VZCZCXRO5667
PP RUEHLN RUEHVK RUEHYG
DE RUEHNT #1287/01 3121032
ZNR UUUUU ZZH
P 071032Z NOV 08
FM AMEMBASSY TASHKENT
TO RUEHC/SECSTATE WASHDC PRIORITY 0559
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1140
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 4702
RUEHBUL/AMEMBASSY KABUL PRIORITY 2989
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1648
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RHMFIUU/CDR USEUCOM VAIHINGEN GE PRIORITY
RHMFIUU/CDR USTRANSCOM SCOTT AFB IL PRIORITY 0019
RHMFIUU/DLA FT BELVOIR VA PRIORITY
RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY
RUCADHQ/HQ USCENTCOM FWD  PRIORITY
RHMFISS/HQ USEUCOM VAIHINGEN GE PRIORITY
RHMFIUU/HQ AMC SCOTT AFB IL PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 TASHKENT 001287 
 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN 
TRANSCOM FOR KATHY JOHNSON-CASARES 
 
E.O. 12958: N/A 
TAGS: ECON MARR PGOV AF UZ
SUBJECT: UZBEKISTAN: DOD DELEGATION ENGAGES BUSINESS 
COMMUNITY ON AFGHANISTAN TRANSIT 
 
REF: TASHKENT 1260 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) SUMMARY.  The delegation from the U.S. 
Transportation Command (TRANSCOM) and Central Command 
(CENTCOM) that visited Uzbekistan October 21-23 had numerous 
meetings with local and Western businesses to discuss 
possible purchase of goods and services in support of 
Coalition forces operating in Afghanistan.  Business were 
generally enthusiastic about the prospect of supplying the 
U.S. military, but unclear about the modalities.  The 
Northern Ground Line of Communication (NGLOC) represents an 
important opportunity to establish relationships with the 
businesses community in Uzbekistan. Looking ahead to next 
steps, it will be important provide the Uzbek side, both 
government and private companies, with more specific 
information about the products and services we are looking to 
procure, as well as the modalities of their transport.  NGLOC 
has generated a lot of interest here, but it has also raised 
a lot of questions that we will need to be prepared to 
answer.  END SUMMARY. 
 
¶2.  (SBU) The TRANSCOM/CENTCOM team's October 21-23 visit 
focused on assessing the possibilities for commercial transit 
of goods to Afghanistan through Uzbekistan by air, road, 
rail, or a combination of these.  The Government of 
Uzbekistan appeared very interested in the commercial 
opportunities presented by NGLOC (reftel), as did local 
businesses. During the delegation's stay in Uzbekistan, they 
met with numerous Uzbek state entities, private companies and 
members of the American Chamber of Commerce (AMCHAM). 
 
 
UZBEKISTAN AIRWAYS AND UZBEKISTAN RAILROAD 
------------------------------------------ 
 
¶3. (SBU) DATT, Air Attache, and Econoff met with 
representatives of Uzbekistan Airways (Havo Yollari in Uzbek 
- HY), Uzbekistan Railways (Uzbekistan Temir Yollari in Uzbek 
- UTI), and Korean Airlines (KAL) before the delegation's 
arrival. Each of these companies was clearly interested in 
the commercial possibilities of NGLOC, but wanted 
re-assurance that NGLOC, if implemented, would be a 
profit-making commercial venture. KAL, for its part, has 
invested heavily in the international cargo hub being built 
at Navoi in southwestern Uzbekistan and is eager to see a 
return on its investment. UTI would benefit from potential 
profit that would help it pay off large loans it used to 
build the Guzar-Kom'gorgon and other lines in the 
southeastern part of Uzbekistan.  (NOTE:  The UTI 
representatives noted that although rail traffic had 
increased 30 percent last year, this brings it back only to 
the level it was at in 1991, the year of the breakup of the 
Soviet Union. END NOTE) 
 
 
VISITS TO BUSINESSES IN TASHKENT 
-------------------------------- 
 
¶4. (SBU) The NGLOC delegation visited facilities operated in 
and around Tashkent by Rosella Trading, Coca-Cola, and 
Uz-Texaco.  At Rosella Trading, the Uzbek distributor for 
Proctor and Gamble (P&G), the delegation learned there is no 
local production of P&G products.  All are imported by truck 
from Russia, Europe, and Turkey, with anywhere from 4-25 
trucks arriving per week.  Rosella then supplies the products 
directly to stores, markets, and bazaars.  Thirty percent of 
Rosella's business is in Tashkent, another 30 percent is in 
the Ferghana Valley, and the remainder is distributed through 
the rest of Uzbekistan.  Rosella officials reported they are 
encountering increasing difficulty this year in converting 
profits from Uzbek soums to U.S. dollars.  It now takes up to 
 
