Uzbekistan Owes Germany 130M € after Zeromax Building Spree
Uzbekistan is now in debt to German companies for 130 million euro after a construction spending spree by Zeromax, a large Swiss-registered conglomerate seized by the government earlier this year.
Ferghana.ru, the independent online Central Asian news site, published a report November 5 on how Tashkent became beholden to Berlin -- a fact that came to light because a German trade official publicly expressed unhappiness.
On October 29, officials kicked off German Week, a celebration of German culture, education and trade in Uzbekistan, culminating in an economic forum which was supposed to showcase growing Uzbek-German cooperation and highlight the dynamic trade turnover, $469.4 million in 2009.
But Bernard Duch, advisor to Germany's Federal Ministry of Economics and Technology, announced that Uzbekistan was in debt 130 million euro to German companies for the construction of three buildings and delivery of oil products. The buildings include the Palace of Forums, a residence for the president, and a stadium for the Bunyodkor soccer team.
Duch told ferghana.ru that Germany "cannot agree with the government of Uzbekistan that this is a normal situation." The debt is 40 percent of the trade balance and payments have been delayed, which has harmed relations, he said. He likened Tashkent to a stoplight that was "now turning red, then turning green" and urged Uzbekistan to give a steady green light to German businessmen.
The reason Germany is making a claim to the Uzbek government is because Zeromax was seized by the state-run Uzbekneftegas, and is alleged to have inherited claims against it. The Palace of Forums cost 60 million euro; the presidential residence was 15 million euro, and the remainder was for the sports stadium and petroleum products -- all deals made by Zeromax affiliates.
Construction on the stadium was begun by a Zeromax subsidiary, but halted after May of this year when Zeromax declared bankruptcy. Gulnara Karimova, the daughter of the president, was reportedly associated with Zeromax.
Ferghana.ru provides pictures of the ostentatious Palace of Forums, a Greco-"dictator chic" edifice in the center of Tashkent which has been used to host various prestigious events such as the Shanghai Cooperation Organization summit, and which was built by both Uzbek and German companies. Scenes are also displayed of frozen construction cranes in a lot overgrown with weeds at the stadium site.
According to information from Uzbekneftegas, Zeromax built about 80 percent of the projects in the oil and gas sector, and was one of the contractors for the Turkmen-Chinese pipeline, which was completed. The fate of the unfinished projects is unknown.
Asked by ferghana.ru for a comment on the debt, Alisher Shaykhov, chair of the Uzbek Chamber of Commerce and Industry, said it was not the business of the governments of Uzbekistan and Germany to interfere in a commercial dispute between two companies, and that this was a legal matter for arbitration courts.
President Islam Karimov awarded the no-bid contract for the Palace of Forums to Neftgazmontazh, a Zeromax subsidiary, by decree in 2008, violating his own decree of 2003 which stipulated that government construction contracts should be awarded only on the basis of a competitive bid.