02uzbek
WSJ.com - East of the Oder
February 8, 2002
EAST OF THE ODER
Karimov's War on Islam
Could Destabilize Central Asia
By IGOR ROTAR and LAWRENCE UZZELL
TASHKENT, Uzbekistan -- Although they have been driven from power in
Afghanistan, Islamic extremists still have fair chances of seizing power
in several neighboring states. One is the country that has shifted most
dramatically toward the West during the recent crisis. Uzbekistan's
ferocious policies designed to crush Islamic militants could end up having
just the opposite effect.
Uzbekistan is the strategic kingpin of ex-Soviet Central Asia, an ancient
center of Islamic learning, and a beacon to ethnic Uzbek minorities in
neighboring countries. If a wave of religious fanaticism should sweep out
Uzbekistan's President Islam Karimov, it would surge right through the
artificial state boundaries inherited from the Soviet era.
In the wake of the September 11 atrocities, such threats naturally took
second place in America's calculations. Washington urgently needed access
to air bases near the Afghan border, and Mr. Karimov responded boldly with
an offer of cooperation. Commercial airliners landing at Tashkent's main
civilian airport last month taxied right past a U.S. Air Force transport
plane; neither partner tried to conceal the American presence.
Sound policy, however, looks beyond immediate tactical needs. The most
serious long-term threat to stability and freedom in Uzbekistan comes from
Mr. Karimov himself. In a country where more than 80% of the populace is
of Islamic heritage, his government is pursuing the most aggressively
anti-Islamic policies anywhere in the former Soviet Union. An Uzbek emigre
in Moscow has more freedom to practice his faith than his cousins in their
ancestral homeland.
Speaking in Tashkent to visitors from the Keston Institute, an
Oxford-based research center specializing in international religious
freedom, a local barber said that he had forgotten how to trim a beard,
because, as he put it: "In our country beards are forbidden." Though there
is no such formal law, other sources confirmed that beards are risky.
Unless he is elderly, a man with this traditional sign of Muslim piety is
likely to be detained and taken to a police station for interrogation as a
"suspicious" character. Women with traditional Muslim head coverings also
face discrimination.
Uzbekistan's criminal code includes a vaguely worded ban on the use of
religion to "undermine social harmony." A 1998 law stipulates that only
organizations formally registered by the Ministry of Justice -- which
imposes high hurdles for such registration -- may conduct any kind of
religious activity. One can see in Uzbekistan many buildings formerly used
as mosques but now closed by the authorities.
Mr. Karimov, who led Uzbekistan's Communist Party during the Soviet years,
has revived Soviet practices of minutely regulating religious life. Muslim
institutions are controlled by the Spiritual Directorate of Uzbekistan, in
effect a state agency -- in a country with no tradition whatsoever of
political freedom. An adviser to the directorate's head told us that he
fully supports Mr. Karimov's policies.
In August, Human Rights Watch published a detailed memorandum on religious
persecution in Uzbekistan, based on hundreds of interviews. Its
conclusion: Thousands of Uzbek Muslims have been "detained, harassed,
tortured, and imprisoned" even though "only very few have been charged
with specific violent acts" and "even more rarely have the authorities
produced credible evidence to support charges of the use or advocacy of
violence." Instead, the government has targeted "people who pray in
mosques not run by the government, who belong to Islamic groups not
registered with the government, who possess Islamic literature not
generated by the government, or who meet privately for prayer or Islamic
study, singling them out for nothing more than the peaceful expression of
their religious beliefs."
Keston asked our sources if there had been any cases of such religious
believers charged under the criminal code but then found innocent. They
could not remember one. Conditions within prisons are brutal, with many
instances of torture, and, we have been told, deaths while in custody. One
recently released prisoner told us that his jailers had beaten him simply
for saying his Muslim prayers. The Soviet-style crackdown has also
included harassment of prisoners' relatives, thus swelling the numbers of
embittered citizens.
Certain forces stand ready to exploit such bitterness. The Islamic
Movement of Uzbekistan is explicitly committed to the violent overthrow of
the current regime and its replacement by an Islamic state. It has
launched armed attacks on Uzbekistan from bases abroad. Less extreme is
the Uzbek branch of the international Hizb-ut-Tahrir (Party of
Liberation), which advocates the unification of all Muslims in the world
into a single caliphate. Although in the past this party has publicly
rejected armed methods, its rhetoric has taken a violently anti-Western
turn since Sept. 11. Hizb-ut-Tahrir shares the IMU's hostility to Western
civilization and also that group's anti-Semitism. Its underground
activists have told representatives from Keston Institute that countries
such as the U.S. and Great Britain are offspring of Satan.
So the question is not whether Uzbekistan faces a threat from religious
extremists. It does. The issue is whether the current regime's
heavy-handed methods are likely to quench or inflame that threat. As
Mikhail Ardzinov of the Independent Society for Human Rights in Uzbekistan
told us: "The problem is that Mr. Karimov is waging war not only on
extremists but simply on all serious Muslim believers."
That war affects religious minorities as well. A Baptist pastor in
Tashkent told Keston that he was unable to get official registration for
his congregation because it would be politically awkward for the
authorities to authorize more Christian churches after closing so many
mosques. The regime enforces harsh limits on the importation of Bibles and
other religious literature. Unfortunately, the U.S. State Department has
failed to respond with even the elementary step of classifying Uzbekistan
as a "country of particular concern" under America's 1998 International
Religious Freedom Act.
The post-Sept. 11 alliance with Mr. Karimov puts the U.S. into an
ambiguous position, supporting a regime that has in essence declared war
on Islam as a religion. It gives the extremists evidence for their claim
that the U.S. is fighting not terrorism but Islam as a whole. Washington
should not forget the results of its policies in the 1970s, when it closed
its eyes to the persecution of Muslims by another secularizing,
authoritarian but "pro-American" ruler: the Shah of Iran.
Mr. Rotar is Central Asia representative and Mr. Uzzell is director of
Keston Institute (www.keston.org1).
URL for this article:
http://online.wsj.com/article/0,,SB1013123769450548760.djm,00.html
Hyperlinks in this Article:
(1) http://www.keston.org/
Updated February 8, 2002 12:01 a.m. EST
2
Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved
Printing, distribution, and use of this material is governed by your
Subscription agreement and Copyright laws.
For information about subscribing go to http://www.wsj.com
New U.S. Allies, the Uzbeks: Mired in the Past
May 31, 2002
New U.S. Allies, the Uzbeks: Mired in the Past
By EDMUND L. ANDREWS
ASHKENT, Uzbekistan — Two years ago, Poul Jahn employed 140 people as an
importer of products like candy from Germany and Legos from Denmark.
Today, he is all but out of business, because the government stopped
allowing him to convert his sales revenue from Uzbek som into dollars.
His difficulties are just one example of how hard it is to foster economic
or other development in Uzbekistan and other Central Asian states that
have become the newest United States allies because of their proximity to
Afghanistan and the usefulness of their bases to American troops.
Under President Islam Karimov, a Soviet-era ruler here who has just
extended his term until 2007, Uzbekistan has displayed little appetite for
either democracy or open markets. Political repression is intense,
corruption is widespread and economic policy owes more to Stalin than
George W. Bush.
American leaders are eager to pump economic and military aid into Central
Asian states, but the sort of bureaucratic thicket and isolationism
encountered by Mr. Jahn makes it difficult to see how the World Bank will
dispense the $1 billion earmarked for the region over the next three
years.
Yet without economic reform to improve the prospects for people here, the
attraction of radical Islamic movements to the poor and disaffected may
continue to grow. Mr. Karimov has used the existence of such movements as
the pretext for an often brutal clampdown on any expression of Islam,
jailing thousands of people in sweeps across the country that have been
repeatedly criticized by rights groups.
Every economy in Central Asia is smaller today than it was before the
collapse of the Soviet Union in 1990. Poverty is intense, with average
annual income of about $610 here and less than half that in neighboring
Tajikistan and Kyrgyzstan.
Although leaders like President Karimov have vowed to support economic and
administrative reform, the progress is at best uneven.
"Leaders are finding that they are getting a very different reception now
than they got on Sept. 10," said James D. Wolfensohn, president of the
World Bank, who himself made his first trip to the region only after the
Sept. 11 terror attacks transformed the geopolitical realities of formerly
forgotten Central Asia.
But, Mr. Wolfensohn added, "If they are going to take advantage of this
opportunity for funds and support, then change will be necessary."
Uzbekistan illustrates how hard that change will be. Despite heavy
pressure from the International Monetary Fund, it has yet to abandon its
3
currency restrictions. Policy often seems to be set mainly to buttress Mr.
Karimov's hold on power.
Meanwhile, a crazy quilt of new borders has disrupted trade and routine
travel throughout the region.
Many people are trapped in enclaves, a few square miles of Uzbek or Tajik
territory surrounded by Kyrgyzstan. Traders who once roamed freely across
borders now need to wait in long lines, show visas and often pay bribes.
"People are trapped," said Natalia Ablova, director of the Bureau on Human
Rights and Rule of Law, in Bishkek, Kyrgyzstan. "They cannot travel,
cannot trade, cannot create business. Just travel through the region, and
you will see the intolerable conditions that each country has created for
its own citizens."
Uzbekistan is hardly alone. Turkmenistan, which has big oil and gas
reserves, has become so autocratic and isolated that World Bank officials
have all but stopped offering aid.
Tajikistan, ravaged by civil war through much of the 1990's, remains
plagued by organized crime, heroin smuggling and violence. Few foreign
companies venture to do business there, and the average yearly income is
only about $200.
The new isolationism has greatly increased tensions throughout Central
Asia. Uzbekistan is critically short of water, and constantly accuses
Kyrgyzstan of hoarding it upstream. Kyrgyzstan says it needs to store
water for hydroelectric power, because its neighbors will not supply it
with enough electricity.
"You have this shadow play going on between leaders, whether it is about
problems in the Aral Sea or about trade," Mr. Wolfensohn said.
The difficulties become abundantly clear on a trip through the Fergana
Valley, a region that is just 200 miles long but is home to 10 million
people and a big share of Central Asia's industry and agriculture.
A one-hour trip between the Kyrgyz cities of Osh, an ancient trading post,
and Jalalabad now takes four hours — the main road cuts through Uzbek
territory, and side roads are winding and small.
The enclave of Sokh, claimed by Uzbekistan but surrounded by Kyrgyz
territory, is virtually fenced off from the outside world. Uzbek leaders
argue that strong borders are essential to preventing attacks by militant
Islamic groups, notably the Islamic Movement of Uzbekistan, which has
roots in the Fergana Valley and launched several attacks from Tajikistan
and Kyrgyzstan in 1999 and 2000.
Economics is also partly a factor in the Uzbek behavior — to keep prices
for basic commodities like flour, cotton and gasoline artificially low,
the government has imposed a mind-numbingly complex scheme of currency and
trade controls.
