Why is this important
Entering the EU’s sanctions list would cut Uzbek banks off from European financial markets and international payments. Avoiding sanctions preserves access to investments ($40 billion in project portfolio with EU), simplifies trade, and strengthens Uzbekistan’s reputation as a reliable partner.
What happened
- The EU imposed the 19th sanctions package against Russia, including Central Asian banks for the first time;
- The sanctions affected banks of Tajikistan (Dushanbe City Bank, Spitamen Bank, Tajikistan Commercial Bank), Kyrgyzstan (Tolubai Bank, Eurasian Savings Bank) and Kazakhstan;
- Uzbek banks and organizations were not included in the list;
- Central Bank Chairman Timur Ishmetov explained this by strict sanctions compliance;
- Economist Otabek Bakirov called this the result of a balanced policy with the EU.
EU sanctions
Russian banks: Alfa-Bank, MTS Bank, Absolyut Bank, Zemsky Bank, and the non-bank credit institution “Istina”. The ban on operations comes into effect on November 12.
Foreign branches: VTB, Sberbank and Alfa-bank in Belarus, VTB in Kazakhstan (sanctions from December 2).
Central Asia (a total of 45 companies):
- Tajikistan: Dushanbe City Bank, Spitamen Bank, Tajikistan Commercial Bank;
- Kyrgyzstan: Tolubai Bank, Eurasian Savings Bank;
- Kazakhstan: branches of Russian banks.
Central Bank Comment
Central Bank Chairman Timur Ishmetov stated on October 24 that sanctions risks are always considered in forecasts. Restrictions against banks of neighboring countries will not have a serious impact on Uzbekistan.
We take secondary sanctions very seriously. Over the past two years, the system of sanctions compliance in the banking sector has been improved. We have conveyed to the banks a firm position on the inadmissibility of working with sanctioned goods and organizations. I think it was precisely this kind of work that led to the fact that not a single of our banks fell under sanctions, — said Ishmetov.
Economist’s opinion
Economist Otabek Bakirov called the absence of Uzbek banks in the sanctions list a result of a balanced policy with the EU:
The sanctions list covered 45 companies. The absence of Uzbek banks and companies in it can be considered one of the achievements of Uzbekistan’s mutually beneficial and well-thought-out policy with the European Union, — the economist wrote on Telegram.
The context of EU relations
On October 23, President Mirziyoyev arrived in Brussels on an official visit. Within the framework of the trip, the head of state held a meeting with the heads of leading European companies and banks, discussing the prospects for economic cooperation.
An Agreement on Enhanced Partnership and Cooperation between Uzbekistan and the EU was signed. The portfolio of projects involving European companies has exceeded €40 billion.
Analysis
Avoiding sanctions is the result of two factors: strict compliance with sanctions within the country and deepening relations with the EU. Over the past two years, the Central Bank has tightened the requirements for banks to work with sanctioned goods and organizations.
The inclusion of banks from Tajikistan, Kyrgyzstan, and Kazakhstan in the list is linked to their involvement in circumventing Russian sanctions — payment transit, supply of sanctioned goods, and work with sanctioned structures. Uzbekistan apparently avoided these schemes thanks to the Central Bank’s control.
