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Kazakstan
Index
IN 1991 THE FIVE SOVIET REPUBLICS of Central Asia--Kazakstan,
Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan--were faced for the
first time with the prospect of existence as independent states. In
critical respects, they were unprepared for this event: their economies
all had performed specific tasks in the Soviet system, mainly the supply
of raw materials; only outdated Soviet-era political structures remained
behind in the five republics, with no tradition of national political
institutions; and the end of the union fragmented the armed forces units
of the former Soviet Union that remained on the republics' territory. In
the 1990s, the progress of the five republics toward resolving these
problems has been quite uneven. The republics with the richest natural
resources--Kazakstan, Turkmenistan, and Uzbekistan--have developed the
strongest economies--albeit with serious defects in each case--and have
attracted substantial Western investment. In all cases, movement away from
the Soviet model of strong, one-party central government has been
extremely slow. Some degree of military autonomy has appeared in all
republics save Tajikistan, which still is bedeviled by rebel forces and a
porous southern border. At the same time, the strategic doctrine of all
Central Asian countries remains based on protection from Russia's
military.
The total area of the five republics is approximately 3.9 million square
kilometers, slightly more than 40 percent of the area of the United States
and less than one-quarter of the area of Russia (see fig. 1). The region
stretches from the Caspian Sea in the west to China in the east, and from
central Siberia in the north to Afghanistan, Iran, and Pakistan in the
south. The area of the republics varies greatly: Kazakstan, by far the
largest, occupies about 2.7 million square kilometers, more than
two-thirds of the region. The smallest republic, Kyrgyzstan, occupies only
198,500 square kilometers. The Central Asian republics also feature quite
different topographies, varying from the wide expanses of desert in
primarily flat Kazakstan and Turkmenistan to the steep slopes and river
valleys of mountainous Tajikistan and Kyrgyzstan (see fig. 2).
The region contains enormous natural and agricultural resources. All
five republics have favorable agricultural regions and some combination of
attractive minerals and fuels. Their industrial bases include trained
workers, and their populations have relatively high educational levels and
literacy rates. Unfortunately, the moribund, highly inefficient system
through which the Soviet Union exploited those resources has proved very
difficult to disassemble. The Central Asians have suffered all the typical
transitional ills of former communist states moving toward a market
economy: erratic supply of critical industrial inputs, increased
unemployment, sharply increased inflation, declining capacity utilization
and output by industry, and acute shortages of goods. In response, all
five governments have pledged meaningful reform, but obstacles such as
unworkable government structure, ethnic rivalries, and a variety of social
tensions have made all five move cautiously.
Central Asia has a rich history to which numerous tribes and
nationalities have contributed over at least 2,500 years. A vital factor
in the history of the southern part of the region was its location astride
the most direct trade route between China and Europe, the so-called Silk
Route, which began to develop in the heyday of the Roman Empire (see fig.
3). Cities such as Samarqand (Samarkand) and Bukhoro (Bukhara), founded by
Iranians, became powerful cultural and commercial centers as East-West
trade increased. That prosperity made part or all of the region the object
of many conquests (including those by the Arabs in the eighth century
A.D., several Turkic groups beginning in the ninth century, and the
Mongols in the early thirteenth century). The Arabs and the Turks brought
Islam to much of Central Asia. Meanwhile, the northern part of the region
was inhabited by nomadic herding peoples, including the Turkic
predecessors of the Kazaks and Kyrgyz, who also fell under the control of
the Mongols.
In the sixteenth century, the Uzbeks established powerful khanates along
the Silk Route. Those entities flourished until the nineteenth century,
when they were overtaken gradually by the traders and settlers of the
expanding Russian Empire. The Russians moved southward from the steppes of
Kazakstan in search of trade and later of the cotton that could be grown
in present-day Tajikistan, Turkmenistan, and Uzbekistan. In the ensuing
decades, cotton became the vital economic magnet for increased Russian
occupation, and large tracts of the region were devoted to that crop to
supply Russia's domestic needs.
In 1917 the region passed from the Russian Empire to the Soviet Union,
with little participation by its inhabitants. Full Soviet control did not
occur until the mid-1920s, as guerrilla bands continued to resist Soviet
authority. In the 1920s, four of the five republics came into existence
for the first time as Soviet authorities drew borders in anticipation of
reordering all of Central Asian society. (Kyrgyzstan gained full republic
status in 1936.) In the 1930s, the primarily agricultural region was
traumatized by the forced collectivization campaign of Joseph V. Stalin's
regime; episodes of widespread famine were common. (By 1900 the Kazak,
Kyrgyz, and Turkmen nomads already had suffered massive disruption of
their traditional lifestyles as a result of Russian settlers taking their
grazing land for farms.)
Throughout the Soviet period, the Central Asian republics participated
in the life of the union in a rather peripheral sense, and many phases of
cultural life were unaffected by Soviet rule. Local communist parties
suffered the same purges as those in other republics, but they exercised
little political influence in Moscow. Regional economies were stunted by
increased demands for production of cotton and other specifically assigned
items. As was discovered in the 1980s, decades of Soviet intensive
cultivation caused massive pollution, from which the region still suffers.
Interrepublican animosities over access to scarce resources went largely
ignored by Soviet authorities. The more liberal Soviet regime of Mikhail
S. Gorbachev (in office 1985-91) saw increased airing of grievances that
long had been withheld by the peoples of the Central Asian republics, but
before 1991 no organized movement for independence had evolved from that
discontent.
The five post-Soviet states of Central Asia still are defined by the
arbitrary borders created in the early years of the Soviet era, and the
demarcation among them still fails to correspond to the ethnic and
linguistic situation of the region. Thus, Kyrgyzstan and Turkmenistan have
substantial Uzbek minorities, and Tajikistan and Uzbekistan have large
numbers of their respective neighbor's people. Kazakstan has few Central
Asian people of other nationalities; its largest minorities are Russian,
Ukrainian, and German.
Until the 1990s, the Soviet Central Asian states were viewed from the
outside world largely as parts of a single, homogeneous region. Since
1991, however, the Western world has begun to discover substantial
differences in almost all aspects of those new nations. The West also has
discovered the possibility of commercial gain from oil, natural gas, gold,
and other natural resources abundant in the region. The presence of these
materials was known in the Soviet era, but they were accessible only by
way of Moscow.
In responding to their neighbors in the new independence period, the
policy makers of the five states have moved in two contrary directions:
toward establishing common goals and greater unity in a regional grouping,
and toward individual economic and political development and
identification with countries outside the region. The philosophical ideal
of Pan-Turkism, an ethnically based unity concept that originated among
Central Asian intellectuals in the nineteenth century, still receives
support, but relatively few concrete steps have been taken to realize the
ideal. Furthermore, the people of Tajikistan are of predominantly Persian
rather than Turkic origin. Meanwhile, Central Asians have placed special
emphasis on ethnic self-differentiation as a belated reaction against the
stereotyping of non-Slavs that was common practice in the Soviet Union.
That ethnic generalization continues in the Russian Federation, which
still exerts enormous influence in the Central Asian republics.