At a checkpoint near the Uzbek city of Kuvasai, border police put the
finishing touches last month on a massive new station that looks like the
entrance to a palace.
The new station has multiple rooms for interrogation and searches; animal
pens for the guard dogs; the latest in X-ray and bomb-sniffing equipment,
and a canteen and recreation room for off-duty guards. Police officials
boast that the "Welcome to Uzbekistan" sign can be seen from Kyrgyz
mountainsides 50 miles away.
"You can see that there is nothing like this in Kyrgyzstan or even
Kazakhstan," boasted the station's director, Col. Alisher Amanbaev. "This
has everything you need for a really civilized process."
But not necessarily an easy one. There are no buses or trains that go
straight across the border. Anyone driving a car from Kyrgyzstan will have
to pay $45 for insurance, prohibitive for people in a country where the
average annual income is $270.
"It would be good if we could just drive across," said Micha, a Kyrgyz
hairstylist who waited along the railroad for a ride to Kuvasai. "Before,
we would just go up to the border, stop and then drive through."
4
Economic life has been disrupted in scores of places. At a brick factory
in Kuvasai, managers were told they would have to pay steep new tariffs on
clay from a quarry just over the border in Kyrgyzstan. Factory managers
located another source on their side of the border, but the land belonged
to a collective farm. Local Uzbek authorities then ordered the farm
collective to hand over the quarry land on a 50-year lease at no cost.
Although factory managers say they are selling more bricks than before,
they are not selling any at all in Kyrgyzstan. A rival Kyrgyz brick
factory is not selling anything here, either.
Uzbek attempts to control exchange rates have created an even bigger set
of barriers. A handful of privileged companies, like the Daewoo automobile
assembly plant, are allowed to purchase dollars at about 700 som to the
dollar. Individuals are allowed to change limited amounts of money at
1,450 som to the dollar. The real exchange rate, available on the black
market, is about 1,500 som to the dollar.
The effect is to wreak havoc in trade, swamping neighboring countries with
artificially cheap Uzbek products and making most exports to Uzbekistan
artificially expensive.
"We are a country with a majority of the population living below the
poverty line," complained one top Kyrgyz official. "But trade with our
Eurasian neighbors dropped 20 percent last year."
Mr. Jahn, owner of an importing company called Jahn International, built a
thriving business here through much of the 1990's. But then the Uzbek
government cut in half the amount of Uzbek som he could convert to
dollars.
Then it reduced him to a quarter, and then it cut off his "allocation"
entirely.
To stop him from changing money on the black market, Uzbek authorities
limited bank withdrawals to little more than the amount needed for wages.
To make sure Mr. Jahn did not cheat by selling products out the back door,
they sent inspectors to check his warehouse inventories.
"I don't want to do business illegally," Mr. Jahn said. "Right now, I am
basically out of business."
Under pressure from the International Monetary Fund, change may be under
way. Last month, Uzbek authorities announced that citizens would no longer
have to show them airline tickets and travel documents in order to
exchange Uzbek som for dollars. It was a limited offer — no more than
$1,000 per person every three months.
By Uzbek standards, it is a major reform.
Copyright 2002 The New York Times Company | Permissions | Privacy Policy
Institute for War and Peace Reporting
Thursday, October 3, 2002
Child Labour Rising As Uzbek Economy Worsens
Families are pulling their youngsters out of school and putting them to work to
ensure that there is food on the table
By Gairatjon Sultanov and Umida Khasanova in Samarkand (RCA No. 131, 23-July-02)
Ten-year-old Jakhongir is one of the scores of children who cart heavy goods around
the Siab district bazaar, where people from all over the region travel to buy
vegetables and other produce.
5
Jakhongir, who used to go to the local middle school, says that if he did not work
his family could not afford to eat, "My father retired because of illness, and
receives a pension of only 11,000 som (around $9-$10) a month, and my mother is at
home looking after my three little brothers. This is not enough money for us, and as
the oldest child, I have to help."
Sherali Ergashev, 12, says his earnings are used to put food on the family table. "I
can make 1000-1500 som a day, which I use to buy bread, potatoes, onions, carrots and
so on. The people in charge of the market, the police, and my teachers want me to
stop, because if I do our family will be left without bread."
His father, Ali Ergashev, says there is simply no other choice, "I am forced to ask
my son to do this work, because I am disabled with arthritis, and my wife is also an
invalid. Although we are both disabled, the state doesn't pay us any pensions."
The head of the education board in Samarkand, Anvar Bekmurodov, says they have
visited some of the parents involved and tried to explain that it's illegal for
children to work in the bazaar, "But the parents did not want to listen to us." In
fact, some were extremely hostile towards the officials, driving them out of their
homes with axes.
Kakhramon Usmoniyon, a local official charged with the prevention of juvenile
delinquency, said he had tried, but failed, to stop the practice. "We took carts away
from children many times, and made them leave the markets. The next day their parents
came to the station asking for them back and pleading with us to let the kids earn
some money."
Amid fears that the children would turn to crime, the police, in agreement with the
district market administrators, allow children from poor families to work provided
they register at the market's police station.
"There is a special registration book that contains photographs and complete
information about the children and their parents," said Usmoniyon. "The kids make
around 200-250 som a day. They are all under our control."
Medics in the region are, however, critical of children so young doing such heavy
work. According to local doctor Rano Bobomurodova, children should not perform taxing
manual labour until at least the age of 14. "They could easily injure themselves and
do themselves permanent damage, otherwise," he said. "What sort of a future will the
republic have if the younger generation cripples itself, and has no education?"
Although Uzbekistan is a signatory to the UN convention on the rights of the child,
local authorities have long flouted its provisions, frequently employing Soviet-era
practices of mobilising children to gather cotton and do other seasonal agricultural
work.
The practice of individual families putting their own children to work is relatively
new, only really developing since the mid Nineties, as economic and social problems
in the newly independent republic worsened.
Kamiljon Ashurov, a civil rights activist from Samarkand, says if the problem is to
be truly resolved it is important that the causes and not just the symptoms are
attacked, "We need to solve economic problems, employment issues, and develop social
support for poorly-off sections of the population with large-scale reforms. Only then
will our children not have to work in the markets."
Gairatjon Sultanov and Umida Khasanova are independent journalists in Uzbekistan.
Send this article to a friend
6
Previous article
Recent IWPR Stories of Related Interest:
Uzbekistan: Police Surveillance Fears
By Bobomurod Abdullaev in Tashkent. (RCA No 123, 07-Jun-02)
Uzbekistan: Migrants Suffer Russian Humiliation
By Malik Mansur in Yekaterinburg (RCA No. 121, 24-May-02)
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company reg.
no: 2744185)
Institute for War and Peace Reporting
Thursday, October 3, 2002
Uzbekistan: Land Confiscations Anger Farmers
Farmers lose their livelihoods in government drive to counter drought and a shortage
of arable ground.
By Khalmukhamed Sabirov in Andijan (RCA No. 134, 1-Aug-02)
The Goyib Toshmatov collective farm in Uzbekistan's Andijan province used to be a
thriving business with a fine yield of rice. Seventy-year-old Gofir Ummatov and his
colleagues spent years cultivating their land - but then government took it away to
grow cotton.
"Once our work was done and the land was ready, the local administration seized it
and sowed cotton. They promised to give us other plots in compensation but this
hasn't happened," Ummatov told IWPR.
Due to a severe shortage of arable land, Uzbek farmers are no longer allowed to grow
the crops of their choice. Andijan is one of the worst-affected areas, with many
plots being confiscated by the government.
Thousands of farmers have been now been deprived of their sole source of subsistence
- the land they till from morning to night.
According to collective farm chairman Toir Mirzakhakimov, the authorities believe
that rice is no longer a viable crop, as it consumes too much water. "This region has
been stricken by a severe drought for two years, so the government forbade farmers to
continue sowing rice."
7
The farmers, however, argue that they have been forbidden to cultivate any crops, not
only rice.
"We know water is in short supply so we had plans to sow other things like, for
instance. However, the farm told us not to sow anything - not even those crops that
require little water," said Ummatov.
Uzbekistan's agricultural ministry has allocated a mere 3,200,000 hectares for crops
this year. Of that amount, around half are earmarked for cotton, about a third for
grain crops and the rest will be used to grow fodder, vegetables and legumes.
Andijan's farmers contributed upwards of 380,000 tons of raw cotton to government
stocks last year. "This year, the authorities set us a target of 400,000 tons, so we
had no choice but to expand the acreage," explained Mirzakhakimov.
Although Uzbekistan gained independence and declared its commitment to a market
economy ten years ago, its agriculture is still governed by the old communist
precepts of a planned financial system.
The government sets regional targets not only for raw cotton, but also for other
crops including grain. It is the duty of heads of regional and local authorities to
make sure these are fulfilled.
Local authorities set binding targets for local farmers - and those who fall short
risk losing their land next year. Regional and local governors in turn risk losing
their jobs if they fail to meet government targets for cotton or grain. The system is
exactly the same it was in the Soviet era.
It is ironic that after gaining independence, the new leadership condemned the Soviet
communist party as an exploiter of the Uzbek people because it forced the nation to
only grow cotton.
Just as in the old days, cotton growers cannot set their own prices or sell their
harvest to anyone other than the government, which sets very low rates - even though
Uzbekistan has recently signed a memorandum on economic and financial policy with the
International Monetary Fund which states that farmers should be allowed to sell 50
per cent of their harvest on the open market this year.
Farmers do not believe the memorandum will change anything. One worker at the
Toshmatov collective farm, who declined to be named, told IWPR he did not believe the
government would ever mend its ways. "They have unlawfully confiscated our land for
cotton and they will be back to seize our cotton harvest for a pittance," he said.
"Cotton has never been a profitable crop for farmers. Government officials are the
ones who clean up on it. It makes no sense for us to grow cotton if all we are paid
for it is 15 sums - around two US cents - per kilo."
Farmers at the Toshmatov collective have not reported for work since the local
authority seized their land for cotton. "We cannot work for nothing anymore," said
one. "We should be allowed to grow the crops that are good for us, not the
bureaucrats."
Khalmukhamed Sabirov is the pseudonym for a journalist in Uzbekistan
Send this article to a friend
Next article
8
Recent IWPR Stories of Related Interest:
Uzbekistan: Traders Protest Over Tax
By Galima Bukharbaeva in Tashkent (RCA No. 133, 30-July-02)
Uzbekistan: Missionaries Lure Youngsters
By Ulugbek Khaidarov in Jizak (RCA No. 132, 26-July-02)
Institute for War and Peace Reporting
Uzbekistan: Traders Clash With Police
Government moves to regulate Tashkent's markets spark violent protests.
By Bobomurod Abdullaev in Tashkent (RCA 145, 10-Sep-2002)
Stallholders have clashed with police during protests against swingeing new taxes on
imported goods and an official drive to regulate the capital's markets.
