Uzbekistan — Buyuk kelajak bo'lgan Davlat!

This blog is dedicated to providing rigorous analysis of current events in Uzbekistan. Debate and criticism are welcome, please inform me if you would like to offer a correction.


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Death and Dismissal in Newest Row over Economic Policy

Within a period of a week, Uzbekistan has lost two of its leading lights in the world of economics: Fayzulla Mullajonov and Rustam Azimov. The small amount of time elapsed between the death of the long-time Director of the Central Bank and the dismissal of Deputy Prime Minister Azimov is no coincidence; it is the result of a turbulent fight over the future economic policy of the Republic. Mr. Azimov was the head of a faction of Uzbekistan’s top economic leadership who sought to restructure Uzbekistani economic policy around Keynesian principles, a project which he hoped the reformist President Mirziyoyev would support.  Instead, just as under the Karimov administration, Mr. Azimov found his ambitions stymied by a conservative faction who wish to preserve the risk-adverse economic model designed by President Karimov. This conservative faction was headed by Dr. Mullajonov, who had run the Central Bank of Uzbekistan since its establishment in 1991 and had been a major engineer of the ‘Uzbek model of development’, and Mr. Azimov sought to take advantage of his death to advance his own economic agenda. Convinced of the rightness of the traditionally risk-averse economic policy, a point he believed he had made clear earlier that year during a rare public criticism of Mr. Azimov’s proposed budget, President Mirziyoyev dismissed Mr. Azimov for pursuing these projects instead of concentrating on his assigned duties. While tensions over budgets and economic policy have existed for years, Rustam Azimov — the former Minister of Finance and Deputy Prime Minister — is certainly the most high-profile casualty of the conflict.
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Uzbekistan and Russia Struggle for Leverage in Gas for Investment Deal

On 5 April, President Shavkat Mirziyoyev and President Vladimir Putin both emerged from the Kremlin declaring the complete success of Mr. Mirziyoyev’s first trip to Russia, the crowning jewels of which are a series of trade and investment agreements totaling $15.8 billion and a framework for the joint development of Uzbekistani gas and oil reserves. It is likely, however, that when the two smiling leaders left the Kremlin they rejoiced with two very different understandings of the arrangement that these documents created. The statements made by President Putin on 5 April make it clear that he understood most of the investment promised to be focused on the profitable oil and gas sectors, with Uzbekistan receiving investment so that the quasi-private clique of bureaucrats and businessmen who control energy markets in Eurasia can make fortunes by opening Uzbekistani oil and gas fields up to the world market. President Mirziyoyev, on the other hand, has emphasized elements of the agreement focusing on development projects and Russian investment in unprofitable areas of the economy, like agriculture, basic infrastructure, and manufacturing. How this investment money is spent will set the tone for Uzbekistani development during the Mirziyoyev administration, as it will test the resolve of Uzbekistani government to prioritize long-term development planning over the parochial interests of domestic elites and against Russian pressure. While petrochemicals still make up the core of the deal, as well as recent Uzbekistani agreements with Beijing, how the billions of rubles remaining are spent comes down to the commitment of the Mirziyoyev government to guide Uzbekistan on its own path.
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Gas Shortages in Toshkent City

Lines stretching around city blocks; angry shouts as station after station is forced to closed prematurely; gas prices doubling or tripling as desperate citizens shell out everything to get home: this is not the gas crises of the 1970s, but a reality of life in metropolitan Toshkent. Even without an OPEC embargo, gas shortages are an unfortunately regular occurrence in Uzbekistan. The most recent panic in Toshkent City in the week of 20 October highlights another unfortunate side effect of the byzantine administrative division between the capital territory of Toshkent City and the rest of the country. Despite being total self-sufficient in oil production and refinement, and expected to remain so for at least another 30 years at current levels at petroleum production, Uzbekistan consistently faces issues of temporary oil and gas shortages in Toshkent City. This consistent issue is not so much an issue of inadequate petroleum production, although infrastructure in that process does tend to be outdated and wasteful, but a combination of the difficulties inherent in accommodating market forces in a planned economic model, the administrative complexity of importing fuel into Toshkent City, and widespread hoarding by Toshkentchi eager to secure their own daily commutes.
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Border Controls Liberalized in Farg’ona Valley

