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Russia conquered Uzbekistan in the late 19th century. Stiff resistance to the Red Army after World War I was eventually suppressed and a socialist republic set up in 1925. During the Soviet era, intensive production of "white gold" (cotton) and grain led to overuse of agrochemicals and the depletion of water supplies, which have left the land poisoned and the Aral Sea and certain rivers half dry. Independent since 1991, the country seeks to gradually lessen its dependence on agriculture while developing its mineral and petroleum reserves. Current concerns include insurgency by Islamic militants based in Tajikistan and Afghanistan, a non-convertible currency, and the curtailment of human rights and democratisation.
Update No: 264 - (01/01/03)
Uzbekistan followed a maverick course after independence in 1991. It was not lured into adopting the then IMF approach to transition, that is shock therapy and rapid privatisation, enjoined and enacted by so many others in the FSU.
Gradualism, not Western revolution
In Russia and the Baltic republics, the events of 1991 saw veritable bourgeois revolutions occur, that is states emerge determined to introduce liberal democracy and market capitalism; elections, shock therapy and state asset sales in short. That has done the Baltic states proud and moved Russia forward after several painful bumps. The political triumph of Yeltsin and Baltic reformers was essential to the process.
In Central Asia a different pattern developed. The old communist dictators remained in place and all depended upon their whim, whether they went along with Western prescriptions or ploughed their own lonely furrow. In many ways, the Central Asian States reverted to the one-man autocracies of the Khanates of earlier centuries.
Kyrgyzstan's President Aliyev opted for the Western message and his republic became the region's darling of reform. President Islam Karimov of Uzbekistan took the route of autarchy in economic affairs, while not rejecting foreign assistance or investment on Uzbek terms, namely with strict exchange controls and continuing state management of the economy. The model was if anything China, not Russia - that is repression continued firmly at the political level, while a relaxation of the old command-administrative system was gradually introduced. Modernisation with a Central Asian topping became the guiding formula.
An important corollary of the autonomous Uzbek course was that Karimov was never a chum of the two Clinton administrations (1992-2000); quite the reverse. Clinton's old buddy at Oxford in the 1960s and his roving ambassador to Central Asia in the 1990s, Strobe Talbott, took particular objection to the closed society that Karimov continued. Talbott had been the translator of Khrushchev's memoirs in the 1960s and saw Karimov as a Soviet behemoth, which in many ways is quite right.
1991 was not a revolution in any sense for Uzbekistan. The Communist Party of Uzbekistan simply disbanded itself and overnight, with exactly the same personnel, became the Democratic Front of Uzbekistan. With unwitting irony Karimov and his cronies had hit on the correct name, for a front of democracy is just what it is. The autarchy of the economy is matched by an unrelievedly autocratic government. Serving the dictator.
The economy contracted by 15% in the first four years of independence until 1995. But this was a less catastrophic fall than in Russia and elsewhere in Central Asia where IMF advice was heeded. In the latter half of the 1990s, GDP grew sluggishly by one per cent or less per annum. Yet the country remained the best off in Central Asia, astride the fertile Ferghana Valley and with the largest cotton-exporting industry in the world. Far from Western prosperity; but not a EurAsian catastrophe either.
The new US administration and 9:11 change the score
In the last year or two of the second Clinton Administration a rapprochement of sorts between the US and Uzbekistan was under way. The reason was Washington's new-found anxiety about al-Qaeda. Uzbekistan was an ideal place from which to organise and launch attacks upon the Islamic terrorists, Karimov's sworn enemies for a long time now (they nearly assassinated him in 1998). But the missile attacks from the air on Osama bin Laden shortly afterwards failed.
The new Bush Administration is not particularly fussy about human rights in foreign countries particularly where homeland security is involved. The contacts with Uzbekistan were readily resumed and then came 9:11.
Karimov immediately offered the US forward bases on Uzbek territory, from which to attack al-Qaeda and the Taliban. With Uzbeks prominent in the Northern Alliance, Tashkent was able to offer not just air and ground bases, but excellent intelligence that greatly facilitated the swift victory of the US forces and their Alliance allies. Uzbekistan became overnight an unofficial member of NATO, the key US ally in Central Asia at the other end of the spread of Turkic states to which Turkey itself, that other NATO mainstay, gives the focus in Asia Minor and Europe.
What happens next?
Letting the Americans in has proved a fateful step for many a country. Uzbekistan is likely to be no exception.
The future depends very much on what ensues from American involvement in Afghanistan. If nation-building there fails, then the outcome could be another war, with the Pashtuns (45% of the total population, but still largely excluded from the Northern Alliance government) fomenting a new conflict. Uzbekistan would remain a vital forward base, along with Tajikistan, for Western deployment, whether by US or EU forces.
If peace is somehow sustained, then Uzbekistan, the hub of Central Asia, still remains crucial to the ongoing development of the whole region. The US is moving into the economy of Uzbekistan in a big way. There are over 50 US firms now in place; and altogether some 300 firms with US capital, mostly US-Uzbek joint companies. Trade is mounting rapidly, amounting to US$293m in 2001, a figure surpassed already for trade in the first nine months of the year, US$295m.
