, irrigation, household waste processing, higher education, and labor migration.

The President of Uzbekistan Shavkat Mirziyoyev received a delegation of Saudi Arabia led by the Kingdom’s Minister of Investment Khalid al-Falih and the two sides discussed the expansion of the Uzbek-Saudi multifaceted cooperation and full-scale partnership. Uzbek side is especially interested in the Saudi direct investment in the field of green energy, and the increase in the frequency of direct flights. Uzbekistan also has a lucrative trade agreement with the European Union and is developing as a primary Central Asian consumer market.

The two sides also discussed ACWA Power’ involvement, which is the largest investor and strategic partner in the development of green energy in Uzbekistan. Currently, the company is implementing projects worth US$7.5 billion in Uzbekistan. In addition, Mirziyoyev welcomed the launch of a thermal power plant with a capacity of 1.5 GW in the Syrdarya region and the start of construction of a pilot production of “green hydrogen” in the Tashkent region. The Syrdarya power plant (costing US$1.1 billion) is projected to cover the electricity requirements of more than 3 million and factories in Uzbekistan’s region.

In addition to building a 52MW wind station, the first phase of the green hydrogen production plant project intends to create 3,000 tons of hydrogen, which will then be converted into mineral fertilizers.

Together, these projects are expected to have a major influence on Uzbekistan’s renewable energy capacity, which is expected to reach 25 gigawatts by 2030. In addition, these initiatives are expected to reduce harmful emissions by up to 3 million tons and save 4.5 billion cubic meters of petrol.

The close investments ties between Saudi Arabia and Uzbekistan fit into the long-term pattern which dominated their relations for the past years. For example, In August 2022, during Uzbek president’s visit to Middle East kingdom, the two nations inked 13 agreements valued at US$12 billion. These agreements, involving private sector entities from both countries, were finalized at the Saudi-Uzbek Business Council meeting. Spanning diverse fields such as agriculture, real estate, hospitality, telecommunications, and healthcare, marked a significant upturn in bilateral relations.

Several Saudi enterprises, including ACWA Power and Al-Habib Medical Group, are widely present in Uzbekistan. Saudi Investment Minister Khalid Al-Falih underscored the importance of direct trade links, as current trade predominantly transits through Turkiye and the UAE. The countries have collaborated on various fronts, including a US$50 million investment from the Saudi Fund for Development in Uzbek projects like hospital construction in Tashkent. Other notable ventures include a US$1 billion petrochemical plant deal in 2018 as well as the Samarkand-Gozar Road project at US$30 million. That links Samarkand with a highway to some of the countries most valuable gas reserves.

Although apparently distant, Uzbekistan and Saudi Arabia are becoming increasingly connected via the INSTC and Middle Corridor transport corridors which run from Uzbekistan into Kazakhstan and Turkmenistan’s Caspian Sea Ports from which they can be dispatched south via Iran to the Persian Gulf – and vice-versa.

Saudi Arabia’s close ties with Uzbekistan are also a part of Riyadh’s broader strategy in Central Asia which involves bolstering political and economic connections, illustrated by significant investments, such as the US$2 billion Joint Investment Fund for regional projects. Riyadh’s focus extends to cultural and religious cooperation, educational initiatives, and leading roles in organizations like the OIC to fortify ties among Muslim countries and address regional security and counterterrorism. Saudi Arabia’s activism should be also seen from a wider perspective such as growing cooperation between the Gulf Cooperation Council and five Central Asian states evidenced in the first ever summit held earlier this year where the countries emphasized the need to increase the bilateral trade level which in 2021, stood at US$3.1 billion.

Emil Avdaliani is a professor of international relations at European University in Tbilisi, Georgia, and a scholar of silk roads.

Related Reading

• Kazakhstan To Improve Highway Routes With Uzbekistan, Upgrade Caspian Ports
• Uzbekistan Moving Closer To Joining The Eurasian Economic Union

• Previous Article Türkiye’s Trade With The GCC: 2023/24 Status and Prospects
• Next Article UAE and Philippines Look To Increase US$1.9 Billion Non-Oil Trade Via a CEPA Agreement