Publication: Russia and Eurasia Review Volume: 2 Issue: 14

By Martin C. Spechler

No country of comparable size and strategic interest to the United States suffers more from misunderstanding than the Republic of Uzbekistan. This Muslim country of 25 million sits among fragile and poor neighbors afflicted with Islamist extremism and drug trafficking, and yet the country is stable and functioning. Apart from the three Baltic states, Uzbekistan is unique among the former Soviet republics in seeing its economy recover to its Soviet peak level, and growth–according to international data–has been at 2-4 percent yearly since 1996. As its relatively healthy and well-educated population is growing at only about 1.3 percent yearly, that growth is sufficient to yield some visible improvements in people’s welfare.

Avoiding obvious inequalities such as meet the eye in Almaty or Moscow, the Tashkent regime is meeting the desires of its conservative population for stability, independence from Russia, and preservation of native institutions and culture. To be sure, the autocratic President Islam Karimov permits no significant political opposition or free media, though he would probably win a free election. The 65-year-old president seems ensconced for life, with the docile assent of the Olij Majlis parliament. But there is more law and order and better working infrastructure (water, sanitation, transportation, urban parks) than is typical of Central Asia.

Why the misunderstanding? Uzbekistan is a remote country, and its society is difficult to penetrate, even for those of us who have been there repeatedly. The Turkic language is hard, the people discreet with strangers, and the press quite unrevealing. Most reports appearing in the Western press emanate from one or two human rights organizations with an agenda. Yes, there seem to be several thousand internees in prison for crimes connected with religious extremism and/or political opposition. (But torture, once common, is now being used in only a few cases.)

Relations with the outside world have been touch and go. After quarreling with the government over the non-convertibility of its currency, the soum, in 2000 the IMF withdrew its representative. Despite favorable laws in print, the country’s immature legal system did not welcome foreign investors, even when the local currency was convertible. Since 1996, when the country adopted a multiple exchange rate system, foreign companies operating in Uzbekistan have faced a bureaucratic nightmare of regulations that are intended to keep foreign currency in, criminals out, inflation down, and the image of the country up.

Like most regulations enacted in Eurasia, those in Uzbekistan have failed. Corruption is common, as the (inadequately researched) transparency surveys have it, but small bribes serve to grease the wheels, not to throw sand into them. At the black market rate for the soum, the per capita annual income is only US$550, which sounds very low, though the purchasing power parity estimate is a more reasonable US$2,410. Though the country has world-class architectural treasures and could develop a strong tourist industry, visas are set at a prohibitive US$100. Lufthansa no longer flies there–only Turkish Airlines and El Al, for obvious political reasons. But the country’s flagship Uzbekistan airline flies Boeing aircraft to London and New York without incident.

The few economists who mention Uzbekistan at all dismiss it, along with Belarus, as a “slow reformer” or a country that has simply not reformed. This is not quite true, though the “Uzbek Road” is highly selective and vulnerable to reverses. In 1993 the country adopted the IMF stabilization plan, and got inflation down to the low double digits. The government deficit is manageable, as is the current account deficit. Small businesses in petty trade are thriving, as they are throughout most of the former Soviet Union. Foreign trade has been redirected to world markets instead of Soviet customers. As Richard Pomfret of Australia, the most thorough outside expert on the Uzbekistan economy, has put it, Uzbekistan “is a slow reformer but relatively good performer.” [1] Hardly the “Trashcanistan” that one well-known American political scientist called it, lumping Uzbekistan together with war-devastated Tajikistan and surreal Turkmenistan. [2]

A minor contributor to Uzbekistan’s poor image is commentary from Russia and other post-Soviet neighbors. A number of Russian-language books and articles have appeared belittling the prospects of all the Central Asian states in the “near abroad.” Usually the scientific basis for such pessimism is scanty, and the prejudice obvious. Ex-colonial masters always think themselves indispensable. Occasionally these views appear in English in books with subtitles like “A Gathering Storm?” But dire predictions of impending collapse have failed to transpire for more than a decade now, and the countries of the area are mostly settling their problems by themselves.

