Crossroads Asia

Uzbek President Mirziyoyev Lands in South Korea, Reaffirming a Strong Partnership

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Crossroads Asia

Uzbek President Mirziyoyev Lands in South Korea, Reaffirming a Strong Partnership

East Asian political realities are breathing new energy into Uzbekistan and South Korea’s already strong relationship.

Uzbek President Mirziyoyev Lands in South Korea, Reaffirming a Strong Partnership
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Wednesday, Uzbek President Shavkat Mirziyoyev touched down in Seoul for a four-day visit to South Korea, his first to the country as president. He is expected to meet with new South Korean President Moon Jae-in on Thursday, but plans to address the National Assembly were reportedly cancelled. Over the past 25 years, Uzbekistan and South Korea have built a strong relationship grounded in mutually-beneficial industrial endeavors and a historical link between ethnic Korean peoples, but strategic realities in both countries have added further energy to the relationship.

From the Uzbek perspective, Mirziyoyev’s foray to South Korea fits into the expansion of his engagement initiative. Since officially coming into office last December, Mirziyoyev has visited many of the neighboring states (Turkmenistan three times, Kazakhstan four times, Kyrgyzstan once), regional neighbors (Russia twice, China once, Turkey once, Saudi Arabia once) and also traveled to the United States for the UN General Assembly. A number of the visits were historic: the first visit by an Uzbek president in 17 or 18 years, in the cases of Kyrgyzstan and Turkey.

Previous Uzbek President Islam Karimov last traveled to South Korea in 2015, his first trip after being “re-elected.” As Samuel Ramani wrote at the time, South Korea and Uzbekistan’s close relationship can be explained by two primary factors: shared economic interests and “significant normative and cultural synergy,” a product of South Korea’s “respect for Uzbekistan’s economic sovereignty, Uzbekistan’s support for a nuclear-free Korean peninsula, and the large Korean diaspora in Uzbekistan.”

These factors remain salient two years later with the added bonus of Mirziyoyev’s economy-driven efforts to revive regional cooperation possibly giving South Korea access to an even wider Central Asian market.

Uzbekistan remains South Korea’s largest Central Asian trading partner. According to 2015 data, South Korea comes out on top in the trading partnership, exporting over $1.20 billion in a wide variety of goods, from vehicle parts to air pumps, to Uzbekistan. In 2015, Uzbekistan exported $15.7 million in goods to South Korea, with paper pulp, plants and cotton representing the bulk of exports.

At the same time, major Korean companies have established operations in Uzbekistan. In 2015, Lotte Chemical — the Korean conglomerate’s chemicals wing — completed construction of a large gas chemical complex in Uzbekistan. Lotte Chemical CEO Huh Soo-young categorized the Ustyurt Gas Chemical Complex as the “biggest in size in the Eurasia region built by a Korean chemical firm.” The complex, along with development of the Surgil gas field, is managed by a joint venture, 50 percent owned by the Uzbek state gas company (Uzbekneftgas) and 50 percent by a Korean consortium (Korea Gas Corporation (KOGAS), Lotte Chemical Corporation, and GS E&R). (Keep Lotte in mind, it’s important).

From the Korean end, Mirizyoyev’s visit fits firmly into President Moon’s aim, as the Korea Herald put it, “to expand Seoul’s diplomatic horizons.” Uzbekistan and South Korea have been strategic partners since 2006 and signed a new Joint Declaration during previous Korean President Park Geun-hye’s 2014 visit to Tashkent but there’s renewed impetus in Seoul to further strengthen the country’s relationships with a wider array of countries.

Recent experience with China has underscored the importance of diversification for Korean businesses, especially. Beijing expressed its anger at South Korea’s hosting of an American anti-ballistic missile defense system — Terminal High Altitude Area Defense (THAAD) — by retaliating against Korean businesses. Boycotts and administrative punishments doled out by Beijing have cost South Korea $7.5 billion in 2017 so far, according to the Hyundai Research Institute. Lotte, which provided the golf course land for the THAAD deployment, was hit particularly hard by boycotts and administrative punishments. As of September, regional media reported that 80 percent of the 112 Lotte Mart stores in China had been closed for more than six months “as authorities tightened safety and sanitary inspections and consumers boycotted them, costing Lotte hundreds of millions of dollars.” Lotte decided to pull out of the Chinese market as a result, selling off its stores.

Meanwhile, the conglomerate is looking to refocus not only outside of China, but beyond retail which has long dominated the corporation’s business. The chemical division is seen as a prime area for expansion and Uzbekistan a key piece of Lotte Chemical’s growth in recent years.

Mirziyoyev’s visit coincides, naturally, with a Korea-Uzbekistan business forum. Both sides certainly see their trade relationship as a prime area for expansion, especially in the textile and chemical fields. Ahead of Mirziyoyev’s visit, a delegation from JSC Uzbekengilsanoat (the Uzbek state light industry company, responsible for cotton manufacturing) met with the heads of several key Korean trading companies. According to UzReport, the parties — including Lotte — reached agreements to export $70 million in textile products from Uzbekistan to Korea in the 2017-2018 period. If followed through, this would mark a significant increase in Uzbek exports to South Korea and would build upon growth in textile exports to South Korea already witnessed in 2017 to date.