The most important single cultural commonality among the republics is
the practice of Sunni Islam, which is the professed religion of a very
large majority of the peoples of the five republics and which has
experienced a significant revival throughout the region in the 1990s.
Propaganda from Russia and from the ruling regimes in the republics
identifies Islamic political activity as a vague, monolithic threat to
political stability everywhere in the region. However, the role of Islam
in the five cultures is far from uniform, and its role in politics has
been minimal everywhere except in Tajikistan. For Kazaks, Kyrgyz, and
Turkmen, whose society was based on a nomadic lifestyle that carried on
many traditional tribal beliefs after their nominal conversion, Islam has
had a less profound influence on culture than for the sedentary Tajik and
Uzbek Muslims, who have a conventional religious hierarchy.
Regional economic cooperation, another type of unity that has received
substantial lip service in the 1990s, has failed to materialize on a large
scale. All five republics joined the Economic Cooperation Organization
(ECO--see Glossary) shortly after independence, and Kazakstan, Kyrgyzstan,
and Uzbekistan established a limited common market in 1994. But Uzbekistan
vetoed the membership of unstable Tajikistan, and Turkmenistan refused to
join. Existing arrangements within the free-trade zone have not
significantly promoted large-scale commerce within the group of three. For
all five republics, Russia remains the top trading partner because much of
the emphasis in their agricultural and industrial infrastructures remains
the same as when the republics had assigned roles in supplying Moscow.
Those roles and dependence on Russian trade are changing slowly in the
mid-1990s, however, as diversification occurs.
Several factors encourage economic rivalry rather than cooperation.
Water, a crucial resource for agriculture and power generation, has been
the object of bitter bilateral and multilateral disputes both before and
after independence. In the 1990s, the republics at the headwaters of major
rivers, Kyrgyzstan and Tajikistan, have chafed at apportionment of water
consumption favoring downstream consumers Turkmenistan and Uzbekistan, and
Turkmenistan has complained about excessive water consumption by the
Uzbekistanis upstream. Kyrgyzstan and Uzbekistan have come close to
conflict over water in the Fergana Valley, where vital agricultural reform
and land privatization programs are endangered by unresolved water
disputes.
The republics still offer a similar range of commodities for trade.
Their common emphasis on cotton, natural gas, and oil limits the potential
for advantageous commerce within the group and fosters rivalry in trade
with outside customers. Some of the commercial relationships that have
developed--such as the sale of fuels to Kyrgyzstan and Tajikistan by the
other three fuel-rich republics--have been one-sided and subject to
shutdown in response to nonpayment or in attempts to gain economic and
political leverage.
The five republics have several major problems in common. All remain in
the economic, military, and political shadow of their giant neighbor to
the north. In the mid-1990s, Russian policy makers, encouraged by a very
vocal nationalist faction in the federation, speak openly of recapturing
influence in the "near abroad"; Central Asia usually is the
first region cited as an example. In the first two years of independence,
the five republics remained in the ruble zone (see Glossary), their
monetary activities restricted by the nonconvertibility of the old Soviet
ruble that remained the currency of that grouping. In 1993 all but
Tajikistan introduced new currencies with limited convertibility. Russia
had attempted to keep Kazakstan and Uzbekistan in a new Russian ruble
zone, but ruble distribution problems and harsh conversion conditions
forced those republics to follow the independent course of Kyrgyzstan and
Turkmenistan. The Tajikistani ruble (for value of the Tajikistani
ruble--see Glossary) introduced in 1995 remained closely connected with
its Russian counterpart. In 1996 Kazakstan and Kyrgyzstan established a
new customs union and other economic ties with Russia and Belarus, hoping
to gain selected advantages while avoiding large-scale concessions that
would increase Russian influence.
The Soviet legacy includes an economic infrastructure in which all
republics depend heavily on other republics for vital inputs. A complex
Soviet-designed system of pipelines and electric cables connects the five
republics. Pending completion of Turkmenistan's new line to Iran, only one
railroad line leading out of Central Asia connects the region with a
destination other than Russia (the one line goes only to the Xinjiang
Uygur Autonomous Region in China). Heavy industry in all five republics
also has depended heavily on local Russian skilled labor.
The Central Asian republics also suffer common geographic disadvantages.
All are landlocked and located far from potential markets outside the
Commonwealth of Independent States (CIS--see Glossary) and the Middle
East. Nations such as Azerbaijan and Afghanistan, through which goods must
travel overland to reach Western markets, still are quite unstable, and
others such as China and Russia are powerful neighbors with a history of
taking advantage of weaker nations that need commercial favors. Kazakstan
and Turkmenistan, both in need of a route to move oil and gas to Western
customers, have been especially frustrated by Russia's failure to support
new pipelines. The landlocked position also presents a national security
obstacle.
Although the region is blessed with ample arable land, most of that land
becomes useful only when irrigated. Large-scale irrigation, in turn, has
taken a huge toll on the hydrological systems of the region--in the most
obvious case, the system that feeds the fast-disappearing Aral Sea.
Regional cooperation on the Aral Sea problem, recognized as one of the
most serious environmental crises in the world, received much lip service
and little action in the first half of the 1990s. By 1995 an estimated
36,000 square kilometers of the sea's bed had been exposed, and an
estimated 3 million inhabitants of nearby Turkmenistan, Uzbekistan, and
Kazakstan had developed chronic health problems associated with that
process. In October 1995, a United Nations (UN)-sponsored regional
conference produced the Nukus Declaration, which resulted in the promise
of intensified joint efforts to stabilize the sea and a pledge of US$200
million from the UN and the World Bank (see Glossary) for regional
development and aid.
When independence was declared in 1991, none of the five republics had
experienced an independence movement or had a corps of leaders who had
considered how such a change might be managed. Five years after
independence, in four of the states political leadership remains in the
hands of the same individual as in the last years of the Soviet Union:
Nursultan Nazarbayev in Kazakstan, Askar Akayev in Kyrgyzstan, Saparmyrat
Niyazov in Turkmenistan, and Islam Karimov in Uzbekistan. President
Imomali Rahmonov of Tajikistan was not president in 1991, but, like his
cohorts, his roots are in his republic's pre-1992 political world.
Political power in all five republics is based on clan and regional
groupings that make national coalitions risky and fragile. Clan rivalries
have played a particular role in the civil war of Tajikistan and in
Akayev's difficulties in unifying Kyrgyzstan behind a reform program.
Although all the republics had adopted new constitutions by 1995, the
three government branches prescribed by those documents are severely
imbalanced in favor of the executive. In all five cases, the political
opposition of the early 1990s has been virtually extinguished in the name
of preserving stability and preventing the putative onset of Islamic
politicization. Although the new constitutions of the republics specify
independent judicial branches, the concept of due process has not been
established consistently anywhere.
