Since October 2001, Uzbekistan has been a key ally of the U.S. in the military campaign in Afghanistan. A U.S. base has been established and a far-reaching Agreement on Strategic Partnership was signed in March 2002. Uzbekistan, however, sits uncomfortably in a campaign known as “Enduring Freedom.” It is one of the most authoritarian of the post-Soviet states, with a poor record on human rights and an economy that still owes much more to Soviet central planning than the market.

The new relationship with the U.S. seemed to open up the possibility of a wide range of political, and economic reforms. At the beginning of 2002, many suggested that Uzbekistan had a ‘window of opportunity’ through which to push reforms in a favourable international environment. This report concludes that reforms have largely failed so far and that present international policies are unlikely to persuade the government to change course significantly in 2003.

Many Soviet structures have been preserved from repressive law enforcement agencies to an economic system still dominated by the state. There is very little press freedom, elections are entirely under executive control, there is no legal political opposition, and there is widespread persecution of regime opponents. At least 7,000 people are imprisoned for religious or political beliefs; torture and brutality in police custody and in prisons are commonplace.

The repressive political apparatus is matched by an economic system in which a small elite manages key export sectors, ensuring personal enrichment in the process. But the overall economy does not allow the growth of a significant private sector. Businessmen face a hostile bureaucracy, government interference, high taxes, and a constantly-changing legislative environment. The judiciary provides little defence of contracts, and the multiple exchange-rate system for foreign currency ensures that access to U.S. dollars is possible only for a few favoured businessmen linked to government officials.

The state still dominates agriculture, and much of the product consists of state-order cotton. Almost no profit from export crops remains with farmers. Poverty is growing fast, and with it a sense of hopelessness, especially among young people. Illegal migration of the unemployed to cities is reaching record levels and producing a marginalised, embittered minority. This social discontent threatens to undermine stability and provides fertile ground for Islamic radical groups. Only labour migration abroad provides something of a safety valve.

This report examines the promises made by the Uzbek government to change the system. While political reforms were outlined in the agreement with the U.S., economic reforms have been the subject of a detailed plan drawn up with the IMF. This report examines how far the government has met its public commitments, and how much farther it has to go.

Political reform has been largely non-existent. A referendum in January 2002 was not monitored by international organisations, but observers concluded it was largely rigged in favour of the government. The electorate approved a two-year extension of President Karimov’s rule and the creation of a new bicameral parliament to replace the one-chamber, rubber-stamp body, but with no indication that parliamentary elections due in late 2004 would be more democratic.

There have been some small positive human rigthts steps, with a decline in arrests in early 2002 and the registration of one human rights group in March 2002. But arrests on the basis of political or religious ideas have continued, with hundreds sentenced in 2002 after trials that did not meet international standards. Several well-publicised cases of torture and killings in prisons have undermined positive moves, such as the visit of the U.N. Special Rapporteur on Torture. Other human rights groups seeking registration have been refused, and a number of human rights activists were arrested during 2002. Strong rhetoric on judicial reform by President Karimov has not yet translated to real improvements.

An IMF Staff Monitored Program (SMP) agreed in January 2002 was supposed to lead to major agricultural reforms, improvements in the banking system, trade liberalisation, and moves toward foreign exchange convertibility by July 2002. The government met none of the key targets, although it did achieve some less difficult technical requirements. The centrepiece – progress on foreign exchange liberalisation and convertibility of the Uzbek som – was not met, although there was some devaluation of official exchange rates and limited relaxation of the exchange regime.

After the government failed to take advantage of an extension of the reform program for an additional two months, an IMF mission departed in September 2002, offering to return only when the main planks were achieved. This failure was accentuated by bad government decisions, including new tariffs on imports and extra documentation requirements on private traders that seriously damaged cross-border trade and emptied bazaars across the country. Further decrees undermined the legal basis of privatised companies, suggesting they could be nationalised, and placed capital restrictions on import-export companies that ensured small and medium-sized companies would be unable to trade.

The reasons why the government failed to take advantage of an improved external environment and widespread international support to move on reform are complex but mostly relate to a political system dominated by vested interests at all levels that have a considerable investment in retaining the status quo. A bureaucratic machine that fears change and lacks the capacity to implement reforms has also slowed any program. A people with a long history of authoritarian rulers has also been slow to take independent action and struggle for new freedoms.

Visiting Western legislators and officials tended to take President Karimov’s pro-reform rhetoric at face value. Few openly criticised the regime’s appalling human rights record and hardly any commented publicly on the lack of a functioning parliament or free press. While some compromises are necessary in an era of military action, this blindness to the problems of the system does not help those in the elite who have long pushed quietly for reform from inside. They are few in number and lack the clout to effect real change. But they are the potential future leaders whom Western partners of Uzbekistan should be supporting, rather than the present corrupt elite that has little interest in the success of any reform program.

Uzbekistan enjoyed a uniquely positive environment in which to pursue reforms in 2002. The longer they are delayed, the harder peaceful change will be. The need for reform has only been accentuated by rumours of President Karimov’s ill health that have gained increasing credence. There is a danger that infighting over positioning for a succession could lead to serious instability in the absence of any normal political process for change at the top and against a background of sharp economic decline. Uzbekistan’s future looks bleak unless serious economic and political reforms are implemented. Economic growth hardly keeps pace with the population; unemployment is rife, and poverty is deepening. Now is the time for these reforms. Delay may mean that they will never be effected at all.

Osh/Brussels, 18 February 2003