In the wake of the US, Israeli investors are coming to town. Uzbek specialists are studying irrigation technology and water conservation at Israeli research centres, and there are several planned joint public health projects.
The gradual approach to economic reform is paying off now that 70% of state assets are in private hands, sold off in stages, not in a wild rush as in Russia. GDP is growing by 4% on an annual basis. The republic is resuming its role as a main supplier of heavy metals and it has the fourth largest gold reserves in the world. Uzbekistan is economically doing well and will do better.
Crop crisis in Karakalpakstan
Uzbekistan's autonomous republic of Karakalpakstan is facing an agricultural crisis caused by the authorities' practise of planting large amounts of crops on unsuitable stretches of land, Olga Borisova an independent journalist has reported.
Experts fear that government planners are refusing to take the region's ecological crisis, caused by the drying up of the Aral Sea, into account in their eagerness to fulfil the largest quotas possible.
Authorities demand that as much rice and cotton as possible are planted on the autonomous republic's land, which is fast losing its fertility due to increasingly saline irrigation water from the evaporating sea.
Erejep Kurbanbaev, director of the Karakalpak branch of the Central Asian Scientific Research Institute for Irrigation, warns that very little can be done to save this year's harvest. "Even if there is water all the time, the agriculture plans will only be fulfilled by at most 60 per cent. Not even the most modern system of irrigation can make this land fertile," he told IWPR. Karakalpakstan needs to be developed in a completely opposite way than is currently practised, he argued. The acreage of cotton and rice has to be reduced, and alternative industries such as fish farming could be practised in the republic's artificial and natural ponds. "If this situation continues for another 10-15 years, agriculture in Karakalpakstan will simply perish," warned Kurbanbaev.
But Uzbek agriculture and water resources ministry official, Faizulla Salokhitdinov, defended the government's policy in Karakalpakstan, saying the increase in rice production was "the right decision."
He also pointed out that next year the authorities aim to increase the acreage of the rice fields by three times the current amount. "Karakalpakstan was traditionally a rice producer and it should stay like that," said Salokhitdinov.
Rasuljon Kholmatjonov, from the ministry's department of cotton production, told IWPR, "The policy of our government is to support the agricultural sector. We know very well about water supply and harvest targets and if we decide that cotton should be planted, then that's what has to be done."
But another official, who wished to remain anonymous, confirmed to IWPR that ministry specialists are aware of the problems with Karakalpakstan's soil and water resources - and revealed that a number of proposals to change the cotton-growing policy to take these issues into account have been sent to the government.
Overhaul of Uzbek cotton industry, turns domestic
Uzbekistan, the world's second largest cotton exporter, is overhauling its cotton industry and plans to process half its cotton fibre domestically by 2005, from a quarter now, a top Uzbek official said recently, Uzreport.com reported.
As Foreign Economic Relations Minister, Elyor Ghaniyev, underlined in a news conference, this programme will help the government increase the amount of domestic cotton processing up to 500,000 tonnes by 2005. "In other words, almost 50 per cent of Uzbek cotton fibre will be processed at home," the Uzbek official explained. Meanwhile, the country's industry is also investing large amounts in order to produce higher profits from exporting finished goods rather than cotton fibre.
Most importantly, official sources in the cotton sector have stressed the fact that their market, together with gold and natural gas, accounts for a fifth of gross domestic product and 25 to 28 per cent of the state's budget revenues.
Nevertheless, despite the profitable business climate, prospect of further increases do exist partly because the state buys cotton at low procurement prices and sells it at world prices.
The same sources said that although cotton fibre is among the country's main exports even better results can be achieved from the sale of final products.
Added to this, President Islam Karimov, has personally stated his government's intentions to further enhance the above plans, which should boost profits and create jobs, especially after world prices hit a 30-year low in October 2001.
Among immediate plans for the revamp of the industry, US$1.03bn in capital investment will be pursued whilst 40 plants are soon to initiate refurbishing operations.
Meanwhile, a three-fold increase in garment production, and the processing of 50 per cent of cotton fibre domestically from the current 24 per cent will be also involved in the above plans. As recently as 2000 the country processed just 7-8 per cent of its fibre domestically.
Experts have high hopes for finished products from Uzbekistan, long famous for its silk. Uzbekistan produced 1.055m tonnes of cotton lint in the 2001/2002 season, making it the fifth largest producer behind China, the United States, India and Pakistan.
Uzbek-British JV loan under reconsideration
A syndicate of banks headed by France's Société Generale plans to reconsider the conditions under which a US$31m loan was granted in July 2002 to the Uzbek-British joint venture, Amantaitau Goldfields, to finance the first phase of the development of the Amantaitau gold deposit in the Kyzylkum desert, Interfax News Agency reported recently.
"One of the founders of the venture, Britain's Oxus Mining Plc, has for objective reasons not met the preliminary conditions for the loan, a source at the office of Societe Generale told Interfax. The agreement called for the British company to borrow an additional US$17m by November 8th, 2002. The source said a number of options for additional financing proposed by the British company are now being discussed, including the possibility of leasing production equipment.
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