All five republics have suffered increasing rates of crime in the
liberalized atmosphere of the postindependence years. Drug trafficking,
official corruption, and white-collar crime have increased most
noticeably. All republics lack the resources to equip and train qualified
police and specialized forces, and their judicial systems are not
sufficiently removed from their Soviet antecedents to deal equitably with
new generations of criminals. Evaluation and quantification of crime in
post-Soviet Central Asia have been hampered by changes in responsible
agencies, by irregularities in reporting procedures, and by lack of
control and responsiveness in law enforcement agencies, particularly in
Tajikistan. Statistics for the years 1990 and 1994 from Kazakstan and
Kyrgyzstan show dramatic increases in every type of crime, although those
from the other three republics, where record keeping is known to be
substantially less comprehensive, show considerable drops in many
categories. In 1995 and 1996, Kazakstan and Uzbekistan set up new,
specialized police units to deal with economic and organized crime.
Kazakstan
By far the largest of the Central Asian republics, Kazakstan extends
almost 2,000 kilometers from the Caspian Sea in the west to the border of
China in the east and nearly 1,300 kilometers from central Siberia in the
north to eastern Uzbekistan in the south. Despite its size, in population
Kazakstan is a distant second to Uzbekistan among the Central Asian
republics. With the lowest birth rate and the highest emigration rate in
the region, Kazakstan's population has remained virtually stable for the
past ten years. Kazakstan has by far the largest non-Asian population (45
percent in 1994, equaling the Kazak population) and the smallest
population of other Central Asian ethnic groups (for example, only 2
percent are Uzbek).
The largest minority in Kazakstan is its Russian population (36 percent
in 1994), which until the 1990s was the plurality group. The status of the
Russians, whose number includes many irreplaceable technical experts, has
been one of Kazakstan's burning post-Soviet issues. The government has
resisted making Russian an official second language, although Russian is
understood by most Kazaks and used in most official communications. In May
1996, a treaty established the status of Kazak and Russian citizens in
Russia and Kazakstan, respectively, ending a long disputed aspect of the
nationality issue.
Of the five Central Asian republics, Kazakstan played the most important
industrial role in the Soviet system because of the abundant coal and oil
deposits in the northern sector of the republic, closest to Russia.
Although the Soviet Union developed specific sectors of industry such as
chemicals, metals, and military equipment, the republic also inherited an
antiquated industrial infrastructure geared to feed materials into the
Soviet economy. Energy industries, which also played a large part in the
economy, have suffered from substantial reductions in Russia's post-Soviet
demand, as have other industries that remain dependent on Russian markets.
In 1996 most of Kazakstan's economy was still state-owned and lacked
fundamental restructuring, despite large-scale privatization of smaller
enterprises in the preceding years. Some large firms have been sold to
solid international companies (such as the Republic of Korea's (South
Korea's) Samsung, which now manages the Zhezqazghan Nonferrous Metallurgy
complex and refinery), but many were awarded to unknown companies whose
contracts later were cancelled. In June 1996, the government sold the
country's largest oil refinery at Shymkent, Yuzhneftegaz, one of its
largest oil enterprises, and the Vasilevskoye gold mine, one of the
largest in the world, by public tender to foreign companies. Those sales,
together worth an estimated US$1 billion, were a major departure from
previous policy and were aimed at improving the confidence of
international investors.
In 1996 the healthiest parts of the economy were the oil, gas, and
mineral extraction industries. However, infrastructural decay and slow
structural reform have delayed the recovery of those sectors from
post-Soviet lethargy. Many of the state enterprises concentrated in
northern Kazakstan are far in debt and unable to pay wages to their
workers. The transfer of the national capital from Almaty along the border
of Uzbekistan to Aqmola in the industrial north, planned for 1998, is an
attempt to revive that zone, as well as to retain the cadre of Russian
technical experts who continue to leave the country.
Foreign investment in Kazakstan has been frustrated by complex
bureaucratic rules, and the domestic consumer market is restricted by the
very low average wage of US$96 per month. The Western oil companies
Chevron and Mobil have invested heavily in the Tengiz oil fields offshore
in the Caspian Sea, but they have been frustrated by a long dispute with
the consortium of Kazakstan, Oman, and Russia over the structure of a new
delivery pipeline. The common customs regime established with Russia in
1995 has accelerated trade, but conditions favored Russia in the first
year.
The Central Bank of Kazakstan, President Nazarbayev, and the Council of
Ministers play a strong role in economic policy making. The bank has
advocated market reform and inflation control the most strongly of the
three. Experts rate Nazarbayev's economic initiatives as erratic.
Government goals for 1996 included reducing inflation to 28 percent (the
1995 rate was 60 percent), reducing the budget deficit to about 3.3
percent of the gross domestic product (GDP--see Glossary); and limiting
devaluation of the tenge (for value of the tenge--see Glossary) to a 10
percent decline against the dollar.
The exchange rate of the tenge against the United States dollar has
improved steadily, allowing upper-class Kazaks to expand foreign goods
purchases. For 1997 the Economist Intelligence Unit forecasts significant
stabilization and recovery, with overall GDP growth of 1 percent and
consumer price inflation of 45 percent. Substantial aid was expected from
the International Monetary Fund (IMF--see Glossary) in 1996. Full
membership in the Islamic Development Bank, achieved in mid-1996, brought
Kazakstan additional aid for trade operations, personnel training, and
infrastructure improvements.
Despite the abundance of fuel in Kazakstan, in 1996 the republic
continued to be plagued by its Soviet-era transportation system, which
failed to connect population centers with distant hydrocarbon deposits
within the country. As a result, in the winter of 1996-97 Almaty and
others cities suffered severe shortages of electric power and heat.
In December 1996, Russia finally stopped blocking a multinational
agreement to build an export pipeline that would allow Kazakstan to sell
its abundant oil directly to Western customers. Because the pipeline will
not be available until 1999 or later, in 1997 Kazakstan began shipping oil
across the Caspian Sea for resale in Iran--a procedure that risked Western
condemnation because of the ongoing economic embargo of Iran.
As the Soviet Union faced dissolution late in 1991, Nazarbayev was one
of the last advocates of the union's preservation in some form. Since that
time, he has pursued a careful foreign policy aimed at preserving both
close relations with Russia and as much as possible of his nation's
economic and political independence. In domestic politics, he nominally
expanded some of the republic's democratic institutions, pushing through a
new constitution and a popularly elected parliament. However, Nazarbayev
also consolidated his executive power steadily in the mid-1990s.
Parliaments were dissolved in 1993 and 1995, and Nazarbayev made numerous
changes in the personnel and structure of his cabinets, all in an effort
to obtain cooperation in his reform programs. In April 1995, a referendum
overwhelmingly extended the president's term to 2000, canceling the 1995
presidential election. Decrees by Nazarbayev in December 1995 and April
1996 further extended the president's powers. Nazarbayev also dissolved
the Constitutional Court in 1995 and replaced members of the Supreme Court
in 1996.
Party politics in Kazakstan have not worked well, although a substantial
opposition movement exists. Despite efforts by the ruling People's Unity
Party (SNEK) to minimize opposition activity, the top three opposition
parties gained twenty-two of sixty-seven seats in the lower house
(Majilis) of parliament in the December 1995 elections, and another
fourteen seats went to independent candidates. Indicating the inferior
role of parliament in the Kazakstani government, however, was the lack of
competition in those elections; only forty-nine candidates vied for the
forty Senate (upper-house) seats being contested. In both houses, Kazaks
outnumbered Russians, by forty-two to nineteen in the Majilis and by
twenty-nine to fifteen in the Senate (the president appoints seven
senators).
