A EurasiaNet article by Deirdre Tynan discussing “a morass of inefficiency, arbitrariness and \u201cinformal\u201d payments” in Uzbekistan.<\/p>\n
\nDocuments Highlight Problems with Uzbek Corridor of Afghan Supply Route<\/a><\/h3>\n
June 28, 2010 <\/p>\n
Responses to a Pentagon-issued request for information about sourcing fuel in Uzbekistan appear to suggest that the Uzbek-Afghan corridor of the Northern Distribution Network (NDN) is a morass of inefficiency, arbitrariness and \u201cinformal\u201d payments.<\/p>\n
In documents obtained under the Freedom of Information Act (FOIA), respondents to the Pentagon query made stark comments about severe delays at the Uzbek-Afghan border, and one \u2013 a major partner to USAID in Afghanistan \u2013 said corrupt payments \u201cmight be required to keep business moving.\u201d<\/p>\n
The NDN is a supply line for troops serving in Afghanistan spanning Europe, Russia and Central Asia. It was developed by US Transportation Command, US Central Command, Defense Logistics Agency, and the State Department, in conjunction with a variety of regional commercial and governmental actors. [For background see EurasiaNet\u2019s archive<\/a> [1]<\/span>].<\/p>\n
In August of 2009, the Defense Energy Support Center (DESC) solicited preliminary procurement evaluations from commercial companies in a query titled \u201cSources sought within the Republic of Uzbekistan for Products and Services in Support of Operation Enduring Freedom (OEF).\u201d The query specifically sought information covering possible diesel, motor fuel and aviation fuel supplies.<\/p>\n
According to the FOIA request submitted by EurasiaNet.org, eight companies responded to the DESC query. But only six responses were made available to EurasiaNet.org under the FOIA. Two responses, one from FMN International, the parent company of FMN Logistics, a firm that has strenuously denied any financial connections with the disgraced Uzbek conglomerate Zeromax, and another from NCS Fuels, were deemed \u201cun-releasable.\u201d [For background see EurasiaNet\u2019s archive<\/a> [2]<\/span>].<\/p>\n
One response \u2013 from Milio International Ltd, a company working in the fuel business in the former Soviet Union since 1997 \u2013 contended that \u201cUzbek Railways frequently (often for some period of time each month) bans all rail traffic going to the destination of Hairaton, Afghanistan. This is due to the thousands of rail cars both empty and full of all types of goods that have congested the rail stations for the past year while waiting to get to Afghanistan [\u2026] this is especially the case around the Termez and Karshi areas.\u201d<\/strong> <\/p>\n
Rail cars from the Baltic states and Russia also get \u201cblocked from time-to-time,\u201d the Milio response noted.<\/p>\n
Meanwhile, Afghan Management Group (AMG) said rail transport from Bukhara, Uzbekistan, to Hairaton \u201cwith no \u2018speed up fee\u2019 takes up to 35 days.\u201d<\/strong> But with \u201cpayment of informal fees, the time can be reduced to 7 to 18 days, (depending on amount of money paid).\u201d<\/p>\n
When asked to describe \u201cthe known impacts related to fuel specifications, taxes, transit leases\/approvals, other local laws and challenges you may expect to face,\u201d AMG outlined the payment of \u201cinformal fees\u201d as a major challenge in Uzbekistan.<\/p>\n
\u201cApart from refinery fees and transport costs, there are no taxes to be paid in Uzbekistan. However, payment of informal fees to authorities and individuals might be required to keep business moving,\u201d the AMG response said.<\/p>\n
\u201cOne of the biggest problems in both countries involved is the fact that rules are changing overnight and very frequently. To cope with this issue requires good contacts to authorities and flexibility to adapt own processes to a new situation,\u201d the AMG response added. \u201cAMG\/Partner is very reluctant to pay bribes, but manages issues through established good relationship to authorities involved.\u201d<\/p>\n
AMG is listed as an \u201cimplementing partner\u201d to USAID in Afghanistan. According to both USAID and AMG\u2019s websites, \u201cAMG is a leading firm supporting the reconstruction of developing nations, like Afghanistan, while promoting economic growth and higher living standards among the people of those nations.\u201d<\/p>\n
In another DESC response, Agility, one of Defense Logistics Agency\u2019s top-100 contractors, said fuel trucks could be used as an alternative to the \u201cnormal delays\u201d experienced at the Termez-Hairaton railway crossing<\/strong>.<\/p>\n
\u201cGovernment taxes and leases will always present challenges,\u201d the Agility response added. However, initial talks with \u201cgovernment and commercial officials\u201d signal that \u201cthey are willing to work with the United States to find suitable business arrangements.\u201d<\/p>\n
FMN, a firm that did not have its response to the Pentagon query released, reportedly maintained a strong relationship with Zeromax. According to a document available from the American-Uzbekistan Chamber of Commerce\u2019s website, FMN Logistics purported to be capable of carrying out \u201crail cargo operations coordinated out of Tashkent using Zeromax Rail Code.\u201d [For background click here<\/a> [3]<\/span>].<\/p>\n
\u201cBased on local presence, FMN Logistics and Zeromax Logistics transit times into and through Uzbekistan are half those of major shippers [\u2026] FMN Customs brokerage clearance services can cut Uzbek transit times in half,\u201d the company asserted.<\/p>\n
According to FMN\u2019s website, \u201cFMN was formed on 8 September 1999 as a domestic US corporation. The shareholders were, and remain its founder, Harry F. Eustace, Sr. and members of his family.\u201d<\/p>\n
\u201cIn 2009, FMN formed a subsidiary, FMN Logistics, with Harry F. Eustace, Jr. as its CEO and whose shareholders are the Eustace family plus David O\u2019Connor, a Canadian citizen. FMN Logistics’ prime mission is to serve the US war fighter in Afghanistan by providing effective logistics solutions throughout the Central Asian Theater,\u201d the website added.<\/p>\n
The NDN carries 30 percent of goods delivered to US troops in Afghanistan, according to a White House statement on June 24.<\/p>\n