Uzbekistan on the Path Towards Openness and Change

A lot depends on how clearly peaceful interaction in Central Asia and around it will be re-established, in a way that’s acceptable for all parties, writes Yuri Vasilyev, Special correspondent for the Vzglyad business newspaper. There is one of the main questions for Uzbekistan as one of the main partners of Russia in the region: will the systemic reforms in the country allow it to overcome the dependence of its citizens on systems that facilitate fast payments from abroad?

Uzbekistan, which for many decades was considered one of the most closed countries in the post-Soviet sphere, has over the past five years radically changed the public image of the country and more. A special correspondent of the VZGLYAD business newspaper took part in the Russian-Uzbek conference, organised by the Valdai Discussion Club, and assessed the first results of the reforms undertaken by Shavkat Mirziyoyev, president of the republic.

“TEXNOPARK” — says a logo at the entrance to where an aircraft plant was once located. More precisely, the Tashkent Aviation Production Association named after Chkalov — TAPOiCH. More precisely, the Khimki aircraft plant, which was evacuated from a suburb of Moscow to Uzbekistan in 1941. During the war, Li-2 transport aircraft were made here, and in the final years of the USSR, Il-76 “air trucks” were fully equipped for civilian and military use.

In March 1982, Leonid Brezhnev visited Uzbekistan to award the republic the Order of Lenin. During a meeting with the staff of the aircraft plant, the planked footway, where the workers stood, gave way and fell upon the Secretary General. A little more than six months later, Brezhnev died. “After” — of course, does not mean “due to”, taking into account the age and general condition of Leonid Ilyich Brezhnev. However, the injuries received in Tashkent undoubtedly affected the health of the secretary general — after his death, the USSR did not last long.

In recent years, Uzbekistan has begun to abandon the economic system it directly inherited from Soviet practices: extensive public sector in production, with the centralised exports of Uzbek-made goods, the absence of foreign currency accounts at enterprises, etc. “Beginnings” is the key word, but the start of the reforms launched by the current president of the country, Shavkat Mirziyoyev looks very consistent from the outside.

Some elements of the current socio-economic trend began to appear even under Islam Karimov, the last first secretary of the republican communist party and the first president of independent Uzbekistan. “Before you build a new house, you shouldn’t demolish the old one” says a Uzbek proverb that can often be heard in Tashkent when it comes to Mirziyoyev’s reforms. Therefore, among other things, there is a programme for the gradual privatisation of state-owned enterprises: the list for the near future includes about 500 production facilities, planned either for sale or for restructuring. A fifth of what was accumulated — or has been preserved since Soviet times — remains in the real sector under government control.

The “Technopark”, where the Il-76 were assembled in huge hangars, was launched in Tashkent two years ago. President Mirziyoyev opened the site. Its main goals include import substitution and new jobs: there are now five thousand jobs; there will be ten thousand more. Now there are a dozen enterprises there, with China, Italy and South Korea as partners. Products range from gas meters to elevators, from water pumps to panel radiators, and from industrial to household refrigerators and washing machines.

“Refrigerators are actively exported,” explains one Technopark employee, while an electric trolley fits into the next turn between production lines. First of all, to Russia and Kazakhstan.

— And the salaries?

— 150 dollars per month, the employee answers. — But this is at the initial level, then it goes up to 250 dollars and even up to 300 dollars per month. Plus two meals a day. And those who work at the minimum rates also get dry rations: seven items once per week.

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The Korean refrigerator plant provides 1,500 jobs — almost a third of those created by Technopark. These employees, they argue, are not particularly expensive for transnational employers. However, the wages here are still high by Uzbek standards. There is an understanding of not only the import substitution problem, but also export substitution — an alternative for those citizens who have been looking for work outside Uzbekistan in recent decades.

Government contracts, however, continue to provide for many, even at new sites created from scratch like the Tashkent Technopark. For example, nine thousand elevators were ordered to replace outdated and worn-out lifts, primarily in Tashkent. Three and a half million gas meters were ordered in a year. This is for the domestic market, especially for residents, gas consumers. Moreover, the gas meter is free for them, since the state is primarily interested in the constant monthly payment of bills.

Here, by the way, there is something to think about for much richer countries, or at least one of them.

In the meantime, Uzbekistan is a state with a special ministry of economic development and poverty reduction. Moreover, the minister is also a deputy prime minister, which emphasises the importance of both development and the fight against poverty. The new ministry was established two and a half years ago, in the place of the Ministry of Economy and Industry. Apparently, in the future life the country cannot wean itself off the “commodity nomenclature”, traditional for Uzbekistan, particularly gas, cotton, gold and uranium.

