Friday, May 08, 2009

Fossil Government in Uzbekistan

Uzbekistan mixes rich and poor

By Ian Williams


TASHKENT - Uzbekistan may have recovered somewhat from the post-dissolution economic crash that afflicted so many of the former Soviet republics, but President Islam Karimov has nothing like Beijing's pragmatic success to justify his hold on power. It is rich country with paradoxically poor people.

Replacing Vladimir Lenin with Timur (Tamerlane) as the national hero may have a certain gruesome appropriateness for those who think the Bolshevik leader a ruthless mass murderer, but the 14th century Timur empire, builder of skull pyramids and destroyer of cities, is not everyone's idea of a 21st century icon. Timur's wooden coffin is on display in the Samarkand museum - as part of a display of Uzbek woodwork!

Uzbekistan is a palimpsest of history. With mud-brick the building

material of choice until Soviet concrete came along - and even that is somewhat friable - the past eras melt into a muddy totality. The layers of fire-worshippers, Greco Bactrian deities, Buddha and Islam merge into each other. And the Soviet culture similarly has left its lasting impression.

The regime's political structure is fossilized in Soviet times, and since independence it has been more concerned about maintaining power than growing the economy. At least on paper, it maintains all the pervasive regulation of communist times, such as internal passports and registration for visitors, and exit visas for its citizens who wish to leave. But rather than being the basis for an efficient police state, these regulations are more in the nature of profit points for the government, which levies fees, or just as commonly, for the individual bureaucrat or police officer who will overlook their flouting for a bribe.

However, it has also preserved some aspects of the Soviet social net. The country has a universal health service, even if it seems generally accepted that medical staff deserve something extra from the patients and their families to supplement their abysmal salaries. Across the country the government is building new schools and universities - but once again it's taken for granted that additional payments and bribes may be necessary for teachers and professors.

The green-uniformed militiamen are everywhere, zealous in stopping drivers for real or imagined infractions, but every time one of my drivers was stopped, there was nothing that a dollar or so in bribes would not excuse.

On the main highways, especially going up towards the Ferghana Valley, where the Andijon massacre took place four years ago, the checkpoints were more substantial with police, customs and border guards checking the trunks of cars and occasionally the passports of drivers and passengers.

On the face of it, with a literate population, an infrastructure of rail and roads that is relatively well maintained and a core position in Asian landmass, at the crossroads between north and south, east and west, Uzbekistan is poised to become a Central Asian tiger for all the reasons that Tashkent was the regional center before. However, the pervasive bureaucracy and corruption are just some of the reasons why this is a highly unlikely scenario.

One of the most striking Soviet hangovers is the dependence on cotton, which is in turn dependent on massive Soviet-era irrigation works diverting rivers to the fields. The Aral Sea is now a pond, whose former seabed is being blown toxically about the region, while the irrigation techniques are causing salination of croplands.
It is not often mentioned that Karimov was a leading figure in the Uzbek Communist Party when these ecological disasters were perpetrated, but he now has to measure the immediate social and financial costs of curtailing the government's main source of revenue and the mainstay, albeit at not much above subsistence, of the rural population against the environmental costs.

The cotton industry epitomizes the handicaps of incomplete reform. While the industry was once large-scale, mechanized and industrialized, privatization led to small plots, and most cotton is now harvested by hand. But the state buys the crop at a fraction of the price it sells the cotton on the world market. In an odd hangover, schoolchildren and college students alike are forced to pick the crop, and their labor became increasingly vital as the former Soviet machinery broke down without the resources for replacement.

The state gets assured revenue, but the results do not percolate down to the farmers in an overwhelmingly rural country. This hybrid private-commandism is no way to create a modern economy.

In general, however, the regime epitomizes Jeanne Kirkpatrick's distinction between totalitarian and authoritarian. There is little sign of a personality cult for Karimov, which is just as well - he is about as charismatic as you would expect a former Leonid Brezhnev-era apparatchik to be. The government is concerned about what its citizens do, not what they think.

However, its paranoia reflects its own deep feelings of insecurity. When the citizens of Andijon dared to protest in 2005, up to 2,000 of them were gunned down - and posthumously accused of being Muslim fundamentalists.

In the context of a century of Russian domination, Islam is as much an expression of cultural identity and ethnicity as it is of deep religious fervor, as the numerous dinners I attended that began with prayers and ended with vodka might suggest.

In that context, Karimov has greatly expanded the old Soviet state-controlled mosque and madrassa (seminary) system. However, they are still under tight control - right down to the decibel level from the minarets. Karimov disallowed the electronic systems that pierce the night in so many other Middle Eastern cities. More importantly, any independent civil or religious activity attracts police attention and repression.

The bureaucracy is as leery of genuine entrepreneurial activity as it is of civil or religious activism. Foreign companies, with a few exceptions like Daewoo, British American Tobacco and several cell phone companies, have tried and given up. These survivors provide large tax revenues for the government and so have some degree of protection against the pervasive shakedowns.

At first, since the country is effectively isolated from the global financial system - no credit, no crunch - the government was being boastful about its foresight as the global crisis developed. However, much of its recent increase in prosperity had been based on revenues from commodities like cotton and gas, and above all from remittances. Uzbekistan's major export has been people. Professors cleaning dishes in Brooklyn, engineers laboring on Russian construction sites or teachers working in hotels in London are all finding their earnings dropping, along with the commodity prices.

Uzbeks do not trust banks. Not only is the official exchange rate over 20% lower than the black market rate, it is not easy to get money out of banks if you put it in - not to mention the prospect of paying taxes. The expanding retail sector works in (black market) dollars, right down to pricing of goods, but much of the expatriate remittances was going into property which, familiarly, led to a bubble. This is surely one of the crucial handicaps for Uzbek tigritude, if there is no effective way to marshal domestic capital for growth. The housing market has now plummeted as the world economic crisis grips.

Without the former Soviet subventions, the state does not have the capital for major projects, but because of its paranoia, and the rapacity of its officials, it does not allow the conditions for others to invest.

Boosting the income of the farmers, developing the financial sector so that it can marshal and harness the domestic and remittance capital would all be steps forward to stopping the export of the human capital which is, after all, one of the biggest assets the country has.

It is difficult to see how things can improve under the present government. Karimov has already overstayed his constitutional term, but is confident that his strategic position will protect him. After throwing out the Americans when they protested Andijon, Karimov is now being rewarded with overtures from Washington, not least since Kyrgyzstan has taken the Russian rouble to throw out its American base. He is under similar blandishments and pressure from Russia, while keeping close relations with China.

It is time for him to stop playing the Great Game and to pay more attention to the country's economic potential. There is more to the country than being a strategic location on a geopolitical chessboard.

Ian Williams is senior analyst for Foreign Policy in Focus. He spent most of April travelling in Uzbekistan.

No comments: