UZBEKISTAN: MASTER OF ITS DESTINY

1. SUMMARY: IN HIS LATEST BOOK, "ALONG THE ROAD OF DEEPENING ECONOMIC REFORM," PRESIDENT KARIMOV DISCUSSES UZBEKISTAN'S VARIOUS ECONOMIC ACHIEVEMENTS, STRUCTURAL AND INSTITUTIONAL CHANGES, AND SOCIAL TRANSFORMATIONS UNDERWAY SINCE INDEPENDENCE. THROUGHOUT THE BOOK, HE EMPHASIZES HOW ECONOMIC STABILITY FOSTERS SOCIO-POLITICAL STABILITY AND PROVIDES FOR SOCIAL JUSTICE. IN THE FIRST SECTION, "RESULTS AND LESSONS OF THE FIRST STAGE OF ECONOMIC REFORM," HE POINTS TO THE IMPORTANCE OF ESTABLISHING A LEGAL AND CONSTITUTIONAL FOUNDATION FOR ECONOMIC TRANSFORMATION, NOTES THE NEED FOR AGRARIAN AND AGRO-INDUSTRIAL REFORM, AND OUTLINES PROBLEMS ASSOCIATED WITH "LIBERALIZING" THE ECONOMY. IN PART TWO, "TASKS AND PRIORITIES OF THE SECOND STATE OF ECONOMIC REFORM," KARIMOV DELVES INTO THE NEED TO CONTINUE THE PROCESS OF PRIVATIZATION, FOSTER A COMPETITIVE ECONOMIC ENVIRONMENT, STRENGTHEN THE NATIONAL CURRENCY, AND ESTABLISH STRONG SOCIAL GUARANTEES TO SUPPORT ECONOMIC GROWTH. THE BOOK IS THE LATEST IN A SERIES OF PRESIDENTIAL TOMES ON UZBEKISTAN'S VARIOUS POLITICAL, ECONOMIC, AND SOCIAL ACHIEVEMENTS OVER THE LAST FOUR YEARS. END SUMMARY.

2. IN THE FIRST SECTION, "RESULTS AND LESSONS OF THE FIRST STAGE OF ECONOMIC REFORM," KARIMOV DISCUSSES HOW UZBEKISTAN IS IMPLEMENTING ECONOMIC REFORM, ESTABLISHING A LEGAL FOUNDATION FOR ECONOMIC GROWTH, PRIVATIZING STATE PROPERTY, AND REFORMING THE AGRARIAN SECTOR. THE MOST IMPORTANT RESULT OF THIS PERIOD, HE ARGUES, IS THE END OF UZBEKISTAN'S ECONOMIC ISOLATION AND THE CREATION OF AN INDEPENDENT FOREIGN ECONOMIC POLICY. DURING THIS TIME, THE COUNTRY ALSO WORKED TO REDUCE ITS DEPENDENCE ON IMPORTS OF MANUFACTURED GOODS AND TO INCREASE THE VOLUME OF OIL AND NATURAL GAS EXTRACTED.

3. KARIMOV POINTS OUT THAT DURING THE FIRST STAGE OF ECONOMIC TRANSFORMATION, UZBEKISTAN ESTABLISHED A LEGAL FOUNDATION FOR THE TRANSITION FROM A COMMAND TO A MARKET ECONOMY, CONSOLIDATED SOVEREIGNTY AND STATEHOOD, DECENTRALIZED INDUSTRY, TRADE, TRANSPORTATION, AND OTHER AREAS, AND WORKED TO ELIMINATE OLD WAYS OF THINKING. HE UNDERSCORES THE NEED FOR A STRONG LEGAL BASIS TO CREATE AN ENVIRONMENT IN WHICH PRIVATE BUSINESSES CAN DEVELOP AND PRIVATE PROPERTY CAN BE PROTECTED. APPROXIMATELY ONE HUNDRED LAWS SUPPORTING A LEGAL BASIS FOR ECONOMIC REFORM HAVE ALREADY BEEN ADOPTED, AND NOW UZBEKISTAN NEEDS A CIVIL CODE. OTHER MAJOR ACHIEVEMENTS DURING THIS PERIOD INCLUDE THE ESTABLISHMENT OF TAX, CREDIT, AND MONETARY POLICIES; FORMATION OF A TWO-LEVEL BANKING SYSTEM, COMPRISED OF A CENTRAL BANK AND A BROAD NETWORK OF INDEPENDENT COMMERCIAL AND PRIVATE BANKS; AND LIBERALIZATION OF WHOLESALE AND RETAIL PRICES, WHILE TEMPORARILY MAINTAINING REGULATED PRICES FOR SELECTED GOODS.

