MERCHANTS PROTEST NEW BANKING LAWS IN UZBEKISTAN

Mass riots have rocked the city of Khokand located in Uzbekistan’s Fergana Valley. The riots started after a government decree on toughening trade regulations, which was issued in August, went into effect on November 1, 2004. The new regulations make it mandatory for every merchant to have a cash register and to open an account in a commercial bank, where he or she should deposit daily profits. More controversially, the new regulations also mandate that if the weekly profit is less than expected, then the entrepreneur will temporarily lose his business license.

Approximately 6,000 merchants from Khokand threw stones at a tax agency building and set two police cars on fire. Three tax inspectors and one police officer were severely beaten by the raging crowd. All four were hospitalized with varying degrees of injury. Protests against the governmental decree took place in other Fergana Valley cities as well (Kazakh Information Agency, Inform.kz, and Information Agency Central Asian News, Centran.ru, November 2, 2004). The second-largest riot occurred in the city of Karshi (southern Uzbekistan.) A human rights activist from Kharshi, Tulkin Kharaev, reported that approximately 500 bazaar merchants had gathered in front of the city administration building. According to Talib Yakubov, the chairman of one leading human rights organization, merchants also protested in Tashkent and Jizzakh (western Uzbekistan).

Notably, the press and news media in Uzbekistan carried no information about the riots. Khokand human rights activist Khamdam Sultanov told Jamestown that the authorities managed to restore order after they promised to postpone the implementation of the governmental decree until January 1, 2005.

The revolt in Khokand, a relatively small city by Uzbekistan’s standards (population about 214,000), is unprecedented in modern-day Uzbekistan. The last time such popular unrest was accompanied by violence was in February 2002, when residents responded to a sudden rise in prices. At the time, several thousand Tashkent students began to loot stores and set cars on fire.

But since the 2002 incident, Uzbekistan’s authorities have managed to keep the situation under control through explicitly authoritarian methods of state governance. (Human Rights Watch, for example, believes there are approximately 7,000 political prisoners in Uzbekistan). In fact, even peaceful demonstrations are rather rare in Uzbekistan, and, as a rule, they are usually dispersed by police.

The last time Uzbekistan saw large demonstrations was in August 2003, when workers from two petrochemical plants in the city of Fergana (the administrative center of the Fergana oblast, which is located 100 km east of Khokand) organized a strike protesting unpaid wages. The tense standoff was resolved when the plant administration convinced workers to stop the strike by paying them part of their overdue salaries.

The November demonstrations in Khokand are the direct result of Tashkent’s attempts to maintain control over the economy. The president of Uzbekistan, Islam Karimov, was the head of the Communist Party of Uzbekistan in Soviet times, and he seems to be set on continuing the economic policies of the Brezhnev era.

Although Uzbek peasants have the right to rent land, the agricultural products that they are supposed to cultivate on this land are specified by the government. The peasants are supposed to surrender their crops and other agricultural products to the state. As a result, the price for cotton in Uzbekistan is ten times cheaper than in neighboring Kyrgyzstan, where cotton is traded at real-market prices. Tashkent not only officially regulates the prices of certain commodities (such as gasoline and bread), but also skillfully eliminates rivals, thereby maintaining its monopoly.

Two years ago Tashkent introduced a 90% import duty in order to protect the domestic market from foreign goods that typically are cheaper and better quality. As a result, the prices on foreign goods in Uzbekistan are double the prices in neighboring Kyrgyzstan and Kazakhstan. Because of the population’s low purchasing power, the introduction of duties on imported goods bankrupted the majority of entrepreneurs (the so-called shuttle traders), who used to haul in consumer goods from neighboring countries. In contrast with other Central Asian states, the shuttle traders and bazaar merchants constitute the only domestic entrepreneurs in Uzbekistan. The August governmental decree seems designed to completely eliminate this economic class.

For the majority of the population of Uzbekistan, the bazaar trade remains the only possible means of survival. If judged by the level of living standards, Uzbekistan occupies one of the lowest rungs in the Commonwealth of Independent States (CIS). Statistical information about national salary levels is highly classified and it is impossible to access this data in any of the state statistical agencies.

Officially, the minimum monthly salary is 5,900 Uzbek soms (about $6). Nonetheless, it can be stated with reasonable certainty that the average salary in the country is less than $20. Hence, in the relatively well off (by Uzbek standards) Tashkent, it is practically impossible to find an individual with a salary of more than $50. In the provinces, salaries are often not paid for as much as six months. The recent popular unrest indicates that a substantial portion of the population faces the real threat of hunger and starvation and is ready to resort to public acts of civil disobedience without fearing government reprisals.