Critics maintain the moves - which include the imposition of 90 and 50 per cent
customs duties on imports of industrial and food products respectively - are part of
a government push to reduce demand for foreign currency before a visit by the
International Monetary Fund, IMF, later this month.
The so-called shuttle traders - itinerant merchants who bring sorely needed goods
into Uzbekistan from neighbouring countries - fear the clampdown will drive them out
of business.
Seven traders were charged with disorderly conduct after an incident at the Eski Djua
(Old Town) bazaar in Tashkent on September 4. Three of those arrested - including
Jjakhongir Shosalimov, an activist from the prohibited opposition party Erk and
member of the Independent Organisation for Human Rights in Uzbekistan, IOHRU - are
serving 15-day prison sentences while the other four were fined.
The violence erupted when police began to enforce the new tax regime, which
stipulates that traders must have a quality certificate and an invoice for imported
materials - proof that the increased taxes have been paid - and must also have their
own cash register.
Tax police angered traders when they began to confiscate goods from stalls whose
owners could not meet the new requirements.
Witnesses told IWPR that the police began to beat trader Nurmat Jonjigitov when he
refused to hand over his goods, dragging him into a police van. His pregnant wife
Gulbakhor rushed to help him, only to be violently restrained by officers.
"Despite the fact Gulbakhor was pregnant, one of the policemen kicked her in the
stomach, and when she fell down they kicked her in the head," claimed trader Sherzod
B, who did not want to give his full name. People were outraged and began to hurl
rocks and bricks, smashing the windows of three police vans and injuring one officer,
according to Zukhriddin Bobokalonov of the Tashkent Main Internal Affairs Department,
GUVD.
9
The department denied reports that several traders were injured by a truncheonwielding special police division that was later called in to deal with the
disturbance.
Speaking to IWPR at the scene of the trouble, only minutes before he was arrested,
Shosalimov said that the crackdown was designed to reduce the number of private
traders, whom the government thinks are too reliant on foreign currency. "With
customs duties like these, shuttle traders will stop importing goods, which means
they will not have to buy dollars on the black market, and this will lead the dollar
rate to drop," he said.
"Additionally, the cash registers will allow their entire earnings to be accounted
for, reducing turnover and thus lowering the consumer demand for dollars," he said.
Shosalimov said the measures had been taken to fulfil the conditions of a memorandum
on mutual understanding signed with the IMF in January 2002. The agreement envisages
a liberalisation of the country's economy, first of all in the foreign currency
market.
The IMF commission is soon to visit the country to check if the memorandum has been
implemented correctly. A first instalment of 100 to 300 million US dollars will be
handed to the republic before the end of autumn if the reforms meet with approval.
"Although the republic needs this money, it is not as important as IMF recognition
and cooperation, which will be a powerful signal to all international financial
institutions that Uzbekistan is a nation with a market economy," said David Pearce,
head of the local World Bank mission. The IMF closed its Uzbekistan office in April
2001, claiming it saw no reason to stay in a country that did not want to carry out
economic reforms or listen to advice.
However, when Uzbekistan allowed the US to use its Khanabad airbase during the recent
military operation in Afghanistan, Washington agreed to help with economic reforms
and persuaded the IMF to give the republic another chance.
Uzbek traders and consumers are already feeling the consequences of the new policies.
Traders cannot work, many Tashkent markets are closed or empty, and consumers cannot
find the goods they need.
Government officials estimate that more than 12,000 people trade imported goods in
the capital. Their source of income is under threat, as are those of hundreds of
thousands of market workers - drivers, warehouse security guards, porters, loaders
and cooks.
"I fed my family exclusively by driving customers from the regions to the Tashkent
markets, and now I don't know what to do," said private taxi driver Gulom from
Tashkent. Consumers are also at a loss, as the capital's markets were a source of
wholesale goods for the whole country.
"My family cannot afford to buy clothes at expensive shops so we bought everything at
the markets - including food products," said Elena Rashchektaeva, a nurse from
Tashkent.
However, interior ministry official Bobokalonov has warned that "nothing will change"
- no matter how many people are unhappy with the government's decree.
Bobomurod Abdullaev is an IWPR correspondent in Uzbekistan.
Send this article to a friend
Next article in this issue | Previous article in this issue
10
Recent IWPR Stories of Related Interest:
Uzbekistan: Traders Protest Over Tax
By Galima Bukharbaeva in Tashkent (RCA No. 133, 30-July-02)
Uzbekistan: Shuttle Traders Curbed
By Bobomurod Abdullaev in Tashkent (RCA No. 129, 12-July-02)
Uzbekistan: Police Surveillance Fears
By Bobomurod Abdullaev in Tashkent. (RCA No 123, 07-Jun-02)
Institute for War and Peace Reporting
Thursday, October 3, 2002
Uzbek Fury Over Unpaid Salaries
Workers are going hungry as confusion grows over who is responsible for the continued
non-payment of their wages.
By Ulugbek Khaidarov in Tashkent (RCA No. 146, 13-Sep-2002)
Uzbekistan is facing growing industrial tension as the country's workers and
pensioners go for months without pay and benefits.
Public anger at the delay in payments has been made more acute by the government's
vast expenditure on Independence Day celebrations.
Workers are going hungry while their employers blame the banks for not providing them
enough cash to pay salaries. The latter in turn claim they don't have enough money to
go round.
Staff at one of the country's biggest enterprises, the Chkalov Aviation-Industrial
Union in Tashkent, have not been paid since June. The company's pensioners last
received a cheque in March.
"President Islam Karimov increased state pensions in April - and that's exactly when
we stopped receiving them. Now I live like a beggar, selling whatever belongings I
have left in order to buy bread," former Chkalov specialist worker Olga Nazarenko
told IWPR.
The situation may be difficult in the capital, but some areas of the country are even
worse off. Workers at cotton-refining factories, state farms and construction trusts
in the Jizak region have not been paid for a number of months.
Bakhtiyor Tokbaev and 12 of his colleagues recently won a court case against their
employer - Automotive Enterprise No. 21 in the Jizak town of Gagarin - for not paying
salaries for more than a year.
11
The courts ordered the firm to pay 23,196,000 sums (more than 20,000 US dollars) to
its employees in August. However, the local prosecutor found that the enterprise was
totally insolvent and owed its suppliers huge amounts of money.
"The management of the enterprise is not hurrying to pay its staff, and new debts are
emerging all the time," Assistant Prosecutor Komiljon Isoqov told IWPR.
Workers at the Zarbdar cotton-refining factory in Jizak, who have only received two
monthly salary payments this year, are now threatening to go on strike.
"Dissatisfaction grows among the workers and I am already afraid to look in their
eyes," said factory director Raim Kasymov.
"My cashier goes to the bank every day hoping to receive at least half of the sum
that should be paid to the workers. But the bank says that they do not have the money
- and do not expect to have it any time soon."
Yuldash Safarov, a senior official at the central bank's Jizak branch, said the
problem was created because the cash it paid out in salaries was not being banked
there, as most of the local population spent their wages in the capital and its
neighbouring Samarkand region.
Commercial bank managers say the problem is the result of monthly limits on cash
payments imposed on them by the central bank. Uzbekistan is in the process of
implementing a series of reforms to strengthen its banking system and liberalise
foreign trade under the supervision of the International Monetary Fund.
In a July memorandum, the central bank admitted that there was a serious problem with
the non-payment of salaries. Its deputy chairman, Muhammadjon Jumagaliev, told IWPR
that all debts related to payment of salaries have been paid off throughout the
republic as of this month.
"In July we did have problems, but we created an emergency task force which monitored
the situation in all of the regions, dealt with the problems and organised payment,"
he said.
However, reports from Jizak suggest otherwise. "As of September 1, the debt of only
one enterprise, the Kaitashskii mine, equals 33,600,000 thousand sums," said Yuldash
Safarov, head of the salaries department at the central bank's Jizak branch.
Local human rights activists complain that government statements are only making
matter worse. "Right now, resolutions about timely payment of salaries and pensions
are so pathetic that they only annoy people," said Bakhtiyar Khamraev, chairman of
the Jizak branch of the Human Rights Society of Uzbekistan, HRSU.
Some suspect that the cash shortages stems from the government's vast expenditure on
Independence Day celebrations.
Khamraev alleged that the Khokim - head of the regional administration - had ordered
around 2,000 dollars to be taken from the accounts of local enterprises to pay for
Uzbek pop stars to perform at September 1 event, which cost around 500 million sum around 440,000 dollars - in total.
Such reports have angered the unpaid workers, who feel they have very little to
celebrate. "It would have been better if they paid us our salaries," said Khamraev,
one of the out-of-pocket employees at Gagarin's Automotive Enterprise No. 21.
"I can't even afford a kilo of meat for my children for the holiday, not to mention
clothes and various school items needed for the coming year."
12
Ulugbek Khaidarov is an independent journalist from Jizak
Send this article to a friend
Next article in this issue | Previous article in this issue
Recent IWPR Stories of Related Interest:
Uzbekistan: Traders Clash With Police
By Bobomurod Abdullaev in Tashkent (RCA 145, 10-Sep-2002)
Uzbekistan: Sex Trade on the Rise
By Umida Khasanova and Gairatjon Usmanov in Samarkand (RCA No. 138, 16-Aug-02)
Uzbekistan: Land Confiscations Anger Farmers
By Khalmukhamed Sabirov in Andijan (RCA No. 134, 1-Aug-02)
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company reg.
no: 2744185)
Tariff Policy Fueling Social Tension in Uzbekistan
posted on TOL Wire on 26 September 2002
Tariff Policy Fueling Social Tension in Uzbekistan
from EurasiaNet
TASHKENT, 26 September (Eurasianet)--Desperate to reestablish a good working
relationship with international monetary institutions, Uzbekistan’s government is
pushing ahead with fiscal policies that are causing hardship for possibly millions of
its citizens. Already, a punitive tax on imported goods is ravaging the country’s
entrepreneurial sector, and foreign sources in Uzbekistan report that popular anger
is building.
The government imposed a 90 percent tariff in July on most imported items, including
those manufactured in other Commonwealth of Independent States (CIS) countries.
Packaged food and industrial equipment carries a hefty 50 percent tariff. The
measures have effectively caused activity at bazaars throughout the country to grind
to a halt, eliminating the primary source of income for most traders, drivers,
teamsters and other workers. Authorities require all vendors at bazaars to either
provide a certificate of payment of the tariff, or produce proof that the goods being
13
sold were made in Uzbekistan. Shoppers are hard-pressed to find anything other than
fruits and vegetables grown in Uzbekistan at bazaars today.