4. KARIMOV STATES THAT IT WAS "EXTREMELY VITAL" AT THE INITIAL STAGE OF ECONOMIC REFORM TO MAINTAIN THE COUNTRY'S SYSTEM OF ADMINISTRATION OR RISK LOSING MANAGERIAL CONTROL OF THE ECONOMY, "SINCE NEWLY-ORGANIZED ORGANS HAD NEITHER EXPERIENCE NOR THE VERY MECHANISM OF SELF-REGULATION IN MARKET CONDITIONS." HE STATES THAT THERE IS A NEED FOR "REASONABLE ADMINISTRATIVE REGULATION, PARTICULARLY SO IN THE INTERESTS OF MAINTAINING EXECUTIVE AND FINANCIAL ORDER." AS PROOF THAT UZBEKISTAN'S GO-SLOW APPROACH TO ECONOMIC REFORM IS PREFERABLE TO APPROACHES USED ELSEWHERE, KARIMOV CONTRASTS THE PRECIPITOUS DECLINE OF GDP IN RUSSIA AND OTHER CIS STATES (30-50 PERCENT SINCE INDEPENDENCE) WITH THE COMPARATIVELY SMALLER DECLINE IN UZBEKISTAN (10-15 PERCENT).

PRIVATIZATION

5. REGARDING PRIVATIZATION, THE PRESIDENT POINTS TO THE FACT THAT UZBEKISTAN REJECTED THE IDEA OF ISSUING VOUCHERS--DESPITE PRESSURE FROM FOREIGN EXPERTS--AND PRIVATIZED NINETY-FIVE PERCENT OF THE STATE HOUSING STOCK--OVER ONE MILLION APARTMENTS--SINCE INDEPENDENCE. THE COUNTRY HAS ESTABLISHED INSTITUTIONAL STRUCTURES AND SPECIAL AGENCIES TO MANAGE STATE PROPERTY AND ITS TRANSFORMATION INTO PRIVATE OWNERSHIP. HE ADDS THAT CONSIDERABLE ATTENTION HAS BEEN PAID TO PRIVATIZING TOURIST COMPLEXES IN TASHKENT, BUKHARA, SAMARKAND, AND KHIVA.

6. KARIMOV NOTES THE PARTICULAR NECESSITY FOR REFORM IN THE AGRICULTURAL AND AGRO-INDUSTRIAL SECTORS, STATING THAT "THE FUTURE OF THE COUNTRY AND THE PEOPLE WILL LARGELY DEPEND ON HOW LAND USE IS ORGANIZED IN UZBEKISTAN." UZBEKISTAN SHOULD OBTAIN MORE ADVANCED EQUIPMENT AND TECHNOLOGY TO IMPROVE ITS PRODUCTION OF AGRICULTURAL PRODUCTS, IN PARTICULAR COTTON, HE ARGUES. IN THE RURAL AREAS, THE COUNTRY SHOULD ENCOURAGE THE CREATION OF SMALL ENTERPRISES, DEVELOP THEIR SOCIAL INFRASTRUCTURES, AND IMPROVE THE POPULATION'S STANDARD OF LIVING. AS OF 1 JANUARY 1995, THE AGRARIAN SECTOR ACCOUNTED FOR OVER TWENTY-FOUR PERCENT OF THE COUNTRY'S GROSS DOMESTIC PRODUCT AND EMPLOYED APPROXIMATELY THIRTY-SEVEN PERCENT OF THE ITS LABOR FORCE.

A SLIGHT NOD TO HUMAN RIGHTS

7. THROUGHOUT THE BOOK, KARIMOV LINKS ECONOMIC STABILITY WITH SOCIO-POLITICAL STABILITY AND ARGUES THAT THE FORMER IS A NECESSARY PRECONDITION FOR THE LATTER. HE WRITES VAGUELY ABOUT HUMAN RIGHTS, STATING THAT THE COUNTRY NOW NEEDS LEGISLATION GUARANTEEING "RELIABLE CONSTITUTIONAL AND JURIDICAL HUMAN RIGHTS." HE NOTES THAT "PREPARATION, DISCUSSION AND ADOPTION OF FUNDAMENTAL LAWS REGULATING AND PROVIDING GUARANTEES OF HUMAN RIGHTS AND FREEDOMS, RIGHTS AND FREEDOMS OF PUBLIC ORGANIZATIONS AND FREEDOM OF CONSCIENCE AND RELIGION HAVE BEEN SOMETHING PRINCIPALLY NEW IN PRACTICAL LAW MAKING IN THIS COUNTRY."

8. KARIMOV PAYS SCANT ATTENTION TO ISLAM. WHILE ACKNOWLEDGING THE "SPIRITUAL ROLE" ISLAM PLAYS IN UZBEKISTAN, HE CAUTIONS THAT "NOT A SINGLE IDEOLOGY SHOULD RAISE TO THE LEVEL OF STATE IDEOLOGY." HE ADDS THAT "IT IS VITAL TO PROTECT PEOPLE AND THE SOCIETY FROM EXTREMISTS AND POLITICAL ADVENTURISTS AND PREVENT ANY ATTEMPT TO SOW ENMITY, DISCORD AND CONFRONTATION. IN PEACE, ACCORD AND THROUGH MUTUAL ASSISTANCE WE SHALL BE ABLE TO OVERCOME ALL HARDSHIPS....ONLY IN CONDITIONS OF PEACE AND TRANQUILLITY WILL IT BE POSSIBLE TO PERSISTENTLY AND INTELLIGENTLY, STAGE BY STAGE RE- STRUCTURE THE SOCIETY AND THE WHOLE ECONOMY."