In the Soviet era, Semipalatinsk (now Semey) in northeastern Kazakstan
was the world's largest and most frequently used test site for nuclear
weapons. During the long Cold-War period of nuclear weapons testing, an
estimated 1.5 to 2 million people were affected by radioactive pollution
in northern Kazakstan. Demonstrations against nuclear testing began in
1989, and a major environmental movement sprang from that opposition.
When the Soviet Union dissolved, Kazakstan was one of four republics
possessing nuclear weapons and materials. In November 1994, the United
States completed Project Sapphire, which involved the purchase and removal
of more than 600 kilograms of weapons-grade plutonium from Kazakstan,
whose insecure storage facilities and possible nuclear sales to Libya and
Iran had aroused international concern. In May 1995, the last of
Kazakstan's nuclear weapons was destroyed, removing a major shadow from
the Soviet past. The United States has promised aid in permanently sealing
the Semey test site.
In the 1990s, Kazakstan's foreign policy has continued Nazarbayev's
early support of a federation among the former Soviet states, now loosely
united in the CIS. Because the country's industrial and energy bases are
located close to Russia's southern border, experts have identified
Kazakstan as the former Soviet republic most likely to experience Russian
pressure toward reunification. Despite the strains caused by the uncertain
status of the large Russian minority in his republic, Nazarbayev has
maintained close relations with Russia; in early 1996, he brought
Kazakstan into a new commercial confederation with Belarus, Russia, and
Kyrgyzstan. In June 1996, Prime Minister Akezhan Kazhegeldin reiterated
Kazakstan's full support for additional CIS integration (while preserving
member-state sovereignty) and for the reelection of Boris N. Yeltsin as
president of Russia. Meanwhile, Kazakstan worked with Kyrgyzstan and
Uzbekistan to extend the activities of the Central Asian Economic Union,
which was established in 1993. At the Bishkek summit of January 1997, a
treaty of "eternal friendship" guaranteed mutual security
assistance among the three member nations; the summit also discussed
mutual convertibility of the three currencies.
Kyrgyzstan
Kyrgyzstan, the second-smallest of the Central Asian republics in both
area and population, is located between two giants: Kazakstan to its north
and China to its south and east. The rural population, already the largest
by percentage in Central Asia, is growing faster than the cities. Like
Kazakstan, Kyrgyzstan has a minority population of Russians (22 percent in
1994) whose accelerated emigration threatens the country's technological
base. The country's legal and political systems give clear priority to the
Kyrgyz majority, alienating not only Russians but also the large Uzbek
minority concentrated in the Osh region of southwestern Kyrgyzstan.
Friction persists over control of the scarce land of the Fergana Valley,
which overlaps the territory of three republics: Kyrgyzstan, Tajikistan,
and Uzbekistan. The regime of President Askar Akayev (first elected in
1990) has attempted to balance sorely needed national reform programs with
the demands of ethnic groups and clans that still exercise strong
influence on the country's political and social structures.
Kyrgyzstan, ranked as the second-poorest republic in Central Asia,
possesses a more limited range of natural resources than its neighbors. In
the Soviet era, Kyrgyzstan contributed a specific group of
minerals--antimony, gold, and mercury--to Moscow's economic plan. Of the
three, only gold is a valuable asset in the post-Soviet world; it has
attracted several Western investor companies. Kyrgyzstan has only limited
amounts of coal and oil. The major energy resource is water power from the
republic's fast-moving rivers. However, despite a government program of
increased emphasis on hydroelectric power, Kyrgyzstan must import a large
proportion of its energy supply. Kyrgyzstan's industry, which had been
specialized to serve the Soviet military-industrial complex, suffered
heavily when that demand disappeared; conversion has proven very
difficult.
After independence, Kyrgyzstan suffered one of the worst economic
declines among the CIS states (particularly in industrial output), despite
a reform program that was deployed more rapidly than most others.
Statistically, privatization was very effective, but because meaningful
economic change did not occur after privatization, inefficient state
enterprises continued to drag down the economy. Government and commercial
corruption also diluted the effects of economic reform.
In the mid-1990s, official measurements of Kyrgyzstan's economic
performance were very negative; they were, however, not completely
accurate. By 1996 an estimated 30 percent of real GDP came from the "black
economy"--independent, unregistered entrepreneurs selling their wares
on the street or in private shops--while state-owned enterprises continued
to go bankrupt or failed to pay their employees. However, even official
GDP bottomed out in 1995; it dropped 6.2 percent after slumping by 26
percent in the previous year. The Economist Intelligence Unit forecast GDP
rises of 1 percent in 1996 and 2.5 percent in 1997, the latter spurred by
the opening of the Canadian joint-venture gold mine at Kumtor. In 1995 the
volume of industrial production dropped 12.5 percent, and consumer goods
production dropped 25.4 percent, but agriculture improved by 38.8 percent.
Other indicators are more positive, however. By early 1996, the
inflation rate, which had reached 1,400 percent in 1993, was about 1
percent per month. The government's goal was to halve the end-of-1995 rate
by the end of 1996. The exchange rate of the som (for value of the
som--see Glossary) remained stable in 1996 at eleven to US$1. The budget
deficit remained high at about 12 percent of GDP, with foreign loans
applied to make up the shortfall.
Foreign investment remained very sparse in 1996. Many joint ventures
with Turkey have failed, and the sale of Kyrgyzstani firms to foreign
investors has provided embarrassingly little revenue for the government.
International loans continue, but Kyrgyzstan already has fallen behind in
repayments to Russia and Turkey. Repayment of pending international debts
inevitably will raise the national debt. Debt and the failure of foreign
investment have forced Kyrgyzstan to rely more heavily on Russia. The
customs union that Kyrgystan joined with Belarus, Kazakstan, and Russia
early in 1996 will add to Moscow's power over Kyrgyzstan's trade policy.
At the same time, Kyrgyzstan's parliament has resisted reform
legislation that would modernize the tax code and privatization of large
state enterprises in energy, telecommunications, mining, and aviation.
According to a government estimate, as many as 70 percent of privatized
enterprises were bankrupt in 1996 because, under existing economic
conditions, they simply lacked customers. A limited capital market
includes the Kyrgyzstan Stock Exchange, which opened in early 1995, and
some independent brokerage houses, but because there is no legal framework
or government regulation for capital exchange, cash transactions were few
in 1996.
Although President Akayev began his regime with ideals of multiparty
democracy, strong opposition stymied his reform programs and moved him
gradually closer to the authoritarian positions of his four Central Asian
colleagues. Power struggles between the legislative and executive branches
of government promoted Akayev's expansion of executive power. In the
mid-1990s, two elections--the first reelecting Akayev by a huge margin in
December 1995 and the second giving 95 percent approval in a referendum on
extending his power in February 1996--were approved by international
observers as free and fair, although the opposition claimed otherwise. The
referendum empowers the president to conduct domestic and foreign policy
and to name and dismiss cabinet ministers and judges without consulting
parliament. The parliament retains approval rights over the presidential
appointment of the prime minister, Supreme Court judges, and other
officials, but the president may dissolve parliament if it fails three
times to approve a nominee. Akayev had argued that centralizing
presidential power was necessary to speed economic, political, and legal
reform and to reduce the influence of regional political centers. In March
1996, he exercised his new power by securing the resignation of the
government, naming four new ministers, and redesignating the positions of
five others. He also reorganized local government to reduce the power of
provincial leaders and assign them direct responsibility for enactment of
national reforms.
