Central Asia: Last Chance for Change

To access this briefing in Russian, please click here. OVERVIEW

The Annual Meeting of the European Bank for Reconstruction and Development (EBRD) commencing on 3 May 2003 is an opportunity to assess frankly and honestly the records of the governments of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. If the chance is grasped to push for reform in a more coordinated and concerted way, the controversial decision to hold this meeting in Tashkent will prove well justified. If it is not, and any impression is left that the location of the meeting is a mark of approval for Uzbekistan's current policies, there is a major risk of further deterioration in both the economic and security climate in Central Asia.

Uzbekistan was certainly a difficult choice for the annual meeting of a major international financial organisation committed to democratic principles and open economies. According to the Heritage Foundation and the Wall Street Journal, it ranks 149th out of 156 countries in terms of economic freedom, worse than Burma, although slightly better than Cuba. In Freedom House's rankings of political freedoms and civil rights, it is termed "not free", with a ranking of 6.5 out of 7 (Saddam Hussein's Iraq scored 7, as did Turkmenistan).

Instead of enjoying the transition to democracy and open economies as experienced in much of Central Europe, in Uzbekistan as elsewhere in Central Asia a different type of political and economic system has begun to emerge, closer to authoritarian feudalism than democracy. Economies have remained largely closed to free competition and frequently distorted by government intervention and corruption.

The reality of these systems is seldom recognised by the international community, which has too often taken government rhetoric about democratisation and reform at face value. The problem is not just a lack of political will to pursue reforms, but in many cases active political actions in opposition to reform, while retaining a façade of pro-Western rhetoric to maintain the flow of credits and grants.

Central Asian states can sometimes appear to be relatively stable on the surface, but this stability is a dangerously thin veneer over a host of unresolved tensions. The issue at stake is not merely the economic prosperity of Central Asia, but its political stability and the potential for future unrest that would have a huge impact on the wider region.

All the states of the region face tremendous challenges:

• poorly performing economies that have failed to lift living standards since the end of the Soviet Union;

• heavy reliance on one or two export commodities for economic survival, increasing the risk of economic shocks, corruption and civil conflict;

• unrepresentative and rigid political structures, with limited mechanisms for the transfer of power;

• failure to develop working regional cooperation on a range of key issues, from border management and security to trade and water distribution;

• vulnerability to the growth of extremist political and religious groups;

• organised crime, particularly linked to narcotics transit from Afghanistan;

• young and rapidly growing populations with limited prospects for education, work and health; and

• a complex international environment, with major states competing for influence in the region.

Now is a good time to reassess the problems and prospects of Central Asia. The EBRD meeting offers just such a chance but it needs to take a realistic view of the real problems that the five states face and offer practical solutions that will make a difference.

The EBRD has set out some broad themes for discussion at the meeting, addressing:

• political will as a vital element in improving the investment climate;

• responsible business and the impact of foreign investment on ordinary people;

• obstacles to trade and regional cooperation;

• water disputes among Central Asian states; and

• nurturing small business as an engine of economic growth.

This briefing provides an overview of the issues and suggests some ways in which the pressure for change from organisations such as the EBRD could turn into real reform.

Osh/Brussels, 29 April 2003