In addition, the tariffs have imposed a restriction on shuttle trading. The
livelihoods of possibly hundreds of thousands of Uzbeks depend on shuttle-trading, in
which individuals travel to a neighboring country--including Russia, Kazakhstan and
Turkey--buy goods and return to Uzbekistan to re-sell the wares. Overall, some
political observers estimate that potentially two million Uzbeks, including traders
and their families, have suffered economic repercussions due to these tariffs.
The Uzbek government says that the measures are designed to stimulate local
production of consumer goods, including clothing, household products, and
electronics. However, some observers say the government’s main objective is to
curtail black-market activity and to establish tighter controls over money supply.
Officials have a tendency to view the country’s bazaars as black market bastions.
Currently, imported goods can now only be found in state-run stores. Yet Uzbeks
report that even in many state-run stores shelves are empty. At present, the Uzbek
economic infrastructure lacks the ability to make up for the consumer goods shortage
… created by the import tariffs.
The tariffs were imposed weeks after an International Monetary Fund (IMF) mission
visited Tashkent to evaluate implementation of a Staff Monitored Program (SMP). The
main goals contained in the SMP were the unification of the country’s exchange rates
and the free convertibility of the Uzbek currency, the som.
The Uzbek government had promised to implement free convertibility by July 2002.
Compliance with the SMP was seen as the key to future cooperation between Uzbekistan
and the IMF. The IMF closed its office in Tashkent in April 2001, citing the Uzbek
government’s reluctance to implement recommended programs. Since early 2002, Uzbek
authorities have been seeking to entice the IMF to return to Tashkent. Uzbekistan’s
support for the U.S.-led campaign against terrorism prompted Washington to encourage
the IMF to resume activity in Uzbekistan.
In the weeks before the June IMF mission, the government acted to cut currency … by
administratively causing a shortage of banknotes. The shortage succeeded in
temporarily closing the gap between the black market currency exchange rate and the
official rate, largely because black market traders lacked cash in Uzbek som. Over
time, however, the black market rate crept back up again.
The import tariffs are seen by many local observers as an extension of the earlier
efforts to narrow the exchange rate gap. Uzbek media reported in early September that
the black market rate for one US dollar was starting to gradually decline again.
Biznes-Vestnik Vostoka, for example, … the rate had fallen from 1,200 soms to 1,140
soms to the dollar.
Nevertheless, the tariff policy has so far failed to completely satisfy the IMF. A
second IMF mission wrapped up a 10-day visit to Tashkent on 20 September. An IMF
statement issued at the conclusion of the visit noted that the government had failed
to fulfill its currency liberalization commitments. At the same time, the statement
also expressed general satisfaction with tax and budget policies, according to the
UzReport web site.
Meanwhile, local political observers have expressed concern that popular anger over
the tariffs could prompt mass unrest. Already, relatively small-scale protests have
hit many towns and cities, including Tashkent.
So far, government officials have publicly downplayed the economic disruption,
refusing to acknowledge that the tariffs are a source of hardship for many. "We are
going to saturate our domestic market with quality goods as soon as possible," Deputy
Prime Minister Mirabor Usmonov said in an interview broadcast by Uzbek television 13
September.
14
"There will no longer be commodity hunger as before [during Soviet times]," Usmonov
stated. "Goods manufactured in our country will be enough for us."
The news items posted on TOL Wire have been edited by TOL staff with only minor
changes to the original content. Larger additions are marked as follows: [TOL
editor's note].
We want your feedback.
If you have comments on this, or any other TOL article,
please email us at react@tol.cz
Copyright © 2002 Transitions Online. All rights reserved.
Institute for War and Peace Reporting
Thursday, October 3, 2002
Karakalpakstan: Thousands Escape Poverty
Tashkent wants to keep control of Karakalpakstan - yet seems unconcerned that its
people are flooding into Kazakstan.
By Olga Borisova in Nukus (RCA No. 150, 30-Sep-02)
Officials in Uzbekistan appear to be turning a blind eye to a mass migration of
people from its autonomous republic of Karakalpakstan to neighbouring Kazakstan.
An increasing number of Karakalpaks are doing anything they can - including bribing
officials - to cross the border into Kazakstan, where living standards are seen to be
higher and work more readily available.
The problem was highlighted by the recent arrest of a provincial passport officer who
was discovered to have been accepting money to alter Karakalpak travel documents effectively turning the bearer into a Kazak citizen.
It's not known how many have changed their identities in this way, but law
enforcement officials say it is becoming increasingly common.
The Uzbek government appears to be completely unconcerned by this. While its
demography and migration agency claims only around 63,000 people moved from
Karakalpakstan to Kazakstan between 1991 and 2001, independent analysts put the
figure much higher.
Specialists from the Karakalpak branch of the International Foundation to Save the
Aral Sea say that almost a quarter of a million people have emigrated to Kazakstan in
the last seven years alone - practically a sixth of the population.
Karakalpakiya, formerly part of Kazakstan, became an autonomous Soviet republic in
1932, and should have become a separate independent state.
15
But four years later, Tashkent convinced Moscow to turn it over to Uzbekistan, and
any talk of Karakalpak-Kazak reunification has been suppressed since that time.
As well as sharing a very similar language, Karakalpaks are ethnically close to
Kazaks, and the culture and customs of both people are very similar.
While Tashkent seems unconcerned about the Karakalpak people, it has a very keen
interest in the territory itself, which comprises almost a third of Uzbekistan and is
of significant strategic importance.
As the railways and motorways of one of the country's two northern trunk routes go
through Karakalpakstan, Tashkent is especially keen to keep control of the autonomous
republic - and this can be better achieved if the majority of its population are
Uzbeks, rather than Karakalpaks and Kazaks.
Karakalpak local authority sources told IWPR that there are plans for an
"Uzbekisation" of the region - and that the departure of non-Uzbeks is in Tashkent's
interests.
The political machinations of Uzbekistan and Kazakstan are of little interest to the
Karakalpak people, however, who care only for the prospect of decent work and a life
without poverty.
Ertai Jumanov, a villager in the Takhtakupyr region, is slowly dismantling his house
in preparation for a move to Kazakstan. Selling the roof, bricks and doors to
building contractors is the only way he can recoup the money invested in his home.
Nobody is interested in buying property in Karakalpakstan.
Jumanov says he is leaving because of "the terrible poverty and lack of work
prospects, and because I can't support my wife and three children if I stay here".
Almost every family in this small village has a relative now living - and working in Kazakstan. Dozens of partially dismantled houses and outbuildings, stripped of
everything that could be sold on to building companies, are dotted along its dusty
streets.
The flow of migrants speeded up in the year 2000-2001, when the republic's
agriculture-based economy was devastated by a severe drought. Harvests were destroyed
and desperate farmers were forced to kill their livestock, as they could no longer
feed them.
Farmers in the northern regions of the autonomous republic were hardest hit, and
emergency water tanks had to be delivered to stop thousands dying of thirst. The
standard of living, which in these places was already very low, became unbearable for
many.
While water has returned to Karakalpakstan, its farmers have neither the energy nor
the will to rebuild their lives there. And although Kazakstan has its own problems
with poverty, it is still seen as a far more attractive prospect.
Another Takhtakupyr villager, who didn't want to be named, told IWPR that the people
have lost faith in the Uzbek state, claiming it did not provide enough assistance to
save the farmers from ruin during the drought, and has "never wanted to pay honestly"
for their efforts.
"In Kazakstan, our lives will be incomparably better. Workers are well paid and
migrants are treated with special attention. The state will help us out with work and
housing," he said.
16
Olga Borisova is a correspondent for IWPR in Karakalpakstan.
© Institute for War & Peace Reporting
Lancaster House, 33 Islington High Street, London N1 9LH, UK
Tel: +44 (0)20 7713 7130
Fax: +44 (0)20 7713 7140
The opinions expressed in IWPR Online are those of the authors and do not
necessarily represent those of the Institute for War and Peace Reporting.
Registered as a charity in the United Kingdom (charity reg. no: 1027201, company reg.
no: 2744185)
Uzbek Militants' Decline Provides Clues to U.S.
October 8, 2002
Uzbek Militants' Decline Provides Clues to U.S.
By C. J. CHIVERS
ASHKENT, Uzbekistan — The mountain trails crisscrossing this nation's
eastern borders were quiet this summer, except for occasional blasts of
Uzbek land mines killing civilians or livestock. The guerrillas the mines
were meant to deter have not appeared.
It is quite a change. For three years, bearded fighters from the Islamic
Movement of Uzbekistan descended during thaws to skirmish with government
soldiers. It was Central Asia's largest militant group, financed by Osama
bin Laden, given refuge in Afghanistan by the Taliban and included on the
State Department's list of terrorist organizations. Its incursions, and
the accusation that it was behind an assassination attempt on the Uzbek
president, Islam Karimov, in 1999, ensured that it was studied for signs
that the brand of Islam used by the Taliban might spread.
Then came the American-led campaign in Afghanistan after the Sept. 11
attacks. The group's Afghan training bases were destroyed. Its sources of
financing were driven further underground. American officials say its
military leader, Juma Namangani, was killed. Experts now agree it is
severely weakened, more a nuisance than a security threat.
"Their level of organization used to be pretty good," one intelligence
official said. "That level of organization no longer exists."
The decline is a major victory for the United States, helping to
strengthen relations with a new ally and extend American influence in
Asia. It also provides clues about the nature of Islamic militants and the
steps that can be taken to marginalize them.
Reporters from The New York Times collected hundreds of the group's
records from ruined residences and bases last fall. This material,
combined with interviews with intelligence officials, offers a detailed
insight into the group's miscalculations in fighting repression by
fomenting Islamic revolution. It is a militants' morality tale, a portrait
17
of the rise and fall of a movement that arose fighting social injustice
and then transformed itself into a jihad group as it pursued money and
contacts in the extremist world.
The Islamic Movement of Uzbekistan, analysts say, made a deal with
militant Islam, and it lost.
Mr. Namangani's mansion in Mazar-i-Sharif, in northern Afghanistan, said
much about his life. One room was littered with ammunition; another was a
mosque. In the yard was a pull-up bar, with which he maintained his
hardened physique.
Mr. Namangani, a former Soviet paratrooper, was the military leader of the
Islamic Movement of Uzbekistan and commander of the 055 Brigade, the
formation of foreign Taliban fighters in Afghanistan. Like the man he
served, Tokhir Yoldesh, the movement's imam, he came from the Ferghana
Valley in Uzbekistan, the cultural center of an impoverished republic of
24 million that declared its independence from Moscow in 1991.
Islam had existed underground in the Ferghana throughout the years of
enforced atheism, and as the Soviet Union crumbled, several Islamist
political parties emerged. But Uzbekistan was hardly fertile soil for
Islamism. Although the country is overwhelmingly Sunni Muslim, its people
are largely tolerant and secular, with a yearning for connections to the
West. Nevertheless, they had been bitterly disappointed when state
socialism rapidly became a dictatorship under Mr. Karimov, and quietly
supported the Islamist parties' fight against repression.