In May 1996, a new government document described social conditions and
listed goals for social programs in the ensuing years. Kyrgyzstan, which
has made earnest efforts to maintain social support programs in the lean
years of the 1990s, is emphasizing job creation and prevention of
unemployment, reorganization of social insurance and pension systems, and
reforms in education and health care. The official unemployment figure in
mid-1996 was 76,600; about 60 percent of the unemployed received
unemployment benefits. The government goal is to keep unemployment below
100,000 while mounting a new, long-term job creation program. In 1996 a
proposal was made for a government-controlled social fund to run a uniform
state insurance and pension system that would remove the severe inequities
of Kyrgyzstan's current system.
Meanwhile, nearly one-third of the population (1.257 million) are
estimated to live below the poverty line, and the 14,000 refugees arriving
annually from Tajikistan create additional social pressures. Kyrgyzstan
became a preferred refugee destination when Kazakstan and Uzbekistan
tightened their migration controls in 1993.
In the 1990s, Kyrgyzstan's foreign policy has been shaped by the small
country's reliance on Russia for national security. In 1996 President
Akayev reiterated that Kyrgyzstan always would view Russia as a natural
ally and partner. At the same time, Kyrgyzstan has appealed to the North
Atlantic Treaty Organization (NATO--see Glossary) and the Organization for
Security and Cooperation in Europe (OSCE--see Glossary) to replace the CIS
force in Tajikistan and, in fact, to guarantee the security of the entire
region--a position at odds with Russia's strong opposition to NATO
influence anywhere in the former Warsaw Pact regions. However, in early
1997 Akayev backed Russia's opposition to NATO expansion in Europe. In
1996-97 Kyrgyzstan diversified its national security policy somewhat by
participating in the Central Asian peacekeeping battalion under the aegis
of the Central Asian Economic Union.
Difficult relations with Central Asian neighbors increase the need for
an outside source of security. Uzbekistan, which has a 13 percent minority
population in western Kyrgyzstan, has flexed its muscles by shutting off
fuel supplies. Kyrgyzstan depends heavily on the Kazakstani capital,
Almaty, for air traffic in the absence of a first-class domestic airport.
Unresolved border issues and a continuing flow of civil war refugees have
inflamed relations with Tajikistan. Greatly expanded trade relations with
China also have brought large numbers of Chinese merchants who threaten to
stifle domestic commerce in some Kyrgyzstani cities. Kyrgyzstan has
expressed the need to balance its policy between China and Russia, and has
praised China for its relative restraint in exerting influence over
Central Asia.
Tajikistan
Located on the western slopes of the Pamir Mountains, Tajikistan
occupies one of the most rugged and topographically divided regions in the
world. Possessing extremely convoluted frontiers, it borders Uzbekistan to
the west, China to the east, Afghanistan to the south, and Kyrgyzstan to
the north. Tajikistan is the smallest in area and third-largest in
population of the Central Asian republics. Unlike the ethnically dominant
groups of the other four republics, the Tajiks have a culture and a
language based on Iranian rather than Turkic roots. Despite their
differing cultural backgrounds, the Tajiks and the Uzbeks did not consider
themselves separate until the Soviet Union's artificial demarcation of the
republics in the 1920s. (Until 1929 the Autonomous Republic of Tajikistan
was part of the Soviet Socialist Republic of Uzbekistan.)
The Soviet Union brought Tajikistan significant advancement in
education, industry, and infrastructure compared with the primitive
conditions of 1917. In the mid-1990s, however, the country remained the
most backward of the Central Asian republics, partly because of
specifically focused Soviet development policies and partly because of
topographical factors that enormously complicate exploitation of existing
resources.
In the Soviet system, the Tajikistani economy was designed to produce
cotton, aluminum, and a few other mineral products, including uranium and
gold. Waged across a large portion of the republic, the civil war has
caused great and lasting damage to the national economy. In 1994 damage to
industry was estimated at about US$12 billion. Production levels in all
industries had dropped an estimated 60 percent in 1994 compared with 1990.
Many Germans and Russians, a high percentage of the country's key
technical personnel, fled the civil war. The rate of inflation was steep
in 1992-93.
In 1996 Tajikistan's economy still was in desperate condition. It
remains the least attractive of the former Soviet republics for foreign
investment. Only the export of cotton and aluminum has brought significant
profits. A joint cotton venture with the United Arab Emirates was
scheduled to begin in mid-1996. In 1995 the Regar (Tursunzoda) aluminum
plant produced 230,000 tons of primary aluminum, about half its capacity
but enough to make aluminum the second-largest export product. As it was
earlier in the 1990s, aluminum production has been limited by continued
reliance on imported raw materials and energy. Tajikistani industry
remains handicapped in general by the country's inability to pay foreign
energy suppliers.
Some movement toward economic reform was seen in 1996, although the
unreliability of performance statistics makes evaluation difficult. Prime
minister Yahyo Azimov, who took office in February 1996, has stressed the
need for quick privatization and assistance from the IMF and the World
Bank. In early 1996, controls were lifted on bread prices, a move that led
to riots in some cities but that was considered a sign of commitment to
market reform. The Azimov government set a 1996 budget deficit cap of 6
percent of GDP. In mid-1996 the World Bank was considering a loan of US$50
million, but the IMF withheld aid pending improvement of foreign exchange
and other conditions. The privatization target for the end of 1996 was 50
percent of total enterprises, after only 8 percent of the country's
enterprises were privatized in the first four years of independence. The
Economist Intelligence Unit forecast additional GDP reductions of 12.4
percent in 1996 and 10 percent in 1997.
In 1996 and 1997, Tajikistan attempted to join regional organizations
that would improve its economic position. The customs union of Belarus,
Kazakstan, Kyrgzstan, and Russia considered Tajikistan for membership, but
the Central Asian Economic Union of Kazakstan, Kyrgyzstan, and Uzbekistan
refused Tajikistan's overtures.
Some improvements were made in 1995-96 in Tajikistan's woefully shabby
infrastructure. The Daewoo firm of South Korea modernized the telephone
system, and United States, German, and Turkish firms were scheduled to add
new features. The Dushanbe Airport still needs modernization, although in
the mid-1990s regular flights were established to Moscow, India, and some
other points.