9. IN REFERENCE TO WOMEN'S RIGHTS--KARIMOV NEEDED ONLY THREE PARAGRAPHS TO DISCUSS THEM--THE PRESIDENT ACKNOWLEDGES WOMEN'S SPECIAL ROLE AS "WOMEN-MOTHERS" AND PRESSES FOR BETTER CHILD CARE PROVISIONS.

LOOKING TO THE FUTURE

10. IN THE SECOND SECTION, "TASKS AND PRIORITIES OF THE SECOND STAGE OF ECONOMIC REFORM," KARIMOV SAYS THE COUNTRY IS NOW CONSOLIDATING THE STRUCTURAL TRANSFORMATIONS DISCUSSED IN PART ONE AND FORGING A DEMOCRATIC STATE WITH STRONG SOCIAL GUARANTEES. WHILE HE ARGUES THAT UZBEKISTAN'S OBJECTIVE MUST BE TO BUILD A DEMOCRATIC, LAW-GOVERNED STATE, A SECULAR SOCIETY, AND A MARKET-ORIENTED ECONOMY ("ECONOMY MUST PREVAIL OVER POLITICS"), HE SAYS THAT IF THE STATE DOES NOT CONTINUE TO PLAY A REGULATORY ROLE IN THE ECONOMY, IT RUNS THE RISK OF UNCONTROLLED FREE-MARKETEERING AND INFLATION, A LA RUSSIA.

11. KARIMOV SINGLES OUT SEVERAL GOALS WHICH UZBEKISTAN MUST NOW FULFILL. TO BEGIN WITH, THE COUNTRY MUST FINISH PRIVATIZING STATE PROPERTY AND CONTINUE PROMOTING INDIVIDUAL BUSINESSES. KARIMOV SAYS THAT PRIVATIZED PROPERTY IS FOR "THE OWNER WHO WOULD NOT SQUANDER THE PROPERTY OBTAINED AND TURN IT INTO THE SOURCE OF PERSONAL ENRICHMENT, BUT WOULD RATHER INCREASE THIS PROPERTY, RETOOL IT AND UPDATE IT, AND TO USE IT FOR MANUFACTURING COMPETITIVE PRODUCTS. THIS IS THE OWNER WHO COULD ORGANIZE THE PRODUCTION IN SUCH A WAY THAT IT WOULD PROVIDE JOBS FOR THE DISENGAGED POPULATION, BRING PROFIT TO THE OWNER HIMSELF AS WELL AS TO THE WORKERS AND THE STATE." UZBEKISTAN MUST ALSO OVERCOME THE RECESSION AND ENSURE MACROECONOMIC STABILIZATION. FURTHER, THE GOVERNMENT HAS TO STRENGTHEN THE NATIONAL CURRENCY--THE SOM--AND ITS CONVERTABILITY. TO ACHIEVE THIS, KARIMOV NOTES, IT MUST PURSUE TIGHT MONETARY POLICIES AND MAINTAIN STRONG ANTI-INFLATIONARY POLICIES. UZBEKISTAN NEEDS TO FOCUS ON PRODUCING FINISHED GOODS "ACCORDING TO THE WORLD STANDARDS" FOR EXPORT.

12. OTHER GOALS INCLUDE: OBTAINING ECONOMIC INDEPENDENCE BY DECREASING RELIANCE ON IMPORTS AND INCREASING DOMESTIC PRODUCTION; OVERCOMING THE ONE-SIDED RAW MATERIAL ORIENTATION OF THE ECONOMY; EXPANDING THE COUNTRY'S EXPORT POTENTIAL; STRENGTHENING GOLD AND FOREIGN EXCHANGE RESERVES; ENSURING THE "RATIONAL EMPLOYMENT OF MANPOWER;" AND TRANSFORMING THE SYSTEM OF TAXATION, SO THAT A REDUCTION OF THE TAX BURDEN IMPOSED UPON ENTERPRISES CAN OPEN UP THE POSSIBILITY FOR GREATER BUSINESS ACTIVITY.

13. COMMENT: THE RECURRING THEME IS STABILITY, STABILITY, STABILITY, AND KARIMOV CITES THIS FACTOR--BOTH IN THE BOOK AND ELSEWHERE--AS A REASON WHY UZBEKISTAN'S ECONOMY HAS NOT SUFFERED THE FREE FALL OF OTHER FORMER SOVIET STATES. THE BOOK IS A MIX OF SOUND ECONOMIC IDEAS, OLD STATIST THINKING, AND MORALIZING, AND PROVIDES A GOOD REVIEW OF THE ECONOMIC REFORM STEPS TO DATE AND ADDITIONAL INSIGHTS INTO KARIMOV'S THINKING.