Late in 1991, after Mr. Yoldesh and a few hundred supporters seized a
government building in the city of Namangan to demand more rights, the
president began an intense crackdown. Security services rounded up
suspected Muslim supporters, closed mosques and branded Islamists enemies
of the state.
Mr. Namangani and Mr. Yoldesh were forced into exile. Mr. Namangani fled
to Tajikistan, where he formed a battalion of 200 to 350 fighters that
carried out paramilitary activities during the civil war that broke out
there in 1992. Mr. Yoldesh settled, intelligence officials believe, in
northwest Pakistan, where he befriended militants and began to build an
Uzbek community in exile.
Much of this activity went unnoticed until February 1999, when five bombs
exploded in Tashkent, killing at least 16 people and wounding more than
100 others. Mr. Karimov was said to have been spared only because he was
late for a meeting.
Although the group never claimed responsibility for the bombs, a month
later, it announced a jihad from a radio station in Iran. "Before
Uzbekistan becomes a ruin," it said, according to a copy of the
declaration found in Mr. Namangani's house, "we ask the regime of Tashkent
to resign unconditionally."
To prepare for war, the movement organized training, first in Tajikistan
and then in camps in Afghanistan, at which Mr. Namangani schooled
volunteers in small-unit tactics, marksmanship and rudimentary instruction
in making bombs that could be delivered in suitcases or trucks. The
training appeared effective.
"I had the pleasure of watching some I.M.U. units, and they were cheap
copies of the Soviet paratroopers," an American intelligence official
said.
But to finance the training, the movement began drawing on the networks of
trainers and money available in Afghanistan, analysts say, forcing it to
align itself with Al Qaeda. The group appeared to coordinate its
activities to follow Mr. bin Laden, or at least to impress him, with hopes
of receiving more money. This, the analysts say, ultimately proved to be a
fatal mistake.
Dr. Abdujabar Abduvakhitov, who has studied the group since its inception
and is now president of Westminster International University in Tashkent,
said the movement made a choice: to turn toward incitement and terror and
thus to get access to supporters in Turkey, Saudi Arabia, Pakistan and
18
Iran. But this path gave it a poisonous tone and led to a pledge of jihad
rather than simple reform, ensuring that the movement was repulsive to the
Uzbek people it hoped to attract.
"What they found was that through Islam, and Islamic slogans, they could
make more money and get weapons," he said. "But as they did these things,
they made themselves out of touch with the people at home."
In August 1999, six months after the Tashkent bombings, five men sent by
Mr. bin Laden met Mr. Namangani in Tajikistan, said an American official
familiar with the meeting. The next month the guerrillas appeared in
Kyrgyzstan, where they battled government troops, killing at least 18, and
took hostages, including Kyrgyz police officers, four Japanese geologists
and four American mountain climbers. (All the hostages either escaped or
were released for ransom.)
The campaign was quiet in the winter. But when the guerrillas returned in
2000, they crossed into Uzbekistan along its southeastern border with new
medical kits, tactical radios and night-vision goggles. "All of this
speaks to better funding, it speaks to better contacts," one intelligence
official said. "They had made an impression on bin Laden."
Most analysts say that at its peak the movement had about 1,500
guerrillas, with perhaps another 2,000 family members who left home with
the men — hardly enough to topple a government. But the incursions drew
extensive news coverage, in which Mr. Namangani's bands of fighters were
portrayed as almost magically skilled. They became a mythic presence, holy
warriors who embarrassed the Central Asian states.
But mythic status had a price: the adoption of radical Islam. By late last
year, the movement's material carried almost as much anti-Western and
anti-Jewish material as it did details of problems in Uzbekistan. In a
training center in Kunduz, the guerrillas stored pamphlets promoting
global jihad, most of them printed in Pakistan. They railed against Israel
and America, and against song, smoke, sex and drink.
One radio script, found in a home used by the movement's military leader,
complained that the anti-Taliban Northern Alliance wanted "to sell
Afghanistan to America's Jews," and that American soldiers waging war
there were the sons of servicemen in Vietnam who "tore open the stomachs
of pregnant women and took the baby child, bayoneted the baby and held it
up toward thirsty soldiers."
Michael Hickok, a former professor of terrorism and Central Asian studies
at the Air War College in Alabama, said: "It is a much more radical Islam
than Namangani had ever embraced before. It is a borrowing from the
Taliban. It's as if they had to pitch their message so it was consistent
with their hosts."
The final element of the movement's trade-off was in place by last spring,
analysts say. American intelligence officials said that early last year
Mr. Yoldesh entered an agreement with Mullah Muhammad Omar, the Taliban
leader, to set aside the Central Asia campaign temporarily and use his
fighters against the Northern Alliance. If Mr. Namangani's men would fight
the Taliban's war, then the Taliban would offer more help for the
movement's actions in Central Asia.
The decision would be Mr. Namangani's undoing. He began the year fighting
the anti-Taliban forces of Ahmed Shah Massoud in northern Afghanistan.
After the Sept. 11 attacks, he found himself facing the United States.
In October, Mullah Omar appointed him commander of the 055 Brigade. It was
perhaps the worst job on the planet, requiring him talk into tactical
radios just as American warplanes showed up, with their laser-guided bombs
targeting electronic communications. He was fatally injured on Nov. 18
when a convoy in which he was traveling was struck in Kunduz Province,
United States officials said.
There were no subordinate commanders of Mr. Namangani's stature or
ability, intelligence officials say, and no one has emerged to replace
him. They also say Mr. Namangani's polyglot guerrilla formations are
scattered now, pushed into hiding in Afghanistan, Pakistan, Iran,
19
Tajikistan and Kyrgyzstan. Some members are believed to have quit.
A few experts predict that with its guerrilla units disrupted the movement
may now become smaller, bent more on terror and less on conventional
fighting. But others see several obstacles, especially the movement's
alliance with Al Qaeda, which has earned it revulsion at home. In
addition, Mr. Yoldesh, never a military leader, is thought to lack the
skills and charisma to train fighters.
Most important, they say, the movement's former underwriters in Pakistan,
Afghanistan and Al Qaeda are no longer in a position to offer much help.
Having alienated their base at home, and with their benefactors largely
overwhelmed, the experts now say the group does not appear to be a
significant regional threat.
Copyright The New York Times Company | Permissions | Privacy Policy
Country Guide / The Times of Central AsiaDaily news from
Central Asia!
Wednesday, Nov 27, 2002
State Structure:
Government type: republic; effectively authoritarian
presidential rule, with little power outside the
executive branch
Administrative divisions: 12 wiloyatlar (singular wiloyat), 1 autonomous republic (respublikasi), and 1
city (shahri); Andijon Wiloyati, Bukhoro Wiloyati,
Farghona Wiloyati, Jizzakh Wiloyati, Khorazm Wiloyati
(Urganch), Namangan Wiloyati, Nawoiy Wiloyati,
Qashqadaryo Wiloyati (Qarshi), Qoraqalpoghiston (Nukus),
Samarqand Wiloyati, Sirdaryo Wiloyati (Guliston),
Surkhondaryo Wiloyati (Termiz), Toshkent Shahri,
Toshkent Wiloyati.
Oliy Majlis of the Republic of Uzbekistan
The highest representative body of the state is the Oliy
Majlis. Uzbekistan's Supreme Assembly. This body
Exercises legislative powers.
The Oliy Majlis of the Republic of Uzbekistan shall
consist of deputies, elected by territorial
constituencies on a multi-Party basis for a term of five
years.
Oliy Majlis adopt and amend the Constitution and laws of
Republic of Uzbekistan, legislatively regulate customs,
currency and credit systems, problems of the
administrative - territorial structure, and alteration
of frontiers of the Republic of Uzbekistan and approve
of the state's budget.
Oliy Majlis nominates elections to Oliy Majlis of
Republic of Uzbekistan and local representative bodies,
elect of the Constitutional Court, Supreme Court, Higher
Arbitration Court of the Republic of Uzbekistan,
ratifies of the decrees of the President on the
20
appointment and removal of the higher officials of
country, ratifies a modification of organs of state
management, ratifies the international treaties and
agreements and realizes other activity.
The right to initiate legislation in the Oliy Majlis of
the Republic of Uzbekistan is vested in the President of
the Republic of Uzbekistan, the Republic of
Karakalpakistan through the highest body of state
authority, the deputies of the Oliy Majlis of the
Republic of Uzbekistan, the Cabinet of Ministers of the
Republic of Uzbekistan, the Constitutional Court, the
Supreme Court, the Higher Arbitration Court and the
Prosecutor General of the Republic of Uzbekistan.
The Oliy Majlis of the Republic of Uzbekistan shall pass
laws, decisions and other acts. Any law shall be adopted
when it is passed by a majority of the total voting
power of the deputies of the Oliy Majlis.
Promulgation of the laws and other normative acts shall
be a compulsory condition for their enforcement.
The President of the Republic of Uzbekistan
The President of the Republic of Uzbekistan is the head
of state and the executive authority in the Republic of
Uzbekistan. He is also a Chairman of the Cabinet of
Ministers and elected for a five-year term.
The President of the Republic of Uzbekistan shall:
Form the administration and lead it, ensure
interaction between the highest bodies of state
authority and administration, set up and dissolve
ministries, state committees and other bodies of
administration of the Republic of Uzbekistan;
Appoint and dismiss the Prime Minister, his First
Deputy, the Deputy Prime Ministers, the members of the
Cabinet of Ministers of the Republic of Uzbekistan,
the Procurator General of the Republic of Uzbekistan
and his Deputies;
Present to the Oliy Majlis of the Republic of
Uzbekistan his nominees for the posts of Chairman and
members of the Constitutional Court, the Supreme
Court, and the Higher Economic Court, as well as the
Chairman of the Board of the Central Bank of the
Republic of Uzbekistan, and the Chairman of the State
Committee for the Protection of Nature of the Republic
of Uzbekistan;
Appoint and dismiss judges of regional, district, city
and arbitration courts;
Sign the laws of the Republic of Uzbekistan;
Serve as the Supreme Commander of the Armed Forces of
the Republic and is empowered to appoint and dismiss
the high command of the Armed Forces and also to
confer top military ranks;
Establish the national security and state control
services, appoint and dismiss their heads, and
exercise other powers vested in him.
The President of the Republic of Uzbekistan issues
decrees, enactments and ordinances binding on the entire
territory of the Republic on the basis of and for
enforcement of the Constitution and the laws of the
Republic of Uzbekistan.
Cabinet of Ministers
The Cabinet of Ministers is appointed by the President
of the Republic of Uzbekistan and approved by the Oliy
21
Majlis. Karakalpakistan head of government is an ex
officio member of the Cabinet of Ministers.
The Cabinet of Ministers issues enactments and
ordinances in accordance with the current legislation.