TASHKENT 00001287  002 OF 003 
 
 
270 days for Rosella to convert its profits to dollars, 
whereas last year it took only 100 days.  (COMMENT:  We have 
heard similar complaints from other Western businesses 
operating in Uzbekistan.  END COMMENT)  Consequently, Rosella 
has been able to recoup the cost of its imports only through 
last December and is now limiting its stock.  Indeed, 
Rosella's warehouses appeared to be only half full. 
 
¶5. (SBU) At Coca-Cola the NGLOC delegation was treated to a 
long tour of the clean, modern production facilities. 
Coca-Cola's first production facility was opened in Tashkent 
in 1994, followed by a second Tashkent plant in 1996 and a 
facility in Namangan in 1998.  Coke's Mega-Plant opened in 
Tashkent in 1998.  For the past several years Coca-Cola 
production in Uzbekistan has doubled every year.  Coke 
imports its sugar from Europe, its concentrate from France, 
and its plastic from Korea.  Altogether, Coca-Cola employs 
over 200 people in Uzbekistan ranging from low-level service 
employees to high-level managers, chemists, and biologists 
responsible for guaranteeing the purity of the bottled 
product.  In addition to local sales, Coca Cola's Uzbek 
operation used to export its product to Afghanistan.  These 
exports ended once Afghanistan acquired its own Coca-Cola 
bottling plant.  (COMMENT:  It proved surprisingly difficult 
to arrange the NGLOC delegation's visit to Coca Cola.  We 
suspect that the local manager did not want to receive the 
delegation until he received approval from his regional 
office in Istanbul and also, perhaps, the GOU. END COMMENT) 
 
¶6. (SBU) The U.S. joint venture Uz-Texaco briefed the team on 
its operations and experiences working in Uzbekistan. 
Uz-Texaco produces lubricants in Uzbekistan and exports a 
large part of its production.  Currently, the company 
supplies some 20 percent of the Uzbek market for automobile 
lubricants and 90 percent of the market for agricultural 
lubricants.  A significant part of its output comes from 
low-grade petroleum refined in Bukhara which is suitable 
primarily for Soviet-made equipment.  Like other companies, 
Uz-Texaco faces difficulties in currency conversion and other 
vagaries of the business climate in Uzbekistan. 
 
 
AMCHAM BLAZES THE WAY 
--------------------- 
 
¶7. (SBU) The American Chamber of Commerce (AMCHAM) in 
Tashkent played an important role during the NGLOC visit.  In 
addition to helping arrange several of the visits to local 
businesses, it provided a suggested list of business 
representatives to invite to an evening reception at the 
Ambassador's residence on October 22.  This reception was 
well attended, with many local businessmen coming with 
proposals for products and services they could provide in 
support of NGLOC operations.  On October 23 AMCHAM hosted a 
sit-down meeting that brought the NGLOC delegation together 
with commercial representatives who were able to leave 
information about their companies. 
 
 
COMMENT 
------- 
 
¶8. (SBU) AMCHAM members and the heads of smaller businesses 
in Uzbekistan were clearly excited about the potential 
business that NGLOC would bring.  Indeed, AMCHAM treated the 
NGLOC delegation's visit as a major business event. There is 
strong interest among the business community in Uzbekistan to 
work with the U.S. military on a commercial basis. As the 
next delegation prepares its visit, people here will be 
anxious to hear more details about the types of products and 
services that could be the object of local procurement.  The 
airlines and the railroad will look for answers on the role 
they would play in delivering goods to Afghanistan, 
 
TASHKENT 00001287  003 OF 003 
 
 
particularly via Navoi.  Although Uzbekistan is a developing 
country, there is a small part of the business community, 
including several companies the delegation visited, that 
operates fully at Western standards and could be reliable 
suppliers for NGLOC.  Expectations have been raised here, 
making it essential that the next delegation arrive ready to 
provide details on what, if anything, could be procured 
locally and clarity regarding the various options for transit. 
NORLAND