Uzbekistan

Politics:

• Analysis

  Uzbekistan politics: Quick View - CSTO exit confirmed

  Event

  At a meeting in Moscow on December 19th the Collective Security Treaty Organisation (CSTO) announced that it had accepted Uzbekistan's withdrawal from the organisation.

  Analysis

  The bloc's decision is essentially a formality-Uzbekistan had unilaterally suspended its membership of the organisation in June 2012. However, the announcement ties up loose ends, as Uzbekistan had legally remained a part of the CSTO. The Belarusian president warned that if Uzbekistan decided that it wanted to rejoin the organisation, it would not be given any concessions and would have to fulfil all the requirements of the CSTO again. Uzbekistan previously left the CSTO in 1999, but decided to rejoin in 2006. The authorities' decision appeared to have been motivated by the US response to the Andizhan massacre in 2005.

  Uzbekistan's withdrawal from the CSTO will not have a significant impact on relations with Russia. Responding to Uzbekistan's decision, the Russian foreign minister, Sergei Lavrov, said that although Russia regretted Uzbekistan's decision, he believed that it was possible to co-ordinate the CSTO's agenda at a bilateral level, adding that Uzbekistan and Russia already had agreements on military co-operation in place. Mr Lavrov met his Uzbek counterpart, Abdulaziz Kamilov, on December 17th. They discussed the potential ramifications of the US withdrawal from Afghanistan in 2014 on the stability of Central Asia. This will be one of the main challenges for the region in the coming years, and will ensure that ties between Uzbekistan and Russia remain fairly close.

  Uzbekistan has been developing closer ties with the US in a bid to counter any negative implications of the withdrawal from Afghanistan. Improved relations will become increasingly important as occasional problems with the Pakistan supply route will increase the importance of Central Asia in the withdrawal. Uzbekistan's exit from the CSTO will allow it much more freedom to pursue negotiations on this matter.

  December 20, 2012

• Background

  Uzbekistan: Political forces

  Most political parties are pro-government

  Uzbekistan's Soviet-style constitution promises wide-ranging political rights that, in reality, are curbed by state practice and legislation. Although stating that all citizens have the right to form trade unions, political parties and any other public associations, subsequent legislation and administrative procedures ensure that only parties approved by the state can operate legally in Uzbekistan. Until 2004 the main political force was the PDP, headed by Abdulhafiz Jalolov. As of the 2004 election, the PDP ceded its dominant position to the LDP, founded in November 2003 by government loyalists, and describing itself as a party for entrepreneurs and businessmen. In addition to these two, three other pro-government parties won parliamentary seats: the Adolat (Justice) Social Democratic Party (not to be confused with the banned Islamic movement Adolat), Fidokorlar (Self-Sacrificers') Party, and Milliy Tiklanish (National Renaissance) Party.

  Secular opposition parties struggle to survive

  The government allows no genuine opposition movements to operate freely in Uzbekistan, and uses force, exile and legal harassment to prevent credible opposition groups from emerging. Two main secular opposition movements emerged in the late communist era: Birlik (Unity) and Erk (Freedom, which split from Birlik in the early 1990s). The leaders of both groups, Abdurahim Pulatov (Birlik) and Muhammad Solikh (Erk), are living in exile, and years of repression have left the groups with limited popular support. Between mid-2003 and early 2005 the movements were permitted to hold small-scale meetings in Tashkent, but the authorities rejected their attempts to register as political parties in advance of the 2004 election and prevented their candidates from standing as independents.

  Two parties attempt to represent the large agricultural population, Ozod Dehqonlar (Free Peasants) and the Agrarian Party, both of which were barred from the 2004 election. Neither has been able to take advantage of the discontent with government policies that exists in rural areas. Another secular opposition movement, Serquyosh Uzbekistonim (My Sunny Uzbekistan), emerged in mid-2005. The group's leader, Sanjar Umarov, was highly critical of the authorities' response to the unrest in Andizhan, and in October 2005 was arrested—ostensibly on charges of embezzlement. He was subsequently sentenced to 14.5 years in prison. Another leader of My Sunny Uzbekistan, Nodira Hidoyatova, received a ten-year sentence, having been convicted of a range of charges, including tax evasion (although she was released from custody in May 2006, with her prison term reduced to a three-year suspended sentence).