This is binding on all bodies of administration,
enterprises, institutions, organizations, officials and
citizens throughout the Republic of Uzbekistan.
Judicial Authority in the Republic of Uzbekistan
The judicial system in the Republic of Uzbekistan
consists of the Constitutional Court of the Republic,
the Supreme Court, the Higher Economic Court of the
Republic of Uzbekistan, along with the Supreme Court,
and the Economic Court of the Republic of
Karakalpakistan. These courts' judges have been elected
for a term of five years. The judicial branch also
includes regional, district, town, city, Tashkent city
courts and arbitration courts appointed for a term of
five years.
The Constitutional Court of the Republic of Uzbekistan
hears cases relating to the Constitutionality of acts
passed by the legislative and executive branches.
The Constitutional Court of the Republic of Uzbekistan
judges the constitutionality of the laws of the Republic
of Uzbekistan and other acts passed by the Oliy Majlis
of the Republic of Uzbekistan, the decrees issued by the
President of the Republic of Uzbekistan, the enactments
of the government and the ordinances of local
authorities, as well as obligations of the Republic of
Uzbekistan under inter-state treaties and other
documents; Confirm the constitutionality of the
Constitution and laws of the Republic of Karakalpakstan
to the Constitution and laws of the Republic of
Uzbekistan; Interpret the Constitution and the laws of
the Republic of Uzbekistan.
The Supreme Court of the Republic of Uzbekistan is the
highest judicial body of civil, criminal and
administrative law. The rulings of the Supreme Court are
final and binding throughout the Republic of Uzbekistan.
The Supreme Court of the Republic of Uzbekistan has the
right to supervise the administration of justice by the
Supreme Court of the Republic of Karakalpakistan, as
well as by regional, city, town and district courts.
International organization participation: AsDB, CCC,
CIS, EAPC, EBRD, ECE, ECO, ESCAP, IAEA, IBRD, ICAO,
ICRM, IDA, IFC, IFRCS, ILO, IMF, Intelsat, Interpol,
IOC, ISO, ITU, NAM, OIC, OPCW, OSCE, PFP, UN, UNCTAD,
UNESCO, UNIDO, UPU, WFTU, WHO, WIPO, WMO, WToO, WTrO
(observer).
Head of the State (As of March, 2001)
President - Islam A. Karimov
Islam Karimov Biography
Cabinet members of the Republic of Uzbekistan
Prime MinisterOtkir Sultonov
Deputy Prime MinisterRustam Azimov
Deputy Prime MinisterValeriy Otaev
Deputy Prime MinisterDilbar Guliamova
Deputy Prime MinisterMirabror Usmanov
Deputy Prime MinisterAnatoliy Isaev
Deputy Prime MinisterHamidullah Karamatov
Deputy Prime MinisterTurop Holtoev
22
Deputy Prime MinisterRustam Yunusov
Minister of Foreign AffairsAbdulaziz Kamilov
Minister of Foreign Economic RelationsElyor Ganiev
Minister of Internal AffairsZokirjon Almatov
Minister of Higher & Secondary Specialized
EducationSaidakhror Ghulomov
Minister of HealthFeruz Nazirov
Minister of CultureHairullah Jurayev
Minister of EducationRisboy Juraev
Minister of DefenseKodir Ghulomov
Minister of LaborShavkatbek Ibragimov
Minister of FinanceMamarizoh Nurmuradov
Minister of Energy & ElectricityIrgash Shoismatov
Minister of JusticeAbdusamat Polvon-Zoda
Minister of Emergency SituationsBahodir Kasymov
Minister of social maintenanceOkiljon Obidov
Chairman of the National Security Service Rustam
Inoyatov
Chairman of the Constitutional CourtBahodir
Eshonov
Chairman of the Supreme CourtUbaydulla Mingboev
Chairman of the State Committee for
CustomsSaid-Azim Oripov
Chairman of the State Taxation Committee Botir
Hojaev
Chairman of the State Geology & Mineral Resources
CommitteeNurmuhammad Ahmedov
Chairman of the State Committee for architecture &
construction Azamat Tohtaev
Chairman of the National Bank for Foreign Economic
ActivityZainutdin Mirhojaev
Chairman of the State Central BankFayzulla
Mullajonov
Detailed information on Uzbekistan provinces
Economic Overview:
Uzbekistan is a dry, landlocked country of which 10%
consists of intensely cultivated, irrigated river
valleys. More than 60% of its population lives in
densely populated rural communities. Uzbekistan is now
the world's third largest cotton exporter, a large
producer of gold and oil, and a regionally significant
producer of chemicals and machinery. Following
independence in December 1991, the government sought to
prop up its Soviet-style command economy with subsidies
and tight controls on production and prices.
Faced with high rates of inflation, however, the
government began to reform in mid-1994, by introducing
tighter monetary policies, expanding privatization,
slightly reducing the role of the state in the economy,
and improving the environment for foreign investors. The
state continues to be a dominating influence in the
economy and has so far failed to bring about much-needed
structural changes. The IMF suspended Uzbekistan's $185
million standby arrangement in late 1996 because of
governmental steps that made impossible fulfillment of
Fund conditions. Uzbekistan has responded to the
negative external conditions generated by the Asian and
23
Russian financial crises by tightening export and
currency controls within its already largely closed
economy. Economic policies that have repelled foreign
investment are a major factor in the economy's
stagnation. A growing debt burden, persistent inflation,
and a poor business climate led to stagnant growth in
2000, with little improvement predicted for 2001.
Industries: textiles, food processing, machine building,
metallurgy, natural gas, and chemicals
Agriculture - products: cotton, vegetables, fruits,
grain; livestock.
Exports - commodities: cotton, gold, natural gas,
mineral fertilizers, ferrous metals, textiles, food
products, and automobiles.
Imports - commodities: machinery and equipment,
chemicals, metals; foodstuffs.
Database of companies in Uzbekistan
GENERAL INFORMATION:
Facts at a Glance, Flag Description, State Symbol,
National Anthem, Country Map, Survival Info, Embassies,
Passport and Visa, Money and Costs, Public Holidays,
Voltage, Weight, Metric System, Useful links, Add Your
Link
COUNTRY PROFILE:
Geography, Environment, Main Cities, Climate, History,
Different nations, Religion, State Structure, Economic
Overview, Export, Import, Investors, Special Topic,
Picture gallery
TO AND IN:
How to get there, Air, Road, Culture & Arts, Museums,
Theaters, Cinemas, National music samples, Where to
stay, Telecommunication, Uzbek Cuisine, Leisure,
Recreation possibilities, ABC, Phrases
Copyright © 1999-2002
The Times of Central Asia
News / The Times of Central AsiaDaily news from Central Asia!
EBRD Chief to Meet Karimov Amid Criticism on Board
Meeting in Tashkent
Uzbekistan, November 27, 2002 [ 18:15 ]
By Ron Synovitz, RFE/RL
More news on:
24
PRAGUE. The latest "Transition Report" by the European
Bank for Reconstruction and Development (EBRD) confirms
that Uzbekistan ranks alongside Turkmenistan and Belarus
as one of the most tightly controlled republics in the
former Soviet Union. Despite Tashkent's poor record on
both economic and democratic reforms, the EBRD is, for
now, still planning to conduct its annual board meeting
in the Uzbek capital next May. But RFE/RL that EBRD
President Jean Lemierre is conducting a personal
investigation of the situation in Uzbekistan during a
three-day visit to the country that starts tomorrow.
The decision of the European Bank for Reconstruction and
Development to conduct its annual board meeting in
Uzbekistan next May has opened the London-based
institution up to strong criticism from human rights
groups.
That's because the EBRD has a mandate to foster
democracy and market economics within the 27 former
communist countries that it operates. Yet according to
the EBRD's own latest data -- which was released this
week in the bank's annual "Transition Report" -Uzbekistan continues to rank alongside Turkmenistan and
Belarus as the former Soviet republics that have the
worst reform records.
Sources within the EBRD told RFE/RL today that bank
President Jean Lemierre will personally investigate the
political, economic, and human rights situation in
Uzbekistan during a three-day visit to the country that
starts tomorrow.
Lemierre is scheduled to meet with Uzbek President Islam
Karimov. The agenda of those talks includes Tashkent's
poor record on economic and political reforms, as well
as next May's EBRD board meeting. One EBRD official, who
requested anonymity, told RFE/RL that the human rights
situation in the country will be discussed in "broad
terms." That EBRD official stressed that there has not
been any decision to move the board meeting away from
Tashkent. The official said that if there is a decision
to cancel the Tashkent meeting, it will not be announced
until after Lemierre's visit this week.
EBRD Chief Economist Willem Buiter told RFE/RL yesterday
that the newly released "Transition Report" shows the
bank is not downplaying concerns about the lack of
reform in Uzbekistan. "We did point out in the specific
section of the ["Transition] Report" that deals with
Uzbekistan -- and elsewhere in the report -- that
Uzbekistan had not made any reform progress this year,
at any rate, and very little for quite a long time now.
[Also] it pointed out that [Uzbekistan] is amongst the
least advanced of the transition countries [that are]
our 27 countries of operations. We made that very clear
and very open. We are not mincing our words there."
Buiter said it would be wrong for Karimov's regime to
25
suggest that the bank's board meeting in Tashkent
signals EBRD support for the record of Karimov's regime
on democratic and economic reforms. He also said it
would be wrong to suggest that having the meeting in
Tashkent is the result of pressure from Washington to
reward Uzbekistan for the role it played in the U.S.-led
antiterrorism campaign in neighboring Afghanistan.
"In the 11 years that the bank has been operating, we
have never had an annual meeting in Central Asia. And it
was time. We decided this [before 11 September], but I
think the events of 11 September point out that the
region doesn't just have human and economic
significance, but it has also got global strategic
significance. So an annual meeting in Central Asia was
overdue. The center, the core of Central Asia, is
Uzbekistan. It has 25 million people. That's as much as
the rest of the region combined. So that was the place
to go. We are going there not to approve or disapprove.
We say very clearly what our views are on the economic
development in the country. We also will very clearly
bring our message to the country that political
pluralism and successful economic reform go hand in
hand. There can be no sustained growth [or] sustained
development in the economic sphere that is not also
reflected in the political sphere."
New York-based Human Rights Watch is one of several
groups that has been trying to convince the EBRD to use
the meeting in Tashkent as a way to pressure Karimov's
regime into changing oppressive practices. Marie
Struthers, a Human Rights Watch researcher based in
Moscow who has conducted extensive field research in
Uzbekistan, told RFE/RL today that she thinks it would
unrealistic to expect the EBRD to change the location of
the meeting at the last minute.
