Uzbek President Islam Karimov has said that he does not support Kazakh President Nursultan Nazarbayev’s idea of setting up a Central Asian Union. He covered up his stance by differences in socioeconomic development of regional countries. Economic conditions should be similar in all Central Asian countries to do this, the Uzbek president said during his visit to Astana on 22 April.

Mr Karimov has always been sceptical about a union of Central Asian countries. He must have his reasons for it, and rivalry with Kazakhstan may not be the least one. Uzbekistan was used to be the powerhouse of Central Asia in Soviet times. However, Kazakhstan has been economically more successful after independence and is continuing to attract more investment than any other Central Asian country.

At the same time, the presidents of the two countries agreed to prepare to set up a free trade zone which Mr Nazarbayev regards as the first step towards an economic union. A free trade zone will be expected to set up to stimulate bilateral trade. It doubled to $1.4bn in 2007. The surplus is on the Kazakh side. However, trade with Uzbekistan accounts for a meagre 1.7% of Kazakhstan’s total foreign trade.

The presidents of Uzbekistan and Kazakhstan expressed dissatisfaction with the composition of bilateral trade saying that only for goods made up about 80% to 90% of the total bilateral trade. They did not specify what goods they were but most probably trade between Kazakhstan and Uzbekistan is based around grain ( Kazakhstan to Uzbekistan) and vegetables ( Uzbekistan to Kazakhstan). The idea of promoting trade between the two countries is positive, because until now the two countries have had many problems in trade, for example Uzbekistan’s bans on vegetable exports or border closures.

The two presidents also discussed settling the water and energy problems in the region. This is a key problem in the region when the countries where the Syr Darya river starts ( Kyrgyzstan and Tajikistan) want to use its water resources to generate energy while countries located in its lower reaches want to use it for irrigation. The use of water resources of the Syr Darya basin has been a stumbling block between Central Asia countries and has even led to conflicts.

The use of water for power generation in Kyrgyzstan in winter has led to floods in Kazakhstan’s southern regions. The problem was exacerbated by Uzbekistan’s measures to limit the flow of water to its Arnasay reservoir which acts as the regulator of water flows of the Shardara reservoir in Kazakhstan’s south to prevent floods.

The Kazakh government has recently decided to build the Koksaray reservoir. A water and energy consortium was set up by Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan in 2003 but it has not yet produced great results. A three-party meeting ( Kazakhstan, Uzbekistan and Kyrgyzstan) will be held in Bishkek at the end of April. President Nazarbayev has called on the parties to solve the problem by applying international law. The conflict of interests of the three countries in using Syr Darya water resources and the lack of desire to cooperate may prevent the countries from adopting a decision that satisfies all parties.