  Legislative Chamber election, Dec 26th 2004(a)
  Party	% of vote	No. of deputies
  Liberal Democratic Party	34	41
  People's Democratic Party	23	33
  Fidokorlar (Self-Sacrificers') Party	n/a	18
  Milliy Tiklanish (National Renaissance) Party	n/a	11
  Adolat (Justice) Social Democratic Party	n/a	10
  Independent	n/a	7
  Total	100	120
  (a) Run-off elections were held in 56 constituencies on January 9th 2005. Official turnout was 85.1% in the first round and 80% in the run-off elections.
  Source: press reports.

  Download text file (csv format)

  Underground groups win supporters

  The suppression of the secular opposition has left virtually no avenues open for dissent, and has increased the attractiveness of underground groups such as Hizb ut-Tahrir (Party of Freedom), a radical Islamist group that seeks to overthrow the Karimov administration and establish an Islamic state. Hizb ut-Tahrir does not advocate the use of violence in Uzbekistan (although it has incited and used violence elsewhere), but the Uzbek authorities have accused it of espousing an ideology that encourages terrorism. They have arrested many of those suspected of membership of the group, and handed down lengthy prison sentences for such offences as possessing banned literature.

  Unlike Hizb ut-Tahrir, the Islamic Movement of Uzbekistan (IMU) advocated the use of violence to oust the government. Allied to al-Qaida, the IMU was believed to have been responsible for the February 1999 bomb attacks in Tashkent (see Recent political developments). The movement suffered a significant military defeat at the hands of US-led coalition forces in Afghanistan in November-December 2001, although members of the IMU are now thought to be hiding along the Afghanistan-Pakistan border, and there are reports that some have tried to infiltrate back into Central Asia. An IMU successor group, the Jihad Islamic Group (JIG), is believed to have been responsible for several terrorist attacks in Uzbekistan in March and July 2004.

  March 20, 2007

• Structure

  Uzbekistan: Political structure

  Official name

  Republic of Uzbekistan

  Legal system

  The Soviet republic of Uzbekistan declared its independence on September 1st 1991, after the failure of the Moscow coup. A new constitution was adopted on December 8th 1992, declaring Uzbekistan a multiparty democracy and a presidential republic

  National legislature

  A bicameral parliament, the Oliy Majlis (Supreme Assembly), was elected in two stages in December 2004 and January 2005, replacing the unicameral 250-member legislature. Following the election in December 2009, the Legislative Chamber, the lower house of the new parliament, comprises 135 members chosen by direct election. The 100-member upper house, the Senate, is made up of 84 senators elected by local governments and 16 senators appointed by the president

  Electoral system

  Universal suffrage over the age of 18

  National elections

  December 2009 (parliamentary); December 2007 (presidential). Next parliamentary election due in December 2014; next presidential election scheduled for 2015

  Head of state

  Islam Karimov, re-elected president with 88% of the vote on December 23rd 2007

  National government

  Council of Ministers, headed by the prime minister, who is nominated by parliament on the recommendation of the president. In practice, Mr Karimov exercises total control and appoints regional governors, who report directly to him

  Main political parties

  Adolat (Justice) Social Democratic Party; Fidokorlar (Self-Sacrificers' Party); Liberal Democratic Party (LDP); People's Democratic Party (PDP, former Communist Party); Milliy Tiklanish (National Revival), all pro-government creations; Birlik (Unity) and Erk (Freedom), both banned democratic parties