Especially in comparison with the stable regimes that have dominated the
other republics since 1991, the political scene in Tajikistan has been
unsettled from the day of independence onward. Throughout the 1990s, an
old guard with roots in the Soviet era parried the efforts of various
opposition groups to share or monopolize power. In 1992 a short-lived
coalition government broke down, sending the country into a civil war that
was won nominally when the old guard forces captured Dushanbe and named
Imomali Rahmonov chief executive. But conflict persisted, based partly on
the geographical and clan divisions of the country and partly on the
political question of reform versus reaction. Between 1993 and 1996,
fighting flared, mostly in limited engagements, in several regions of
Tajikistan and across the border in Afghanistan. In 1993 a multinational
CIS force, dominated by Russian units, entered the country with the
primary mission of enforcing the southern border, across which opposition
forces had received substantial support. In early 1994, the UN arranged a
first round of peace talks, and five more rounds followed over the next
two years. None of the talks led to an agreement on peace terms, however.
In 1996 Tajikistan's political situation remained as unstable as it had
been for the previous three years. The Rahmonov regime was unable to
defeat rebel forces or to compromise enough to reach a satisfactory
agreement with them. As it had in the previous three years, Russia failed
to bring the government and the opposition to the peace table. Meanwhile,
continued instability provided Russia the pretext for maintaining
substantial "peacekeeping" forces in a key region of the former
Soviet Union. The situation has led some outsiders to doubt the sincerity
of Russia's efforts to bring peace to the area.
In early June 1996, the civil war in Tajikistan intensified once again,
and observers saw similarities between Russia's military activity there
and its occupation of Chechnya. Russian air attacks on opposition villages
in south-central Tajikistan contravened the latest three-month extension
of the UN-sponsored cease-fire (originally signed in 1994), which had been
set in May. In a new campaign apparently coordinated with Moscow,
Tajikistani troops moved with Russian air support eastward into the
country's narrow central corridor toward opposition strongholds.
Meanwhile, in May the Rahmonov regime refused to reconvene UN-sponsored
talks as scheduled, and the UN Observer Mission in Tajikistan (UNMOT) was
refused access to the combat zone. In August 1996, opposition troops moved
close to Dushanbe amid intensified fighting that ended yet another
cease-fire agreement.
In the fall of 1996, the government's military position was unfavorable
as rebel forces drove from Afghanistan into central and eastern
Tajikistan. In December Rahmonov signed a peace agreement with Sayed
Abdullo Nuri, leader of the opposition Islamic Rebirth Party. The
agreement called for a National Reconciliation Council that would be a
forum to negotiate the terms of a permanent peace. In the months that
followed, the Rahmonov government negotiated with the United Tajikistan
Opposition to reintegrate the political and military organizations of the
two sides. Scattered fighting continued into the spring of 1997, however.
According to a Russian report in May 1996, the Tajikistani army was
lacking 40 percent of its nominal officer cadre, and only 40 percent of
those in service, many of them callups from the reserves, had a military
education. The Tajikistani force was evaluated as inferior to its
opposition in training and armament. Instances of troop mutiny reinforced
that opinion, paralleling the situation in Afghanistan during the 1980s.
In both Tajikistan and Afghanistan, Russian troops operated in a highly
unstable civil war atmosphere, and the opposing sides were deeply divided
within themselves.
As the civil war continued, the Rahmonov regime took steps to avoid
internal sources of opposition. Although the new constitution approved in
November 1994 contained substantial guarantees of human rights (also
staples of all the Soviet-era constitutions), prescribed legislative and
review functions for the legislature, and mandated an independent
judiciary, in fact the country's governance amounted to one-man rule based
on declarations of emergency executive powers extended from 1993 and 1994.
The result has been imprisonment, exile, and assassination of opposition
political figures and some foreign observers. Rahmonov won a decisive
victory in the presidential election of 1994, with opposition only from a
second hard-line politician of similar background, in what was generally
labeled a rigged outcome. The unicameral legislature offers decisive
majority support for Rahmonov's programs, and the judiciary is fully under
the control of the president, who has the power to dismiss any judge. The
Gorno-Badakhshan Autonomous Province, which accounts for nearly 45 percent
of the republic's territory, has disputed status and is a main stronghold
of separatist opposition forces.
Tajikistan's foreign policy increasingly has sought the economic and
military security of close relations with Russia. In Tajikistan, the
Russian minority enjoys a more liberal set of privileges than it finds in
any other Central Asian republic. For example, Russians are allowed dual
citizenship and Russian remains an official language. In April 1996,
Rahmonov appointed the Russian mayor of Dushanbe, Yuriy Ponosov, as first
deputy prime minister, continuing the policy of granting high government
positions to ethnic Russians. Despite favorable treatment of the Russian
minority, Russians have fled Tajikistan steadily since 1992. In early
1996, only about 80,000 of the 500,000 Russians identified in the 1989
Soviet census remained. Most have complained that Russian government
authorities did not afford them adequate aid or security in Tajikistan,
leaving them no choice but to leave.
Turkmenistan
Turkmenistan was known for most of its history as a loosely defined
geographic region of independent tribes. Now it is a landlocked, mostly
desert nation of only about 3.8 million people (the smallest population of
the Central Asian republics in the second-largest land mass). The country
remains quite isolated on the eastern shore of the Caspian Sea, largely
occupied by the Qizilqum (Kyzyl Kum) Desert. Traditional tribal
relationships still are a fundamental base of society, and
telecommunications service from the outside world has only begun to have
an impact. Like the Kazaks and the Kyrgyz, the Turkmen peoples were
nomadic herders until the second half of the nineteenth century, when the
arrival of Russian settlers began to deprive them of the vast expanses
needed for livestock.
Agriculture contributes about half of Turkmenistan's GDP, whereas
industry accounts for only about one-fifth. However, irrigation is
necessary for nearly all the republic's arable land. In the early 1990s,
government subsidies protected consumers from the shock of leaving the
insulated Soviet system. Nevertheless, the standard of living protected by
those subsidies had been among the lowest in the Soviet Union, and it
deteriorated further in the 1990s. Although the Niyazov regime launched
ambitious privatization programs in 1992 and 1993--with energy,
transportation, agriculture, and communications to remain under state
control--only minor progress had been made toward the programs' goals by
the mid-1990s. Progress also has been quite slow in the reform of
commercial and banking legislation.
Turkmenistan played a vital role in the Soviet system as a natural gas
supplier. In the post-Soviet period, Russia remained the republic's top
trade partner, with Turkey moving into second place in the mid-1990s. A
crucial rail link with Iran also was an important commercial improvement.
The single most important mineral resource is natural gas;
Turkmenistan's reserves may be among the largest in the world, with
estimates as high as 15 trillion cubic meters. Nearly all the republic has
been identified as potentially productive, and important offshore reserves
exist in the Caspian Sea. The second major resource is petroleum, of which
Turkmenistan has an estimated 63 billion tons. However, the range of the
republic's mineral resources is small: sulfur, mineral salts, and clays
complete the list.