But Steve Crawshaw, who directs the London office of
Human Rights Watch, said that the EBRD should, indeed,
threaten to move the meeting elsewhere if Karimov's
regime doesn't immediately bring an end to the use of
torture and arbitrary detention against potential
political opponents and activists. "It is
extraordinarily important that if this meeting is to go
ahead, it must not be perceived as an endorsement -- let
alone that Islam Karimov, the Uzbek president, should be
able to use this as an endorsement of his regime and all
that is happening there. We are very worried that the
EBRD -- that the bank-- is at the moment allowing this
[board meeting] to go ahead believing that this will go
in the direction of democracy. What, in practice, is
happening is the regime is taking this as an endorsement
of its appalling behavior which already exists."
Considering the tight press controls that exist in
Uzbekistan, Crawshaw said he expects the Uzbek media to
characterize an EBRD board meeting in Tashkent as a sign
that the international community approves of the
behavior of Karimov's regime. "The EBRD still believes
somehow that by going ahead with the meeting it will
send the right message. We think that under present
26
circumstances, that is absolutely wrong. It is
extraordinarily naive of the bank -- which, after all,
has had dealings with many of these kinds of regimes
over the years -- it's extraordinarily naive not to
understand how a regime like that will use [the EBRD's
meeting.] It will be top of the TV. [State-controlled
broadcasters will say,] 'Isn't it marvelous. All these
limousines are appearing in town.' [And they will] link
it precisely to [claims by Tashkent that it has made
progress on] democracy. The fact that the bank says [the
meeting] is not meant as an endorsement will absolutely
be swallowed up. You're not going to hear that from the
Uzbek regime."
Human Rights Watch isn't alone in its criticism of
Uzbekistan's poor record on democracy and market
reforms. The United Nations Committee Against Torture
last May released a highly critical report charging that
Tashkent is in violation of the international convention
against torture. The UN group has demanded an
investigation into thousands of cases of arbitrary
arrests and the alleged torture of individuals who have
been critical of Karimov's regime.
A U.S. State Department report issued this year widely
echoes the findings of the UN committee. It charges that
Uzbek police and the country's National Security Service
have routinely used torture and mistreated detainees to
obtain confessions or incriminating statements. The U.S.
State Department says Uzbekistan's record on human
rights is very poor and that officials in the country
continue to commit serious abuses.
It says citizens of Uzbekistan face difficulties if they
try to exercise the right to change their government
peacefully. It notes that the Uzbek government does not
permit the existence of opposition political parties. It
also says the Uzbek government severely restricts
freedom of speech and the press -- and that an
atmosphere of repression stifles public criticism about
Uzbek President Islam Karimov and his government.
On economic reforms, the U.S. Department of State notes
that Uzbekistan's banking system remains closely
controlled by the state through a complex set of
regulations, decrees and practices. It says most loans
are directed by the government, financed through the
Central Bank of Uzbekistan and guaranteed by the
Ministry of Finance. There are few private banks, and
those that exist are very small.
Another study critical of Uzbekistan's record on
economic reform is the "Index of Economic Freedom,"
which was released earlier this month by the U.S.-based
Heritage Foundation and "The Wall Street Journal." The
"Index of Economic Freedom" ranks Uzbekistan near the
bottom of its list -- placing it 149th out of the 156
countries surveyed. The authors of that study
categorized Uzbekistan as "repressed" in terms of
economic freedom.
27
The "Index of Economic Freedom" says Uzbekistan's trade
policies reveal a "very high level of protectionism." It
says the country's banking and finance sector suffers
from a "very high level of restrictions," which
discourage foreign investment. Regulations faced by
emerging private businesses also were described as "very
high." It also says protections for those who own
private property in Uzbekistan are weak. It also notes a
high level of corruption and black-market activity in
the country.
The Economist Intelligence Unit (EIU), elaborating on
the issue of corruption, has described the Uzbek
judiciary as "subordinate" to Karimov's regime. It says
Uzbekistan's judicial procedures fall far short of
international standards -- and that this "contributes to
widespread corruption."
The EIU also warns that reforms in Uzbekistan's
agricultural sector have been undermined by prohibitions
against private ownership of land, which can only be
leased. Indeed, there is no land market in Uzbekistan.
And although leasehold rights are legally permanent and
inheritable, they often are curtailed by local
authorities who have considerable discretion over the
rights of private farmers.
Last month, the British-based "The Economist" magazine
published a report about the EBRD's choice of Uzbekistan
for next year's meeting under the headline "European
Bank for Repression and Dictatorship?" That report asked
rhetorically what the EBRD's leadership could have been
thinking of when they decided upon Tashkent for its next
meeting.
Copyright © 1999-2002 The Times of Central Asia
News / The Times of Central AsiaDaily news from Central Asia!
FINANCE - Corporate Bond Market Developing in
Uzbekistan
Uzbekistan, November 30, 2002 [ 09:31 ]
TCA
TASHKENT. Uzbekistan is fourth in the CIS after Russia,
28
Ukraine, and Kazakhstan in terms of the amount of
corporate bonds issued.
The corporate bond market in Uzbekistan was marked by an
increase in the number of issues and the development of
a secondary market. However, demand on the second market
is weak due to high interest rates, thus only a small
number of companies have decided to issue bonds.
Financial consultants
The first corporate bonds in Uzbekistan were issued in
1999 by companies and banks that generally had a
significant share of foreign capital. Corporate bonds
were used only as a better way of borrowing for short
terms and there was no secondary market.
The mechanism for placing the bonds also indicates that
they were not market instruments. Almost all corporate
bond issues at the time were sold directly by the
issuing company and were bought by affiliated companies.
Only a subsidiary of Naitov networks in 2000 engaged
Uzbek bank Business-Bank to be the underwriter for two
bond issues.
More than 10 corporate bond issues worth 600 million sum
were issued from 1999 to August 2001 and a third of this
was issued at the start of 2001.
For comparison the Ministry of Finance issued nearly 120
billion sum in GKO during the period, which indicates
that the corporate bond issues remained small even for
the local stock market. The corporate bond market just
one year ago accounted for less than 0.5% of the debt
market.
The need to develop borrowing instruments and the active
efforts by several financial companies and banks to
advertise and create a market niche for underwriting
bond issues led in August 2001 to the formation of the
International Issue Syndicate. This new organization
specialized in organizing bond issues, assisting in
their placement and acting as payment agent, and
creating and supporting a liquid secondary market.
A group of Uzbek banks - Business-Bank, Alp Zhamol Bank,
Capital Bank, KHIF Bank, A&TM electronic information
center, and a subsidiary of Britain's Carthill
Investment Company, were the initiators and the first
members of the new structure. The Carthill subsidiary,
Carthill Assets Management Company, is the biggest
management and investment company in the country. This
company became the organizer of most projects in the
syndicate and coordinated securities issues.
Another non-bank member of the consortium, A&TM,
analyzed the financial situation at companies planning
bond issues and prepared the prospectuses for the
issues. It works with Carthill to promote and present
the new issues.
29
The other members of the syndicate serve as underwriters
for bond issues, support the secondary market and act as
payment agents.
In addition to the banks already mentioned the syndicate
now includes ABN Amro Bank NB Uzbekistan A.O., Aviabank,
Pakhta Bank, Zamin Bank, Trust Bank, Tashkent Bank (a
subsidiary of the Interstate Central Asia Bank for
Cooperation and Development), Ravnak Bank, Ipak Iuli
Bank, and Uzprivatbank. Thus, a third of the country's
banks are members of the corporate bond syndicate.
The International Issue Syndicate is essentially a
monopoly in assisting corporate bond issues.
A consortium of brokers and depositary-registrars Tatat, also plays an important role on the corporate
bond market. Tatat often acts as the market maker on the
secondary market.
Market development
Laws that would allow the successful development of the
corporate bond market did not begin to appear until this
year and were largely the result of lobbying by the
issue syndicate, namely the efforts of Carthill Assets
Management Company.
The allowable size of corporate bond issues was changed
only in March of this year. Corporate bond issues were
previously limited to 20% of charter capital but have
now been increased to the equivalent of charter capital.
Following the issue of a presidential decree on measures
to restrict the increase in money supply and increase
liability for financial discipline, which stipulated the
development of a corporate bond market, it became
possible to process a bond issue quickly.
Another obstacle to the development of a market for
corporate fixed income instruments was a restriction
established by the Central Bank instructions on the
capital of bond organizers and underwriters. After the
syndicate was formed (which bears joint liability and
has combined capital of more than 12 billion sums) it
became possible to service bond issues by the country's
biggest enterprises. Each issue generally has one main
underwriter and several co-underwriters.
In the standard agreements for bond issues the bank
underwriters assume the obligation to buy the bonds from
secondary investors. One important change that was
brought about by the International Issue Syndicate was
the organization of a secondary bond market that began
to function in April of this year. A trading floor for
corporate bonds was organized at the Tashkent Stock
Exchange that is a specialized exchange for fixed income
corporate securities.
Trading requires the 100% deposit of cash and securities
and is held through a dual auction with automatic
30
quotes.
The market maker sets the firm price for the bonds
within 15 minutes after the start of trading. The
electronic system enables accelerated bidding and
one-time posting on each terminal. This lends the
necessary transparency to the market. In order to be
admitted the trading bonds must undergo a standard
listing procedure. Trading on the specialized floor for
corporate bonds is held each business day from 2 to 4
p.m. local time.
In addition to the trading floor organized on the
country's biggest exchange, corporate bonds are also
traded on the Internet in a system organized by Carthill
Assets Management Company. Unlike the exchange, trades
can be made in the Carthill system round the clock every
day.
Despite the broad opportunity to invest
bonds the organized secondary market is
April to October volume on the Tashkent
900.6 million sum, which is just 10% of
bonds issued during that time.
in corporate
very small. From
exchange totaled
the corporate
Volume was highest in the third quarter of this year. In
the period since trading opened on July 1, just one
transaction was conducted on the secondary market. Tatat
as the market maker sold bonds of subsidiary NCI
Projects Inc worth 278.5 million sum at 103.15%.
Main projects
Since the International Issue Syndicate began
functioning it has organized seven corporate bond issues
worth 4.87 billion sum.
The first corporate bonds issued with the help of the
syndicate were bonds of Uzbek-German M.A.X. Huroson, a
leader in the production of mineral water and beverages
in Uzbekistan. Alp Zhamol Bank was the main underwriter
for the issue and co-underwriters were Business Bank,
Capital Bank, and KHIF Bank.
The placement began on October 26, 2001. The issue was
worth 100 million sum and face value was 1 million sum.
The bonds mature in nine months, thus they have been
almost fully redeemed (according to a schedule
established previously). The interest rate on the
placement was 27% annually, which was close to the
Central Bank refinancing rate of 30%.
The next two projects undertaken by the International
Issue Syndicate were bond issues for Uzbek-American
N.COM, the biggest supplier of computers and software in
Uzbekistan, and NCI Projects, a subsidiary of NCI
Projects International (U.S.), also a software
developer.
These two issues were adapted to the secondary market.