  Council of Ministers

  Prime minister: Shavkat Mirziyoyev

  Deputy prime ministers: Rustam Azimov

  Gulomdzhon Ibragimov

  Adham Ikromov

  Elmira Basithanova

  Ulugbek Roziqulov

  Botir Zokirov

  Key ministers

  Agriculture & water: Zafar Ruziev

  Culture: Tursunali Kuziyev

  Defence: Kabul Berdiyev

  Economy: Galina Saidova

  Education: Temir Shirinov

  Emergency situations: Tursunxon Xudoyberganov

  Finance: Rustam Azimov

  Foreign affairs: Abdulaziz Kamilov

  Health: Anvar Alimov

  Interior: Bakhodir Matlyubov

  Justice: Nigmatilla Yoldoshev

  Labour & social protection: Aktam Xaitov

  Central Bank chairman

  Faizulla Mullazhanov

  December 14, 2012

• Outlook

  Uzbekistan: Key developments

  Outlook for 2013-17

  • The Economist Intelligence Unit expects that the president, Islam Karimov, will retain a tight grip on power. Despite ostensible moves to give parliament greater influence, there is little prospect of democratisation.
  • Given his age, Mr Karimov's longevity is subject to question. There are doubts over who will eventually succeed him, making for an uncertain outlook once he departs the political scene.
  • Political links with the West will be closer over the forecast period than in the late 2000s, driven by the regional security agenda. However, political and economic ties with Russia and China will also remain strong.
  • Real GDP growth will remain solid in 2013-17, owing to broadly favourable export prices. However, owing to the poor external outlook, we expect growth to ease to 7.4% in 2012 and 6.7% in 2013, slowing to 5.8% by 2017.
  • Average annual inflation will decline modestly in 2013-17 because of lower global commodity prices, but will remain high, at above 10%. Higher state-sector wages and welfare benefits will contribute to inflationary pressure.
  • We estimate a current-account surplus of 6.5% of GDP in 2012, and forecast that it will fall to around 3.2% of GDP by 2017 as global prices for Uzbek commodity exports will be weaker over the forecast period.

  Review

  • In December parliament approved a decision to release or reduce the jail terms of those prisoners charged with "minor" crimes, as a way of celebrating the 20th anniversary of the country's independence.
  • Mr Karimov and the foreign minister met the EU's high representative for foreign policy and security, Catherine Ashton, in November. Security and energy issues were discussed.
  • Large cities and towns have faced a petrol shortage since mid-November. The shortages have been caused by the country's refineries operating under capacity, combined with insufficient imports to meet domestic demand.
  • Real GDP grew by 8.2% year on year in January-September, according to official sources, moderately slower than the 8.6% in the year-earlier period.
  • Industrial production grew by 7.2% year on year in the first three quarters as output from the energy sector remained robust.
  • The trade surplus was just under US$2bn in January-September. Historically high global prices for cotton and energy export products supported the surplus.

  December 14, 2012

Economy:

• Background

  Uzbekistan: Population

  Population growth slows

  Data on Uzbekistan's population are unreliable and are only intermittently available. According to the World Bank, the population was 26.2m in 2004; the Economist Intelligence Unit estimates that it had risen to about 27m by January 2007 (based on official figures). Population growth slowed from an annual average of 2.5% in the 1980s to 1.9% in 1990-99, decelerating further to an annual average of just over 1.2% since 2001, owing to a falling birth rate and large-scale emigration by ethnic minorities. Between 1990 and 1999 there was net emigration of 845,000 people, most of them Russian-speakers.

  Officially registered unemployment was just 0.4% of the workforce as of mid-2004. However, the UN Development Programme (UNDP) has estimated unemployment at 6%. Moreover, hidden unemployment (workers on compulsory unpaid leave) was as high as an additional 8% in industrial enterprises in 2004. The largest share of unemployment is in rural areas; 73.4% of total unemployment was in these areas in 2004, according to the UNDP. The number of rural unemployed is likely to have risen since then, as restructuring in the agricultural sector has been transforming the shirkat (large agricultural enterprises) into private farms (see Economic sectors: Agriculture).

  Population data are skewed by political aims

  The size of ethnic minorities and the scale of emigration are sensitive subjects. The government wants to balance its emphasis on Uzbek nationhood with policies that will slow the exodus of non-Uzbeks. The position is complicated by the fact that in the past many people, especially Tajiks, came under official pressure to declare themselves as ethnic Uzbeks. As a result, the number of Tajiks indicated in official statistics is probably under-reported.