In the mid-1990s, Turkmenistan's economic policy continued to rely
heavily on the West's demand for natural gas. But, for a nation isolated
along the east coast of the Caspian Sea, gas sales depend strictly on
pipeline movement. Existing lines, built to serve the Turkmenistan-Russia
north-south axis, cannot fill this need. New lines moving from east to
west have been planned, but all plans encounter strong geopolitical
opposition from a regional power or from the United States. Until the
pipeline problem is solved, Turkmenistan can sell gas only to the same
customers it served in the Soviet era, who now are its impoverished fellow
members of the CIS. Armenia and Ukraine, major CIS customers, have been
chronically late in paying. In February 1996, Turkmenistan made a
long-term agreement to sell as much as 15 billion cubic meters of gas per
year to Turkey between 1998 and 2020. Turkey also received development
rights for a field in Turkmenistan believed to contain 20 million tons of
oil.
Many recent economic indicators can only be approximated because
Turkmenistan has not issued precise statistics. The national currency, the
manat (for value of the manat--see Glossary), was devalued in late 1995
from a ratio of 500 to US$1 to 2,100 to US$1; it has remained
non-convertible. It is believed that inflation in 1995 exceeded 1,000
percent; the 1996 annual rate, 140 percent, still was the highest in
Central Asia. Exports for 1995 were about US$1.9 billion and imports about
US$1.5 billion in official estimates. However, Turkmenistan conducts much
barter trade, and payment failures of gas customers further undermine the
application of cash trade figures. For 1996 the Economist Intelligence
Unit forecast a 5 percent reduction of GDP following a drop of 15 percent
in 1995. It also forecast a reduction in inflation in 1996 to 800 percent
and a further drop in the value of the manat to a rate of 3,000 to US$1.
The state still strongly dominates the national economy. Little private
enterprise occurs without some form of government approval or support, and
about 90 percent of the work force is in state enterprises. In 1996 plans
called for modernization of tax and business laws, including joint-venture
conditions for the oil and gas industries. Pending those developments,
foreign investors face a mass of state bureaucracy.
Foreign investment has been small, and experts predict no short-term
improvement, partly because of the republic's insufficient legal and
bureaucratic infrastructure, and partly because the very small and
impoverished population provides little market opportunity. (The official
average monthly wage was US$7 in early 1996.) The European Bank for
Reconstruction and Development (EBRD) and other international banks are
funding a textile complex, and Ashgabat Airport will be modernized with a
loan of US$31 million from the British Export Credit Agency. However, for
1996 total direct investment was only US$32 million, with another US$61
million in joint ventures and US$161 million in foreign loans.
Turkmenistan has pursued the most independent and pragmatic foreign
policy of the five Central Asian republics. The overall goal has been to
form advantageous regional relationships without becoming involved in
regional conflicts such as the Tajikistani civil war. In December 1996,
Turkmenistan passed legislation declaring permanent neutrality and
prohibiting membership in any military or political-military alliance
entailing responsibilities for collective action by its members.
President Niyazov has run the country's foreign policy personally; he
has faced little pressure at home to orient policy in a particular
direction. Thus, he has been able to form ties with diverse foreign
nations, maintaining economic advancement as the primary goal. Through the
mid-1990s, Iran has been the top regional partner, although national
security relations with Russia also have been a high priority during that
period. In 1995 Turkmenistan signed a series of bilateral agreements with
Russia, expanding economic and political cooperation and proclaiming the
two nations "strategic partners" through 2000.
Turkmenistan has explicitly avoided multilateral arrangements, most of
them sponsored by Uzbekistan, with the other Central Asian republics. It
refused membership in the Central Asian customs union established by
Kazakstan, Kyrgyzstan, and Uzbekistan in 1994, and in the Central Asian
Economic Union that sprang from the initial agreement. Turkmenistan also
contributed nothing to the CIS peacekeeping force sent to Tajikistan by
those three nations and Russia in 1993. Substantial tension has arisen
with Uzbekistan over water consumption, competition on the world cotton
market, the Uzbek minority population's potential for unrest, and
resentment of Uzbekistan's ambitions for regional leadership. By the end
of 1995, tensions with Uzbekistan were so high that Turkmenistan boycotted
all regional meetings. However, in January 1996 a meeting of the two
nations' presidents produced a package of economic cooperation agreements,
and new agreements on road and railroad transportation were discussed in
the first half of 1996.
Uzbekistan
Uzbekistan is the third-largest of the Central Asian republics in area
and the first in population (estimated at 23 million in 1994 and growing
at the fastest rate in Central Asia). Uzbekistan is completely landlocked
between Kazakstan to the north, Turkmenistan to the south, and Kyrgyzstan
and Tajikistan to the east. It shares the Aral Sea, and hence the
environmental problems of that area, with Kazakstan. The territory of
modern Uzbekistan was at the center of the rich cultural and commercial
developments that occurred in Central Asia over a period of two millennia,
especially along the axis defined by the Silk Route between Europe and
China. Included in Uzbekistan are the three chief Silk Route outposts of
Bukhoro (Bukhara), Khiva, and Samarqand (Samarkand).
Besides the agricultural base that yields cotton, vegetables, and grain,
Uzbekistan's economy is blessed with gold, several other valuable
minerals, and substantial reserves of energy resources, especially natural
gas. In the mid-1990s, the economy still is based primarily on
agriculture, following substantial increases in irrigation-dependent
output in the 1970s and 1980s. Cotton remains the most valuable crop, and
Uzbekistan is the fourth-largest cotton producer in the world.
Uzbekistan has suffered from high inflation, mainly because the state
has continued Soviet-era social protection programs, bank credits for
unprofitable enterprises, budget deficits, and price supports that require
expanding the supply of money. As inflation has redistributed wealth, many
Uzbekistanis have suffered substantial losses of real income. By 1994
annual inflation reached 1,300 percent, but government restrictions in
1995 lowered the year-end figure to 77 percent.
Throughout the post-Soviet period, a primary goal of Uzbekistan's
economic reform policy has been to avoid the disruptions associated with
rapid transition. While proclaiming the eventual goal of a market economy,
economic planners have moved very slowly in privatization and in the
creation of a Western-style financial sector that would offer economic
incentives and encourage private entrepreneurial initiative. This strategy
has succeeded in reducing the transition shocks experienced by other
post-Soviet societies. Since independence, Uzbekistan's GDP has fallen
about 20 percent, compared with the Central Asian average of 50 percent.
Part of that moderation results from Uzbekistan's initially more favorable
situation in 1992. Because the cotton monoculture gave Uzbekistan a
commodity with sales value worldwide (in 1995 some 75 percent of cotton
exports went outside the CIS) and because Uzbekistan was less dependent on
foreign trade and imported energy supplies than the other Central Asian
countries, the end of the Soviet Union imposed fewer economic hardships.
The 1995 cotton crop, expected to set a record, was significantly below
forecast levels, however. Meanwhile, in 1996 the republics of the region
continued nominal efforts to improve the Aral Sea environmental disaster,
amid significant doubts that Uzbekistan would sacrifice cotton irrigation
water from Aral tributaries to achieve that goal.