31
Their face value was lowered to 100,000 sum and the
entire issue was placed in a non-certificate form
involving centralized depositary. The issue size was
increased to 200 million sum and 300 million sum,
respectively.
The Business Bank was the main underwriter for these two
issues and it signed an agreement on behalf of the
syndicate making Tatat the market maker on the secondary
market.
Despite the fact that the new bonds differed
considerably from those issued by M.A.X. Huroson in
their term (N.COM bonds were issued for one year and NCI
Projects for two years), the interest rates were
similar. Yield on the shorter N.COM bonds was 27% and
26% for NCI Projects.
Asklepii, a pharmaceutical company that imports from
Europe and Russia, was the next to place a bond issue.
The company issued 270 million sum in bonds and the
issue was similar to that of N.COM in terms of
parameters and underwriters (one year at 27% annually).
The International Issue Syndicate portfolio by the start
of October had reached 20 bond issues. In addition to
the four named above, three more large companies placed
bonds in September and October, increasing the market by
six times.
A bond issue placed in mid-October by Almalyk
Metallurgical Combine worth 2 billion sum was the
biggest bond issue ever issued in Uzbekistan. The bonds
mature in one year and were placed at 29% annually.
Uzprivatbank was the main underwriter for the Almalyk
issue, joining the syndicate specifically for this bond
issue. The issue is currently being registered with the
securities market regulatory center, which oversees the
market.
Another big Uzbek company that placed a bond issue this
autumn was the Uzbek-American joint venture Coscom. The
company placed an issue worth 1 billion sum for two
years with a quarterly coupon of 29% annually. Analysts
said the bonds could become the leader on the secondary
market in terms of volume, however, NCI Projects is the
current undisputed leader on this segment.
The most recent corporate bond issue placed through the
International Issue Syndicate was one by Sovplastital
worth 1 billion sum. The syndicate will probably issue
one or two more corporate bonds by the end of the year.
A subsidiary of Planete Ltd plans an issue worth 500
million sum.
While International Issue Syndicate actively promotes
its services to organize corporate bond issues, a number
of rather interesting issues bypassed the syndicate. A
corporate bond issue by MDS-Service this summer that was
underwritten by one of the country's biggest banks who
32
is not a member of the syndicate, Uzzhilsberbank, is the
most appealing in terms of its potential on the
secondary market.
The bond issue was worth 350 million sum and face value
was 500,000 sum. The bonds were issued for two years at
26% annually and target corporate and private investors.
Advantages and shortfalls
The development of the corporate bond market reveals the
modest interest in the instrument both among enterprises
and investors. The high yield on corporate bonds is a
plus for investors. Government securities currently pay
18% - 19% annually and bank deposits pay up to 22%
annually. There are no other instruments for portfolio
investment in Uzbekistan.
On the other hand, paying 27% - 30% on borrowing along
with commission to the organizers and underwriters makes
this form of borrowing ineffective. Companies that
placed long issues have a difficult time. This is
because rapid devaluation in the next year could turn to
stabilization, which would lower nominal profitability
and complicate interest payments.
At the same time, companies can receive additional
working capital and money for investment projects
through bond issues. The amount of money borrowed under
bond issues is considerably higher than a bank could
provide, which is limited by the amount of its capital.
Corporate bond issues enable big companies to establish
a credit history and eventually operate on world capital
markets.
Another upside to corporate bond issues is that they
give institutional investors and instrument to diversify
portfolios and increase returns.
Copyright © 1999-2002
The Times of Central Asia
ADB Supports Microenterprises in Uzbekistan - ADB.orgHome | What's New |
ADB Supports Microenterprises in Uzbekistan
MANILA, PHILIPPINES (10 December 2002) - The Asian Development Bank (ADB)
approved a US$20 million loan to help provide microfinance services to
poor households, micro-enterprises and small businesses in Uzbekistan.
In addition, ADB will provide a technical assistance grant of US$400,000
to strengthen the capacity of the Central Bank of Uzbekistan for
prudential regulation and supervision of savings and credit unions (SCUs).
The loan will help create SCUs and strengthen the capacity of commercial
banks to provide microfinance services.
The assistance package supports the Government's efforts to promote the
development of micro and small enterprises (MSEs) as a means of generating
33
income and employment and easing the challenges of structural reforms. As
Uzbekistan moves towards a market-oriented economy, it must carry out
difficult reforms, including the restructuring and privatization of
state-owned enterprises. The development of MSEs will help to offset the
unemployment created by such reforms.
But Uzbekistan has a small and underdeveloped financial sector with
limited capacity to provide financial support to MSEs and to poor
households, particularly in isolated areas. In the past, there have been
no formal, legally incorporated microfinance institutions.
"An effective and well-funded financial system, which mobilizes savings
and provides the poor with financial support to set up MSEs is critical to
supporting the country's transition to a market economy and reducing
poverty," says Radhakrishna Narasimham, Senior Portfolio Management
Specialist in ADB's East and Central Asia Department.
The Small and Microfinance Development Project has three major elements:
Developing an effective regulatory and institutional framework for SCUs
Setting up an institutionally and financially sustainable network of 20
SCUs, supervised by the Central Bank
Providing a credit line to commercial banks for onlending to households,
microenterprises, and SCUs.
The total cost of the project, due to be completed in 2010, is US$50
million. Apart from ADB, it will be funded by contributions from the
Government, SCU members, participating commercial banks and their
borrowers.
The ADB loan will be made from its ordinary capital resources and will
have a 20-year term, including a grace period of five years. The interest
rate will be determined in accordance with ADB's LIBOR-based lending
facility.
More at adb.org/media
Contacts
Press Inquiries Only
Contact: Pamposh Dhar
Tel: + 632 632 5937
E-mail: pdhar@adb.org
6 ADB Avenue, Mandaluyong
PO Box 789
0980 Metro Manila, Philippines
Tel: + 632 632 4444
Fax: +632 636 2444
Telex: 63587 ADB PN/29066 ADB PH
© 2002 Asian Development Bank
Privacy | Terms of Use Top of page
FT.com / World
EBRD's Uzbek meeting under review
By Stefan Wagstyl, East Europe Editor
Published: December 17 2002 22:19 | Last Updated: December 17 2002
22:19
34
The European Bank for Reconstruction and Development (EBRD) has
warned that "under exceptional circumstances" it could cancel its
annual meeting in Uzbekistan next year because of concern about
human rights abuses and lack of economic reform in the central Asian
state.
Jean Lemierre, EBRD president, said this week that the bank had
contingency plans to switch the meeting, normally attended by
hundreds of officials, business people and journalists, from
Tashkent to its home city of London. However, he emphasised that the
bank was not now planning a switch as there would have to be "a very
strong case for cancellation".
Any decision to pull out of Tashkent would be taken by the bank's 60
shareholder governments, including the US, the European Union states
and Japan. Such a move would cause deep controversy given
Uzbekistan's key role in the US-led coalition against terrorism and
in providing stability in central Asia.
Speaking after a recent visit to Tashkent, Mr Lemierre said:
"Cancellation would be a profound decision for the people of
Uzbekistan. It would be a major decision from a political point of
view. Uzbekistan is in a critical region after September 11."
The key moment could come in February when the board is due to
consider a new investment strategy for Uzbekistan. By then the UN is
expected to publish a report on torture prepared by Theo van Boven,
a UN envoy who visited Tashkent at the same time as Mr Lemierre.
Even before he left Tashkent, Mr van Boven said he had found
evidence of "systemic" torture.
Mr Lemierre said the bank would be monitoring Uzbekistan before,
during and after the annual meeting, due to be held in early May. He
had received "commitments" from Islam Karimov, Uzbekistan's
president, that human rights would be respected, including the
freedoms of local non-government organisations and local
journalists.
However, western NGOs are concerned that even if the Uzbek
authorities behave properly during the meeting, there could be
reprisals later, particularly if the meeting shows Uzbekistan in a
poor light.
Human Rights Watch (HRW), a US-based group, says the EBRD meeting
should only go ahead if Tashkent implements comprehensive reforms,
including introducing the judicial review of detention, the
decriminalisation of legitimate religious activity, and the release
of political prisoners.
Steve Crawshaw, an HRW spokesman, said: "We are not expecting
democracy in three months, but we want to see these changes."
HRW wants the EBRD to set down clear criteria by which it would
judge Tashkent's progress in the next few months.
© Copyright The Financial Times Limited 2002. "FT" and "Financial Times"
are trademarks of the Financial Times. Privacy policy | Terms & conditions
| Advertising
FT.com / World
EBRD's Uzbek meeting under review
By Stefan Wagstyl, East Europe Editor
Published: December 17 2002 22:19 | Last Updated: December 17 2002
35
22:19
The European Bank for Reconstruction and Development (EBRD) has
warned that "under exceptional circumstances" it could cancel its
annual meeting in Uzbekistan next year because of concern about
human rights abuses and lack of economic reform in the central Asian
state.
Jean Lemierre, EBRD president, said this week that the bank had
contingency plans to switch the meeting, normally attended by
hundreds of officials, business people and journalists, from
Tashkent to its home city of London. However, he emphasised that the
bank was not now planning a switch as there would have to be "a very
strong case for cancellation".
Any decision to pull out of Tashkent would be taken by the bank's 60
shareholder governments, including the US, the European Union states
and Japan. Such a move would cause deep controversy given
Uzbekistan's key role in the US-led coalition against terrorism and
in providing stability in central Asia.
Speaking after a recent visit to Tashkent, Mr Lemierre said:
"Cancellation would be a profound decision for the people of
Uzbekistan. It would be a major decision from a political point of
view. Uzbekistan is in a critical region after September 11."
The key moment could come in February when the board is due to
consider a new investment strategy for Uzbekistan. By then the UN is
expected to publish a report on torture prepared by Theo van Boven,
a UN envoy who visited Tashkent at the same time as Mr Lemierre.
Even before he left Tashkent, Mr van Boven said he had found
evidence of "systemic" torture.
Mr Lemierre said the bank would be monitoring Uzbekistan before,
during and after the annual meeting, due to be held in early May. He
had received "commitments" from Islam Karimov, Uzbekistan's
president, that human rights would be respected, including the
freedoms of local non-government organisations and local
journalists.
However, western NGOs are concerned that even if the Uzbek
authorities behave properly during the meeting, there could be
reprisals later, particularly if the meeting shows Uzbekistan in a
poor light.
Human Rights Watch (HRW), a US-based group, says the EBRD meeting
should only go ahead if Tashkent implements comprehensive reforms,
including introducing the judicial review of detention, the
decriminalisation of legitimate religious activity, and the release
of political prisoners.
Steve Crawshaw, an HRW spokesman, said: "We are not expecting
democracy in three months, but we want to see these changes."
HRW wants the EBRD to set down clear criteria by which it would
judge Tashkent's progress in the next few months.
36