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Kazakstan
Introduction
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system, mainly the supply of raw materials; only outdated Soviet-era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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