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Russia pardons 95% of Uzbekistan debt in exchange for waiver of claims to Diamond Fund

March 30, 12:18 UTC+3 MOSCOW
Uzbekistan’s debt totaled $889.3 million as of November 1, 2014, including $500.6 million on the principal and $388.7 million on interest, according to the data of the Russian side
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The crown, the scepter, and the Chain of the Order of St Andrew used in coronation ceremonies of Russian monarchs belonging now to the Diamond Fund of the former Soviet Union

The crown, the scepter, and the Chain of the Order of St Andrew used in coronation ceremonies of Russian monarchs belonging now to the Diamond Fund of the former Soviet Union

© Gennady Khamelyanin/TASS

MOSCOW, March 30. /TASS/. The Federation Council, the upper house of Russia’s parliament, ratified an inter-governmental agreement between Russia and Uzbekistan on Wednesday on settling mutual financial claims and obligations.

The document signed on December 10, 2014 stipulates a waiver of mutual claims that arose under operations of the former Soviet Union and due to its disintegration and also on loans provided by Russia to Uzbekistan in 1992-1993.

The agreement defines the categories of mutual financial claims, the amount of the debt and the term of its repayment, the procedure of overdue debt interest accrual and the currency of payments.

Under the agreement, Uzbekistan will pay Russia $25 million within 30 calendar days, after which all financial claims will be considered as finally settled.

Uzbekistan’s debt totaled $889.3 million as of November 1, 2014, including $500.6 million on the principal and $388.7 million on interest, according to the data of the Russian side. All the liabilities are overdue.

The government of Uzbekistan earlier recognized only a part of the debt in the amount of $43.1 million and advanced counter financial claims, in particular, to a share in the Diamond Fund of the former Soviet Union estimated by the Uzbek side at $1-2 billion.

The agreement crowns a complex compromise reached between the parties, the explanatory note says.

"Official Tashkent has made a concession by actually recognizing its obligations on all earlier obtained loans. Also, the Uzbek side waives after a long period of hesitation all its claims on the former Soviet Union’s Diamond Fund and the so-called internal foreign currency debt of the former USSR," according to the explanatory note.

"Russia’s major concession is that it provides a considerable debt relief to the republic by writing down 95% of the principal," the explanatory note says.

At the same time, the agreement stipulates that "the sum of the debt Russia is pardoning generally corresponds to the practice of the past few years when comparable claims were written down, for example, the claims to Mongolia (97.8%), North Korea (90%) and Cuba (90%). Moreover, in the latter two cases, the remainder of the debt is used for operations under the formula: "debt in exchange for assistance."

The Federation Council’s Committee for International Affairs has said in a statement that the implementation of the agreement won’t entail any expenditure for the federal budget and, on the contrary, will ensure the payment of $25 million into the state coffers.

The committee has also said that the document's provisions "comply with the generally recognized principles and rules of international law and are consonant with Russia’s international commitments.".

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