  Ethnic composition of the population
  (% of total; year-end)
  	1989	1996
  Uzbek	71.1	75.8
  Russian	8.3	6.0
  Tajik	4.7	4.8
  Kazakh	4.1	4.1
  Tatar	3.3	1.6
  Kyrgyz	0.9	0.9
  Jewish	0.5	0.1
  German	0.2	0.1
  Other	6.9	6.6
  Sources: 1989 Soviet census; Uzbek government.

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  March 20, 2007

• Structure

  Uzbekistan: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 14, 2012

• Outlook

  Uzbekistan: Country outlook

  Uzbekistan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The president, Islam Karimov, dominates politics, and there is little prospect of democratisation over the forecast period. Mr Karimov, who was most recently elected for a seven-year term in December 2007, is expected to maintain a firm grip on power. Years of repression have prevented the emergence of an opposition figure capable of challenging him successfully. Most of his opponents are in exile. There seems to be no co-ordinated opposition to his rule from within the political hierarchy--although recent events in the Middle East and North Africa (MENA) have shown how quickly such assumptions can change. The centralisation of power in Mr Karimov makes for an uncertain outlook once he departs politics. Doubts over the 74-year-old's health add to the uncertainty.

  ELECTION WATCH: A parliamentary election will be held in 2014, although parliament is at best a rubber-stamp body. The authorities will heavily control the election, and voters will not be given a meaningful choice: genuine opposition parties were impeded from taking part in the parliamentary election in December 2009. A more significant issue is the next presidential election. A new election law was passed in March 2012 and confirms that the next presidential election will be held in 2015. Confusion had arisen following parliament's decision in December 2011 to reduce the president's terms in office from seven to five years. Mr Karimov could stand again in the presidential election, if his health permits, and he would be certain to win. However, in view of his advancing age (he turned 74 in January 2012), he is more likely to attempt an orderly handover of power to a trusted successor, whether in 2015 or earlier.

  INTERNATIONAL RELATIONS: Relations with the US and the EU have improved in recent years, driven by anti-terrorist initiatives, the regional security agenda, and the desire of some EU states to look for alternative energy sources in Central Asia in order to reduce their reliance on Russia. The US is becoming a more prominent partner in anti-terrorism measures, following an agreement in 2009 to allow US non-munitions supplies to Afghanistan to cross Uzbek territory. US concerns over the reliability of Pakistan as a transit route to Afghanistan have taken priority over human rights concerns. In August the latest high-level meeting between the Uzbek and US authorities was held in the Uzbek capital, Tashkent. Links are likely to deepen ahead of the US withdrawal from Afghanistan in 2014.

  POLICY TRENDS: The government will continue to support growth by expanding public investment into infrastructure and industry--partly financed from the Fund for Reconstruction and Development (FRD)--and by increasing public-sector wages and social payments. The IMF has repeatedly called for greater progress in developing the banking system, liberalising the trade and payments systems, and adopting a more flexible exchange-rate policy. Given the government's record, the Economist Intelligence Unit remains sceptical that rapid progress on these issues will occur.

  ECONOMIC GROWTH: Real GDP grew by 8.3% in 2011, according to Mr Karimov, modestly more slowly than in 2010. Nonetheless, official output data are highly suspect and often internally contradictory. We expect that officially reported growth will continue to exaggerate the true rate.

  INFLATION: The government has said that inflation did not exceed the target of 7-9% in 2011. However, official figures understate the true level of inflation, which we believe to be 13.3% at end-2011. In 2012 the poor grain harvest in Kazakhstan, owing to a drought, will have a feed-through effect on food prices, as Kazakhstan is one of the main suppliers of grain to Uzbekistan. This has probably lead to an increase in inflationary pressures in late 2012. However, the impact of the regional drought has been partly been offset by robust agricultural performance, according to official data. We estimate annual average inflation of 13.2% in 2012. Throughout the forecast period the authorities will attempt to limit inflation through price controls on basic foodstuffs and energy. However, historically high global commodity prices, combined with a depreciation of the som (which will boost imported inflation) will create inflationary pressures. Robust money supply growth--from rapid growth in export earnings, and as the government increased wages and benefits further--will also push up prices. Large inflows of gas-related foreign exchange and a continuation of loose fiscal policy will prevent more rapid disinflation in 2013-17. From 2013 onwards, slower growth in domestic demand and the money supply will help to curb inflationary pressures. We forecast annual average inflation of 10.8% in 2013-17.