Economic growth has occurred in Uzbekistan in ways likely to throw off casual statisticians. While some countable manufactures have grown, particularly the very serviceable Daewoo sedans and minivans, most have not. Rather, agricultural production, clearly Uzbekistan’s comparative advantage, has increased, and the state has kept control of the cotton harvest, which it sells on world markets well above the price paid to peasants. Uzbekistan’s significant gold production is also a state monopoly. (Russia would be well advised to pursue just such a policy with its oil and gas: To sell it at world market prices and use the surplus to fund government projects.) Like other ex-Soviet economies, however, the country has yet to rationalize the use of natural resources. Scarce water is dispensed free of charge, and visibly wasted. Energy, in which the country is self-sufficient, is under-priced to householders. The trade and services sectors, neglected in Soviet times, have expanded, perhaps beyond the statistical capability to count. Post and telephones hardly work, but private substitutes have arrived for those who can afford them. Health and education services have held up, very much in contrast to the deplorable record in Russia and Ukraine. All these sectors are labor-intensive, so unemployment has been contained in most areas.

The distribution of benefits in Uzbekistan has been fairly egalitarian in terms of income, with a Gini coefficient of only 26.8, according to latest World Bank estimates. The top 10 percent of earners receive only 22 percent of reported incomes, and there are very few signs of conspicuous consumption around the capital. Neighboring economies show much higher inequality scores. On the other hand, in the crowded Fergana valley, which Uzbekistan shares with Kyrgyzstan and Tajikistan, youth unemployment and malnourishment are still extremely troubling. Besides the humanitarian toll, this area is a breeding ground for militant Islamist movements, like the Islamic Movement of Uzbekistan.

A majority Sunni country, Uzbekistan’s Islam has been of a fairly relaxed sort. In Soviet times, of course, the imams were answerable to Communist authorities. But now mosques have been rebuilt, often with contributions from the Gulf states. That would be welcome to the regime except that Saudi Arabia has tried to export its puritanical version of Islam, quite foreign to Central Asian traditions. Very few veiled women can be seen on city streets in Uzbekistan or Kazakhstan, though modest headscarves and long dresses are common in historic Samarkand and Bukhara. Alcohol is sold openly, and Orthodox and Jewish believers practice their faiths freely. President Karimov wants Islam, the traditional religion of the area, to be practiced privately. But the IMU, now decapitated by U.S. military action in Afghanistan, and the Hizb-ut-Tahrir movement want to establish a unified Islamic state (caliphate) in Central Asia. Despite its protestations of non-violence, therefore, Hizb-ut-Tahrir is outlawed throughout the region. Some of its adherents find themselves in Uzbek detention, and a number of innocent Muslims are falsely imprisoned, too. With the Taliban on the southern border, Uzbek authorities have taken few chances, but in response to international pressure some prisoners are now being released. More judicial oversight would be beneficial, though Western harangues on this subject are unlikely to prove effective.

Uzbekistan has been an outspoken and active American ally in the war in Afghanistan. Despite Russia’s initial objections, basing rights were granted for about 1,500-2,000 American service personnel at the former Soviet Khanabad airbase. These rights were said to be for “humanitarian” and “rescue” purposes only, at President Karimov’s insistence. Initially, Uzbekistan feared possible Taliban revenge for any assistance to the Americans and hence was reluctant to open the bridge south from Termez over the Amu Darya (the river Oxus) until the threat subsided. With the surprisingly swift defeat of the Taliban regime, ethnic-Uzbek warlord Rashid Dostum, a shady and unreliable character even by Afghan standards, is still in control of Mazar-i-Sharif. (Their relations are said to be cool.) That is sufficient reason for Karimov to welcome a continued U.S. presence, contained as it is on a remote base, even if Washington had not promised additional financial and technical assistance this year. As for possible conventional threats from its neighbors, Uzbekistan has sufficient military power to deter them, though it spends only about 1 percent of its GDP on defense. With Pakistan an unpredictable variable in the near future, the United States wants small forward air bases in Uzbekistan and Kyrgyzstan, as well as in other potential trouble spots. Accordingly, the State Department is unlikely to renew its jeremiads against the Uzbek human rights record from advocates such as Madeleine Albright, now heading the National Democratic Institute. That won’t restrain the EBRD and OECD, however.

Uzbekistan is a country that is visibly striving to be a full and respected member of the international community. It cultivates good relations with all UN members. Its regime is fully aware of what it must do to bolster its reputation, both in the economic area and in the matters of civil and democratic rights. But without an indigenous tradition of non-authoritarian politics and with dicey international surroundings, President Karimov is probably safe in moving slowly towards a democratic, law-abiding, and market-guided society.

1. Richard Pomfret, “The Uzbek Model of Economic Development, 1991-99,” Economics of Transition, vol. 8, no. 3 (2000), pp. 733-748.

2. Stephen Kotkin, “Trashcanistan: A Tour through the Wreckage of the Soviet Empire,” in The New Republic, April 15, 2002.

Martin Spechler is a Professor of Economics at Indiana University.