In the first eight months of the year, Uzbek migrant workers sent about $5 billion home using fast cross-border payment systems. This was a third more than in 2020, the first year of the pandemic, which hit labour migration worldwide. Russia, the main source of such money for Uzbek families, did not introduce stringent measures — for which, of course, Uzbekistan is grateful.

Obviously, by the end of the year, much more than six billion dollars will come from Russia. To put things in perspective, that is equal to last year’s official foreign trade turnover between the Russian Federation and Uzbekistan. When unhampered by such crises, it accounts for nearly 15 percent of the country’s GDP, which is now about $60 billion. The dependence on migrant earnings is as obvious as the problems associated with further development. For example, this prevents the possible entry of Uzbekistan into the Eurasian Economic Union: trade relations are natural, and the benefits are just as obvious. However, joining the EAEU will open the Russian labour market up to Uzbek citizens much wider than now; Russia, of course, is not ready for such a noticeable shake-up. The correct and soft preparation of such an increase in the EAEU is a separate issue, equally interesting for both parties.

However, this and other similar problems in present-day Uzbekistan are being discussed very widely — which is also considered here as one of the achievements of the new course. Many interlocutors of the VZGLYAD’s special correspondent noted that even five years ago, public discussions about labour migration were not recommended. “Five years ago” — therefore, before Shavkat Mirziyoyev; deciphering the wording “not recommended” is not difficult either.

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The monument to Amir Timur — that is, Tamerlane bears the inscription “Power in Justice” in Uzbek, Russian, English and Arabic. The rider stands with his right hand raised in the middle of Amir Temur Park. Once the park was called Konstantinovsky — in honour of Konstantin von Kaufman, the commander of the Turkestan military district and the first governor-general of Turkestan.

Seven more monuments stood on the spot between the time of the Kaufman monument (1913) and that of Amir Timur (1993). Immediately after the revolution there was a podium for demonstrations in the form of a hammer and sickle, later a stele for the 10th anniversary of the revolution (it also had to be removed because of the inscription, which albeit in Uzbek was in Arabic script, which was considered counter-revolutionary at that time). Lenin’s bust turned out to be too small for the massive pedestal, so both the bust and the pedestal were demolished. A monument to Stalin appeared in 1952 — surely, it did not last long. The pedestal was adorned with the words from the programme of the 22nd Congress of the CPSU Central Committee “Peace, Labour, Freedom, Equality, Brotherhood and Happiness” — in two languages, and also had a very short life. A bust of Karl Marx — the immediate predecessor of Amir Timur — was erected in 1968. The great conqueror has been standing for almost thirty years, and no change is expected.

At the conference, titled “Russia and Uzbekistan in the Face of Development and Security Challenges at a New Historical Stage of Interaction” organised by the Valdai Discussion Club and the Institute for Strategic and Regional Studies under the President of the Republic of Uzbekistan, the experts spoke about the changes in Central Asia. “Russia is not trying to put the countries of the region in front of a geopolitical choice: with it or against it. The main goal is to ensure regional security,” said Andrei Rudenko, Deputy Minister of Foreign Affairs of the Russian Federation. Farhod Arziev, First Deputy Foreign Minister of Uzbekistan, in turn, stressed that over the past five years, relations between the two countries have reached a “qualitatively new and unprecedentedly meaningful” level.

On the part of Russia, a lot has already been done for the declared development — from a loyal migration policy and favourable import regulations for Uzbek goods to helping the energy sector of Uzbekistan overcome its gas dependence. A nuclear power plant near Lake Tuzkan, which is being built by Russian specialists, should go into operation in seven years, in 2028. Among the expectations are joint actions to ensure that very security, which is especially topical after the “enchanting departure of the Americans from Afghanistan”, as Fyodor Lukyanov, the research director of the Valdai Club, quipped about the tumultuous August troop pull-out.

The conference showed, among other things, that the two countries share a common position on Afghan refugees: those who want to leave Afghanistan should be dealt with by those nations who had been there for the previous twenty years — it is not the responsibility of Russia or Uzbekistan. There is also an understanding that ignoring the changes in Afghanistan and refusing to contact the current Afghan authorities is not, in any case, the most effective response, including with respect to resolving humanitarian problems associated with the recent “enchanting” events.

After all, a lot depends on how clearly peaceful interaction in Central Asia and around it will be re-established, in a way that’s acceptable for all parties. There is one of the main questions for Uzbekistan as one of the main partners of Russia in the region: will the systemic reforms in the country allow it to overcome the dependence of its citizens on systems that facilitate fast payments from abroad?

Judging by how much Uzbekistan has changed over the past five years, this may be a question of when rather than if.


Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.