  EXCHANGE RATES: The authorities will continue to target a regular pace of nominal depreciation to support export competitiveness. By end-2011 the som had depreciated by around 26% in nominal terms since end-September 2008. We expect the official exchange rate to be around Som2,604:US$1 by end-2017, compared with Som1,795:US$1 at end-2011, a fall of about 31%.

  EXTERNAL SECTOR: We estimate that the current-account surplus rose in 2011 as a consequence of a rise in export prices. Based on historical data from the IMF and the World Bank, we estimate the current-account surplus at US$3.4bn (7.4% of GDP) in 2011. Automotive exports will continue to rise. However, the current-account surplus will fall from 2012 onwards, to around 3.2% of GDP by 2017, as global gold and cotton prices remain high by historical levels. Although a fall in global food prices over the longer term will reduce import costs, demand will rise for consumer goods and imported inputs into state-funded infrastructure development. Our forecast assumes that gas export prices will remain higher than in the historical period. Although gas supplies to Russia declined in 2011, gas exports to China, which were launched in 2012, will help to support exports.

  December 12, 2012

• Forecast

  Uzbekistan: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	7.4	6.7	6.5	6.3	6.0	5.8
  Consumer price inflation (av)c	13.2	12.6	10.2	10.6	10.5	10.1
  Consumer price inflation (end-period)c	14.3	10.1	10.6	10.5	10.5	10.1
  Government balance (% of GDP)	-0.2	-0.2	-0.1	0.1	0.3	0.4
  Exports of goods fob (US$ m)	12,438	12,325	12,684	12,825	12,861	13,088
  Imports of goods fob (US$ m)	-8,640	-8,910	-9,450	-9,890	-10,340	-10,830
  Current-account balance (US$ m)	3,266	3,289	3,287	3,154	2,899	2,640
  Current-account balance (% of GDP)	6.5	5.9	5.4	4.6	3.9	3.2
  External debt (year-end; US$ bn)	9.5	11.4	13.3	15.2	17.0	19.0
  Exchange rate Som:US$ (av)	1,889	2,046	2,174	2,309	2,452	2,604
  Exchange rate Som:US$ (end-period)	1,973	2,104	2,234	2,373	2,520	2,676
  Exchange rate Som:€ (av)	2,411	2,583	2,723	2,857	3,089	3,282
  Exchange rate Som:€ (end-period)	2,525	2,640	2,759	2,978	3,176	3,370
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c The data are based on the IMF's inflation measure.

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  December 14, 2012

View detailed map

Country Briefing

Land area

447,400 sq km, of which 9% is arable

Population

27.6m (January 2009)

Main towns

Population in '000, July 1999

Tashkent (capital): 2,400

Samarkand: 392

Namangan: 378

Climate

Continental desert

Languages

Uzbek is the state language; Russian is widely spoken; Tajik is spoken in Samarkand and Bukhara; Karakalpak is used in the autonomous republic of Karakalpakstan

Weights and measures

Metric system

Currency

The som-coupon was introduced on November 29th 1993 as the successor to the rouble. It was replaced by the som on July 1st 1994, at a rate of Som7:US$1. A multiple exchange-rate system was introduced in 1997, and the main reference rate was subsequently repeatedly devalued in order to keep pace with the rapid depreciation of the currency on the black market. The exchange rate was unified on October 15th 2003 at a rate of Som975:US$1

Time

Six hours ahead of GMT

Public holidays

January 1st (New Year); March 8th (International Women's Day); March 21st (Nowruz; Persian New Year); May 9th (Day of Memory and Respect); September 1st (Independence Day); October 1st (Day of Teachers and Instructors); October 26th(Feast of the Sacrifice); December 8th (Constitution Day)

March 26, 2012