The utterly lack of obvious natural barriers from one end of the Farg’ona Valley to the other belies a fiendishly complex system of territory division that carve up the flat expanse in defiance of geography, infrastructure, migration patterns, and logic. A mere 25 years ago, the Farg’ona Valley was traversable from Xujand to Jalal-Abat without obstructions of any kind, a situation enabled by the free movement allowed within the constituent republics of the USSR and reflected in the crumbling infrastructure of the modern republics. Even since the deteriorating security situation in Tajikistan and the Kyrgyz Republic raised the prospect of armed groups operating across the still porous borders — a danger highlighted by high profile kidnappings in Batken in 1999 — Uzbekistan has been the primary force in constructing and enforcing borders in the Farg’ona Valley, setting up arduous requirements for entry and trade, and even resorting to extreme measures such as land mines to prevent illegal crossings in high altitude areas. As pointed out by the Center for Preventive Action in their visit to the Valley, the intense securitization of the borders has caused numerous hardships to befall the already disadvantaged communities of the Farg’ona Valley, particularly those living in the border towns of Osh and Xujand. Under the temporary administration of Shavkat Mirziyoyev, the norm of strict border control that has lasted for nearly two decades appears to be eroding as the caretaker government has taken tentative steps towards normalizing border relations between Uzbekistan and the Kyrgyz Republic.
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XDP Recruitment Drive Fails to Deliver

At the end of September, the Xalq Demokratik Partiyasi (XDP) initiated a recruitment campaign to attract new registered party members in preparation for the presidential elections in December. These efforts, however, have been largely unsuccessful, as registered party members remain a tiny minority of the voting population. The chance of the XDP to usurp electoral power in Uzbekistan, particularly in the upcoming elections, has always rested on the party’s ability to successfully mobilize remaining support networks from the Communist Party of Uzbekistan, meaning that the failure of these recent recruitment drives cast doubt on the ability of the current XDP to successfully challenge Mr. Mirziyoyev’s drive towards the presidency. The lackluster picture painted by the party’s recent performance, however, may be deceiving because of the significant exigent circumstances during the recent campaign, and overall lack of centralized coordination. The registration campaign was undertaken on local initiative and thus lacked the resources and connections which the central XDP leadership might be able to bring to bear in an election, moreover the campaign occurred contemporaneously with the national drive to collect the hundreds of thousands of signatures needed to officially register the party, limiting the scope of the project and the party resources that could be devoted to registering new members.
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Uzbekistan Takes Bold Step Towards Protecting Private Enterprise

On 5 October 2016, interim President Shavkat Mirziyoyev signed into being easily one of the most significant reforms in recent Uzbekistani history. The Presidential Decree, whose long official title I will not write out here, severely curtails the discretionary ability of the Bosh Prokuratura — translating to the General Procuracy, a term I will use in lieu of the more common, but misleading, translation of Prosecutor-General — to conduct investigations of illicit business activity, effectively abolishing one of the major forms of administrative abuse and malfeasance in Uzbekistan. For years, the Procuracy has been the bane of Uzbekistani entrepreneurs, using the threat of short-term imprisonment or temporary cessation of business activities to coerce business owners to pay the significant bribes demanded by the Procurators. The new measures to limit the discretionary ability to conduct inspections and create an ombudsman system to report abuse will cripple this system of extortion, hopefully making life a little easier for Uzbekistan’s struggling middle class. On the flip side, making the Procuracy has been one of the major institutions beating back the trend of oligarchy so dominant elsewhere in the former USSR. A major test for whatever administration inherits the new situation next year will be its ability to protect the small businessman while making sure that Uzbekistan’s wealth disparity does not become a power disparity.
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Remittances from Russia Continue to Decline

The effects of the current economic crisis in Russia have been felt throughout the region, often reaching Central Asian nations through the sudden crunch in the value of remittances being sent from migrant workers in Russia. The original shocking numbers were released in June of 2016, when the Central Bank of Russia announced that the value of remittances for the first quarter of 2016 were a paltry $27 million, less that 20% of the remittance value for the previous year’s quarter. This precipitous decline continued in the spring of 2016, with remittances for the second quarter further declining to $21 million. The values of individual measured money transfers have only declined slightly in the past year, meaning that the decline in remittances reflects not only decreases in earned wages, but major job cuts and a rapid exit of Uzbekistani migrant workers from the Russian labour market. This Central Asian exodus from Russia is driven by a combination of economic and social factors which make young men less likely to seek out work in Russia and existing migrant workers less likely to stay there.
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