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Uzbekistan: Once-Expelled Turkish Businesses Returning

Turkish businesses forced out of Uzbekistan during the rule of the late President Islam Karimov are expected to slowly begin reentering the market in the more evidence of a possible improvement in investment conditions.

RFE/RL’s Uzbek service, Radio Ozodlik reported on June 11 that President Shavkat Mirziyoyev had signed a decree ordering the restitution of assets confiscated from Turkish company Demir Holding during an ugly crackdown on Turkish investors in 2011.

Ozodlik said the issue was discussed and then settled during a visit to Uzbekistan by Turkey’s Foreign Minister Mevlüt Çavuşoğlu on April 25-27. Çavuşoğlu travelled to Tashkent with a large delegation of Turkish business representatives in tow.

The broadcaster cited unnamed sources as saying that the owner of Demir Holding, Ahmet Demir, was among those in the delegation and that he had travelled to Tashkent at Mirziyoyev’s personal invitation. 

Demir Holding’s interests in Uzbekistan were liquidated following a series of aggressive tax inspections. In March 2011, following a raid by the police, the company’s Turkuaz supermarket chain, which was hugely popular among shoppers in Tashkent, closed down. The company was accused at the time of failing to pay taxes, fraudulent bookkeeping and illegally manufacturing textiles in the basement of their supermarkets.

Intensifying the onslaught, state television aired a TV news show called “The Ungrateful,” listing a series of explosive allegations, including one that Turkuaz outlets were being used to distribute the literature of religious groups viewed with suspicion by Uzbek officials. Around the same time, Uzbek television stations stopped airing popular Turkish soap operas.

The courts refused to entertain any legal appeals by the Turkish companies affected, so determining the rights and wrongs of the Uzbek state remains impossible. What is more clear, however, is that many local businesses sought to capitalize on the sudden vacuum created by the disappearance of numerous profitable Turkish enterprises. 

In September 2011, for example, Turkuaz was replaced a wholly locally owned analogue, Toshkent. But the chain was unable to fully capture the model of its predecessor and went bust within two years.

Another flourishing Turkish-owned concern, the Grand Mir hotel, was scooped up by Ilhom Shokirov, ethnic Tajik and Russian citizen whose son is married to the daughter of Uzbekistan’s now ex-deputy prime minister, Rustam Azimov.

Local commentators note acidly that all these seizures of property and businesses could almost certainly not have happened without the blessing — if not connivance — of the head of the National Security Service, Rustam Inoyatov. As with much else that goes on in Uzbekistan today, this story too has an intra-elite dimension.

Quite how Mirziyoyev intends to wrest assets out of the control of Inoyatov cronies and find money to compensate defrauded Turkish businesses remains to be seen.

The thaw in relations between Turkey and Uzbekistan occurred quickly in the wake of Karimov’s death.  In November, a little less than three months after Karimov’s death, Turkish President Recep Tayyip Erdogan traveled to Uzbekistan, setting the stage for a concrete improvement. 

While trade turnover between Uzbekistan and Turkey reached $1.2 billion in 2016, it is widely agreed by economic experts that this sum is considerably short of the potential. Letting once-hounded Turkish companies back into the country will be an important step toward changing that tune.

Uzbekistan: Once-Expelled Turkish Businesses Returning

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