In late 1995, the IMF lent the regime US$260 million for economic
reform, the first money accepted by Karimov from the IMF. In its
evaluation at that time, the IMF noted that Uzbekistan's structural reform
had been slow, notably in the banking sector, but that its tight monetary
policy had slowed the economy's previous runaway inflation and
liberalization of foreign exchange had been effective. Inflation for 1995
was 77 percent; the IMF year-end inflation target for 1996 was 21 to 25
percent; the exchange rate of the Uzbekistani som (for value of the
som--see Glossary) fell from thirty to the United States dollar in 1995 to
thirty-five to the dollar in 1996. The Economist Intelligence Unit
forecast a 1996 drop in GDP of 1 percent, followed by growth of 1 percent
in 1997. The projected budget deficit for 1996 was 3.5 percent of GDP,
which conforms with IMF loan guidelines. An IMF credit of US$124 million
was granted in December 1995.
Uzbekistan's economy is one of the most stable in the Central Asian
region, and foreign investment activity there has been the highest in the
region. In December 1995, the United States Overseas Private Investment
Corporation agreed to provide US$500 million to convert the Soviet-era
military industry, and United States oil companies committed US$1.3
billion of long-term investments in the oil and gas industry. Uzbekistan
is the regional distribution center for electronic and domestic appliances
from Dubai, based on a favorable tariff system that places no tax on most
imports (a 15 percent tariff was levied on electronics in 1996). A large
Daewoo (South Korean) television and videocassette plant in Tashkent is
the most visible foreign electronics enterprise. The British
Massey-Ferguson firm plans an agricultural machinery plant at some future
date, and the British Quickstop supermarket chain opened outlets in
Tashkent in 1996. Although some improvement has been made in Uzbekistan's
tax and legal system, the dominance of the state bureaucracy continues to
complicate foreign investment.
In 1996 the Karimov regime became noticeably less cautious in its
approach to economic reform. Karimov criticized some bureaucrats for
hindering execution of reform decrees, and the president began advocating
private enterprise as the surest path to individual and national
prosperity.
Overall foreign trade goals still include expanded commercial agreements
with East Asia and the West, but by 1996 Uzbekistan had expressed
willingness to join a customs union with Belarus, Kazakstan, and Russia,
which already had reached a series of commercial accommodations early in
1996. Self-sufficiency in oil, gained for the first time in 1996, has
freed Uzbekistan from dependence on Russia in a key area.
Uzbekistan's position as the only Central Asian state bordering all the
other four has combined with other advantages (the largest population in
the region and significant natural resources) to advance its claim as the
leader and potential unifying force of the Central Asians. That putative
role also has gained Uzbekistan considerable distrust among the other four
republics, each of which has a significant Uzbek minority population and
each of which has felt the impact of Uzbekistan's drive for supremacy in
different ways. In 1992 Uzbekistani troops--the best-equipped in Central
Asia--were instrumental in the triumph of Imomali Rahmonov's communist
forces in Tajikistan, and since that time Uzbekistan has participated in
the CIS force attempting to keep the peace in that country. In tandem with
its drive for Western economic ties and privatization, in 1996 Uzbekistan
intensified its promotion of regional economic and security agreements.
Partly as a counterweight to Russia's influence in the region, Uzbekistan
has encouraged broader activities by the Central Asian Economic Union,
which it shares with Kazakstan and Kyrgyzstan. In 1996 the most notable
departure from dependency on Russia was establishment of the Central Asian
peacekeeping battalion, which held an initial exercise in the United
States under the auspices of the NATO Partnership for Peace program. In
January 1997, the economic union's members signed a treaty of "eternal
friendship" that included mutual security guarantees.
The armed forces, which had inherited a substantial infrastructure from
the Soviet period, were the best-equipped force in the region by 1996,
after developing steadily in the interim years. In 1996, Uzbekistan's
armed forces numbered 30,000 persons, including 25,000 ground and 4,000
air force troops. At that time, the government announced that ethnic
Uzbeks constituted 80 percent of the country's armed forces, compared with
6 percent in the former Soviet force of 1992.
After independence, much of Uzbekistan's political structure remained
essentially unchanged. Although some impetus had existed toward more
democratic governance prior to independence, Karimov set the tone for
political activity by winning a rigged presidential election in 1991. The
new constitution approved in December 1992 prescribed a secular,
multiparty democracy with full observance of human rights. However, the
trial and harassment of opposition political figures and the restriction
of the media began immediately; international protests in the next few
years achieved scant results. Only two parties, Karimov's and a token
opposition group, were permitted to participate in the parliamentary
election of 1994. In March 1995, a rigged referendum extended the
presidency of Karimov until 2000. Shortly thereafter, Karimov sentenced
seven leaders of the political opposition to prison terms. Although the
stable atmosphere fostered by Karimov's regime had tended to soften
international criticism, Uzbekistan's human rights record still left much
to be desired. In 1995 and 1996, however, a general improvement in
government observation of human rights was noted; the government
apparently has attempted to attract Western investors by responding to
criticism of its handling of human rights cases. Two new political parties
were formed and registered officially in mid-1995.
Uzbekistan's relations with Russia have been characterized by a
combination of resentment and dependence, representing one of the few
areas where the Karimov regime does not exercise full control. Although
Karimov has strongly encouraged business activities by Western countries,
especially Germany, he has been careful not to alienate Russia's
commercial interests. In 1994 and 1995, Uzbekistan signed commercial
treaties with a variety of CIS countries, but Russia always was the
primary partner in such deals.
The issue of dual citizenship for the Russian minority in Uzbekistan,
strongly pressed by Russia in the early 1990s, has caused serious
irritation, as did Russia's unsuccessful pressure for Uzbekistan to remain
in the ruble zone in 1993. Like the other Central Asian republics,
Uzbekistan has suffered a rapid loss of its Russian technocrat population.
Since independence, an estimated 500,000 Russians (out of the 1.65 million
in 1989) have left, and the emigration of Germans, Jews, and Koreans
further depleted the republic's base of technical know-how.
Just beyond the borders of Central Asia, Uzbekistan has established new
relationships with Iran, Pakistan, and Turkey, based chiefly on economic
exchanges. Stimulated by the economic stability of Uzbekistan,
international lenders such as the EBRD and the IMF have offered fairly
generous loans. The United States, conscious of human rights violations,
has offered less generous assistance to Uzbekistan than to other Central
Asian countries.
The republics of Central Asia emerged from the Soviet Union with a
combination of assets and handicaps. Their geographic isolation has
complicated establishment of commercial relationships, and even name
recognition, in the West. The complete lack of democratic tradition has
kept the republics from complying with Western legal and commercial
standards, and the expression of political dissent has been erratic and
sometimes costly to dissenters. Serious deterioration of the Soviet-era
education systems in all five countries threatens to diminish the
capabilities of the next generation to contribute to the national
economies at a time when those economies may be ready to flourish. At the
same time, ample natural resources hold out the prospect that at least the
republics most blessed in this way--Kazakstan, Turkmenistan, and
Uzbekistan--may ultimately enrich their economies and hence the standard
of living of their people. The prospect of full regional cooperation
remains only theoretical, in spite of numerous bilateral and trilateral
agreements. And relations with Russia, traditionally the dominant outside
force in Central Asia's geopolitical situation, remain close and vital,
although fraught with misgivings. In early 1997, the future of the region
remained nearly as unclear as it was in 1991, the year of independence.
March 31, 1997 Glenn E. Curtis
Data as of March 1996
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